Item 22 2024-01917 Agreements Pertaining to the City of Sacramento Delta Shores Community Facilities District No. 2019-01 (Improvements) Improvement Area No. 1 Special Tax Bonds, Series 2024 (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. 1 Special Tax Bonds, Series 2024 and Related Actions — Sacramento City Council, November 19, 2024 (part 1 of 4)

City of Sacramento
City Council - 5PM Report
915 I Street Sacramento, CA 95814
www.cityofsacramento.org
File ID: 2024-01917 11/19/2024 Discussion Item 22.

Agreements Pertaining to the City of Sacramento Delta Shores Community Facilities District No. 2019-01 (Improvements) Improvement Area No. 1 Special Tax Bonds, Series 2024 (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. 1 Special Tax Bonds, Series 2024 and Related Actions
File ID: 2024-01917
Location: District 8, Represented by Councilmember Vang 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. 1 Special Tax Bonds, Series 2024; 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. 1 Special Tax Bonds, Series 2024; 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: Claudia Lara, Debt Analyst, (916) 808-2267, [email protected]; Brian Wong, Debt Manager, (916) 808-5811, [email protected], Office of the City Treasurer Presenter: Claudia Lara, Debt Analyst, (916) 808-2267, [email protected], Office of the City Treasurer
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 Smith & Associates, Inc. 9-Appraisal Review Report prepared by BBG, Inc.

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File ID: 2024-01917 11/19/2024 Discussion Item 22.

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 No. 2019-01 (Improvements) Improvement Area No. 1 Special Tax Bonds, Series 2024 (the Bonds). Staff is seeking this waiver of the posting requirement concerning the contracts being approved today, specifically the Bonds and the Bond Purchase Contract, the Master Indenture, and the First Supplemental Indenture for the Bonds because certain terms in the agreements will be subject to negotiation up until the day of the pricing of the Bonds.

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 $16 million, and the proceeds will be used for the following purposes:
§ To finance the costs of acquisition and construction of certain eligible public facilities including, but not limited to water and storm drain improvements, roadways and traffic improvements, landscaping and park improvements, in addition to other improvements. § To fund a debt service reserve fund to secure repayment of the Bonds. § To pay costs of issuance.
§ To fund capitalized interest on a portion of the Bonds through December 1, 2026.

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 the proceeds of the special tax levied on the taxable parcels within Improvement Area No. 1 (IA 1) of the City of Sacramento Delta Shores Community Facilities District No. 2019-01 (Improvements) (CFD), net of priority administrative expenses and by a lien recorded upon those parcels.

Policy Considerations: City Code section 4.04.020.C requires all agreements greater than $1 million 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 1, and the Master Indenture and the First Supplemental Indenture for the Bonds.

The issuance of these Bonds is also consistent with the City’s Debt Management Policy in effect as of the date of this council report.

Economic Impacts: Not applicable.

Environmental Considerations:

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File ID: 2024-01917 11/19/2024 Discussion Item 22.

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 Stifel, Nicolaus & Company, Inc., the underwriter of the Bonds, and the Master Indenture and 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 concerning the contracts being approved today, specifically the Bonds and the Bond Purchase Contract, the Master Indenture, and the First Supplemental Indenture for the Bonds because certain terms in the agreements will be subject to negotiation up until the day of the pricing of the Bonds.

Approval of the attached resolution authorizes the City Treasurer or his 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 1, 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.

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File ID: 2024-01917 11/19/2024 Discussion Item 22.

Terms of the Sale
The Bonds will be issued in an amount not to exceed $16 million to finance the acquisition and construction of certain eligible public facilities. The true interest cost for the Bonds may not exceed

6.00% and is anticipated to be around 4.86% (based on current market rates as of November 6, 2024), and the underwriter’s compensation may not exceed 1.80% 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.

Estimated Sources and Uses of Funds
Par Amount of Bonds $14,480,000.00
Plus/Less Net Original Issue Premium / Discount509,655.90 Total Sources $14,989,655.90
Use of Funds:

Acquisition and Construction Fund $11,790,890.45
Debt Service Reserve Fund 1,254,252.95
South of CRB Capitalized Interest - through March 1, 2026785,100.00 North of CRB Capitalized Interest - through December 1, 2026136,012.50 Costs of Issuance(1) 1,023,400.00
Total Uses $14,989,655.90
(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.

Estimates based on market conditions as of November 6, 2024 Source: Stifel, Nicolaus & Co., Inc., the Underwriter of the Bonds Estimated Bond Statistics
Par Amount $14,480,000
True Interest Cost 4.860293%
Total Interest Payments to Final Maturity$15,321,050
Total Debt Service to Final Maturity $29,801,050
Estimates based on market conditions as of November 6, 2024.

Source: Stifel, Nicolaus & Co., Inc., the Underwriter of the Bonds Value to Lien

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File ID: 2024-01917 11/19/2024 Discussion Item 22.

Under 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. Here, the estimated value-to-lien ratio for the taxable property in IA 1 of the CFD (inclusive of the Bonds and certain overlapping debt) is 5.82:1, as determined by the appraiser, Smith and Associates.

Security for the Bonds
As noted above, payment of debt service on the Bonds is secured solely by a special tax on real property within IA 1 and is solely the responsibility of the taxable property within IA 1. A standard debt service reserve fund will also be established for the Bonds.

Local Business Enterprise (LBE): Not applicable.

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RESOLUTION NO. 2024-_____
Adopted by the Sacramento City Council
November 19, 2024
AUTHORIZING (1) THE ISSUANCE OF THE CITY OF SACRAMENTO DELTA SHORES COMMUNITY FACILITIES DISTRICT NO. 2019-01 (IMPROVEMENTS) IMPROVEMENT AREA NO. 1 SPECIAL TAX BONDS, SERIES 2024; (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 September 25, 2019, in Improvement Area No. 1 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 $8,000,000 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 increased 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 $17,000,000.

C. At the election held on September 25, 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. 1 Special Tax Bonds, Series 2024 (the “Series 2024 Bonds”) under the Act to finance certain of the Facilities.
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E. The City desires to sell the Series 2024 Bonds to Stifel, Nicolaus & Company, Incorporated (the “Underwriter”), and the City Council has determined that a private (i.e., negotiated) sale of the Series 2024 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 2024 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 Zions Bancorporation, 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 2024 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 2024 Bonds to the Underwriter and the Underwriter agrees to purchase the Series 2024 Bonds (the “Bond Purchase Contract”).
 A preliminary form of an Official Statement describing the Series 2024 Bonds (the “Preliminary Official Statement”).
 A Continuing Disclosure Certificate obligating the City to provide certain ongoing disclosure with respect to the Series 2024 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.

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Section 2. The City Council hereby authorizes and approves the issuance of the Series 2024 Bonds in accordance with the Indenture in an aggregate principal amount not to exceed $16,000,000.

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 2024 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 2024 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 2024 Bonds, and other terms of the Series 2024 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 2024 Bonds to the Underwriter in accordance with the Bond Purchase Contract upon payment by the Underwriter of the purchase price of the Series 2024 Bonds (the “Instructions”).
(c) The Series 2024 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 2024 Bonds must be in the form set forth in, and otherwise be in accordance with, the Indenture. When the Series 2024

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Bonds are so executed, the Treasurer shall deliver them to the Trustee for authentication. The Trustee is then to deliver the Series 2024 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 2024 Bonds may not exceed

6.00%, and the Underwriter’s compensation may not exceed 1.80% of the principal amount of the Series 2024 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 2024 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

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Statement, the Final Official Statement, the Continuing Disclosure Certificate, and the Series 2024 Bonds. All actions previously taken by those officers with respect to the Series 2024 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
11/08/24
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MASTER INDENTURE
between the

CITY OF SACRAMENTO
and

ZIONS BANCORPORATION, NATIONAL ASSOCIATION,
as Trustee
Relating to the

CITY OF SACRAMENTO
DELTA SHORES COMMUNITY FACILITIES DISTRICT NO. 2019-01 (IMPROVEMENTS) IMPROVEMENT AREA NO. 1 SPECIAL TAX BONDS
Dated as of [Dated Date]

4152-3284-8957.5

MASTER INDENTURE
This Master Indenture (the “Master Indenture”), dated as of [Dated Date], between the City of Sacramento, a California municipal corporation (the “City”), and Zions Bancorporation, National Association, a national banking association 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 Improvement Area No. 1 of the Delta Shores Community Facilities District No. 2019-01 (Improvements), City of Sacramento, County of Sacramento, State of California (the “Improvement Area”) on September 25, 2019, the qualified electors therein duly authorized the issuance of eight million dollars ($8,000,000) principal amount of special tax bonds under the Mello-Roos Community Facilities Act of 1982, as amended (being Section 53311 et seq. 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 increased 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 seventeen million dollars ($17,000,000); and WHEREAS, at the election held on September 25, 2019, the qualified electors in the Improvement Area authorized the levy and collection of a special tax under 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 Community Facilities District No. 2019-01 (Improvements) Improvement Area No. 1 Special Tax Bonds (the “Bonds”) in series pursuant hereto and pursuant to one or more Supplemental Indentures and to secure 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 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 Master Indenture a valid agreement for the uses and purposes herein set forth in accordance with its terms, have been done and taken, and the execution and delivery hereof and the execution and delivery of the Bonds, subject to the terms hereof, have in all respects been duly authorized;
NOW, THEREFORE, THIS MASTER INDENTURE WITNESSETH, that in order to secure the payment of the interest on and principal of and redemption premiums, if any, on all Bonds at any time issued and outstanding hereunder according to their tenor, and to secure

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the observance 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 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 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 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 purposes hereof and of any Supplemental Indenture and of the Bonds and of any certificate, 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) Improvement Area No. 1 Special Tax Bonds Acquisition and Construction Fund established 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 Government Code of the State 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) Improvement Area No. 1 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. 1 Special Tax Bonds Bond Reserve Fund established pursuant to Section 5.02 (to be maintained by the Trustee).

Bond Year
“Bond Year” means the twelve-month period ending on September 1 of each year; provided, that the first Bond Year shall 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 (Improvements) Improvement Area No. 1 Special Tax Bonds at any time Outstanding hereunder that are executed, authenticated and delivered in accordance with the provisions hereof. “Serial Bonds” 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 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.

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 Internal Revenue Code of 1986 and all regulations of the United States Department of the Treasury issued thereunder from time 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 reference 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 the City of Sacramento Delta Shores Community Facilities District No. 2019-01 (Improvements) Improvement Area No. 1 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 the City that are related to the authorization, sale, execution, authentication and initial delivery of such Series, including, but not limited to, costs of preparation and reproduction of documents, 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, together with all costs for the preparation of the Bonds of such Series, and any other cost or expense in connection with the authorization, 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. 1 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 Outstanding 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 from 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,

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plus (3) the Sinking Fund Account Payments required 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 Sacramento Delta Shores Community Facilities District No. 2019-01 (Improvements) Improvement Area No. 1 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 Facilities, including the cost of environmental evaluations, and all costs associated with the determination of the amount of the Special Tax, the collection of the Special Tax and the payment of the Special Tax, together with all costs otherwise incurred in order to carry out the authorized purposes of the Community Facilities District, and any other expenses incidental to the acquisition, construction, completion and 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 September 25, 2019 and January 25, 2022.

Federal Securities
“Federal Securities” means (a) any securities now or hereafter authorized both the interest on and principal of which are guaranteed by the full faith and credit of the United States of America, and (b) any of the following obligations of federal agencies not guaranteed by the full faith and credit of the United States of America: (1) participation certificates or senior debt obligations of the Federal Home Loan Mortgage Corporation, (2) bonds or debentures of the Federal Home Loan Bank Board established under the Federal Home Loan Bank Act and bonds of any federal home loan bank established under such act, and (3) stocks, bonds, debentures, participations and other obligations of or issued by the Federal National Mortgage Association, the Student Loan Marketing Association, the Government National Mortgage Association and the Federal Home Loan Mortgage Corporation, to the extent that such securities or obligations are eligible for the legal investment of City funds, together with any 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 one hundred two percent (102%) of the amount invested in the repurchase agreement, (2) are in the possession of the Trustee 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.

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First Supplemental Indenture
“First Supplemental Indenture” means the First Supplemental Indenture, dated as of [Dated Date], between the City and the Trustee supplemental to this Master Indenture.

Fiscal Year
“Fiscal Year” means the twelve-month period terminating on June 30 of each year, or any other annual accounting 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 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, then the term “Fitch” shall be deemed to refer to any other nationally recognized securities rating agency selected by the City.

Generally Accepted Accounting Principles
“Generally Accepted Accounting Principles” 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 generally accepted authority on such procedures, and includes, as applicable, the standards set forth by the Governmental 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 Area No. 1 of the City of Sacramento Delta Shores Community Facilities District No. 2019-01 (Improvements), 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 Accountant” 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;

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(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 the accounting records of and make reports thereon to the City.

Legal Investments
“Legal Investments” means any securities in which funds 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 investment 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 [Dated Date], between the City and the Trustee, entered into under and pursuant 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, then 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.

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

Outstanding
“Outstanding,” when used as of any particular time with reference to Bonds, means (subject to the provisions of Section 8.02) all Bonds except -- (1) Bonds cancelled and destroyed by the Trustee 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 particular time its corporate trust business is being administered, except that with respect to presentation of Bonds for registration, payment, redemption, transfer or exchange, such term shall mean the corporate trust operations office of the Trustee in Salt Lake City, Utah, or such other office designated 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 2024-25, $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 Sacramento Delta Shores Community Facilities District No. 2019-01 (Improvements) Improvement Area No. 1 Special Tax Bonds Rebate Fund established pursuant to Section 6.03 (to be maintained by the Treasurer).

Required Bond Reserve
“Required Bond Reserve” means, as of any date of calculation, the least of (a) ten percent (10%) of the principal amount of the Outstanding Bonds, or (b) Maximum Annual Debt Service, or (c) one hundred twenty-five percent (125%) of the average Debt Service 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

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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 upon 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 Required 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, executed and authenticated pursuant hereto and pursuant to one or more Supplemental Indentures as constituting a single series and delivered on initial issuance in a simultaneous 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 2024 Bonds
“Series 2024 Bonds” 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” means the payments required by all Supplemental Indentures to be deposited in the Sinking Fund Account 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 Improvement 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 Amended 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. 1 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 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, then the term “Standard & Poor’s” shall be deemed 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 and the Trustee, amendatory of or supplemental hereto; but only to the extent that such Supplemental Indenture is specifically authorized hereunder.

Tax Certificate
“Tax Certificate” means any certificate delivered 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 Area 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 Zions Bancorporation, National Association, a national banking association 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, at its

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Principal Corporate Trust Office, and its successors or assigns, or any other bank or trust company which may at any time be substituted in its place as provided in Section 7.01.

Undeveloped Property
“Undeveloped Property” means all parcels of Taxable Land for which a building permit has not been issued.

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 Indenture shall be deemed to be and shall constitute a contract between the City and the Holders from time to time to secure the full and final payment of the interest on and principal of and redemption premiums, if any, on all Bonds which may from time to time be authorized, sold, executed, authenticated and 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 whatsoever, except as expressly 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 established by the City pursuant to the Act and pursuant hereto and pursuant to one or more Supplemental Indentures, which Series shall be entitled to the benefit, protection and security hereof. The Bonds shall be designated the “City of Sacramento Delta Shores Community Facilities District No. 2019-01 (Improvements) Improvement Area No. 1 Special Tax Bonds,” together with such further appropriate particular designation added to or incorporated in the title of the Bonds of each Series as the City may determine or as shall be required by the Act, and each Bond shall bear upon its face the designation so determined for the Series to which it belongs. Additionally, the Bonds may

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contain or have endorsed thereon such other descriptive 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.
(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 Outstanding Bonds, make deposits to the Bond Reserve Fund or otherwise 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 the foregoing, as further provided herein or in any Supplemental Indenture.
(c) From and after the issuance of any Series, the findings and determinations of the City Council respecting such Series shall be conclusive evidence of the existence of the facts so found and determined in any action 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 for 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 contained in the Bonds that the Bonds are issued pursuant to the Act and pursuant hereto and pursuant to one or more Supplemental Indentures shall be conclusive evidence of their validity and of the regularity of their initial issuance, and all Bonds shall be incontestable from and 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 and the purchase price thereof 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 such Series other than the Series 2024 Bonds:
(a) The issuance of such Series shall have been authorized pursuant to the Act and pursuant hereto and shall have been provided 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

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which principal of such Series falls due, and the Term Bonds of such 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 that the first installment of interest may be payable on either March 1 or September 1 and shall be for a period of not longer than twelve (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 identical in all respects, except as to number or denomination, and (iv) serial 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 payment 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 appropriate or necessary and are not inconsistent with the provisions hereof;
(b) No Event of Default hereunder or under 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 each 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; 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 the Allocable Value-to-Lien Ratio of all Undeveloped Property (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 (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, the term “Aggregate Value- to-Lien Ratio” means the ratio of the Value of all Taxable Land to the aggregate principal amount of all Bonds Outstanding and the Series proposed to be issued plus the aggregate

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principal amount of all other assessment bonds and bonds issued under the Act and reasonably allocable to such Taxable Property, and the term “Allocable Value-to-Lien Ratio” means the ratio of the Value of all Undeveloped Property to the principal amount of all Bonds Outstanding and the Series proposed to be issued and reasonably allocable to such Undeveloped Property, plus the principal amount of all other assessment bonds and bonds issued under the Act and reasonably allocable to such Undeveloped 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 issuance and delivery of such Series, either (i) none of the Bonds theretofore issued hereunder will be Outstanding or (ii) the Debt Service in each Bond Year that 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 Indenture 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 constitute the valid and binding special tax obligations of the City;
(d) A Certificate of the City containing such 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 established 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 No. 1 Special Tax Bonds Acquisition 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 Supplemental Indenture providing for the issuance of a Series. All money in the Acquisition and Construction Fund shall be applied 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 incidental to or connected with such acquisition and construction; or for the repayment of funds advanced to or for the Community Facilities District; provided, that any money remaining in the separate account in the Acquisition and Construction Fund created

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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 withdrawn by the Treasurer from the Acquisition and Construction 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. 1 Special Tax Bonds Costs of Issuance Fund,” into which fund shall be deposited (in a separate account 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 the Costs of Issuance Fund shall be applied by the Trustee as directed in a Written Request of 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 with the issuance of such Series (after the completion of the payment of the Costs of Issuance relating to such Series as specified in a Written Request of the City to the Trustee) shall 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 to do so in a Written Request of the City, 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 Fund 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 the United States of America at the Principal Corporate Trust Office of the Trustee; provided that the Trustee may agree with the Holder of any Bond that such Holder may, in lieu of surrendering the same for a new Bond, endorse on such Bond a record of partial payment of the principal of such Bond in the 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 record 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 discharged from all liability to the extent of such payment regardless of whether such endorsement shall or shall not have been made upon such Bond by the Holder thereof and regardless 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 Supplemental Indenture authorizing the issuance of such Series and shall be numbered as determined by the City. (c) Each Bond shall bear interest from the interest payment date next preceding the date of authentication thereof, unless it 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 it is authenticated on a day on or before the fifteenth (15th) 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.

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 (15th) day of the month next preceding 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 Holder 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 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 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 Corporate Trust Office of the Trustee 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 Special Tax Revenues and the other funds 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 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 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; that the Bonds are not secured by a legal or equitable pledge of or charge, lien or encumbrance upon any of the property 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 any, 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 signature of the Mayor and countersigned by the manual or a facsimile signature of the City 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 officer until such delivery and issuance. Also, any Bond may be signed on behalf of the City by any officer of the City who 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 Trustee 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 evidence that the Bonds so authenticated 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 such 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 deliver a new Bond or Bonds of the same Series and maturity date and of authorized denominations 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 treat 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 the Trustee shall be affected by any notice or knowledge to the contrary; and payment of the interest on such Bond shall be made only to the registered owner thereof at the close of business as the fifteenth (15th) day of the month next preceding each interest payment date and payment of the principal of and redemption premium, if any, on such Bond shall be made only to the registered owner thereof, which payments shall be valid and effectual to satisfy and discharge 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 Bond or shall be believed by the Trustee to have been destroyed, 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 Trustee 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 deliver at its Principal Corporate 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 shall determine in exchange and substitution for and upon cancellation of the mutilated 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 matured 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 all other Bonds issued hereunder, and the City and the Trustee shall not be required to treat both the original 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 typewritten, 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 substantially the same manner as the definitive Bonds. If the City issues temporary Bonds, it will execute and furnish definitive Bonds without delay, and thereupon the temporary Bonds may be surrendered in exchange therefor at the Principal Corporate Trust Office of the Trustee, and the Trustee shall deliver in exchange for such temporary Bonds an

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equal aggregate principal amount of definitive Bonds of authorized 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 Supplemental 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 & Co.,” 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 successor 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 substitute 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 depository 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 Trustee, 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 principal 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 Request of the City. In the 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 Written Request of the City to the Trustee, 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 Trustee in such denominations and registered in the names of such persons as are requested in such Written Request of the City, subject to the

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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 purposes 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 transmitting 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 depository or its successor), except to The Depository Trust Company or its successor (or 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 effecting 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 pursuant to a Supplemental Indenture 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 terms (in addition to and consistent with the terms contained in this article) as may be prescribed in the Supplemental Indenture authorizing the issuance of such Series.

SECTION 4.02. Selection of Bonds for Redemption. Unless otherwise provided in the Supplemental Indenture providing for the issuance of a Series of Bonds, if less than all the Bonds of any Series 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 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 thereof of such maturity date to be redeemed in integral multiples of five thousand 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 Bonds 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 original underwriter or first purchaser of the Bonds selected for redemption. Such notice shall state 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 Trust Office of the Trustee), 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, the respective portions of the principal amount thereof to be redeemed, 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 surrendered at the Principal Corporate Trust Office of the Trustee for payment of the redemption price thereof. 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 presentation of such Bond for redemption 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 equal in aggregate principal 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 Article X of this Master Indenture, the notice must state that the redemption will be conditional upon the receipt by the Trustee on or before the date fixed for redemption of amounts sufficient 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 force 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 made 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 failure 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 rescinded by written notice given to the Trustee by the City no later than five Business Days before the date specified for redemption. The Trustee 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 principal 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 the principal of and redemption premiums, if any, on, together with interest to the redemption date on, the Bonds 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 shall 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 principal 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 Sacramento Delta Shores Community Facilities District No. 2019-01 (Improvements) Improvement Area No. 1 Special Tax Bonds Special Tax Fund,” which fund is hereby established in the treasury of the City and which fund the City hereby agrees and covenants to maintain 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 apart 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 Indenture permitting the application thereof for the purposes 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 terms and the provisions of this Master 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 Construction 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) transfer 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 No. 1 Special Tax Bonds Expense Fund (maintained by the Treasurer) (Priority Administrative Expenses Deposit). Promptly after the receipt of any proceeds of the Special Tax in a Fiscal Year, the Treasurer shall, from the money in the Special Tax Fund, transfer 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. 1 Special Tax Bonds Bond Redemption Fund (maintained by the Trustee). At least one Business Day prior to the first (1st) day in each March and September, 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 aggregate amount of interest becoming due and payable on all Outstanding Bonds on such March 1 or September 1, as the case may be, and at least one Business Day prior to 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 aggregate amount of principal becoming due and payable on all Outstanding Serial Bonds on such September 1 plus the Sinking Fund Account Payments required to be made on such September 1 into the Sinking Fund Account; provided, that all of the aforesaid payments 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 equal to the amount of principal of the 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; 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 this 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 interest on the Bonds as it shall become due and payable (including accrued interest on any Bonds purchased or redeemed prior to maturity) plus the principal of and redemption premiums, if any, on the Bonds as they shall mature or upon the prior redemption thereof, except that any money in the Sinking Fund Account shall be used only to purchase or redeem or retire Term Bonds and 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, subject to the terms of the Supplemental Indenture providing for the issuance of such Series of Bonds, be used 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. 1 Special Tax Bonds Bond Reserve Fund (maintained by the Trustee). On or before the first (1st) day in September 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 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 investments 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) months from the date of valuation, or if such investments mature more than twelve (12) months after the date of valuation, at the lesser of (i) the par value of such investments, or (ii) the price at which such investments are redeemable by the holder at his or her option, if so redeemable, or if not so redeemable, at the lesser of (i) the par value of such investments, or (ii) the market value of such investments; provided, that no deposit need be made into the Bond Reserve Fund if the amount contained therein is at least equal to the Required Bond Reserve. In making any valuations hereunder, the Trustee may utilize computerized securities 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 Redemption 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 portion of the Required Bond Reserve (each a “Reserve Fund Credit Instrument”); or (iii) retiring 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; provided, that if as a result of any of the valuations required by the first paragraph of this Section 5.02(3) it is determined that the amount of money in the Bond Reserve Fund exceeds the Required Bond Reserve, the Trustee shall withdraw the amount of money representing such excess from such fund and shall deposit such amount of money in the Bond Redemption Fund. (4) Expense Fund. On September 1 in each year, the Treasurer shall, from the then remaining money in the Special Tax Fund, transfer to and deposit 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 beginning 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 were not already funded or reimbursed by a deposit of Priority Administrative Expenses as set out in subparagraph (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 to reimburse the City for the payment of unbudgeted Expenses as herein provided, or, at the option of the City, to pay interest on or principal of or redemption 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 transferred therefrom on or prior to such date by the

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provisions of Sections 5.02(1), (2), (3), and (4), shall be withdrawn from the Special Tax Fund by the Treasurer for and deposited in the “City of Sacramento Delta Shores Community Facilities District No. 2019-01 (Improvements) Improvement Area No. 1 Special Tax Bonds Community Facilities Fund,” which fund the City hereby agrees and covenants to maintain with the Treasurer so long as any Bonds are Outstanding hereunder, and all money in the Community Facilities Fund shall be used and withdrawn by the City solely for 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 and principal of and redemption premium, if any, to become due on every Bond issued hereunder in strict 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 payable from the Net Special Tax Revenues except as provided herein, and will not create, nor permit the creation of, any pledge, lien, charge or other encumbrance upon any money in the Special Tax Fund 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 District which are payable from any money in the Community Facilities Fund as may from time to time be deposited therein (as provided in Section 5.02) so long as any payments due thereunder shall be subordinate 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 “arbitrage bonds” subject to federal income taxation by reason of Section 148 of the Code or “private activity bonds” subject to federal income taxation by reason of Section 141(a) of the Code or obligations subject to federal income taxation because they are “federally guaranteed” as provided 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; provided, that if the City shall obtain an opinion of nationally recognized bond counsel to the effect that any action required under this section is no longer required, or to the 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

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the Code, the City may rely conclusively on such 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 the investment of any money held by the Treasurer hereunder or otherwise the City shall 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 the 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 regulations of the United States Department of the Treasury issued thereunder to the extent that such regulations are, at the time, applicable and in effect, which obligation shall survive payment in full or defeasance 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 No. 1 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 United 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 transactions made by the Trustee it will cause the Trustee to keep, appropriate accounting records in which complete and correct entries shall be made of all transactions relating to the 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 times 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 2025) and file with the California Debt and Investment Advisory Commission by mail, postage prepaid, or any other method approved by the California Debt and Investment Advisory Commission all information required to be filed pursuant to Section 53359.5(b) of the Act. Additionally, the City will 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 ten (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.

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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 the 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 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 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, 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 redemption 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 Reserve Fund Credit Instrument, as contemplated by Section 5.02(3)) and to pay all current Expenses as they become due and payable in accordance with the provisions and terms hereof. The Special Tax shall be collected in the same manner as ordinary ad valorem property taxes 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 the public records of the County of Sacramento relating to the collection of the Special Tax in order to determine the amount of the Special Tax collected in the prior Fiscal Year, and 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 (a) all parcels that are delinquent in the payment of two installments of such Special Tax in such Fiscal Year and (b) all parcels that are delinquent in the payment of such Special Tax if the total amount so collected is less than ninety-five percent (95%) of the total amount of the Special Tax levied in such Fiscal Year, in each case to enforce the lien of all such delinquent installments of such Special Tax and will diligently prosecute and pursue such foreclosure proceedings to judgement and sale; provided, that any actions taken to enforce delinquent Special Tax liens shall be taken only consistent with Sections 53356.1 through 53356.7, both inclusive, of the Government Code of the State of California; and provided 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 hereof, failure of the City to comply with any continuing disclosure certificate or continuing disclosure agreement shall not be considered an Event of Default hereunder; provided, that any Holder may take such actions as may be

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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 further assurances, instruments and resolutions 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 benefits provided herein, including without limitation the filing of all financing statements, agreements, instruments or other documents in the forms and in the locations 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. Zions Bancorporation, National Association, at its Principal Corporate Trust Office, 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 purpose 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 initially 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 company 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 authority, 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 purpose 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 Trustee may at any time resign by giving written notice of such resignation to the City and by giving notice of such resignation by mail pursuant to Section 11.09 to the Holders, and upon receiving such notice of resignation, the City shall promptly appoint a successor Trustee by an instrument in writing having the qualifications required hereby. Any resignation or removal of a Trustee and appointment of a successor 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 shall 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 proper and prescribe and as may be required by law, appoint a successor Trustee having the qualifications required hereby.

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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 resulting from any merger or consolidation 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 interest payment date on the registration books required to be kept by it pursuant 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 Outstanding 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 the Federal Reserve System and that is located in the United States of America according to written instructions provided 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 premiums, 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 shall (if requested by the City) deliver to the City a certificate of such destruction, and the Trustee shall keep 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 the 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 interest 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 between 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 engineers or other experts employed by it in the exercise and performance of its rights and obligations hereunder, and indemnify and save the Trustee harmless against loss, expenses, costs, claims and liabilities (including without limitation those of its attorneys and agents) not arising from its own negligence 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 and 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 obligations 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

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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 duties expressly set forth herein, and no implied duties or obligations shall be read herein against the Trustee. The Trustee shall have no responsibility with respect 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, consent, 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 counsel, including, without 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 respect to any action taken or suffered hereunder in good faith and in accordance therewith. The Trustee 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 obligations hereunder shall have actual knowledge thereof or the Trustee shall have received written notice thereof 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 (unless 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 City or an Accountant’s Report, which shall be full warrant to the Trustee for any action taken or suffered under the provisions hereof upon the faith thereof, and on which the Trustee may 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.

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 delivery 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 principal amount of the Bonds then Outstanding, exclusive of Bonds

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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 the 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 the currency and from the funds provided 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 Revenues on a parity with the Bonds other than as provided herein, or jeopardize the ability of the City to levy and collect the Special Tax, or (3) reduce the percentage of Bonds required for the written consent 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 Supplemental Indenture that deems any Holder purchasing such Series of Bonds to consent for purposes of this Section 8.01(a) by virtue of its purchase of such Series of Bonds.
(b) Amendment or Supplement Without Consent of Holders. This Master Indenture and the rights and obligations of the City and of the Holders may also be amended or supplemented at any time by the execution and delivery 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 covenants 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 reserved herein to or conferred herein upon the City which shall not (in the opinion of the City) materially adversely 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;
(iii) To authorize the issuance under the Act and hereunder of a Series and to provide the conditions and terms under which such 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

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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 provided for in this article or in Article IX, and 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 hereinabove provided, the City may determine that the Bonds may bear a notation by endorsement in form approved by it as to such action, and in that case 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 shall be made on such Bond. If the City shall so determine, new Bonds so modified as, in the opinion 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 exchanged 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 accepting any amendment or 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 Account Payment for any of the Bonds when and as

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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 covenants contained herein required to be observed or performed by it, and such default shall have continued 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 jurisdiction shall approve a petition filed with or without the consent of the City 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 under the provisions of any other law for the relief or aid of debtors any court of competent jurisdiction shall assume custody or control of the City or of the whole or any substantial part of its property;
then in each and every such case during the continuance 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 any of the officers or employees of the City to perform each and every term, provision and covenant contained in this Master 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 officers 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 continuing, all Net Special Tax Revenues thereafter received by the City shall be immediately transferred 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 necessary in the opinion of the Trustee to protect the interests of the Holders of the Bonds, including the costs and expenses of the Trustee and the Holders in declaring such Event of Default, and payment of reasonable fees and expenses of the Trustee (including reasonable fees and disbursements of its counsel and other agents) incurred in and about the performance of its powers and duties under this Master Indenture.
(b) To the payment of the principal 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

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payment if only partially paid, or surrender thereof 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 the 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 Account 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 the payment thereof ratably, according to the amounts of principal of and premium, if any, due on such date to the persons entitled thereto, without any discrimination or preference. (c) Any remaining amounts shall be transferred 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 respective Holders of the Bonds, by taking and holding the same, shall be conclusively deemed to have so appointed the Trustee) as trustee and true and lawful attorney-in-fact of the Holders of the Bonds for the purpose of exercising and prosecuting on their behalf such rights and remedies as may be available to such Holders under the provisions of the Bonds, this Master Indenture, the Act and 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, 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 specific 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 Act 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 and enforced by the Trustee without the possession of any of the Bonds or the production thereof in any proceeding 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.

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SECTION 9.04. Holders’ Direction of Proceedings. Anything in this Master Indenture to the contrary notwithstanding, the Holders of a majority in aggregate principal amount of the Bonds then Outstanding shall have the right, by an instrument or concurrent instruments in writing executed and delivered to the Trustee, and upon indemnifying the Trustee to its satisfaction therefor, to direct the method 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 which 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 institute any suit, action or proceeding at law or in equity, for the protection or enforcement of any right or remedy under this Master 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 principal amount of the Bonds then Outstanding shall have made written request upon the Trustee to exercise the powers hereinbefore granted or to institute such suit, action or proceeding in its own name; (3) such Holder or said Holders shall have tendered to the Trustee indemnity satisfactory to it against the costs, expenses and liabilities to be incurred in compliance with such request; and (4) the Trustee shall have refused or omitted to comply with such request for a period of sixty (60) days after such written request 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 security of this Master Indenture or the rights of any other Holders of Bonds, or to enforce any right under this Master Indenture, the Act or other applicable law with respect to the Bonds, except in the manner herein provided, and that all proceedings at law or in equity to enforce any such right shall be instituted, had and maintained in the manner herein provided and for the benefit and protection of all Holders of the Outstanding Bonds, subject to the provisions of this Master Indenture.

SECTION 9.06. Absolute Obligation of the City. Nothing in Section 9.05 or in any other provision 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 interest on the Bonds to the respective 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 herein pledged therefor, and not otherwise, or affect or impair the right of such Holders, which 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 account 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 City, the Trustee and the Holders, subject to any

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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 hereunder or now or hereafter 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 arising upon the occurrence of any default shall impair any such right or power or shall be construed to be a waiver of any such default or an acquiescence therein; and every power and remedy given by this Master Indenture to the Trustee or to the Holders of the Bonds may 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 the principal thereof and the redemption premiums, if any, thereon at the times and in the manner stipulated therein and herein, then all agreements, covenants and other obligations of the City to the Holders of such Bonds hereunder shall thereupon cease, terminate 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 satisfaction, 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. (b) Any Outstanding Bonds shall on the maturity date or redemption date thereof be deemed to have been paid within the meaning 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 redemption 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 the 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 either (x) money in an amount which shall be sufficient to pay when due the interest to become due on such Bonds on

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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 or (y) Federal Securities which are not subject to redemption except by the holder thereof prior to maturity (including 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 such escrow agent or the Trustee at the same time, shall be sufficient to pay when due the interest 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 their terms subject to redemption within 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 dates 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 money held by the Trustee in trust for the payment and discharge of any of the Bonds or any interest thereon which remains unclaimed for two (2) years after the date when such Bonds or interest thereon have become due and payable, 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 interest thereon became due and payable, shall be repaid by the Trustee to the City as its absolute property free from trust for deposit in the Community Facilities Fund and for use in accordance with the Act, and the Trustee shall thereupon be released and discharged with respect thereto and the Holders shall 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 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 herein, 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 the payment of the interest on or principal of or redemption premiums, if any, on the Bonds.

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The Bonds 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 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 General Fund of the City is not liable and the full faith and credit of the City is not pledged for the payment of the interest on or principal of or redemption premiums, if any, on the Bonds, and 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. The Bonds are not secured by a legal or equitable pledge of or charge, lien or encumbrance upon any property of the City or any of its income or receipts except the Net Special Tax Revenues and such other funds, and neither the payment of the interest on or principal of or redemption premiums, if any, on the Bonds is a general debt, liability or obligation of the City. The Bonds do not constitute an indebtedness of the City within the meaning of any constitutional or statutory debt limitation or restriction, 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 premiums, 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, the Trustee and the Holders 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 shall be deemed to include the successor to the powers, duties and functions with respect to the 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 benefit of the respective successors thereof whether so expressed or not.

SECTION 11.04. Execution of Documents by Holders. Any declaration, request, consent or other instrument which is permitted 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 declaration, 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 signing such declaration, request, consent 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 date of holding the same shall be provided by the registration books required to be kept by the Trustee pursuant to Section 3.03.

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Any declaration, request, consent or other instrument or writing of the Holder of any Bond shall bind all future Holders of such Bond 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 herein shall be deposited by the Treasurer in time or demand deposits in any state or nationally chartered bank or trust company, including the Trustee or its affiliates, 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 Legal Investments. All money held by the Trustee in the Bond Redemption 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 hereunder 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 Written 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 portfolio composed of or secured by Federal Securities, provided, however, that any such investment shall be made by the Trustee only if, prior to the date on which such investment is to be made, the Trustee shall have received a written direction of the City specifying a specific money market fund that satisfies the requirements of this Section in which such investment is to be made and, if no such written direction is so received, the Trustee shall hold such moneys uninvested. The Trustee (or any of its affiliates) may act as principal or agent or as sponsor, advisor or manager in connection with the making of any investment by the Trustee hereunder and may impose its customary charges therefor, and the Trustee shall not be responsible for any loss suffered in connection with any investment made in accordance herewith.

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

Except as otherwise provided in a Supplemental 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 the 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 money so deposited or invested shall be borne by the fund from which the deposit or investment was made.

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SECTION 11.06. Waiver of Personal Liability. No member of the City Council or officer or employee of the City shall be individually or personally 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 duty 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 otherwise, 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 compliance with an agreement, condition, covenant or term provided herein shall include (a) a statement that the person or persons making or giving such certificate or report have read such agreement, condition, covenant or term 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 report 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, covenant or term has been complied with; and (d) a statement as to whether, in the opinion of the signers, 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 representation with respect to the matters upon which his certificate may be based, as aforesaid, is erroneous, or in the exercise 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 respect to the matters upon which his representation may be based, as aforesaid, is erroneous, or in the exercise of reasonable care should have known that the same was erroneous.

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 the original underwriter or first purchaser of the Bonds shall be given by mailing a copy of such notice, first class postage prepaid, to such Holders at their addresses appearing 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 thirty (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 such notice nor any immaterial defect contained therein shall affect the sufficiency or validity of the proceedings 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 established and maintained by the Treasurer or the Trustee may be

41 4152-3284-8957.5

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 fund, 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 such 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 regard 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 and the table of contents appended hereto shall be solely for convenience of reference 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 subdivisions 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 terms or portions thereof required hereby to be observed or performed by the City or the Trustee should be contrary to law, then such agreement or agreements, such condition or conditions, such covenant or covenants or such term or terms or such portions thereof shall be null and void and shall be deemed separable from the remaining agreements, conditions, covenants or terms or portions thereof and shall in no way affect the validity hereof or of the Bonds; and the Holders shall retain all the rights and benefits accorded to them under the Act or any other applicable provisions of law. The City hereby declares that it would have executed this Master Indenture and each and every other article, section, paragraph, subdivision, sentence, clause and phrase hereof and would have authorized the issuance of the Bonds pursuant hereto irrespective of the fact that any one or more of the articles, sections, paragraphs, subdivisions, sentences, clauses or phrases hereof or the application 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 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 transaction 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 electronic signature is the legal equivalent of having placed its handwritten signature on this agreement 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 Indenture 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:

42 4152-3284-8957.5

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:

Zions Bancorporation, National Association
550 South Hope Street, Suite 300
Los Angeles, CA 90017
Attention: Corporate Trust
SECTION 11.16. Effective Date of the Master Indenture. This Master Indenture shall take effect from and after its execution and delivery.

43 4152-3284-8957.5

IN WITNESS WHEREOF, the City of Sacramento has caused this Master Indenture to be signed in its name by the City Treasurer, and Zions Bancorporation, 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

ZIONS BANCORPORATION, NATIONAL
ASSOCIATION, as Trustee

By_______________________________________
Jacqueline M. Nowak
Vice President
Zions Bank Division

TABLE OF CONTENTS

Page

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4152-3284-8957.5

ARTICLE I
DEFINITIONS; EQUAL SECURITY

SECTION 1.01. Definitions...................................................................................... 2 SECTION 1.02. Equal Security .............................................................................. 11

ARTICLE II

ISSUANCE OF BONDS

SECTION 2.01. Authorization and Purpose of Bonds ........................................... 11 SECTION 2.02. Conditions for the Issuance of Bonds .......................................... 12 SECTION 2.03. Procedure for the Issuance of Bonds ........................................... 14 SECTION 2.04. Acquisition and Construction Fund ............................................. 14 SECTION 2.05. Costs of Issuance Fund ................................................................ 15

ARTICLE III

TERMS AND PROVISIONS OF BONDS

SECTION 3.01. Terms of Bonds ............................................................................ 15 SECTION 3.02. Execution of Bonds ...................................................................... 17 SECTION 3.03. Transfer and Exchange of Bonds ................................................. 17 SECTION 3.04. Mutilated, Destroyed, Stolen or Lost Bonds ................................ 18 SECTION 3.05. Temporary Bonds......................................................................... 18 SECTION 3.06. Use of Depository for Bonds ....................................................... 19

ARTICLE IV

REDEMPTION OF BONDS

SECTION 4.01. Privilege of Redemption of Bonds ............................................... 20 SECTION 4.02. Selection of Bonds for Redemption ............................................. 20 SECTION 4.03. Notice of Redemption .................................................................. 21 SECTION 4.04. Partial Redemption of Bonds ....................................................... 21 SECTION 4.05. Effect of Redemption of Bonds ................................................... 22

TABLE OF CONTENTS
(continued)
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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 ....................................................................................... 22 SECTION 5.02. Allocation of Money in the Special Tax Fund ............................. 22

ARTICLE VI

COVENANTS OF THE CITY

SECTION 6.01. Punctual Payment and Performance ............................................ 25 SECTION 6.02. Against Indebtedness and Encumbrances .................................... 25 SECTION 6.03. Against Federal Income Taxation ................................................ 25 SECTION 6.04. Payment of Claims ....................................................................... 26 SECTION 6.05. Accounting Records and Other Reports ...................................... 26 SECTION 6.06. Protection of Security and Rights of Holders .............................. 27 SECTION 6.07. Levy and Collection of the Special Tax ....................................... 27 SECTION 6.08. Foreclosure of Special Tax Liens ................................................ 27 SECTION 6.09. Continuing Disclosure ................................................................. 27 SECTION 6.10. Further Assurances....................................................................... 28

ARTICLE VII

THE TRUSTEE

SECTION 7.01. The Trustee .................................................................................. 28 SECTION 7.02. Liability of the Trustee................................................................. 29 SECTION 7.03. Notice to the Trustee .................................................................... 30

ARTICLE VIII

AMENDMENT OF OR SUPPLEMENT TO THE MASTER INDENTURE

SECTION 8.01. Procedure for Amendment of or Supplement to the Master Indenture ...................................................................................... 30 SECTION 8.02. Disqualified Bonds....................................................................... 32 SECTION 8.03. Endorsement or Replacement of Bonds After Amendment or Supplement .............................................................................. 32 SECTION 8.04. Amendment or Supplement by Mutual Consent .......................... 32

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ARTICLE IX

EVENTS OF DEFAULT AND REMEDIES OF HOLDERS

SECTION 9.01. Events of Default and Remedies of Holders ................................ 32 SECTION 9.02. Application of Net Special Tax Revenues After Default............. 33 SECTION 9.03. Trustee to Represent Holders ....................................................... 34 SECTION 9.04. Holders’ Direction of Proceedings............................................... 35 SECTION 9.05. Limitation on Holders’ Right to Sue ............................................ 35 SECTION 9.06. Absolute Obligation of the City ................................................... 35 SECTION 9.07. Termination of Proceedings ......................................................... 35 SECTION 9.08. Remedies Not Exclusive .............................................................. 36 SECTION 9.09. No Waiver of Default................................................................... 36

ARTICLE X

DEFEASANCE

SECTION 10.01. Discharge of the Bonds ................................................................ 36 SECTION 10.02. Unclaimed Money ........................................................................ 37

ARTICLE XI

MISCELLANEOUS

SECTION 11.01. Liability of City Limited to Net Special Tax Revenues and Certain Other Funds ..................................................................... 37 SECTION 11.02. Benefits of the Master Indenture Limited to Certain Parties ....... 38 SECTION 11.03. Successor is Deemed Included in All References to Predecessor .................................................................................. 38 SECTION 11.04. Execution of Documents by Holders ........................................... 38 SECTION 11.05. Deposit and Investment of Money in Accounts and Funds ......... 39 SECTION 11.06. Waiver of Personal Liability ........................................................ 40 SECTION 11.07. Acquisition of Bonds by City ...................................................... 40 SECTION 11.08. Content of Certificates and Reports ............................................. 40 SECTION 11.09. Notice by Mail ............................................................................. 40 SECTION 11.10. Maintenance of Accounts and Funds ........................................... 40 SECTION 11.11. Article and Section Headings, Gender and References ............... 41

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(continued)
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SECTION 11.12. Partial Invalidity........................................................................... 41 SECTION 11.13. Execution in Counterparts; Electronic Signatures ....................... 41 SECTION 11.14. Governing Law ............................................................................ 41 SECTION 11.15. Notices ......................................................................................... 41 SECTION 11.16. Effective Date of the Master Indenture ........................................ 42

4152-3284-8957.5

OH&S
DRAFT
11/08/24
4161-5579-2445.6

FIRST SUPPLEMENTAL INDENTURE
between the

CITY OF SACRAMENTO
and

ZIONS BANCORPORATION, NATIONAL ASSOCIATION,
as Trustee
Relating to the
$[PRINCIPAL AMOUNT]

CITY OF SACRAMENTO
DELTA SHORES COMMUNITY FACILITIES DISTRICT NO. 2019-01 (IMPROVEMENTS) IMPROVEMENT AREA NO. 1 SPECIAL TAX BONDS, SERIES 2024
Dated as of [Dated Date]

TABLE OF CONTENTS

Page

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ARTICLE I

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

ARTICLE II
ISSUANCE OF SERIES 2024 BONDS
SECTION 2.01. Authorization of Series 2024 Bonds ........................................... 2 SECTION 2.02. Terms of Series 2024 Bonds ........................................................ 2 SECTION 2.03. Redemption Prices of Series 2024 Bonds ................................... 4 SECTION 2.04. Form of Series 2024 Bonds .......................................................... 5 SECTION 2.05. Application of Net Proceeds of Sale of Series 2024 Bonds ............................................................................................. 5

ARTICLE III

MISCELLANEOUS
SECTION 3.01. Authority for First Supplemental Indenture ............................. 6 SECTION 3.02. Terms of Series 2024 Bonds Subject to the Master Indenture ...................................................................................... 6 SECTION 3.03. Execution in Counterparts; Electronic Signatures ................... 6 SECTION 3.04. Effective Date of First Supplemental Indenture ....................... 6

EXHIBIT A

FORM OF SERIES 2024 BONDS

1 4161-5579-2445.6

FIRST SUPPLEMENTAL INDENTURE

This First Supplemental Indenture (the “First Supplemental Indenture”), dated as of [Dated Date], is between the CITY OF SACRAMENTO, a California municipal corporation (the “City”), and ZIONS BANCORPORATION, NATIONAL ASSOCIATION, a national banking association 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”).

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

B. The City has determined to prescribe the terms, conditions, and form of $[PRINCIPAL AMOUNT] aggregate principal amount of City of Sacramento Delta Shores Community Facilities District No. 2019-01 (Improvements) Improvement Area No. 1 Special Tax Bonds, Series 2024 (the “Series 2024 Bonds”) under the Master Indenture.

C. The City has determined that all things necessary to cause the Series 2024 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 accordance with its terms, have been done and taken, and the execution and delivery hereof and the execution and delivery of the Series 2024 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 2024 Bonds at any time issued and outstanding hereunder according to their tenor, and to secure the observance 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 2024 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 2024 Bonds by the registered owners thereof from time to time, and for other valuable considerations, 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 2024 Bonds, as follows:

2 4161-5579-2445.6

ARTICLE I

DEFINITIONS
SECTION 1.01. Definitions.
(a) Except as otherwise provided herein, all terms 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 requires, 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 Indenture, of the Series 2024 Bonds, and of any certificate, opinion, report, request, or other 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 Supplemental Indenture, dated as of [Dated Date], between the City and the Trustee entered into under the Act and the Master Indenture.
“Series 2024 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. “Term Series 2024 Bonds” means the Series 2024 Bonds that are Term Bonds.

ARTICLE II
ISSUANCE OF SERIES 2024 BONDS
SECTION 2.01. Authorization of Series 2024 Bonds. The City Council has reviewed all proceedings heretofore taken relative to the authorization of the Series 2024 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 2024 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 2024 Bonds in the form and manner provided herein, which Series 2024 Bonds will be entitled to the benefit, protection, and security of the Act, the Master Indenture, and this First Supplemental Indenture.

The purpose for which the Series 2024 Bonds are to be issued is to provide funds to finance the acquisition of certain Facilities, make a deposit to the Bond Reserve Fund, fund a portion of the interest on the Series 2024 Bonds, and pay the Costs of Issuance of the Series 2024 Bonds.

SECTION 2.02. Terms of Series 2024 Bonds.
(a) The Series 2024 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. 2019-01 (Improvements) Improvement Area No. 1 Special Tax Bonds, Series 2024;” 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-day calendar months) at the rates per annum,

3 4161-5579-2445.6

payable semiannually on March 1 and September 1 in each year, commencing on [March 1, 2025], as follows:

Maturity Date
(September 1)

Principal Amount

Interest Rate
$ %

Sinking Fund Account Payments are hereby established for the mandatory redemption and payment of the Series 2024 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 2024 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 2024 Bonds maturing on September 1, 20[__] shall be reduced proportionately by the principal amount of all such Series 2024 Bonds so optionally or extraordinarily redeemed and the City will provide the Trustee with a revised schedule of Sinking Fund Account Payments for the Series 2024 Bonds maturing on September 1, 20[__]), namely:

Year Ending
September 1
Sinking Fund
Account Payment
$

*
___________
* Maturity
Sinking Fund Account Payments are hereby established for the mandatory redemption and payment of the Series 2024 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 2024 Bonds maturing on September 1, 20[__] shall have been optionally or extraordinarily redeemed under Section

4 4161-5579-2445.6

Sinking Fund Account Payments for the Series 2024 Bonds maturing on September 1, 20[__]), 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 the Trustee (upon receipt of a Written Request of the City) at any time for the purchase of the Term Series 2024 Bonds at public or private sale as and when and at such prices (including brokerage and other charges) as the City may in its discretion determine, but not to exceed the principal amount of such Term Series 2024 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 September 1 for the mandatory redemption or payment of the Term Series 2024 Bonds; and the City hereby agrees and covenants with the Holders of the Term Series 2024 Bonds to call and redeem in accordance with Article IV of the Master Indenture, or pay, the Term Series 2024 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 September 1, 20[__], there is money in the Sinking Fund Account available for such purpose.

SECTION 2.03. Redemption Prices of Series 2024 Bonds.
(a) The Series 2024 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 Master Indenture, at the following redemption prices (expressed as a percentage of the principal amount of Series 2024 Bonds or portions thereof called for redemption), together with accrued interest to the date of redemption:

5 4161-5579-2445.6

(b) The Series 2024 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 Master Indenture, at the following redemption prices (expressed as a percentage of the principal amount of Series 2024 Bonds or portions thereof called for redemption), together with accrued interest to the date of redemption:

Redemption Date Redemption Price
Any interest-payment date from [March 1, 2025] 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%

(c) The Term Series 2024 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 redemption price equal to the principal amount thereof to be redeemed, together with accrued interest thereon to the date of redemption, without premium.

SECTION 2.04. Form of Series 2024 Bonds. The Series 2024 Bonds and the authentication and registration endorsements and the 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 2024 Bonds. The net proceeds of the sale of the Series 2024 Bonds in the amount of $[______] (composed of $[PRINCIPAL AMOUNT].00 aggregate principal amount of the Series 2024 Bonds, [plus/less] an [net] original issue [premium/discount] of $[______], and less an underwriter’s discount of $[______]) shall be set aside and deposited or transferred 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 the Bond Reserve Fund, which equals the Required Bond Reserve as of the date of issuance of the Series 2024 Bonds.

6 4161-5579-2445.6

(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 2024 Bonds through and including [______].
(d) Fourth, the Trustee shall deposit $[______] in the Costs of Issuance 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 2024 Bonds Subject 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 Indenture and to the Series 2024 Bonds with the same force and effect as if they were set forth at length in this First Supplemental Indenture, with such omissions, variations, and modifications as may be appropriate to conform them to this First Supplemental Indenture.

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 transaction 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 electronic signature is the legal equivalent of having placed its handwritten signature on this agreement 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.

7 4161-5579-2445.6

IN WITNESS WHEREOF, the City has caused this First Supplemental Indenture to be signed in its name by the City Treasurer, and Zions Bancorporation, National Association, as Trustee, in token of its acceptance 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

ZIONS BANCORPORATION, NATIONAL
ASSOCIATION, as Trustee

By _________________________________
Jacqueline M. Nowak
Vice President
Zions Bank Division

A-1 4161-5579-2445.6

EXHIBIT A FORM OF SERIES 2024 BONDS

Unless this Bond is presented by an authorized representative of The Depository Trust Company, a New York corporation (“DTC”), to Zions Bancorporation, National Association, for registration of transfer, exchange, or payment, and any Bond issued 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 other 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. 1 SPECIAL TAX BOND, SERIES 2024

Interest
Rate
Maturity
Date
Dated
as of CUSIP
_____% September 1, 20__ [_____], 2024

REGISTERED OWNER: CEDE & CO.

PRINCIPAL AMOUNT: DOLLARS
The City of Sacramento, a municipal corporation duly organized and existing under and pursuant to the Constitution and laws of the State of California (the “City”), for value received hereby promises to pay (but only out of the Net 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 right of prior redemption hereinafter provided for) the principal amount set forth above, together with interest thereon from the interest payment date 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 fifteenth (15th) day of the month next preceding the first interest payment date on the Bonds, in which event 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

A-2 4161-5579-2445.6

March 1 and September 1 in each year, commencing on [March 1, 2025]. 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 Zions Bancorporation, 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 registered owner hereof at the close of business on the fifteenth (15th) day of the month next preceding 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 made 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 Sacramento for Improvement Area No. 1 of the Delta Shores Community Facilities District No. 2019-01 (Improvements), City of Sacramento, County of Sacramento, State of California (the “Improvement Area”) located in the City, designated the “City of Sacramento Delta Shores Community Facilities District No. 2019-01 (Improvements) Improvement Area No. 1 Special Tax Bonds, Series 2024” (the “Series 2024 Bonds”), under and pursuant to the Mello-Roos Community 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 supplemental thereto (the “Act”), and under and pursuant to a Master Indenture, dated as of [Dated Date] (as supplemented and amended, the “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. 1 Special Tax Bonds” (the “Bonds”), and a First Supplemental Indenture supplemental thereto, dated as of [Dated Date] (the “First Supplemental Indenture,” and together with the Master Indenture, the “Indentures”), 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 2024 Bonds). All the Series 2024 Bonds are payable on a parity with all other Bonds issued under the Master Indenture in accordance with the terms 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 2024 Bonds are issued and for the rights of the registered owners of the Series 2024 Bonds; and all the terms of the Act and the Indentures are hereby incorporated herein and constitute a contract between the City and the registered owner from time to time of this Series 2024 Bond, to all the provisions of which the registered owner of this Series 2024 Bond, by his acceptance hereof, agrees and consents; and each

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taker and subsequent registered owner hereof shall have recourse to all the provisions of the Act and the Indentures and shall be bound by all the conditions and terms thereof. All capitalized terms used herein but not otherwise defined shall have the meanings contained in the Indentures.

The Series 2024 Bonds are issued to provide funds to finance the acquisition of certain Facilities, make a deposit to the Bond Reserve Fund, fund a portion of the interest on the Series 2024 Bonds, and pay the Costs of Issuance of the Series 2024 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 principal of and redemption premiums, if any, on the Series 2024 Bonds are payable solely from the Net Special Tax Revenues (as 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 interest on or the principal of or the redemption premiums, if any, on the Series 2024 Bonds, and no tax or assessment other than the Special Tax (as that term is defined in the Indentures, and herein 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 2024 Bonds. The Series 2024 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 established under the Indentures, and neither the payment of the interest on or the principal of or the redemption premiums, if any, on the Series 2024 Bonds is a general debt, liability or obligation of the City. Additional Bonds payable on a parity with the Series 2024 Bonds from the Net Special Tax Revenues may be issued subject to the conditions and limitations contained in the Indentures.

The Series 2024 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 Master Indenture, at the following redemption prices (expressed as a percentage of the principal amount of Series 2024 Bonds or portions thereof called for redemption), together with accrued interest to the date of redemption:

Redemption Date 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%
The Series 2024 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 Indentures, at the following redemption prices (expressed as a percentage of the principal amount of Series 2024 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 date from [March 1, 2025]
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%

The Series 2024 Bonds maturing on September 1, 20[__] are subject 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 Account (as those terms are defined in and as provided in the Indentures), upon mailed notice as provided in the Indentures, at a redemption price equal to the principal amount thereof to be redeemed, together with accrued interest thereon to the date of redemption, without premium.

If less than all the Series 2024 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 2024 Bonds to be redeemed, and if less than all the Series 2024 Bonds of any one maturity date are to be redeemed at any one time, the Trustee shall select the Series 2024 Bonds or portions thereof of such maturity date to be redeemed in integral multiples of five thousand dollars ($5,000) in any manner that it deems appropriate.

Notice of redemption of any Series 2024 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 securities information services selected by the City in accordance with the Indentures and to the original underwriter or first purchaser of the Series 2024 Bonds selected for redemption, but neither failure to receive any such notice nor any 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 redemption premiums, if any, on, together with interest to the redemption date on, the Series 2024 Bonds or portions thereof so called by redemption is held by the Trustee, then this Series 2024 Bond or the portion thereof to be redeemed shall, on the redemption date designated in such notice, become due and payable at the above-described redemption price; and from and after the date so designated interest on this Series 2024 Bond or the portion thereof to be redeemed shall cease to accrue and the registered owner of this Series 2024 Bond shall have no

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rights in respect hereof except to receive payment of the redemption price of this Series 2024 Bond or the portion thereof to be redeemed, and upon surrender of this Series 2024 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 2024 Bond or new Series 2024 Bonds of the same maturity date and of authorized denominations equal in aggregate principal amount to the unredeemed portion of this Series 2024 Bond so surrendered.

The City has covenanted that, so long as any Series 2024 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 Special 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, conditions, covenants and terms 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 2024 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 2024 Bonds are issuable in the form of fully registered Bonds in denominations of five thousand dollars ($5,000) or any integral multiple thereof. The registered owner of any Series 2024 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 2024 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 2024 Bond is transferable on the registration books kept by the Trustee by the registered owner hereof or by his duly authorized attorney upon surrender of this Series 2024 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 2024 Bond or Series 2024 Bonds of authorized denominations in the same aggregate principal amount will be issued to the transferee in exchange therefor in the manner, subject 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 this Series 2024 Bond is registered as the absolute owner hereof 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 2024 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 2024 Bond or reduce the interest rate hereon or otherwise alter or impair the obligation of the City to pay the interest hereon or the principal hereof or any Sinking Fund 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

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provided herein without the express written consent of the registered owner of this Series 2024 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 2024 Bonds other 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 2024 Bonds required for the written consent to an amendment or supplement of the Indentures, or (4) modify any rights or obligations of the Trustee without its prior written assent thereto; all as more fully set forth in the Indentures.

The Series 2024 Bonds do not constitute 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 2024 Bonds otherwise than from the Net Special Tax Revenues and the other funds as provided in the Indentures.

This Series 2024 Bond shall not be entitled to any benefits under the Indentures or become valid or obligatory for any purpose 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 2024 Bond do exist, have happened and have been performed in due time, form and manner as required by law and that the amount of this Series 2024 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 2024 Bonds permitted to be issued under the Indentures.

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IN WITNESS WHEREOF, the City of Sacramento has caused this Series 2024 Bond to be executed in its name and on its behalf by the manual 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 2024 Bond to be dated [____], 2024.

CITY OF SACRAMENTO

By _________________________________
Mayor

Countersigned:

_______________________________
City Clerk

[FORM OF CERTIFICATE OF AUTHENTICATION AND
REGISTRATION TO APPEAR ON SERIES 2024 BONDS]

This is one of the Series 2024 Bonds described in the within-mentioned Indentures which has been authenticated and registered on the date indicated below.

Date: [______], 2024

ZIONS BANCORPORATION, NATIONAL
ASSOCIATION, as Trustee

By _________________________________
Authorized Signatory

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[FORM OF ASSIGNMENT TO APPEAR ON SERIES 2024 BONDS]
For value received the undersigned do(es) hereby sell, assign and transfer unto _______________________________________________ the within Series 2024 Bond and do(es) hereby irrevocably constitute and appoint ______________________________ attorney to transfer the same on the bond register of the Trustee, 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 2024 Bond in every particular, 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:
____________________

82822.00016\42661028.3
Bond Purchase Contract | Page 1

BOND PURCHASE CONTRACT
$[PAR AMOUNT]

CITY OF SACRAMENTO
DELTA SHORES COMMUNITY FACILITIES DISTRICT NO. 2019-01
(IMPROVEMENTS)
IMPROVEMENT AREA NO. 1
SPECIAL TAX BONDS, SERIES 2024
[________], 2024
City of Sacramento
915 I Street
Sacramento, California 95814
Greetings:

Stifel, Nicolaus & Company, Incorporated, 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. 1 therein (“Improvement Area No. 1”). 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 ”); (b) a certificate from KB Home Sacramento Inc., a California corporation (“ KB Home”), 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 “ KB Home POS Certificate ”); and (c) a certificate from Meritage Homes of California Inc. (“Meritage”) in form and substance as set forth in Exhibit I-3 to this contract, and dated as of the date of the Preliminary Official Statement identified in Section 4(b) of this contract (the “Meritage 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 $[PAR AMOUNT] aggregate principal amount of the Bonds at a purchase price (the “ Purchase Price”) of $[AMOUNT] (being an amount equal to the par amount of the Bonds of $[PAR AMOUNT], [plus/less] an [net] original issue [premium/discount] of $[AMOUNT], and less an Underwriter's discount of $[UW DISCOUNT]).

2. Authorizing Instruments. The City will issue the Bonds under— (a) the Mello-Roos Community Facilities Act of 1982, as amended (the “Act”); 82822.00016\42661028.3

Bond Purchase Contract | Page 2

(b) the resolution of the Sacramento City Council (the “City Council”), adopted on [November 19, 2024], that authorizes the issuance of the Bonds (the “Resolution”); and (c) that certain Master Indenture, dated as of [December 1, 2024], as supplemented by a First Supplemental Indenture (the “First Supplemental Indenture”), dated as of [December 1, 2024] (collectively, the “Indenture”), by and between the City and Zions Bancorporation, 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. 1) in Improvement Area No. 1 (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. 1; (b) fund a reserve fund securing the Bonds; (c) pay costs of issuance of the Bonds; and (d) fund capitalized interest on a portion of the Bonds through and including December 1, 2026.

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. 1 as required by Rule 15c2-12 (the “Continuing Disclosure 82822.00016\42661028.3

Bond Purchase Contract | Page 3

Certificate”). The form of the Continuing Disclosure Certificate will be attached as an appendix to the Preliminary Official Statement and Final Official Statement.

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. 1 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. 1 therein, the incurrence of bonded indebtedness for Improvement Area No. 1, and the levy of the Special Taxes within Improvement Area No. 1. 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.
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Bond Purchase Contract | Page 4

(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. (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, KB Home, or Meritage, to the Underwriter, the City, or Disclosure Counsel; (B) concern either M&H, KB Home, or Meritage, or either of them, or their affiliates, M&H’s, KB Homes’s, or Meritage’s and their affiliates’ property ownership and proposed development of the property within the CFD and Improvement Area No. 1, or M&H’s, KB Homes, or Meritage’s 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. 1 or omit to state any material fact relating to the City or the CFD and Improvement Area No. 1 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.
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(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. (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 82822.00016\42661028.3

Bond Purchase Contract | Page 6

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 monies 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. 1 and are secured by a lien on the Taxable Property within Improvement Area No. 1 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 monies 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. (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. 1.

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 (provided, however, that any funds associated with the Acquisition and Construction Fund (as defined in the Master Indenture) are remitted to the City).
(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 82822.00016\42661028.3

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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. (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 82822.00016\42661028.3

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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. (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 that, 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 82822.00016\42661028.3

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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. 1 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 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 Stradling Yocca Carlson & Rauth, disclosure counsel to the City (“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, 82822.00016\42661028.3

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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.
(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.
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(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, Smith & Associates, Inc. of Folsom, 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 BBG, Inc., independent appraisers, addressed to the City and the Underwriter, regarding its conclusions of 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 KB Home POS Certificate, delivered as of the date of the Preliminary Official Statement in the form of Exhibit I-2 to this contract.
(21) The Meritage POS Certificate, delivered as of the date of the Preliminary Official Statement in the form of Exhibit I-3 to this contract.
(22) 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.
(23) A closing certificate of KB Home, in form and substance as set forth in Exhibit J- 2 to this contract, dated as of the Closing Date.
(24) A closing certificate of Meritage, in form and substance as set forth in Exhibit J-3 to this contract, dated as of the Closing Date.
(25) 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. (26) One or more letters of counsel to KB Home, in form and substance as set forth in Exhibit K-2 to this contract, dated as of the Closing Date. (27) One or more letters of counsel to Meritage, in form and substance as set forth in Exhibit K-3 to this contract, dated as of the Closing Date. (28) 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.
(29) Continuing disclosure certificates executed by each of M&H, Meritage and KB Home, in form and substance as set forth as Appendix H to the Final Official Statement.
(30) A Blanket Letter of Representations of the City to DTC, which qualifies the Bonds for delivery via the facilities of DTC.
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(31) 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 reasonable 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— (1) the purchase and sale of the Bonds under this contract is an arm’s-length commercial transaction between the City and the Underwriter; 82822.00016\42661028.3

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(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:

Stifel, Nicolaus & Company, Incorporated
One Montgomery Street, 35th Floor
San Francisco, California 94104
Attention: Eileen Gallagher, Managing Director
Email address: [email protected]

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.”
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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. Each of the parties hereto agrees that the transaction consisting of this contract may be conducted by electronic means. Each party agrees, and acknowledges that it is such party’s intent, that if such party signs this contract using an electronic signature, it is signing, adopting, and accepting this contract and that signing this contract using an electronic signature is the legal equivalent of having placed its handwritten signature on this contract on paper. Each party acknowledges that it is being provided with an electronic or paper copy of this contract in a usable format.

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 a 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 82822.00016\42661028.3

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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 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 A, 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 A 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 82822.00016\42661028.3

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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 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.

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(Signature Page Follows)
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STIFEL, NICOLAUS & COMPANY,

INCORPORATED

By:

Authorized Representative

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

CITY OF SACRAMENTO

By:

John P. Colville Jr., City Treasurer

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EXHIBIT A

$[PAR AMOUNT]

CITY OF SACRAMENTO
DELTA SHORES COMMUNITY FACILITIES DISTRICT NO. 2019-01
(IMPROVEMENTS)
IMPROVEMENT AREA NO. 1
SPECIAL TAX BONDS, SERIES 2024

MATURITY SCHEDULE AND REDEMPTION TERMS

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

Total: $

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, 20[__] through and including March 1, 20[__]
103
%
September 1, 20[__], and March 1, 20[__] 102
September 1, 20[__], and March 1, 20[__] 101
September 1, 20[__], and any Interest Payment Date thereafter 100

Mandatory Sinking Fund Redemption. The 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:

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Sinking Fund Redemption Date
(September 1) Sinking Fund Payments

(*Maturity)

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 [DATE], between the City and Stifel, Nicolaus & Company, Incorporated or the Final Official Statement, as applicable.

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EXHIBIT B

$[PAR AMOUNT]

CITY OF SACRAMENTO
DELTA SHORES COMMUNITY FACILITIES DISTRICT NO. 2019-01
(IMPROVEMENTS)
IMPROVEMENT AREA NO. 1
SPECIAL TAX BONDS, SERIES 2024

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 [DATE]

CITY OF SACRAMENTO

By
John P. Colville Jr.

City Treasurer

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EXHIBIT C

$[PAR AMOUNT]

CITY OF SACRAMENTO
DELTA SHORES COMMUNITY FACILITIES DISTRICT NO. 2019-01
(IMPROVEMENTS)
IMPROVEMENT AREA NO. 1
SPECIAL TAX BONDS, SERIES 2024

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 Stifel, Nicolaus & Company, Incorporated, dated [SALE DATE] (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: [DATE]

CITY OF SACRAMENTO

By:

John P. Colville Jr.

City Treasurer

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EXHIBIT D

$[PAR AMOUNT]

CITY OF SACRAMENTO
DELTA SHORES COMMUNITY FACILITIES DISTRICT NO. 2019-01
(IMPROVEMENTS)
IMPROVEMENT AREA NO. 1
SPECIAL TAX BONDS, SERIES 2024

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. 1 therein (“Improvement Area No. 1”). The Special Tax Consultant has reviewed the amended and restated rate and method of apportionment of special tax for Improvement Area No. 1 (the “RMA”), which is set forth in Appendix A to the Official Statement (the “Official Statement”) dated [SALE DATE], 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 net of Priority Administrative Expenses (as defined in the Master Indenture), 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 net of Priority Administrative 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. 1, based upon the appraisal report dated [DATE] (with a date of value of September 25, 2024), 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. 1.

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

Dated: [DATE] NBS

By: _____________________________________
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EXHIBIT E

$[PAR AMOUNT]

CITY OF SACRAMENTO
DELTA SHORES COMMUNITY FACILITIES DISTRICT NO. 2019-01
(IMPROVEMENTS)
IMPROVEMENT AREA NO. 1
SPECIAL TAX BONDS, SERIES 2024

CERTIFICATE OF TRUSTEE

The undersigned hereby states and certifies that they are an authorized officer of Zions Bancorporation, National Association, as trustee (the “Trustee”) under that certain Master Indenture, dated as of [December 1, 2024] as supplemented by a First Supplemental Indenture dated as of [December 1, 2024] (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: [DATE]
Zions Bancorporation, National Association,
as Trustee

By
Authorized Officer

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EXHIBIT F

SUPPLEMENTAL OPINION OF BOND COUNSEL

[DATE]

Stifel, Nicolaus & Company, Incorporated
San Francisco, California

City of Sacramento
Delta Shores Community Facilities District No. 2019-01
(Improvements) Improvement Area No. 1 Special Tax Bonds, Series 2024 (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 [SALE DATE] (the “Contract”), between you and the City of Sacramento (the “City”), providing for the purchase of $[PAR AMOUNT] principal amount of City of Sacramento Delta Shores Community Facilities District No. 2019-01 (Improvements) Improvement Area No. 1 Special Tax Bonds, Series 2024 (the “Bonds”). The Bonds are being issued pursuant to a Master Indenture, dated as of [December 1, 2024] (the “Master Indenture”), as supplemented by a First Supplemental Indenture, dated as of [December 1, 2024] (the “First Supplemental Indenture” and, together with the Master Indenture, the “Indenture”), each between the City and Zions Bancorporation, 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 genuineness of all documents and signatures provided to us and 82822.00016\42661028.3

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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 [SALE DATE] (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 82822.00016\42661028.3

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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 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

[DATE]

Stifel, Nicolaus & Company, Incorporated
San Francisco, California

Re: $[PAR AMOUNT] City of Sacramento Delta Shores Community Facilities District No. 2019-01 (Improvements) Improvement Area No. 1 Special Tax Bonds, Series 2024

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 [December 1, 2024] as supplemented by a First Supplemental Indenture dated as of [December 1, 2024] (collectively, the “Indenture”), by and between the City and Zions Bancorporation, National Association, as trustee (the “Trustee”). We are providing this opinion to you in connection with the Bond Purchase Contract dated [SALE DATE], between the City and Stifel, Nicolaus & Company, Incorporated (the “Contract”), which among other things provides for the purchase of the Bonds in the aggregate principal amount of $[PAR AMOUNT].

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. 1 of the CFD is a duly and validly designated improvement area within the CFD.
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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 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; 82822.00016\42661028.3

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(d) that is likely to adversely affect the validity or enforceability of the Resolution, the Bonds, or the City Documents; or
(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, KB Homes’s or Meritage’s financial capacity or lack of financial capacity; M&H’s, KB Homes, or Meritage’s 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

$[PAR AMOUNT]

CITY OF SACRAMENTO
DELTA SHORES COMMUNITY FACILITIES DISTRICT NO. 2019-01
(IMPROVEMENTS)
IMPROVEMENT AREA NO. 1
SPECIAL TAX BONDS, SERIES 2024

CERTIFICATE OF APPRAISER
Smith & Associates, Inc., of Folsom, California (the “Appraiser”), prepared an appraisal report of certain properties within Improvement Area No. 1 of the City of Sacramento Delta Shores Community Facilities District No. 2019-01 (Improvements) with respect to Improvement Area No. 1 therein, dated [DATE], (with a date of value of September 25, 2024) (the “Appraisal Report”). The Appraisal Report is described and summarized in, and is set out as Appendix B 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 Appraiser hereby certifies as follows to the best of its knowledge and belief: (a) all information with respect to the Appraisal Report in the Preliminary Official Statement and the Final Official Statement was true and correct as of the date of the Appraisal Report; (b) since the date of the Appraisal Report, 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 Report; provided, that acts and events may have occurred since the date of the Appraisal Report which could result in both positive and negative effects on market value of such property; and (c) that an updated Appraisal Report has not been completed as of the date of this certificate.

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

Dated: [DATE]
SMITH & ASSOCIATES, INC.

By:

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EXHIBIT I-1

CITY OF SACRAMENTO
DELTA SHORES COMMUNITY FACILITIES DISTRICT NO. 2019-01
(IMPROVEMENTS)
IMPROVEMENT AREA NO. 1
SPECIAL TAX BONDS, SERIES 2024

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

[DATE]
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. 1 Special Tax Bonds, Series 2024 (the “Bonds”), and pursuant to a Bond Purchase Contract (the “Bond Purchase Contract”) to be entered into between the City and Stifel, Nicolaus & Company, Incorporated, 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. 1 (“Improvement Area No. 1”) 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 82822.00016\42661028.3

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regarding the Bonds. For purposes of this Certificate, the term “Affiliates” shall not include Meritage Homes of California, Inc. or KB Home Sacramento, 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 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. 1 – General,” “INTRODUCTION –Property Ownership and Development Status,” “DEVELOPMENT OF PROPERTY IN IMPROVEMENT AREA NO. 1” (other than under the captions “-Meritage Development Plan” and “-KB Home Development 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. 1, 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 82822.00016\42661028.3

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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.

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. 82822.00016\42661028.3

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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.

14. An appraisal of the taxable properties within Improvement Area No. 1, dated [DATE] (the “Appraisal Report”), was prepared by Smith & Associates, Inc. (the “Appraiser”). The Appraisal Report estimates the market value of the taxable properties within Improvement Area No. 1 as of [DATE] (the “Date of Value”), confirming the market values of the taxable property within Improvement Area No. 1 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 [DATE] “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. 1, to challenge the adoption of the ordinance levying special taxes within Improvement Area No. 1, to invalidate the District, the designation of Improvement Area No. 1, 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 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 under the Resolution, the Master 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. 82822.00016\42661028.3

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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 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 82822.00016\42661028.3

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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:
82822.00016\42661028.3

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EXHIBIT A

EXCERPTS FROM THE APPRAISAL

82822.00016\42661028.3

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. 1
SPECIAL TAX BONDS, SERIES 2024

CERTIFICATE OF DEVELOPER
(KB Home Sacramento Inc.)

[DATE]

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. 1 Special Tax Bonds, Series 2024 (the “Bonds”), and pursuant to a Bond Purchase Contract (the “Bond Purchase Contract”) to be entered into between the City and Stifel, Nicolaus & Company, Incorporated, as underwriter (the “Underwriter”), the undersigned, in their capacity as a duly authorized officer or representative of KB Home Sacramento 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. 1 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.
82822.00016\42661028.3

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(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 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 or Meritage Homes of California, Inc.. (d) “Property” means the real property located within Improvement Area No. 1 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 to (i) execute and deliver this Certificate; and (ii) 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. 1,” “INTRODUCTION – Property Ownership and Development Status,” and “DEVELOPMENT OF PROPERTY IN IMPROVEMENT AREA NO. 1—KB Home Development Plan – Homes Construction Plans,” and “—KB Home Financing Plan,” and “PROPERTY OWNERSHIP – KB Home,” 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 82822.00016\42661028.3

Bond Purchase Contract | Page I-2-3

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.

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, 82822.00016\42661028.3

Bond Purchase Contract | Page I-2-4

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 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 Master 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 82822.00016\42661028.3

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

KB HOME SACRAMENTO INC.,
a California corporation
By:

Name:________________________
Its:___________________________

82822.00016\42661028.3

Bond Purchase Contract | Page J-1-1

EXHIBIT I-3

CITY OF SACRAMENTO
DELTA SHORES COMMUNITY FACILITIES DISTRICT NO. 2019-01
(IMPROVEMENTS)
IMPROVEMENT AREA NO. 1
SPECIAL TAX BONDS, SERIES 2024

CERTIFICATE OF DEVELOPER
(Meritage Homes of California, Inc.)

[DATE]

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. 1 Special Tax Bonds, Series 2024 (the “Bonds”), and pursuant to a Bond Purchase Contract (the “Bond Purchase Contract”) to be entered into between the City and Stifel, Nicolaus & Company, Incorporated, as underwriter (the “Underwriter”), the undersigned, in their capacity as a duly authorized officer or representative of Meritage Homes of California Inc., a California corporation (the “Developer”), hereby certifies, on behalf of the Developer, as follows as of the date hereof:

18. The Developer is the owner of certain property (the “Property”) located within Improvement Area No. 1 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.

19. 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:
(e) “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.
82822.00016\42661028.3

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(f) “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 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. (g) “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 or KB Home Sacramento Inc. (h) “Property” means the real property located within Improvement Area No. 1 of the City of Sacramento Delta Shores Community Facilities District No. 2019-01 (Improvements) (the “District”) held in the name of Developer.

20. 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 to (i) execute and deliver this Certificate; and (ii) undertake all of the transactions on its part described in the Preliminary Official Statement.

21. 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.

22. 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. 1,” “INTRODUCTION – Property Ownership and Development Status,” and “DEVELOPMENT OF PROPERTY IN IMPROVEMENT AREA NO. 1—Meritage Development Plan – Property Ownership Status and Phased Takedown Schedule,” “-Home Construction Plans,” and “- Meritage Financing Plan,” and “PROPERTY OWNERSHIP – Meritage,” solely as they relate to the Developer and its Affiliates, the Property, ownership of the Property, the Developer’s proposed development 82822.00016\42661028.3

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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.

23. 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.

24. 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.

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

26. 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.

27. 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.

28. 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, 82822.00016\42661028.3

Bond Purchase Contract | Page J-1-4

29. 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.

30. 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.

31. 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.

32. 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-3 to the Bond Purchase Contract.

33. 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 82822.00016\42661028.3

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34. 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.

MERITAGE HOMES OF CALIFORNIA INC.,
a California corporation
By:

Name:________________________
Its:______________________________
82822.00016\42661028.3

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EXHIBIT J-1
$[PAR AMOUNT]

CITY OF SACRAMENTO
DELTA SHORES COMMUNITY FACILITIES DISTRICT NO. 2019-01
(IMPROVEMENTS)
IMPROVEMENT AREA NO. 1
SPECIAL TAX BONDS, SERIES 2024

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

[DATE]

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. 1 Special Tax Bonds, Series 2024 (the “Bonds”), and in accordance with the Bond Purchase Contract (the “Bond Purchase Contract”) between the City and Stifel, Nicolaus & Company, Incorporated, 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 [POS DATE] (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 [SALE DATE] (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 82822.00016\42661028.3

Bond Purchase Contract | Page J-1-2

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.

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:

82822.00016\42661028.3

Bond Purchase Contract | Page J-2-1

EXHIBIT J-2
$[PAR AMOUNT]

CITY OF SACRAMENTO
DELTA SHORES COMMUNITY FACILITIES DISTRICT NO. 2019-01
(IMPROVEMENTS)
IMPROVEMENT AREA NO. 1
SPECIAL TAX BONDS, SERIES 2024

CLOSING CERTIFICATE OF DEVELOPER
(KB HOME SACRAMENTO INC.)

[DATE]

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. 1 of the bonds captioned above (the “Bonds”), and pursuant to a Bond Purchase Contract (the “Bond Purchase Contract”) between the City and Stifel, Nicolaus & Company, Incorporated, as underwriter (the “Underwriter”), the undersigned, in their capacity as a duly authorized officer or representative of KB Home Sacramento 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 (KB Home Sacramento Inc.), dated [POS DATE] (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 [SALE DATE] (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 82822.00016\42661028.3

Bond Purchase Contract | Page J-2-2

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 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.

KB HOME SACRAMENTO INC.,
a California corporation

By: _____________________
Name:___________________
Its: _____________________

82822.00016\42661028.3

Bond Purchase Contract | Page K-1

EXHIBIT J-3
$[PAR AMOUNT]

CITY OF SACRAMENTO
DELTA SHORES COMMUNITY FACILITIES DISTRICT NO. 2019-01
(IMPROVEMENTS)
IMPROVEMENT AREA NO. 1
SPECIAL TAX BONDS, SERIES 2024

CLOSING CERTIFICATE OF DEVELOPER
(MERITAGE HOMES OF CALIFORNIA INC.)

[DATE]

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. 1 of the bonds captioned above (the “Bonds”), and pursuant to a Bond Purchase Contract (the “Bond Purchase Contract”) between the City and Stifel, Nicolaus & Company, Incorporated, as underwriter (the “Underwriter”), the undersigned, in their capacity as a duly authorized officer or representative of Meritage Homes of California 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 (Meritage Homes of California Inc.), dated [POS DATE] (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 [SALE DATE] (the “Official Statement”).

Bond Purchase Contract | Page K-1

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

MERITAGE HOMES OF CALIFORNIA INC.,
a California corporation

By: _____________________
Name:___________________
Its: _____________________

82822.00016\42661028.3

Bond Purchase Contract | Page K-1

EXHIBIT K-1

$[PAR AMOUNT]

CITY OF SACRAMENTO
DELTA SHORES COMMUNITY FACILITIES DISTRICT NO. 2019-01
(IMPROVEMENTS)
IMPROVEMENT AREA NO. 1
SPECIAL TAX BONDS, SERIES 2024

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 [SALE DATE] (the “Contract”), between the City of Sacramento (the “City”) and Stifel, Nicolaus & Company, Incorporated, 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 [POS DATE], or the Final Official Statement, dated [SALE DATE], 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. 1 – General,” “INTRODUCTION –Property Ownership and Development Status,” “DEVELOPMENT OF PROPERTY IN IMPROVEMENT AREA NO. 1” (other than under the captions “—KB Home Development Plan” and “—Meritage Development 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 (as defined in the Official Statement) 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 to (a) undertake the Developer’s planned acquisition, 82822.00016\42661028.3

Bond Purchase Contract | Page K-1

development, and sale of property it owns in the CFD as contemplated by the Official Statement; or (b) pay special taxes or ad valorem property taxes before delinquency on the property it owns in the CFD.

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.
82822.00016\42661028.3

Bond Purchase Contract | Page K-2-1

EXHIBIT K-2
$[PAR AMOUNT]

CITY OF SACRAMENTO
DELTA SHORES COMMUNITY FACILITIES DISTRICT NO. 2019-01
(IMPROVEMENTS)
IMPROVEMENT AREA NO. 1
SPECIAL TAX BONDS, SERIES 2024

FORM OF DEVELOPER’S COUNSEL OPINION
(KB HOME SACRAMENTO INC.)
Capitalized terms used but not defined in this exhibit have the meanings given them in the Bond Purchase Contract dated [SALE DATE] (the “Contract”), between the City of Sacramento (the “City”) and Stifel, Nicolaus & Company, Incorporated, as underwriter (the “Underwriter”).

A. One or more letters of legal counsel that KB Home Sacramento 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 [POS DATE], or the Final Official Statement, dated [SALE DATE], 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. 1,” “INTRODUCTION – Property Ownership and Development Status,” “DEVELOPMENT OF PROPERTY IN IMPROVEMENT AREA NO. 1—KB Home Development Plan – Homes Construction Plans,” and “—KB Home Financing Plan,” and “PROPERTY OWNERSHIP – KB Home,” (excluding any information regarding any property owner other than the Developer (as defined in the Official Statement) 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 to (a) undertake the Developer’s planned acquisition, development, and sale of property it owns in the CFD as contemplated by the Official Statement; or (b) pay special taxes or ad valorem property taxes before delinquency on the property it owns in the CFD. 82822.00016\42661028.3

Bond Purchase Contract | Page K-2-2

Bond Purchase Contract | Page L-1

EXHIBIT K-3
$[PAR AMOUNT]

CITY OF SACRAMENTO
DELTA SHORES COMMUNITY FACILITIES DISTRICT NO. 2019-01
(IMPROVEMENTS)
IMPROVEMENT AREA NO. 1
SPECIAL TAX BONDS, SERIES 2024

FORM OF DEVELOPER’S COUNSEL OPINION
(MERITAGE HOMES OF CALIFORNIA INC.)
Capitalized terms used but not defined in this exhibit have the meanings given them in the Bond Purchase Contract dated [SALE DATE] (the “Contract”), between the City of Sacramento (the “City”) and Stifel, Nicolaus & Company, Incorporated, as underwriter (the “Underwriter”).

A. One or more letters of legal counsel that Meritage Homes of California 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 [POS DATE], or the Final Official Statement, dated [SALE DATE], 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. 1,” “INTRODUCTION – Property Ownership and Development Status,” “DEVELOPMENT OF PROPERTY IN IMPROVEMENT AREA NO. 1—Meritage Development Plan – Property Ownership Status and Phased Takedown Schedule,” “-Home Construction Plans,” and “- Meritage Financing Plan,” and “PROPERTY OWNERSHIP – Meritage,” (excluding any information regarding any property owner other than the Developer (as defined in the Official Statement) 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.

Bond Purchase Contract | Page L-2

the CFD as contemplated by the Official Statement; or (b) pay special taxes or ad valorem property taxes before delinquency on the property it owns in the CFD.

Bond Purchase Contract | Page L-1

EXHIBIT L
$[PAR AMOUNT]

CITY OF SACRAMENTO
DELTA SHORES COMMUNITY FACILITIES DISTRICT NO. 2019-01
(IMPROVEMENTS)
IMPROVEMENT AREA NO. 1
SPECIAL TAX BONDS, SERIES 2024

FORM OF ISSUE PRICE CERTIFICATE

The undersigned, Stifel, Nicolaus & Company, Incorporated (“Stifel”), 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 [SALE DATE] (the “Sale Date”), Stifel and the Issuer executed a Bond Purchase Contract (the “Purchase Agreement”) in connection with the sale of the Bonds. Stifel 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) Stifel 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, Stifel 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.”
82822.00016\42661028.3

Bond Purchase Contract | Page L-2

(b) Hold-the-Offering-Price Maturities means those Maturities of the Bonds listed in Schedule A hereto as the “Hold-the-Offering-Price Maturities.” (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, or (ii) the date on which Stifel 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 Stifel’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 82822.00016\42661028.3

Bond Purchase Contract | Page L-3

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.

STIFEL, NICOLAUS & COMPANY, INCORPORATED

By:
[Title]

Dated: [DATE]

82822.00016\42661028.3

Bond Purchase Contract | Page L-4

SCHEDULE A
TO

ISSUE PRICE CERTIFICATE

Actual Sales Information as of Closing Date

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

Total: $

T Term bond.

82822.00016\42661028.3

Bond Purchase Contract | Page L-5

SCHEDULE B
TO

ISSUE PRICE CERTIFICATE

PRICING WIRES
82822.00016\42661028.3

Bond Purchase Contract | Page M-1

EXHIBIT M

$[PAR AMOUNT]

CITY OF SACRAMENTO
DELTA SHORES COMMUNITY FACILITIES DISTRICT NO. 2019-01
(IMPROVEMENTS)
IMPROVEMENT AREA NO. 1
SPECIAL TAX BONDS, SERIES 2024

CERTIFICATE OF MARKET ABSORPTION CONSULTANT

John Burns Real Estate Consulting, Folsom, California (the “Market Absorption Consultant”), prepared a “Market Absorption Analysis Related to Delta Shores Improvement Area 1” for the City of Improvement Area No. 1 of the City of Sacramento Delta Shores Community Facilities District No. 2019-01 (the “CFD”), dated as of July 23, 2024 (the “Market Absorption Report”). The Market 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 Market Absorption Consultant hereby certifies as follows to the best of its knowledge and belief: (a) all information with respect to the Market Absorption Report in the Preliminary Official Statement and the Final Official Statement was true and correct as of the date of the Market Absorption Report; (b) since the date of the Market Absorption Report, nothing has come to the attention of the Market Absorption Consultant which would cause a material change to its conclusions in the Market Absorption Report; and (c) that a further updated Market Absorption Report has not been completed as of the date of this certificate.

2. The Market Absorption Consultant hereby consents to the use of the Market 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 November 12, 2024
4880-8051-7687v9/022536-0033
This Preliminary Official Statement and the information contained herein are subject to completion or amendment. These secur ities 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 NOVEMBER __, 2024
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, among other matters, the accuracy of certain representations and compliance with certain covenants, interest on the Bonds is excluded from gross income for federal income tax purposes under Section 103 of the Internal Revenue Code of 1986 and is exempt from State of California personal income taxes. In the further opinion of Bond Counsel, interest on the Bonds is not a specific preference item for purposes of the federal individual alternative minimum tax. Bond Counsel observes that interest on the Bonds included in adjusted financial statement income of certain corporations is not excluded from the federal corporate alternative minimum tax. Bond Counsel expresses no opinion regarding any other tax consequences related to the ownership or disposition of, or the amount, accrual or receipt of interest on, the Bonds. See “TAX MATTERS.” $14,480,000

CITY OF SACRAMENTO
DELTA SHORES COMMUNITY FACILITIES DISTRICT NO. 2019-01 (IMPROVEMENTS) IMPROVEMENT AREA NO. 1 SPECIAL TAX BONDS, SERIES 2024
Dated: Delivery Date Due: September 1, as shown on the inside cover page This Official Statement describes bonds that are being issued by the City of Sacramento (the “City”) with respect to Improvement Area No. 1 (“Improvement Area No. 1”) 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. 2019-01 (Improvements) Improvement Area No. 1 Special Tax Bonds, Series 2024 (the “Bonds”) are being issued by the City to (a) pay the cost and expense of the acquisition and construction of certain public facilities benefitting the development of Improvement Area No. 1; (b) fund a reserve fund securing the Bonds to the extent described herein; (c) pay costs of issuance of the Bonds; and (d) fund capitalized interest on a portion of the Bonds accruing through December 1, 2026.

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), and pursuant to a Master Indenture, dated as of December 1, 2024 as supplemented by a First Supplemental Indenture dated as of December 1, 2024, each between the City and Zions Bancorporation, National Association, as trustee (the “Trustee”) (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 taxable parcels within Improvement Area No. 1 and from certain other funds pledged under the Indenture, all as further described in this Official Statement. The Special Tax will be levied according to the amended rate and method of apportionment approved by the City Council of the City and the qualified electors within Improvement Area No. 1. See “SOURCES OF PAYMENT FOR THE BONDS.” Special taxes levied in Improvement Area No. 2 and Improvement Area No. 3 of the District are not pledged to and are not available to pay debt service on the Bonds.

The Bonds will be issued in fully registered 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 certificates representing their beneficial ownership of the Bonds but will receive credit balances on the books of their respective nominees. Interest on the Bonds will be payable semiannually on each March 1 and September 1, commencing March 1, 2025. 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. See “THE BONDS — Redemption.”

THE BONDS ARE NOT RATED BY ANY RATING AGENCY, AND INVESTMENT IN THE BONDS INVOLVES SIGNIFICANT RISKS THAT ARE NOT APPROPRIATE FOR CERTAIN INVESTORS. CERTAIN EVENTS COULD AFFECT THE ABILITY OF THE CITY 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 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 information for general reference only. It is not intended 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 approval as to their validity by Orrick, Herrington & Sutcliffe LLP, Bond Counsel to the City, and subject to certain other conditions. Stradling Yocca Carlson & Rauth LLP, 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 counsel to the Underwriter, for the Developer by the Law Offices of Thatch & Hooper, LLP, Sacramento, California, for the builders described herein by their respective counsel, 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 December __, 2024. [STIFEL LOGO]
Dated: ________ __, 2024
 Preliminary, subject to change.

4880-8051-7687v9/022536-0033
$14,480,000

CITY OF SACRAMENTO
DELTA SHORES COMMUNITY FACILITIES DISTRICT NO. 2019-01 (IMPROVEMENTS) IMPROVEMENT AREA NO. 1 SPECIAL TAX BONDS, SERIES 2024

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.† ____

 Preliminary, subject to change.
† CUSIP® is a registered trademark of the American Bankers Association. CUSIP Global Services (CGS) is managed on behalf of the American Bankers Association by FactSet Research Systems Inc. Copyright(c) 2024 CUSIP Global Services. All rights reserved. CUSIP® data herein is provided by CUSIP Global Services. This data is not intended to create a database and does not serve in any way as a substitute for the CGS database. CUSIP® numbers are provided for convenience of reference only. None of the City, the Underwriter or their agents or counsel assumes responsibility for the accuracy of such numbers.

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CITY OF SACRAMENTO

CITY COUNCIL
Darrell Steinberg, Mayor
Caity Maple, Vice Mayor, District 5
Karina Talamantes, Mayor Pro Tem, District 3
Lisa Kaplan, District 1
Shoun Thao, District 2
Katie Valenzuela, District 4
Eric Guerra, District 6
Rick Jennings II, District 7
Mai Vang, District 8
_______________________

ADMINISTRATIVE OFFICES
Howard Chan, City Manager
Michael Jasso, Assistant City Manager
Mario Lara, Assistant City Manager
Leyne Milstein, Assistant City Manager
Ryan Moore, Assistant City Manager
John Colville, City Treasurer
Susana Alcala Wood, City Attorney
Farishta Ahrary, City Auditor
Mindy Cuppy, City Clerk
_______________________

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

Irvine, California
Trustee
Zions Bancorporation, National Association
Los Angeles, California
Special Tax Consultant
NBS
Temecula, California
Appraiser
Smith & Associates, Inc.

Folsom, California

Market Absorption Consultant
John Burns Real Estate Consulting
Folsom, California

Appraisal Reviewer
BBG, Inc.

Sacramento, California

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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 solicitation of an offer to buy nor shall there be any sale of the Bonds by a person in any jurisdiction in which it is unlawful for such person to make such an offer, solicitation or sale.

This Official Statement is not to be construed as a contract 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 Official 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 guaranteed as to accuracy or completeness by the City. The information and expressions of opinion in this Official Statement are subject to change without notice, and neither the delivery of this Official Statement nor any sale made hereunder shall, under any circumstances, create any implication that there has been no change in the affairs of the City or any other parties described in this Official Statement since the date of this Official Statement. All summaries of the Indenture or other documents are made subject to the provisions of such documents respectively and do not purport to be complete statements of any or all of such provisions. 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 Private Securities Litigation Reform Act of 1995, Section 21E of the United States Securities Exchange Act of 1934, as amended, and Section 27A of the United States Securities Act of 1933, as amended. Such statements are generally identifiable by the terminology used such as “plan,” “expect,” “estimate,” “project,” “budget” or other similar words. Such forward-looking statements include, but are not limited to, certain statements contained in the information under the caption “IMPROVEMENT AREA NO. 1” and “DEVELOPMENT OF PROPERTY IN IMPROVEMENT AREA NO. 1.”

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.

THE BONDS HAVE NOT BEEN REGISTERED UNDER 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
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INTRODUCTION .............................................................. 1 General............................................................................ 1 Delta Shores, the District and Improvement Area
No. 1 ........................................................................... 2 Property Ownership and Development Status................. 4 Forward Looking Statements .......................................... 5 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 ....................................................... 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 .............. 14
Limited Obligations ...................................................... 14 Special Tax ................................................................... 15 Bond Reserve Fund ....................................................... 21 Issuance of Parity Bonds ............................................... 21 Teeter Plan .................................................................... 22

DEVELOPMENT OF PROPERTY IN
IMPROVEMENT AREA NO. 1 ....................................... 23 Delta Shores, the District and Improvement Area
No. 1 ......................................................................... 23 Entitlements and Required Mitigation Monitoring ....... 25 Infrastructure Development .......................................... 31 Developer Financing Plan ............................................. 31 KB Home Development Plan ........................................ 32 Meritage Development Plan ......................................... 34 PROPERTY OWNERSHIP .............................................. 35 The Developer .............................................................. 35 KB Home ...................................................................... 36 Meritage ........................................................................ 37 IMPROVEMENT AREA NO. 1 ....................................... 38 General Description ...................................................... 38 Description of Authorized Facilities ............................. 38 Flood Hazard ................................................................ 38 Direct and Overlapping Indebtedness ........................... 39 Estimated Fiscal Year 2024-25 Tax Burden ................. 40 Market Absorption Study .............................................. 42 Property Values ............................................................ 43 Value-To-Lien Ratios ................................................... 45 Delinquency History ..................................................... 48 Debt Service Coverage ................................................. 48 SPECIAL RISK FACTORS ............................................. 49 Risks of Real Estate Secured Investments Generally .... 50 Concentration of Ownership ......................................... 50 Failure to Develop Property .......................................... 50 Parity Taxes and Special Assessments .......................... 51 Limited Obligations ...................................................... 52 Insufficiency of Special Tax ......................................... 52 Impact of Economic Conditions on the
Development in the District ...................................... 53 Increasing Mortgage Interest Rates .............................. 54 Teeter Plan Termination ............................................... 54 No Representation as to Merchant Builders ................. 54 Natural Disasters .......................................................... 55 Hazardous Substances .................................................. 55 Proximity to Wastewater Treatment Plant .................... 56 Payment of the Special Tax is not a Personal
Obligation of the Property Owners ........................... 56 Property Values ............................................................ 56 Disclosures to Future Purchasers .................................. 57 Special Tax Collections ................................................ 57 FDIC/Federal Government Interests in Properties ....... 58 Bankruptcy and Foreclosure ......................................... 59 No Acceleration Provision ........................................... 60 Loss of Tax Exemption ................................................ 60 Limited Secondary Market ........................................... 60 Proposition 218 ............................................................ 61 Litigation with Respect to Community Facilities
Districts .................................................................... 61 Ballot Initiatives ........................................................... 63 Limitations on Remedies .............................................. 63 Potential Early Redemption of Bonds from
Prepayments or Bond Proceeds ................................ 63 Cybersecurity ............................................................... 63 CONTINUING DISCLOSURE ....................................... 64 City Continuing Disclosure .......................................... 64 Developers Continuing Disclosure ............................... 64 TAX MATTERS .............................................................. 65 LEGAL MATTERS ......................................................... 66 ABSENCE OF LITIGATION .......................................... 67 MUNICIPAL ADVISOR ................................................. 67 NO RATING .................................................................... 67 UNDERWRITING ........................................................... 67 FINANCIAL INTERESTS .............................................. 67 PENDING LEGISLATION ............................................. 68 ADDITIONAL INFORMATION .................................... 68

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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$14,480,000

CITY OF SACRAMENTO
DELTA SHORES COMMUNITY FACILITIES DISTRICT NO. 2019-01 (IMPROVEMENTS) IMPROVEMENT AREA NO. 1 SPECIAL TAX BONDS, SERIES 2024

INTRODUCTION
General
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 information 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. 1 Special Tax Bonds, Series 2024 (the “Bonds”) in the aggregate principal amount of $14,480,000*. The Bonds are being issued by the City with respect to Improvement Area No. 1 (“Improvement Area No. 1”) 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 facilities benefitting the development of Improvement Area No. 1; (b) fund a reserve fund securing the Bonds to the extent described herein; (c) pay costs of issuance of the Bonds; and (d) fund capitalized interest on a portion of the Bonds accruing through December 1, 2026. 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 December 1, 2024 ( the “Master Indenture”), as supplemented by a First Supplemental Indenture dated as of December 1, 2024 (the “First Supplemental Indenture” and, together with the Master Indenture, the “Indenture”), each between the City and Zions Bancorporation, 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. 1, 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. 2 and Improvement Area No. 3 of the District are 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 Bonds 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.”

 Preliminary, subject to change.

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Delta Shores, the District and Improvement Area No. 1
General. The property in Improvement Area No. 1 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, straddling the Interstate 5 freeway. 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 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, approximately 50 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. In July 2022, the Developer sold the completed retail development to a real estate investment firm.

The District. The District spans approximately 535 acres of the Delta Shores community, including the planned residential development but excluding the completed retail development described above. The District is divided into three improvement areas. Improvement Area No. 1 is located west of Interstate 5 freeway while Improvement Area No. 2 and Improvement Area No. 3 are located east of Interstate 5. All three improvement areas are entitled for a mix of low, medium and high-density residential units, parks and open space. Elementary schools are planned in each of Improvement Area No. 2 and Improvement Area No. 3. The first phase of residential development in Improvement Area No. 2 is being undertaken by Signature Homes with home construction and sales underway. As of September 1, 2024, of the 421 planned for-sale homes in Improvement Area No. 2, Signature Homes had completed and conveyed 67 homes to individual homeowners.

The City issued special tax bonds with respect to Improvement Area No. 2 of the District in June 2022 to acquire certain public improvements. The property in Improvement Area No. 2 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. 1. Improvement Area No. 1 consists of approximately 107 gross acres and approximately 87 net acres. Improvement Area No. 1 is bordered to the east by the Interstate 5 freeway, to the south by the City-owned Bartley Cavanaugh Golf Course, to the west by the community of Freeport and the Sacramento River and to the north by an existing commercial development. Cosumnes River Boulevard bisects Improvement Area No. 1 with approximately 86.5 gross acres (approximately 77.5 net acres) of property in Improvement Area No. 1 located to the south of Cosumnes River Boulevard and approximately

20.5 gross acres (approximately 8.85 net acres based on the current recorded large lot map) of property north of Cosumnes River Boulevard.

The portion of Improvement Area No. 1 that is located south of Cosumnes River Boulevard is planned for 348 for-sale units. Substantially all of the infrastructure necessary to support development in such portion of Improvement Area No. 1 is complete with remaining infrastructure consisting of minor in-tract improvements and offsite work. As of October 15, 2024, the property in Improvement Area No. 1 that is located south of Cosumnes River Boulevard included completed model homes, production homes under construction and finished/near-finished lots.

The Developer has not finalized development plans with respect to the property in Improvement Area No. 1 located to the north of Cosumnes River Boulevard, which is zoned for medium-density residential

3 4880-8051-7687v9/022536-0033
projects and high-density residential projects. Such property is currently in an undeveloped state with utilities finished to the property line.

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, and 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 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 $8,000,000 with respect to Improvement Area No. 1 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. 1 — Description 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. 2019-0390, which certified the mailed ballot election held for Improvement Area No. 1 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 Method”) and the issuance of bonds in an amount not to exceed $8,000,000 for Improvement Area No. 1.

On December 14, 2021, the City Council adopted Resolution No. 2021-0362, pursuant to which it determined to consider: (1) replacing the Original Rate and Method with an amended and restated rate and method of apportionment of special tax for Improvement Area No. 1 (the “Amended Rate and Method”), (2) increasing the amount of bonded indebtedness authorized to be incurred for Improvement Area No. 1 from $8,000,000 to $17,000,000 and (3) increasing the appropriations limit with respect to Improvement Area No.

1. On February 1, 2022, the City Council adopted Resolution No. 2022-0036, pursuant to which it determined that the necessary two-thirds vote of the eligible voters within Improvement Area No. 1 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, (2) the increase of the amount of bonded indebtedness authorized to be incurred for Improvement Area No. 1 from $8,000,000 to $17,000,000 and (3) increasing the appropriations limit with respect to Improvement Area No. 1. A copy of the Amended Rate and Method is attached as Appendix A hereto.

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. 202202180717. 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.”
On February 7, 2023, the City Council adopted Resolution No. 2023-0030, which interpreted the Amended and Restated Rate and Method for Improvement Area No. 1. The interpretation clarified the expected unit counts in Villages LDR-1 and LDR-2 and expected special tax revenues to be generated at buildout, as shown in Appendix A hereto.

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Property Ownership and Development Status
M&H Realty Partners VI, L.P., a California limited partnership (the “Developer”) has served as the master developer of the Delta Shores development. Since approximately 2009, the Developer has developed and sold significant portions of the Delta Shores development to homebuilders and to another property development company. The Developer was formed and managed by individuals of Merlone Geier Partners.

The major backbone infrastructure necessary for development in Improvement Area No. 1 is complete, which includes Cosumnes River Boulevard (one of the main thoroughfares from which Improvement Area No. 1 is accessed), related traffic signal improvements, wet utilities, dry utilities and wet storm water detention ponds to serve the entire Delta Shores community. For planning purposes, the property in Improvement Area No. 1 has been divided into Villages. The property located south of Cosumnes River Boulevard is planned for 348 market-rate for-sale single-family detached homes, with two Villages zoned for low-density residential development (referred to herein as “LDR-1” and “LDR-2”) and one Village zoned for medium-density residential development (referred to herein as “MDR-1”).

KB Home Sacramento Inc., a California corporation (“KB Home”) acquired all of the property in MDR-1 and LDR-1 from the Developer which are planned for 110 and 81 market-rate homes, respectively.

As of October 15, 2024, KB Home had completed five model homes and had commenced construction of 50 production homes. As of such date, KB Home had 22 homes in escrow in Improvement Area No. 1. All of the property owned by KB Home in Improvement Area No. 1 is in a finished lot condition with minor in-tract improvements remaining to be completed.

As of October 15, 2024, all of the property in LDR-2, consisting of 157 lots, were in a finished lot condition with minor in-tract improvements remaining to be completed. The Developer has entered into a purchase and sale agreement with Meritage Homes of California, Inc., a California corporation (“Meritage”) for Meritage to acquire these 157 lots in LDR-2 in phased takedowns. As of October 15, 2024, Meritage had acquired 77 lots. As of such date, Meritage was undergoing design approvals with the City and had not commenced construction of any homes in Improvement Area No. 1. Under the purchase and sale agreement with the Developer, Meritage is scheduled to acquire the remaining lots in LDR-2 in two additional takedowns, with the final takedown currently scheduled for April 2025. Meritage plans to construct 157 market-rate homes in its project in Improvement Area No. 1.

See “DEVELOPMENT OF PROPERTY IN IMPROVEMENT AREA NO. 1” and “PROPERTY OWNERSHIP.”
The property in Improvement Area No. 1 that is located to the north of Cosumnes River Boulevard consists of approximately 20.5 gross acres (approximately 8.85 net acres based on the current recorded large lot map). A portion of such property is zoned for density ranging from 8-14 units per acre (approximately 46- 80 units) (referred to herein as “MDR-2”) and a portion of such property is zoned for density ranging from 15- 27 units per acre (approximately 59-106 units) (referred to herein as “HDR-1”). The development plan for the property in Improvement Area No. 1 that is located to the north of Cosumnes River Boulevard has not been finalized and may include a combination of detached and attached products and for-sale and for-rent products.

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.

With respect to the property in Improvement Area No. 1 that is located north of Cosumnes River Boulevard, the Bonds have been sized based on Special Tax revenues using the assumed unit mix and count for such property as shown in Exhibit 1 to the Amended Rate and Method, which consists of 34 medium density units and 59 high density residential units. See “SOURCES OF PAYMENT FOR THE BONDS — Special Tax — Amended and Restated Rate and Method of Apportionment of Special Tax” and Appendix A hereto for a description of the required Special Tax prepayments or increases to the Special Tax rates should the unit mix and type deviate from those set forth in Exhibit 1 to the Amended Rate and Method.

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Forward Looking Statements
Certain statements included or incorporated by reference in this Official Statement constitute “forward-looking statements” within the meaning of the United States Private Securities Litigation Reform Act of 1995, Section 21E of the United States Securities Exchange Act of 1934, as amended (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. 1,” “DEVELOPMENT OF PROPERTY IN IMPROVEMENT AREA NO. 1” 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 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.

Sources of Payment for the Bonds
General. The Bonds and any bonds issued and secured 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 the Special Tax to be levied annually against the taxable property in Improvement Area No. 1, or, to the extent 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. 1, it does not constitute a personal indebtedness 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. 1 under and pursuant to the Act at the special election held within Improvement Area No. 1; (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 2025-26, $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. 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, as provided in the Indenture.

The Net Special Tax Revenues are the primary security 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

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debt service on the Bonds and any Parity Bonds are amounts, if any, held by the Treasurer in the Special Tax Fund and the amounts, if any, held in the Bond Reserve Fund and the Bond Redemption Fund held by the Trustee under the Indenture, subject to the terms of the Indenture. See “SOURCES OF PAYMENT FOR 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 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 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 (i) all parcels that are delinquent in the payment of such Special Tax for two installments in such Fiscal Year; and (ii) all parcels that are delinquent in the payment of such Special Tax if the total amount so collected is less than ninety-five percent (95%) of the total amount of the Special Tax levied in such Fiscal Year; in each case to enforce the lien of all such delinquent installments of such Special Tax, and will diligently prosecute and pursue such foreclosure proceedings to judgement and sale provided, that any actions taken to enforce delinquent Special Tax liens shall be taken only consistent with Sections 53356.1 through 53356.7, both inclusive, of the Government Code of the State of California.

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). The County’s policy is that any new taxing entity or special assessment district that includes its levy on the County’s secured tax roll is qualified to be under the County’s Teeter Plan.

Fiscal Year 2025-26 will be the first year of the Special Tax levy and it is expected that Improvement Area No. 1 will be included in the County’s Teeter Plan when the Special Tax is levied. 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 subject to taxation within Improvement Area No. 1 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 sufficient 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. 1. 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 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.

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 consent of any Holders. See 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. 1, 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.”

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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. 1 was prepared by Smith & Associates, Inc., Folsom, California (the “Appraiser”). The Appraisal Report has a date of value of September 25, 2024 (the “Date of Value”). See APPENDIX B — “APPRAISAL REPORT.” 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. 1 subject to the Special Tax was not less than $88,651,000. The following table summarizes the appraised value by ownership as of the Date of Value:

Owner Village Expected No. of
Homes at Buildout
Appraised Value
KB Home MDR-1 and LDR-1 191 $42,786,000
Meritage LDR-2 (portion) 77 19,700,000
Developer LDR-2 (portion) 80 19,615,000
Developer MDR-2 and HDR-1 93(1) 6,550,000
Totals 441 $88,651,000

(1) Based on the expected units as set forth in the Amended Rate and Method. Development plans for Villages MDR-2 and HDR-1 have not been finalized and the actual number of units for such property at buildout may vary from the amounts shown in this table.

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. 1 — Property Values” and “—Value-to-Lien Ratios.” There is no assurance that any property within Improvement Area No. 1 can be sold for the estimated values set forth in the Appraisal Report or that any parcel 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. 1,” “SPECIAL RISK FACTORS — Property Values” and APPENDIX B — “APPRAISAL REPORT.”
Market Absorption Report
In order to provide information with respect to the potential market demand for the proposed development within Improvement Area No. 1, 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 (the “Market Absorption Report”) attached to this Official Statement as Appendix J. The Market Absorption Study assumes that Improvement Area No. 1 will be developed with 348 for-sale residential units in MDR-1, LDR-1 and LDR-2, south of Cosumnes River Boulevard, and either 87 build-to-rent single family homes or 261 for-rent apartment units, north of Cosumnes River Boulevard. The development plan for the property in Improvement Area No. 1 north of Cosumnes River Boulevard has not been finalized and the Market Absorption Study acknowledges that such property could also be developed as for-sale housing.

Based on the assumptions and subject to the limiting conditions set forth in the Market Absorption Study, the Market Absorption Consultant estimates that the 348 proposed for-sale homes within Improvement Area No. 1 will be closed out in 2028, 87 build-to-rent single family homes could achieve equilibrium (95% occupancy) in 2026 and a 261 for-rent apartments could achieve equilibrium in 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 accordance 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 Bonds, 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 — Redemption.” 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
Zions Bancorporation, National Association, Los Angeles, California, will act as Trustee under the Indenture. Stifel, Nicolaus & Company, Incorporated 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 LLP, 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 counsel to the Underwriter, for the Developer by the Law Offices of Thatch & Hooper, LLP, Sacramento, California and for the Trustee by its counsel. Other professional services have been performed by Smith & Associates, Inc., Folsom, 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, NBS, Temecula, California, as Special Tax Consultant, and BBG, Inc., Sacramento, California, as Appraisal Reviewer.

For information concerning respects in which certain of the above-mentioned professionals, advisors, counsel and consultants may have a financial or other interest in the offering 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 on EMMA.

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 any of the Developer, KB Home or Meritage 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, KB Home and Meritage 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. 1 (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, KB Home and Meritage, 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 investment 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 are included in this Official 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 documents, 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, 3rd Floor, Sacramento, California 95814.

THE FINANCING PLAN
Authorized Facilities
A portion of the proceeds of the Bonds will be applied 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 traffic improvements, landscaping and park improvements, in addition to other improvements authorized under the Acquisition Agreement described below. See “IMPROVEMENT AREA NO. 1 — 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:

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

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

(1) Amount represents capitalized interest on a portion of the Bonds accruing through December 1, 2026. (2) Includes Underwriter’s discount, Bond Counsel, Disclosure Counsel, Special Tax Consultant, Municipal Advisor and Trustee fees, appraisal costs, printing costs and other issuance costs.

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 September 1, commencing on March 1, 2025 (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. The interest accruing on a portion of the Bonds through December 1, 2026 is being funded from capitalized interest.

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 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 it is authenticated on a day on or before the 15th 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.

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 the Indenture as the registered owner thereof at the close of business as of the Record Date, meaning the 15th day of the month next preceding any Interest Payment Date. Such interest will be paid by check of the Trustee 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 Holder of $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 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 principal and redemption premiums, if any, to be paid only on

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the surrender of the Bonds at the Principal 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 payments 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% 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

Redemption Dates Redemption
Price
Any Interest Payment Date from March 1, 2025 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.

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:

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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 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)

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 maturity 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 Corporate Trust Office of the Trustee), 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, the respective portions of the principal amount thereof to be redeemed. 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 redemption at the Principal Corporate Trust Office 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) the Holders of all Bonds selected for redemption at their addresses appearing on the register maintained by the Trustee in accordance 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 such notice nor any immaterial defect in such notice will affect the sufficiency or validity of the proceedings for redemption.

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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 force 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, 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 interest to the redemption date on, the Bonds or portions thereof so called for redemption 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.

[Remainder of Page Intentionally Left Blank]

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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.

Date Principal Interest Total Debt Service
$ $ $

Totals $ $ $

Source: The Underwriter.

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 the Bond Reserve Fund. The Bonds are not secured by monies on deposit in the Expense Fund, the Rebate Fund, the Community Facilities Fund, the Costs of Issuance 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. 1 under and pursuant to the Act at the special election held within Improvement Area No. 1; (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)

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for Fiscal Year 2025-26, $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.

See APPENDIX F — “SUMMARY OF CERTAIN PROVISIONS OF THE INDENTURE — Definitions.” Special taxes levied in Improvement Area No. 2 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 amount of the Special Tax to be collected among the Taxable Property in Improvement Area No. 1. 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 Taxable Property within Improvement Area No. 1, it does not constitute a personal indebtedness of the property 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. 1, on September 24, 2019, for the purpose of financing the various public 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 increase of the amount of bonded indebtedness authorized to be incurred for Improvement Area No. 1 from $8,000,000 to $17,000,000 to finance the acquisition of 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. 1 in accordance with the Amended Rate and 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 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, 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

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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 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.

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 thereof 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.

See APPENDIX F – “SUMMARY OF CERTAIN PROVISIONS OF THE INDENTURE – Allocation of Money in the Special Tax Fund” for additional information regarding the deposit, transfer, application, use and withdrawal of money deposited in the Special Tax Fund.

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 pay 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 Method 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. 1 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. 1 as more particularly described below.

The following is a synopsis of the provisions of the Amended Rate and Method for Improvement Area No. 1, 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

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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. 1 shall be classified as Developed Property, Final Subdivision Property, Taxable Contingent Property, Tentative Map Property or Undeveloped Property. Developed Property is defined in the Amended Rate and Method as all Assessor’s Parcels of Taxable Property for which a building permit has been issued prior to June 1st preceding the Fiscal Year in which the Special Tax is being levied.

The following table summarizes the currently estimated number of units within each Land Use Class at buildout and the Fiscal Year 2025-26 Assigned Special Tax rates on Developed Property.

Location Relative
to Cosumnes
River Boulevard
Land Use
Class
Village
Expected
Units(1)
Fiscal Year
2025-26
Assigned
Special Tax
Rate per
Unit
Expected
Fiscal Year
2025-26
Maximum
Special Tax
Revenues(2)
South
1 LDR-1 81 $2,347 $190,084
1 LDR-2 157 2,347 368,434
2 MDR-1 110 1,889 207,773
North
2 MDR-2 34 $1,889 64,221
3 HDR-1 59 271 15,966
Totals 441 $846,477

(1) Based on the expected units as set forth in the Amended Rate and Method. Development plans for the Villages north of Cosumnes River Boulevard have not been finalized and the actual number of units for such property at buildout may vary from the amounts shown in this table.
(2) Based on a levy at the Assigned Special Tax rate on Developed Property.

Source: Special Tax Consultant.

Exemptions. No Special Tax shall be levied on up to 20.10 Acres of Non-Residential Property, Open Space Property, Property Owner Association Property, and Public Property. Tax-exempt status will be assigned by the CFD Administrator in the chronological order in which property becomes Non-Residential Property, Open Space Property, Property Owner Association Property, or Public Property. For the following property types in excess of the 20.10 Acres exempted under the Amended Rate and Method, Non-Residential Property, Open Space Property, Property Owner Association Property, or Public Property that is not exempt from the Special Tax under the Amended Rate and Method, 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. 1.

Maximum Special Tax for Taxable Contingent Property, Tentative Map Property, and Undeveloped Property. The Maximum Special Tax for each Assessor’s Parcel of Taxable Contingent Property, Tentative Map Property and Undeveloped Property will be $10,505.00 per Acre in Fiscal Year 2025-26. The Maximum Special Tax for Taxable Contingent Property, Tentative 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 Property 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 Backup 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

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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 Assessor’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 Units when all Assessor’s Parcels are classified 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 the 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% 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 purposes (as determined pursuant to the Act), the Maximum Special Tax for the Assessor’s Parcel cannot be increased because of future Land Use Class changes for other Assessor’s Parcels.

The development plans for the property in Improvement Area No. 1 north of Cosumnes River Boulevard and the mix of the Land Use Class within such property may differ from the mix set forth in Exhibit 1 to the Amended Rate and Method, which may trigger the required actions described in the immediately preceding paragraph.

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:

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 the applicable Assigned Special Tax or the applicable Backup Special Tax to satisfy the Special Tax Requirement;

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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 the Special Tax Requirement after 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. 1 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 application of such limitation to for-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 apartment in all years. However, subject to the limitations 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 Special Tax at a different time or in a different manner if necessary to meet its financial obligations with respect to Improvement Area No. 1.

Although the Special Tax constitutes a lien on Taxable Parcels within Improvement Area No. 1, it does not constitute a personal indebtedness of the owners of property within Improvement Area No. 1. In

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addition to the obligation to pay the Special Tax, properties in Improvement Area No. 1 are subject to other assessments and special taxes as set forth in Table 1 below. 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. 1. 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. 1 resulting from a landowner’s failure to pay the Special Tax when due, up to the amount of the delinquent Special Tax lien, are included within the Net 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 amount 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.

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 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 (i) all parcels that are delinquent in the payment of such Special Tax for two installments in such Fiscal Year; and (ii) all parcels that are delinquent in the payment of such Special Tax if the total amount so collected is less than ninety-five percent (95%) of the total amount of the Special Tax levied in such Fiscal Year; in each case to enforce the lien of all such delinquent installments of such Special Tax, and will diligently prosecute and pursue such foreclosure proceedings to judgement and sale provided, that any actions taken to enforce delinquent Special Tax liens shall be taken only consistent with Sections 53356.1 through 53356.7, both inclusive, of the Government Code of the State of California.

However, 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).

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 (including amounts in the Bond Reserve Fund) have been exhausted, debt service payments on the Bonds could be delayed until the foreclosure proceedings have ended with the receipt of any foreclosure sale proceeds. Judicial foreclosure actions are subject to the normal delays associated with court cases and may be further slowed by bankruptcy actions, involvement 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

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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.

The Indenture provides that the amount to be maintained in the Bond Reserve Fund as the Required Bond Reserve, as of any date of calculation, 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 Internal Revenue Code of 1986, 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 upon the issuance of a new Series of Parity Bonds; and provided further, that, with respect to any issuance 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%.

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 Bonds.

Subject to the limits on the maximum annual Special Tax which may be levied within Improvement Area No. 1 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 insufficient 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. 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 Revenues 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 provisions of the Master Indenture, which include, among others, the following specific conditions:

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(a) No Event of Default under the Master Indenture 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. 1 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; and (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 the Allocable Value-to-Lien Ratio of all Undeveloped Property (excluding the Value of any parcels of Taxable Land then delinquent in the payment of any Special Tax) shall be at least 3:1. 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 “Aggregate Value-to-Lien Ratio” means the ratio of the Value of all Taxable Land to the aggregate principal amount of all Bonds Outstanding and the Series 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, and the term “Allocable Value-to-Lien Ratio” means the ratio of the Value of all Undeveloped Property to the allocable principal amount of all Bonds Outstanding and the Series proposed to be issued plus the principal amount of all other assessment bonds and bonds issued under the Act and reasonably allocable to such Undeveloped 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, either (i) none of the Bonds and Parity Bonds theretofore issued under the Indenture will be Outstanding, or (ii) the Debt Service in each Bond Year 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.”
Teeter Plan
In July 1993, the Board of Supervisors of the County 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 accrual 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 facilities 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. The County has the discretion to determine which delinquent special taxes will be paid through the Teeter Plan on a case-by-case basis.

The County’s policy includes the following criteria for delinquent parcels to be excluded from the County’s Teeter Plan: (1) tax bills belonging to a governmental/public agency; (2) common area parcels; (3) tax bills on the unitary assessed values or pipeline assessed values; (4) special assessments (subject to judiciary foreclosure) to be stripped from the tax bill; (5) bankruptcy; (6) demolition of the property; (7) vacant buildings (due to a risk of possible demolition); (8) contamination of the property; (9) property that is subjected to the “sealed bid”; (10) the delinquent amount is greater than or equal to assessed value of the

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property; (11) property that is de-enrolled from the Teeter Plan in previous years under the same owner and (12) the amount of code enforcement liens, other delinquent abatement liens, and delinquent utilities abatement liens, and delinquent utilities levied on the property is equal to or greater than 5% of the assessed value of the property.

The County’s policy is that any new taxing entity or special assessment district that includes its levy on the County tax roll is qualified to be under the County’s Teeter Plan. Fiscal Year 2025-26 will be the first year of the Special Tax levy and it is expected that Improvement Area No. 1 will be included in the County’s Teeter Plan when the Special Tax is levied. See “SPECIAL RISK FACTORS — Teeter Plan Termination.” DEVELOPMENT OF PROPERTY IN IMPROVEMENT AREA NO. 1
The information in this section about the Developer, KB Home and Meritage and the developments within Improvement Area No. 1 has been provided by the Developer, KB Home and Meritage 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 any other agreement between the Developer and Meritage 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. 1 will occur in a timely manner or in the configuration or to the density described in this Official Statement, or that the Developer, KB Home, Meritage, 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. 1. Neither the Bonds nor the Special Tax represent personal obligations of any property owner within Improvement Area No. 1. 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. 1 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. 1
Delta Shores. The property in Improvement Area No. 1 is part of an approximately 782-acre new master-planned community being marketed as “Delta Shores.” M&H Realty Partners VI, L.P., a California limited partnership (previously defined as the “Developer”) has served as the master developer of the Delta Shores development. Since approximately 2009, the Developer has developed and sold significant portions of the Delta Shores development to homebuilders and to another property development company. Delta Shores is located in the southern portion of the City, approximately 10 miles from downtown Sacramento, straddling Interstate 5. 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 the map following the table of contents 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 bisecting the Delta Shores site) was completed, providing direct access to the site from the Interstate 5 freeway.

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density housing units in for-rent offerings, 1.3 million square feet of retail and commercial space, two new elementary schools, approximately 50 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 900,000 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. In July 2022, the Developer sold the property that it owned within the South Regional Shopping Center. At the time of sale, the Developer estimated that approximately 96% of the space within the South Regional Shopping Center had been leased.

The District. The District consists of approximately 535 acres and includes the property within the Delta Shores community with the exception of the South Regional Shopping Center described above, which is not within the District. Improvement Area No. 1 is located on the western portion of the District.

Improvement Area No. 2 is located to the east of Improvement Area No. 1 and is planned for a mix of low, medium and high-density residential units, as wells as parks and open space, an elementary school and a wet detention basis. The first phase of the residential development of Delta Shores commenced in Improvement Area No. 2, which initial residential development is being undertaken by Signature Homes. Development in Improvement Area No. 2 is ongoing with home construction and sales underway. As of September 1, 2024, of the 421 planned for-sale homes in Improvement Area No. 2, Signature Homes had completed and conveyed 67 homes to individual homeowners.

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, an elementary school and open space. The Developer has conveyed substantially all of the property in Improvement Area No. 3 to Taylor Builders. In connection with such sale, certain obligations under the Development Agreement (as defined below) for Delta Shores, as well as the obligation to complete a regional sewer lift station, was transferred from the Developer to Taylor Builders. The property in Improvement Area No. 2 and Improvement Area No. 3 is not subject to the levy of the Special Tax and is not security for the Bonds.

20.5 gross acres (approximately 8.85 net acres based on the current recorded large lot map) to the north.

The property in Improvement Area No. 1 located south of Cosumnes River Boulevard (consisting of Villages MDR-1, LDR-1 and LDR-2) is planned for 348 market-rate for-sale single-family detached homes.

As of October 15, 2024, KB Home owned 191 lots in Villages MDR-1 and LDR-1 and had completed five model homes, commenced construction of 50 production homes and had 22 homes in escrow. As of such date, all of the property in LDR-2, consisting of 157 lots, were in a finished lot condition with minor in-tract improvements remaining to be completed. The Developer has entered into a purchase and sale agreement with Meritage for Meritage to acquire these 157 lots in LDR-2 in phased takedowns. As of October 15, 2024, Meritage had acquired 77 lots. As of such date, Meritage was undergoing design approvals with the City and had not commenced construction of any homes in Improvement Area No. 1. Under the purchase and sale agreement with the Developer, Meritage is scheduled to acquire the remaining lots in LDR-2 in two additional takedowns, with the final takedown of 53 lots currently scheduled for April 2025. Meritage plans to construct 157 market-rate homes in its project in Improvement Area No. 1.

As of October 15, 2024, all of the property located south of Cosumnes River Boulevard was in a finished condition with minor in-tract and offsite improvements remaining to be completed. The Developer

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currently expects such remaining infrastructure to be complete by the end of 2024. The balance of the property in Improvement Area No. 1 that is located south of Cosumnes River Boulevard includes a completed detention basin and property planned for two parks totaling approximately 6.6 acres.

The property in Improvement Area No. 1 that is located to the north of Cosumnes River Boulevard consists of approximately 20.5 gross acres (approximately 8.85 net acres based on the current recorded large lot map) zoned in two Villages. Village MDR-2 is zoned for density ranging from 8-14 units per acre (approximately 46-80 units) and Village HDR-1 is zoned for density ranging from 15-27 units per acre (approximately 59-106 units). The development plan for this property has not been finalized and may include a combination of detached and attached products and for-sale and for-rent products. The balance of the property in Improvement Area No. 1 that is located to the north of Cosumnes River Boulevard is planned for a park of approximately 2.8 acres and approximately 7.8 acres of open space. All of such property currently consists of undeveloped land with backbone infrastructure complete to the property line. 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.

Water and sewer conveyance service to Improvement Area No. 1 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.

For more information on the Developer, KB Home and Meritage, 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 development, 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 Report (“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, extension of 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 includes updates to land use assumptions, completed and remaining backbone infrastructure and public facility costs.

Located adjacent to the Delta Shores development to the east of the Interstate 5 freeway is an approximately 141-acre site proposed for an approximately 1,159 unit residential development known as “Stone-Beetland” (formerly known as “Stone-Boswell”). In February 2024, Taylor Builders acquired the Stone-Beetland site. Taylor Builders has commenced mass grading of the Stone-Beetland site. The expectation is that certain backbone infrastructure constructed and to be constructed with respect to Delta

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Shores will also serve the adjacent Stone-Beetland development. The Updated Finance Plan also considers funding and reimbursement obligations associated with the Stone-Beetland 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, the “Development Agreement”), the Developer is vested with the right to develop the Delta Shores project with 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 term of the Development Agreement expires in February 2039 unless it is sooner terminated or the term is further extended by the mutual consent of the parties. In connection with the sale of the property to Taylor Builders and the merchant builders described herein, certain rights and obligations under the Development Agreement were assigned to such entities.

The Development Agreement includes mitigation measures to be satisfied and fees to be paid in order to achieve full buildout of the Delta Shores project, 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 progresses, all discretionary approvals from State and federal agencies in order to complete the Delta Shores project have been obtained. 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 required 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. KB Home has commenced construction of homes in Improvement Area No. 1 and none of the homes under construction are expected to have elevated health risk thresholds which would require implementation of the mitigation measures under the First Amendment.

Second Amendment. The Original Development 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 3,375th 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

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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 City for the costs of a community park may be satisfied 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 housing 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.

Fourth Amendment. As described below under “—Parks,” with respect to the Delta Shores project, at the time of the entitlement 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 to 3.5 acres of parkland per each thousand population. In 2024, the City, the Developer and certain landowners within Delta Shores entered into the Fourth Amendment to the Original Development Agreement to, among other matters, reflect the reduced parkland dedication requirement, which would facilitate converting certain areas previously planned for parkland within Delta Shores (outside of Improvement Area No. 1) to residential uses.

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 Redevelopment Agency (“SHRA”) consistent with the guidelines established pursuant to City Code in order to fully satisfy Delta Shores’ obligations under the MIHO. In connection with the sale of the property in Improvement Area No. 3 to Taylor Builders, Taylor Builders agreed to set aside approximately 15.89 buildable acres in Improvement Area No. 3 to be dedicated 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 exceeds the dedication requirement and 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 Planning Areas to SHRA. Based on the projected timing of buildout within the currently active developments in Delta Shores, the Developer does not expect this threshold to adversely impact the timing of development in Improvement Area No. 1.

Parks. At the time of the entitlement approvals for Delta Shores, 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 people. The City requirement for parkland dedication has since been reduced to 3.5 acres of parkland per each thousand population. Pursuant to the Development Agreement, the total parkland dedication for Delta Shores is approximately 50 acres, which amount may be revised based on the type and actual number of units constructed.

Approximately 9.1 acres of parkland in Improvement Area No. 1 and approximately 32.38 acres of parkland in Improvement Area No. 2 are expected to be dedicated to the City. Within the portion of the property in Improvement Area No. 1 located south of Cosumnes River Boulevard, the parkland is expected to be dedicated by KB Home to the City in conjunction with the development of the homes located within the

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vicinity of such parkland. Similarly, for the property in Improvement Area No. 1 located north of Cosumnes River Boulevard, the parkland is expected to be dedicated to the City in conjunction with the development of the homes located within the vicinity of such parkland. Within Improvement Area No. 2, the Developer has dedicated approximately 6.1 acres of parkland to the City. The Developer expects that Taylor Builders will allocate the necessary acreage within Improvement Area No. 3 to satisfy the remaining parkland dedication for Delta Shores, including Taylor Builders’ future projects in Improvement Area No. 3. The Developer and the builders are 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. KB Home, Meritage and any future builders will be required to pay such fees with respect to the property in which they plan to construct and sell homes.

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 costs 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-square foot building 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 sources 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 $15,182 to $23,013 for residential and mixed-use units and $47.96 to $50.73 per square foot for retail uses.

Similar to the payment of development impact fees to fund park improvements, KB Home and Meritage will be required to pay the Delta Shores Impact Fee with respect to the Villages in which they plan to construct and sell homes. The future developers, if any, of the remaining Villages will be required to pay the Delta Shores Impact Fee with respect to such property as development thereon commences.

Under the Development Agreement there is a requirement to pay $4 million to the City for the costs of a regional park adjacent to Delta Shores, which amount is being satisfied through payment of the Delta Shores Impact Fee.

In February 2024, Taylor Builders acquired an approximately 141-acre site adjacent to Delta Shores known as “Stone-Beetland,” which 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. Other than the reservation of certain school sites, which are in Improvement Area Nos. 2 and 3 of the District, and the payment of statutory school fees, there are no other conditions to be satisfied with respect to the Sacramento City Unified School District in order to obtain building permits and certificates of occupancy for the planned residential units within Improvement Area No. 1.

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, the 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.

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In 2021, a Phase 1 Environmental Site Assessment was prepared for the property within Improvement Area No. 1 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 Permit (Lake and Streambed Alteration) from the State. All appeal periods with respect to such approvals have expired. However, as described 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. 1.

Mitigation Monitoring Plan. As required by the EIR and the 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. 1. 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. Certain of the ongoing mitigation requirements during the development phase within Delta Shores, including Improvement Area No. 1, are described below.

As described herein, the grading and construction of backbone infrastructure within the property in Improvement Area No. 1 that is south of Cosumnes River Boulevard have been substantially completed. KB Home has commenced and Meritage expects to commence, in the near future, vertical construction of homes.

Vertical construction of homes (in contrast to grading and construction of backbone infrastructure) is not expected to be delayed as a result of the requirements under the Mitigation Monitoring Plan described below.

However, the requirements under the Mitigation Monitoring Plan could cause delays in grading and similar activities on the property in Improvement Area No. 1 north of Cosumnes River Boulevard if/when such activities commence.

Through an assignment of the Development Agreement, the Developer expects that each developer/builder of a Village will be responsible for compliance with the Mitigation Monitoring Plan as such Villages are developed, to the extent the requirements are triggered.

Surveys Required for Active Bird Nests. The Mitigation Monitoring Plan requires that, between March 1 and August 1 of each year, 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 the California Department of Fish and Wildlife (“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 Migratory 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 of each

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year, 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 required 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 tree, 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 operation 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 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 California Burrowing Owl Consortium 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 disturbance 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.

No burrowing owls have been found within Improvement Area No. 1 to date. However, if burrowing owls are found, 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 the protected lands site to be enhanced (enlarged or cleared of debris) or new burrows created (by installing artificial burrows).

All grading activities on the property in Improvement Area No. 1 that is south of Cosumnes River Boulevard is complete. Therefore, the requirement with respect to the burrowing owl survey is not expected to be applicable for the remaining development activities on such property. However, the future developer of the property in Improvement Area No. 1 north of Cosumnes River Boulevard will be required to comply with such requirements.

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Infrastructure Development
The Developer completed (either on its own or through partnerships with other builders within Delta Shores) certain major backbone infrastructure necessary for development in Delta Shores. Such infrastructure includes extension of Cosumnes River Boulevard, which is the main arterial roadway from which the property in Improvement Area No. 1 is accessed, 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 (including a completed detention pond in Improvement Area No. 1).

Through an arrangement with KB Home, the Developer and KB Home have expended approximately $38 million on infrastructure improvements necessary for the development in Improvement Area No. 1.

Substantially all of the infrastructure in the portion of Improvement Area No. 1 that is located south of Cosumnes River Boulevard has been completed. Remaining infrastructure improvements consist of minor in- tract work (water and drainage improvements, paving, striping, landscaping and fencing) and minor offsite road improvements. As of October 15, 2024, the estimated costs of the remaining infrastructure was approximately $1.5 million, which amount has been set aside in escrow through a holdback of the purchase price of the property that Meritage is under contract to purchase in Improvement Area No. 1. The Developer expects that all such remaining infrastructure will be complete by December 2024.

Villages MDR-2 and HDR-1 located north of Cosumnes River Boulevard currently consist of undeveloped land, with utilities in place to the property line. Therefore, only in-tract infrastructure is expected to be required to be constructed in the property to the north of Cosumnes River Boulevard once development on such property commences. The Developer does not expect the costs of such in-tract infrastructure within Villages MDR-2 and HDR-1 to be significant.

A 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. Within the active developments in Improvement Area No. 1 and Improvement Area No. 2, there are a total of 769 planned residential units.

As a result, the Developer does not expect the foregoing sewer generation to be exceeded within the expected development timeframe within Improvement Area No. 1.

The requirement to construct the regional sewer lift station is the responsibility of Taylor Builders, as part of the terms of the sale of the property in Improvement Area No. 3 to Taylor Builders. The regional sewer lift station is also necessary to serve the adjacent Stone-Beetland developer, which is also owned by Taylor Builders. The Developer does not expect that the requirement to construct the regional sewer lift station will impact the timing of buildout within Improvement Area No. 1 as described herein. Construction bids for the regional sewer lift station were received in August 2024.

Amenities. Other than park sites, which are to be dedicated to the City, no additional public amenities are planned within Improvement Area No. 1.

Mapping Status. Final tract maps have been recorded for the planned development in Improvement Area No. 1 that is located south of Cosumnes River Boulevard (creating 348 parcels for the planned residential developments). A large lot subdivision map has been recorded for the property in Improvement Area No. 1 that is located north of Cosumnes River Boulevard. The Developer currently does not have a timeline for the recordation of the final small lot subdivision map(s) for the property in Improvement Area No. 1 located to the north of Cosumnes River Boulevard.

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

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costs of infrastructure located outside of Improvement Area No. 1 but which benefits Improvement Area No. 1) and in excess of $10 million on environmental mitigation costs on the Delta Shores development as a whole.

Other than certain costs that the Developer has contractually agreed to fund for certain projects in Improvement Area No. 2, the Developer does not expect to incur any significant additional costs for infrastructure with respect to the Delta Shores development. Notwithstanding the foregoing, the Developer may enter into future arrangements with third parties with respect to the property in Improvement Area No. 1 north of Cosumnes River Boulevard, Improvement Area No. 2 and Improvement Area No. 3 similar to the arrangement with KB Home as described herein pursuant to which the Developer participates in the funding of infrastructure costs for certain projects.

KB Home Development Plan
No assurances can be made that KB Home or any other current or future owner of taxable property within Improvement Area No. 1 will have the resources, willingness, and ability to successfully complete development activities on the property within Improvement Area No. 1. No representation is made as to the ability (financial or otherwise) of KB Home or any other current or future owner of taxable property within Improvement Area No. 1 to complete development as currently planned.

Home Construction Plans. KB Home currently owns the property in Villages MDR-1 and LDR-1, which is planned for a total of 191 single-family market rate homes. As of October 15, 2024, KB Home had completed five model homes, commenced construction of 50 production homes and had 22 homes in escrow.

KB Home currently estimates that it will complete and convey all 191 of the planned homes in Villages MDR- 1 and LDR-1 to individual homeowners by the end of the first quarter of 2027.

Within MDR-1, KB Home plans to construct 110 alley-loaded homes (alley-loaded homes generally do not have individual driveways and front yard garage access) in a project being marketed as “Riva at Delta Shores.” The following table summarizes KB Home’s planned development within the Riva at Delta Shores project.

TABLE 1

KB HOME

RIVA AT DELTA SHORES
(As of October 15, 2024)

Owned by KB Home
Plan
Estimated
Home
Square
Footage
Base
Home
Prices(1)
Total
Units
Planned Closings
Completed
Homes/Homes
Under
Construction(2)
Finished
Lots
1 1,795 $605,000 37 0 8 29
2 2,102 635,000 36 0 8 28
3 2,236 648,000 37 0 8 29
Total 110 0 24 86

(1) Base home prices shown exclude lot premiums, options and extras and any incentives or price reductions. Base sales prices are subject to change.
(2) Completed Homes/Homes Under Construction consist of three completed model homes and 21 production homes under construction.

Within LDR-1, KB Home expects to construct 81 single family homes on traditional lots in a project being marketed as “Edgewater at Delta Shores.” The following table summarizes KB Home’s planned development within the Edgewater at Delta Shores project.

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TABLE 2

KB HOME

EDGEWATER AT DELTA SHORES
(As of October 15, 2024)

Owned by KB Home
Plan
Estimated
Home
Square
Footage
Base
Home
Prices(1)
Total
Units
Planned Closings
Completed
Homes/Homes
Under
Construction(2)
Finished
Lots
1 1,685 $655,990 20 0 10 10
2 2,188 715,990 20 0 7 13
3 2,391 725,990 21 0 6 15
4 2,693 755,990 20 0 8 12
Total 81 0 31 50

(1) Base home prices shown exclude lot premiums, options and extras and any incentives or price reductions. Base sales prices are subject to change.
(2) Completed Homes/Homes Under Construction consist of two completed model homes and 29 production homes under construction.

KB Home Financing Plan. To date, KB Home has financed its land acquisition and various site development and homebuilding costs related to its property in Improvement Area No. 1 through internally generated funds. As of October 15, 2024, KB Home has expended approximately $52.8 million on its projects in Improvement Area No. 1, including land acquisition costs, site development costs, permits and fees, direct and indirect home construction costs, and marketing and sales costs and expenses (exclusive of corporate overhead and other carry costs). KB Home expects to spend approximately $49.7 million on remaining site development costs, permits and fees, direct and indirect home construction costs, and marketing and sales costs and expenses (exclusive of corporate overhead and other carry costs) to complete and convey all 191 planned homes to individual homeowners. KB Home expects to use internal funding (which may include home sales revenue and funding from its parent company) to complete its development within Improvement Area No. 1, and believes that it will have sufficient funds available to complete its planned development as described in this Official Statement.

Although KB Home expects to have sufficient funds available to complete its development in Improvement Area No. 1 as described in this Official Statement, there can be no assurance that amounts necessary to finance the remaining development costs will be available from KB Home Parent (as defined below), KB Home or any other source when needed. Neither KB Home Parent, KB Home, nor any of their subsidiaries or related entities are under any legal obligation of any kind to expend funds for the development of and construction of homes on KB Homes’ property in Improvement Area No. 1. Any contributions by KB Home Parent or KB Home to fund the costs of such development are entirely voluntary. KB Home has no legal obligation to Bond Owners to make any such funds available for construction or development, or the payment of ad valorem property taxes or the Special Tax.

If and to the extent that internal funding, including but not limited to home sales revenue and corporate financing from KB Home Parent, is inadequate to pay the costs to complete the planned development by KB Home within Improvement Area No. 1 and other financing is not put into place, there could be a shortfall in the funds required to complete the remaining planned development by KB Home in Improvement Area No. 1. Many factors beyond KB Homes’ control, or a decision by KB Home to alter its current plans, may cause the actual sources and uses to differ from the projections. See “SPECIAL RISK FACTORS” herein for a discussion of risk factors.”

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Meritage Development Plan
No assurances can be made that Meritage or any other current or future owner of taxable property within Improvement Area No. 1 will have the resources, willingness, and ability to successfully complete development activities on the property within Improvement Area No. 1. No representation is made as to the ability (financial or otherwise) of Meritage or any other current or future owner of taxable property within Improvement Area No. 1 to complete development as currently planned.

Property Ownership Status and Phased Takedown Schedule. The Developer and Meritage have entered into a purchase and sale agreement (as amended to the date hereof, the “Meritage Agreement”) pursuant to which Meritage has agreed to acquire the 157 lots in Village LDR-2 in phased takedowns. As of October 15, 2024, Meritage had acquired 77 lots in Village LDR-2. Under the Meritage Agreement, the remaining scheduled takedowns are as follows: 27 lots on January 22, 2025 and 53 lots on April 7, 2025. The Meritage Agreement provides that the scheduled takedown dates may only be revised upon agreement by the Developer and Meritage. Meritage has provided a deposit that has and will continue to be credited toward the purchase price of each takedown. No assurances can be made that Meritage will acquire the remaining property in Village LDR-2 as currently planned.

Home Construction Plans. Meritage currently plans to develop the property in LDR-2 with 157 single-family market rate homes. As of October 15, 2024, Meritage was undergoing design approvals with the City and had not commenced construction of any homes in Improvement Area No. 1. Meritage currently expects to commence home construction and sales in December 2024. Meritage currently estimates that it will complete and convey all 157 of the planned homes in Village LDR-2 to individual homeowners by December 31, 2027.

The following table summarizes Meritage’s planned development within Improvement Area No. 1.

TABLE 3

MERITAGE DEVELOPMENT PLAN
(As of October 15, 2024)

Owned by Meritage
Plan
Estimated
Home
Square
Footage
Base
Home
Prices(1)
Total
Units
Planned Closings
Completed
Homes/Homes
Under
Construction(2)
Finished
Lots
1 2,339 $735,990 32 0 0 32
2 2,515 750,990 34 0 0 34
3 2,698 770,990 31 0 0 31
4 2,916 780,990 32 0 0 32
5 3,127 800,990 28 0 0 28
Total 157 0 0 157

(1) Base home prices shown exclude lot premiums, options and extras and any incentives or price reductions. Base sales prices are subject to change.

Meritage Financing Plan. To date, Meritage has financed its land acquisition and various site development and homebuilding costs related to its property in Improvement Area No. 1 through internally generated funds. As of October 15, 2024, Meritage has expended approximately $20.3 million on its projects in Improvement Area No. 1, including land acquisition costs, site development costs, permits and fees, direct and indirect home construction costs, and marketing and sales costs and expenses (exclusive of corporate overhead and other carry costs). Meritage expects to spend approximately $70.0 million on remaining land acquisition costs, site development costs, permits and fees, direct and indirect home construction costs, and marketing and sales costs and expenses (exclusive of corporate overhead and other carry costs) to complete

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and convey all 157 planned homes to individual homeowners. Meritage expects to use internal funding (which may include homes sales revenue and funding from its parent company) to complete its development within Improvement Area No. 1, and believes that it will have sufficient funds available to complete its planned development as described in this Official Statement.

Although Meritage expects to have sufficient funds available to complete its development in Improvement Area No. 1 as described in this Official Statement, there can be no assurance that amounts necessary to finance the remaining development costs will be available from Meritage Homes Corporation (as defined below), Meritage or any other source when needed. Neither Meritage Homes Corporation, Meritage, nor any of their subsidiaries or related entities are under any legal obligation of any kind to expend funds for the development of and construction of homes for Meritage’s project in Improvement Area No. 1. Any contributions by Meritage Homes Corporation or Meritage to fund the costs of such development are entirely voluntary. Meritage has no legal obligation to Bond Owners to make any such funds available for construction or development, or the payment of ad valorem property taxes or the Special Taxes.

If and to the extent that internal funding, including but not limited to home sales revenue, is inadequate to pay the costs to complete the planned development by Meritage within Improvement Area No. 1 and other financing is not put into place, there could be a shortfall in the funds required to complete the remaining planned development by Meritage in Improvement Area No. 1. Many factors beyond Meritage’s control, or a decision by Meritage to alter its current plans, may cause the actual sources and uses to differ from the projections. See “SPECIAL RISK FACTORS” herein for a discussion of risk factors.

PROPERTY OWNERSHIP
The information in this section about the Developer, KB Home and Meritage has been provided by Developer, KB Home and Meritage 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.

The Developer
General. M&H Realty Partners VI, L.P. (previously defined as the “Developer”) is a California limited partnership formed on August 1, 2003. M&H Realty Partners VI, L.P. was formed for the purpose of, among other things, acquiring, improving and developing real property. The General Partner of M&H Realty Partners VI, L.P. is MHRP VI L.P., a California Limited Partnership. The General Partner of MHRP VI L.P. is Merlone/Hagenbuch VI Inc. The key officers of Merlone/Hagenbuch VI Inc. are John J. Hagenbuch (Chairman and Secretary) and Peter J. Merlone (President and Treasurer). Brief biographies of the foregoing individuals are set forth below.

The Developer is formed and managed by individuals of Merlone Geier Partners (“Merlone Geier”).

Merlone Geier and its affiliated entities have been active in real estate investment, redevelopment and management activities on the west coast of the United States for approximately 40 years. Merlone Geier and its affiliated entities have primarily been focused on the acquisition and development of community and neighborhood shopping centers.

Peter J. Merlone. Peter Merlone is a founder, co-owner and managing partner of the general partner entities of Merlone Geier and Merlone Geier Management (“MGM”). Mr. Merlone is also a founder, co-owner and president of the general partner entities of M&H Realty Partners (“M&H”), the predecessor to Merlone Geier, and was a founder and president of M&H Property Management (“MHPM”), the predecessor to MGM.

From 1986 to 1993, prior to the formation of the first M&H fund, Mr. Merlone was the founder and owner of The Merlone Company, MHPM’s predecessor.

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Since 1993, Mr. Merlone has overseen twelve institutional limited partnerships with aggregate equity capital commitments of $4.3 billion which have acquired 173 operating properties aggregating to over 28.5 million square feet of retail improvements. Mr. Merlone is a graduate of UCLA, simultaneously earning an undergraduate degree in economics, summa cum laude, and a master’s degree in education; he was also elected to Phi Beta Kappa.

John J. Hagenbuch. John J. Hagenbuch is Chairman of M&H and WestLand Capital Partners, investment firms he co-founded in 1994 and 2010, respectively. Prior to the formation of M&H, Mr.

Hagenbuch served from 1985-1993 as a general partner of Hellman & Friedman, a San Francisco-based investment banking and investment firm, which provided investment banking services to a wide range of clients and managed private equity partnerships with aggregate capital commitments in excess of $1 billion.

Mr. Hagenbuch is the past director of several companies and charitable organizations. He graduated magna cum laude from Princeton University.

Projects. The following summarizes certain of Merlone Geier’s projects:

The Village at San Antonio Center. Located in Mountain View, California, The Village at San Antonio Center is regional shopping center with retail, residential, hotel and office space. The two phases are complete and include approximately 225,000 square feet of retail space, 440,000 square feet of office space (which is 100% leased), a mixed-use component with 330 apartments, a boutique hotel and a nine-level parking structure. Anchor tenants include Safeway and a high-end cinema. Merlone Geier has sold this property.

Stella. Located in Marina Del Rey, California, Merlone Geier developed this project with 244 condominium units and 9,000 square feet of ground floor retail. Construction commenced in 2010 and the project reached stabilized occupancy in 2013. Merlone Geier sold the property in late 2013.

The UV. Located in Sacramento, California, Merlone Geier acquired this neighborhood shopping center in 2014 and reconfigured the site. The property now includes approximately 84,000 square feet of leasable space on approximately 7.6 acres. Approximately 91% of the space is currently leased.

Further information regarding Merlone Geier is available from its website at www.merlonegeier.com.

This internet address is included for reference only, and the information on the internet site is not a part of this Official Statement and is not incorporated by reference into this Official Statement.

KB Home
As previously defined in this Official Statement, “KB Home” is KB HOME Sacramento, Inc., a California corporation, is a wholly-owned subsidiary of KB Home, a Delaware corporation (“KB Home Parent”), whose principal executive offices are located in Los Angeles, California. KB Home Parent is a publicly traded company listed on the New York Stock Exchange under the ticker symbol “KBH.” Founded in 1957, KB Home Parent constructs and sells homes through its operating divisions under the name KB Home. KB Home Parent’s ongoing principal operations are in nine states, including California, Arizona, Nevada, Colorado, Texas, Florida, North Carolina, Idaho and Washington within 47 major markets.

KB Home first developed homes in California in 1963. KB Home Parent’s homebuilding operations offer a variety of homes designed primarily for first-time, move-up and active adult homebuyers, including attached and detached single-family homes, townhomes and condominiums.

KB Home Parent is subject to the informational reporting requirements of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and in accordance therewith is obligated to file annual, quarterly and current reports, proxy statements and other information with the Securities and Exchange Commission (the “SEC”). Such filings set forth, among other things, certain data relative to the consolidated results of

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operations and financial position of KB Home Parent and its subsidiaries. KB Home Parent’s SEC filings are available to the public over the Internet at the SEC’s website at www.sec.gov, and at KB Home’s website at www.kbhome.com.

The foregoing websites are and references to filings with the SEC are given for reference and convenience only, and the information on such websites and on file with the SEC does not form a part of this Official Statement and is not incorporated by reference herein. No representation is made in this Official Statement as to the accuracy or adequacy of the information contained on such websites. KB Home and KB Home Parent are not obligated to advance funds for construction or development or to pay ad valorem property taxes or the Special Taxes and investors should not rely on the information and financial statements contained on such websites in evaluating whether to buy, hold or sell the Bonds. The information contained on such websites may be incomplete or inaccurate and has not been reviewed by the City or the Underwriter.

Meritage
Meritage Homes of California, Inc., a California corporation (previously defined as “Meritage”) is a subsidiary of Meritage Homes Corporation, a Maryland corporation (“Meritage Homes Corporation”).

Meritage Homes Corporation is a homebuilder focused primarily on high-growth regions of the western and southern United States. Meritage Homes Corporation operates as a holding company, has no independent assets or operations, and is traded on the New York Stock Exchange under the ticker symbol “MTH.” Homebuilding, construction, development and sales activities are conducted through subsidiaries. As of July 1, 2024, Meritage Homes Corporation has operations in three regions – West, South and East – comprised of ten states (Arizona, California, Colorado, Texas, Utah, Florida, Georgia, North Carolina, South Carolina and Tennessee).

Meritage Homes Corporation is subject to the informational reporting requirements of the Exchange Act, and in accordance therewith is obligated to file reports, proxy statements and other information with the SEC. Such filings set forth, among other things, certain data relative to the consolidated results of operations and financial position of Meritage Homes Corporation and its subsidiaries (e.g., see Meritage Homes Corporation’s Annual Report on Form 10-K for the fiscal year ended December 31, 2023, as filed with the SEC on February 14, 2024 and Quarterly Report on Form 10-Q for the quarterly period ended June 30, 2024, as filed with the SEC on July 26, 2024) as of the dates described therein. The SEC maintains an Internet website that contains reports, proxy and information statements and other information regarding registrants that file electronically with the SEC, including Meritage Homes Corporation. The address of such Internet website is www.sec.gov. All documents subsequently filed by Meritage Homes Corporation pursuant to the requirements of the Exchange Act after the date of this Official Statement will be available for inspection in such manner as the SEC prescribes. Copies of Meritage Homes Corporation’s annual report, quarterly reports and current reports, including any amendments, will be available from Meritage Homes Corporation’s website at www.meritagehomes.com.

The foregoing internet websites are included for reference only and the information on these internet sites is not a part of this Official Statement and is not incorporated by reference into this Official Statement.

No representation is made in this Official Statement as to the accuracy or adequacy of the information contained on such internet websites. Neither Meritage nor Meritage Home Corporation is obligated to advance funds for construction or development or to pay ad valorem property taxes or the Special Taxes and investors should not rely on the information and financial statements contained on such internet sites in evaluating whether to buy, hold or sell the Bonds.

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IMPROVEMENT AREA NO. 1
General Description
As described above, Improvement Area No. 1 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.

Improvement Area No. 1 consists of approximately 107 gross acres and approximately 87 net acres.

Improvement Area No. 1 is bordered to the east by the Interstate 5 freeway, to the south by the City-owned Bartley Cavanaugh Golf Course, to the west by the community of Freeport and the Sacramento River and to the north by an existing commercial development. Cosumnes River Boulevard bisects Improvement Area No. 1 with approximately 86.5 gross acres (approximately 77.5 net acres) of property in Improvement Area No. 1 located to the south of Cosumnes River Boulevard and approximately 20.5 gross acres (approximately 8.85 net acres based on the current recorded large lot map) of property north of Cosumnes River Boulevard.

The property in Improvement Area No. 1 located south of Cosumnes River Boulevard (consisting of Villages MDR-1, LDR-1 and LDR-2) is planned for 348 market-rate for-sale single-family detached homes being developed by KB Home and Meritage. The development plan for the property in Improvement Area No. 1 that is located to the north of Cosumnes River Boulevard has not been finalized and may include a combination of detached and attached products and for-sale and for-rent products. See “DEVELOPMENT OF PROPERTY IN IMPROVEMENT AREA NO. 1” and “PROPERTY OWNERSHIP” for information with respect to the planned devevlopment and development status within Improvement Area No. 1.

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. 1, in accordance with the terms 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 and traffic improvements, landscaping and park improvements, in addition to other improvements authorized under the Acquisition Agreement. 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 findings 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).

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The property in the District (including Improvement Area No. 1) is currently mapped by the Federal Emergency Management Agency (FEMA) as “X (shaded),” which means that such area is between the limits of the base flood (100-year) and the 0.2% annual chance (or 500-year) flood. Flood insurance is currently not required for the property in Improvement Area No. 1. Notwithstanding the foregoing, all of the City, including Improvement Area No. 1, is subject to the ULOP requirement.

The Sacramento Area Flood Control Agency (“SAFCA”) is the local flood-management agency that serves the area within the City. In 2016, SAFCA prepared 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 projects involving various levee systems designed to protect the City from flood events (the “Levee Project”) are meeting specified development milestones toward providing an ULOP by 2025. In the latest annual progress report prepared by SACFA in August 2024, which the City relied on to make the adequate-progress finding in October 2024, SAFCA noted that as the December 31, 2025 deadline for ULOP attainment draws near, new delays to remaining scheduled construction activities with respect to the Levee Project could constrain attainment for affected portions of the subject basins. 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. In such event, development within Improvement Area No. 1 could be materially delayed.

Certain jurisdictions within the vicinity of the City (e.g. the City of West Sacramento and the Mossdale Tract in the County of San Joaquin) have attained legislative extensions of the December 31, 2025 ULOP deadline, with a new deadline of 2040. The City currently considering seeking a similar legislative extension in early 2025. However, no assurances can be made that such legislation will be sought and if sought, that such legislation will be passed. See “SPECIAL RISK FACTORS — Natural Disasters.” Direct and Overlapping Indebtedness
The ability of an owner of land within Improvement Area No. 1 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. 1 and are set forth in Table 4 below (the “Debt Report”). Table 4 does not include entities that only levy or assess 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. 1’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. and NBS as of October 1, 2024. Neither the City nor the Underwriter have independently verified the information in the Debt Report and do not guarantee its completeness or accuracy.

The property in Improvement Area No. 1 that is owned by KB Home (Villages MDR-1 and LDR-1) is included within a community facilities district (the “SCIP CFD”) formed by the California Statewide Communities Development Authority’s (“CSCDA”) Statewide Community Infrastructure Program (“SCIP”).

CSCDA has informed the City that it expects to issue special tax bonds for the SCIP CFD in approximately May 2025. Based on estimates that CSCDA provided to the City, approximately $5,265,000 principal amount of the SCIP CFD special tax bonds are expected to be allocated to such property owned by KB Home.

Assuming the SCIP CFD special tax bonds are issued and based on the appraised values set forth in the Appraisal Report, the appraised value-to-lien ratio of the property owned by KB Home could be reduced from

5.95-to-1* to 3.44-to-1* and the aggregate appraised value-to-lien ratio of the property in the District could be reduced from 5.82-to-1* to 4.32-to-1* (in each case including the principal amount of the Bonds and the overlapping debt shown in Table 4 below) if property values do not materially increase due to additional development and home sales or other factors. No assurances can be made that the SCIP CFD special tax bonds

* Preliminary, subject to change.

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will be issued or if issued, the final principal amount of such bonds allocated to the property in Improvement Area No. 1 owned by KB Home. The final par amount of the SCIP CFD special tax bonds will depend on market conditions at the time such bonds are sold. In the event the amount of the SCIP CFD special tax bonds allocated to the KB Home property is greater than current estimates, the foregoing value-to-lien ratios would be further reduced.

TABLE 4

CITY OF SACRAMENTO
DELTA SHORES COMMUNITY FACILITIES DISTRICT 2019-01 (IMPROVEMENTS) IMPROVEMENT AREA NO. 1

OVERLAPPING DEBT SUMMARY

Overlapping District
Percent
Applicable
Total Outstanding
Bonded Debt
Los Rios Community College District General Obligation Bonds 0.019% $ 66,533 Sacramento City Unified School District General Obligation Bonds 0.105 631,360 Sacramento Area Flood Control Agency Consolidated Capital Assessment District No. 2 Bonds(1) 0.004 12,669
City of Sacramento Delta Shores CFD No. 2019-01 Improvement Area No. 1 Special Tax Bonds(2) 100.000 $ 14,480,000*
Total
Total Appraised Value(3): $88,651,000
Appraised Value-to-Lien Ratio 5.82-to-1(4)*

* Preliminary, subject to change.
(1) The allocable share of such debt to Improvement Area No. 1 will increase as development within Improvement Area No. 1 progresses.
(2) Includes the principal amount of the Bonds.
(3) Based on the appraised value as set forth in the Appraisal Report as of the Date of Value. (4) See the paragraph above Table 4 for information regarding the proposed SCIP CFD special tax bonds.

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

Estimated Fiscal Year 2024-25 Tax Burden
The following table sets forth the estimated total tax obligation for residential units planned within the Villages LDR-1, LDR-2 and MDR-1 in Improvement Area No. 1 based on the Fiscal Year 2024-25 Special Tax levy at the Assigned Special Tax rates for Developed Property and the Fiscal Year 2024-25 tax rates for overlapping taxing entities. The amounts charged and the effective tax rates vary for individual parcels within Improvement Area No. 1 and may increase or decrease in future years. See “SPECIAL RISK FACTORS — Parity Taxes and Special Assessments.”
The following table does not include the special tax levy with respect to the SCIP CFD, which includes the property in Improvement Area No. 1 owned by KB Home. The SCIP CFD’s Fiscal Year 2024-25 special tax rates range from $1,220 to $1,740 depending on the unit size of the home. Such rates increase by 2% per fiscal year.

[Remainder of Page Intentionally Left Blank]

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TABLE 5

CITY OF SACRAMENTO
DELTA SHORES COMMUNITY FACILITIES DISTRICT 2019-01 (IMPROVEMENTS) IMPROVEMENT AREA NO. 1
ESTIMATED TAX OBLIGATION FOR SAMPLE UNITS IN VILLAGES LDR-1, LDR-2 AND MDR-1 Village: LDR-1
(KB Home)
LDR-2
(Meritage)
MDR-1
(KB Home)
Estimated Property Characteristics
Minimum Lot Size (SF) 5,700 6,825 3,230
Average Building Square Footage 2,241 2,719 2,044
Minimum Lot Acreage 0.13 0.16 0.07

Net Base Price (1) $ 711,113.00 $ 771,647.00 $ 624,282.00 (Less) Homeowner Exemption (7,000.00) (7,000.00) (7,000.00) Average Assessed Value $ 704,113.00 $ 764,647.00 $ 617,282.00

Ad Valorem Tax Rate
General Purpose Ad Valorem Tax (Proposition 13) 1.0000% $ 7,041.13 $ 7,646.47 $ 6,172.82 Los Rios College General Obligation Bonds 0.0200% 140.82 152.93 123.46 Sacramento City Unified School District General Obligation Bonds 0.1317% 927.32 1,007.04 812.96 Total Ad Valorem Taxes 1.1517% $ 8,109.27 $ 8,806.44 $ 7,109.24

Special/Direct Assessments and Taxes
City of Sacramento Delta Shores Community Facilities District No. 2019-1 IA 1 $ 2,300.70 $ 2,300.70 $ 1,851.81 Sacramento Additional Library Service Tax 40.41 40.41 40.41 Sacramento Core Library Services Tax 15.73 15.73 15.73 Neighborhood Park Maintenance Community Facilities District No. 2002-02 83.72 83.72 483.83 Sacramento Maintenance Community Facilities District No. 2014-04 Delta Shores 545.07 545.07 428.19 SAFCA Operation and Maintenance District No. 1 Assessment (2) 12.43 14.88 7.04 SAFCA Consolidated Capital Assessment No. 2 - 1 story 101.00 101.00 101.00 SAFCA Consolidated Capital Assessment No. 2 - 2 stories 83.00 83.00 83.00 Citywide Landscape & Lighting Assessment District (3) 98.82 98.82 68.72 Maintenance Area 9 (4) 20.92 20.92 20.92
CSCDA Community Facilities District No. 2024-17 (Delta Shores)(5) 1,565.00 0.00 1,515.00 Total Special/Direct Assessments and Taxes $ 4,866.80 $ 3,304.25 $ 4,180.65

Total Estimated Annual Property Taxes-1 Story(6) $ 12,893.07 $ 12,027.69 $ 11,206.89 Effective Tax Rate-1 Story 1.8131% 1.5587% 1.7952%
Total Estimated Annual Property Taxes-2 Stories(6) $ 12,875.07 $ 12,009.69 $ 11,188.89 Effective Tax Rate-2 Stories 1.8106% 1.5564% 1.7923%

(1) Based on the Appraisal Report.
(2) Based on the per-acre rate and the Minimum Lot Acreage shown. (3) Reflects the Assigned Special Tax rate for Developed Property for Fiscal Year 2024-25. (4) Reflects the maximum rate for Fiscal Year 2024-25.
(5) See the paragraph above Table 4 for information relating to the SCIP CFD which includes the property in Improvement Area No. 1 that is currently owned by KB Home. (6) SAFCA Consolidated Capital Assessment No. 2 assessment varies depending on whether a home is single-story or two-story.

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

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Market Absorption Study
General. In order to provide an independent assessment of the residential absorption potential within Improvement Area No. 1, the City engaged, John Burns Real Estate Consulting, 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 Market Absorption Consultant expects to influence the absorption of the forthcoming products within Improvement Area No. 1.

The Market Absorption Report is attached hereto as Appendix J. In the Market Absorption Report, 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 Consultant assessed the market size for the residential products in Improvement Area No. 1 mainly on County-wide and Sacramento-Roseville-Arden Arcade metropolitan statistical area-wide data.

For purposes of the Market Absorption Report, the Market Absorption Consultant assumed that Improvement Area No. 1 will include: (i) 348 for-sale market-rate single family homes in Villages MDR-1, LDR-1 and LDR-2, and (ii) with respect to the property in Improvement Area No. 1 located north of Cosumnes River Boulevard, that such property will be developed with either 261 for-rent apartment units or 87 build-to-rent single family homes (build-to-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-sale). The foregoing assumptions for the product mix are subject to change as the property in Improvement Area No. 1 is developed.

Based on the Market Absorption Consultant’s observations of the relevant market demand, the Market Absorption Consultant estimates that: (i) the 348 for-sale residential products located south of Cosumnes River Boulevard could achieve an absorption rate of between 3.5 to 4.0 homes per month; (ii) that a for-rent apartment product located north of Cosumnes River Boulevard could achieve 18 leases per month; and (iii) that build-to-rent single family homes located north of Cosumnes River Boulevard could achieve 6 leases per month.

For-Sale Products. In reaching its estimated rate of absorption for the for-sale residential products in Improvement Area No. 1, the Market Absorption Consultant incorporated product information provided by KB Home and Meritage with respect to the projects in Villages MDR-1, LDR-1 and LDR-2. The Market Absorption Consultant’s absorption estimates are based on the assumption that sales within Villages MDR-1, LDR-1 and LDR-2 will all have commenced by the fourth quarter of 2024 (KB Home has commenced sales in MDR-1 and LDR-1 and Meritage expects to commence sales in LDR-2 in December 2024).

In the Market Absorption Report, the Market Absorption Consultant observes that while absolute sales levels have decreased over the last two years given an increase in mortgage rates, the resulting minimal resale inventory has increased new home market share. Consequently, new home communities are generally absorbing reasonably well throughout the region and pricing remains stable to rising modestly over the last year or so. The Market Absorption Consultant forecasts modest slowing over the next year, but projects that home prices will remain positive through 2027 in the nation and the Sacramento region.

Based on the market trends described above and the product, pricing, location and masterplan setting of the proposed project, regional supply, the performance of new home comparables, and longer-term new home per project norms in the region, the Market Absorption Consultant reached the following estimates for the absorption for the for-sale products in Improvement Area No. 1.

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Village
Total No.
of Units Market Absorption Projected Units Sold Per Year 2024 2025 2026 2027 2028
MDR-1 110 26 48 36 -- --
LDR-1 81 28 48 5 -- --
LDR-2 157 5 42 42 42 26
Totals 348 59 138 83 42 26

For-Rent Products. The Developer has not finalized any development plans with respect to the products in Village HDR-1 and Village MDR-2. Based on input from the Developer, the Market Absorption Consultant assumed in the Market Absorption Report that such property will be developed with either 261 for- rent apartment units or 87 build-to-rent single family homes. Based on the assumption that the 87 build-to-rent single family homes would enter the market in the fourth quarter of 2025, the Market Absorption Consultant estimates that such product could achieve equilibrium (95% occupancy) in the fourth quarter of 2026. Based on the assumption that the 261 for-rent apartment units would enter the market in the second quarter of 2026, the Market Absorption Consultant estimates that such product could achieve equilibrium in the third quarter of 2027.

The development plan for the property in Improvement Area No. 1 north of Cosumnes River Boulevard has not been finalized and the Market Absorption Study acknowledges that such property could also be developed as for-sale housing. The Developer is marketing such property for sale but no assurances can be made as to any actual sales of such property or the timing thereof.

The Market Absorption Consultant identified potential risks that could affect the estimated absorption, including rising interest rates and an economic downturn. See “SPECIAL RISK FACTORS.” A complete copy of the Market Absorption Study is attached hereto as APPENDIX J.

Property Values
Assessed Value. The estimated assessed value of the property within Improvement Area No. 1, as shown on the County’s assessment roll for Fiscal Year 2024-25, is approximately $53,485,097. The assessed value of the property within Improvement Area No. 1 represents the secure assessed valuation established by the County Assessor. Assessed values do not necessarily represent market values. Article XIIIA of the California Constitution (Proposition 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 “full 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, destruction 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. 1 accurately reflect their respective market values, and the future fair market values of those properties may be lower than their current assessed valuations.

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Appraisal. As described above, due to Article XIIIA of the California 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 Improvement Area No. 1, the City engaged Smith & Associates, 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. 1 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. 1 subject to the lien of the Special Tax. As of the Date of Value of the Appraisal Report, the property owners in Improvement Area No. 1 were the Developer, KB Home and Meritage. 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 of the property encumbered by the Special Tax within Improvement Area No. 1 was not less than $88,651,000. The following table summarizes the appraised value by ownership as of the Date of Value:

The estimated market value assumed that the Bonds have just been sold. See “DEVELOPMENT OF PROPERTY IN IMPROVEMENT AREA NO. 1.”
In estimating the value for the Taxable Property in Improvement Area No. 1, the Appraiser used a sales comparison approach and the extraction/land residual method. Under the extraction/land residual methodology method, land value is developed by deducting the construction costs and all costs for the construction of homes from the proposed revenues in arriving at an estimated value of the finished lots. The Appraiser then applied a discounted cash flow model to account for the revenue, absorption period, expenses and discount rate associated with the sale of the developable parcels in Improvement Area No. 1.

In the sales comparison approach, the subject property is compared to similar properties that have been sold recently or for which listing prices or offering figures are known. Data for generally comparable properties are used and comparisons are made to demonstrate a probable price at which the subject property would sell if offered in the open market. Under the extraction method, land value is developed by deducting the construction costs and all costs for the construction of homes from the proposed revenues in arriving at an estimated value of the finished lots.

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. 1 may be less than the amount reported in the Appraisal Report. In any case,

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there can be no assurance that any portion of the property within Improvement Area No. 1 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. 1 as of the Date of Value and under the conditions specified in the Appraisal Report.

The Appraiser’s opinion reflects conditions prevailing in the applicable market as of the Date of Value. The Appraiser’s opinion does not predict the future value of the subject property, and there cannot be any 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 nothing has come to the attention of the Appraiser subsequent to the Date of Value of the Appraisal Report that would cause the Appraiser to believe that the value of the property in Improvement Area No. 1 is less than the market value of Improvement Area No. 1 reported in the Appraisal Report. The Appraiser notes, however, that acts and events may have occurred since the Date of Value of the Appraisal Report which could result in both positive and negative effects on market value within Improvement Area No. 1.

Appraisal Review Report. The City engaged BBG, Inc., independent appraisers, to conduct a review of the Appraisal Report. BBG, Inc. concluded in its report dated _____, 2024 that the Appraisal Report: (i) is within the context of the Uniform Standards of Professional Appraisal Practice (USPAP); (ii) the data and analysis in the Appraisal Report was adequate and relevant; (iii) the propriety of the adjustments is considered adequate and relevant; (iv) the analyses, opinions, and conclusions in the report under review are appropriate and reasonable; (v) the opinion of value presented in the Appraisal Report is considered credible and adequately supported by available market data and the analysis thereof; and (vi) is in compliance with both USPAP and California Debt and Investment Advisory Commission guidelines.

Value-To-Lien Ratios
Based on the principal amount of the Bonds, the estimated appraised value-to-lien ratio within Improvement Area No. 1, including all Taxable Property as of the Date of Value is approximately 5.88-to-1*.

This ratio includes the overlapping debt set forth in Table 4 above. See “— Direct and Overlapping Indebtedness” above.

Table 6 below shows the estimated principal amount of the Bonds and overlapping debt allocable to the Taxable Property in Improvement Area No. 1 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, KB Home and Meritage were the only property owners in Improvement Area No. 1.

With respect to the property in Improvement Area No. 1 that is located north of Cosumnes River Boulevard (Villages MDR-2 and HDR-1), the Bonds have been sized based on Net Special Tax Revenues using the assumed unit mix and count for such property as shown in Exhibit 1 to the Amended Rate and Method, which consists of 34 medium density units and 59 high density residential units. See “SOURCES OF PAYMENT FOR THE BONDS — Special Tax — Amended and Restated Rate and Method of Apportionment of Special Tax” and Appendix A hereto for a description of the required Special Tax prepayments or increases to the Special Tax rates should the unit mix and type deviate from those set forth in Exhibit 1 to the Amended Rate and Method.

As described above, the property in Improvement Area No. 1 that is owned by KB Home is included in the SCIP CFD. Table 6 below does not include the proposed SCIP CFD special tax bonds, which are expected to be issued in approximately May 2025. If issued, approximately $5,265,000 principal amount of

* Preliminary, subject to change.

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the SCIP CFD special tax bonds is expected to be allocated to such property owned by KB Home. Assuming the SCIP CFD special tax bonds are issued and based on the appraised values set forth in the Appraisal Report, the aggregate appraised value-to-lien ratio of the property owned by KB Home could be reduced from 5.95-to- 1* to 3.44-to-1* and the appraised value-to-lien ratio of the property in the District could be reduced from 5.82- to-1* to 4.32-to-1* (in each case including the principal amount of the Bonds and the overlapping debt shown in Table 4 above), if property values do not materially increase due to additional development and home sales or other factors.

In the City Reports provided pursuant to the City Continuing Disclosure Certificate, Table 6 will not be updated based on appraised value, but similar information will be provided based on the assessed value for the then current Fiscal Year.

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TABLE 6

CITY OF SACRAMENTO
DELTA SHORES COMMUNITY FACILITIES DISTRICT 2019-01 (IMPROVEMENTS) IMPROVEMENT AREA NO. 1

VALUE-TO-LIEN RATIOS BASED ON OWNERSHIP
Special Tax Category /
Property Owner (1) Village Acreage
Planned
Residential
Units (2)
Appraised
Value (3)
Estimated
Fiscal Year
2025-26
Special Tax
Levy(4)
Fiscal Year
2025-26
Maximum
Special Tax
at Build
Out(5)
% of Fiscal
Year 2025-
26 Special
Tax Levy
Allocation of
City of
Sacramento
CFD No.
2019-01
Bonds (6)
Allocation of
Overlapping
Tax and
Assessment
Debt (7)(8)
Total Debt
Lien
Value-to-
Lien Ratio*
Developed Property(9)
KB Home(8) LDR-1 1.65 13 $ 3,825,367 $ 27,754 $ 30,507 3.6% $ 521,863 $30,366 $ 552,229 6.93 KB Home(8) MDR-1 1.63 19 4,570,841 32,649 35,888 4.2 613,908 33,473 647,380 7.06 Subtotal 3.27 32 $ 8,396,208 $ 60,402 $ 66,395 7.8% $ 1,135,771 $63,838 $ 1,199,609 7.00

Final Subdivision Property
KB Home(8) LDR-1 9.22 68 $ 16,810,633 $ 145,173 $ 159,576 18.9% $ 2,729,746 $158,962 $ 2,888,707 5.82 KB Home (8) MDR-1 7.62 91 17,579,159 156,370 171,885 20.3 2,940,295 160,297 3,100,592 5.67 Developer(10) LDR-2 14.05 80 19,615,000 170,792 187,737 22.2 3,211,466 143,764 3,355,230 5.85 Meritage Homes LDR-2 13.60 77 19,700,000 164,387 180,697 21.3 3,091,036 138,401 3,229,436 6.10 Subtotal 44.50 316 $ 73,704,792 $ 636,723 $ 699,895 82.7% $ 11,972,542 $601,423 $12,573,965 5.86

Undeveloped Property
Developer MDR-2 5.47 34(2) $ 4,050,000 $ 0 $ 64,221 7.6% $ 1,098,572 $45,300 $ 1,143,872 3.54 Developer HDR-1 3.38 59(2) 2,500,000 0 15,966 1.9 273,115 45,300 318,415 7.85 Subtotal 8.85 93 $ 6,550,000 $ 0 $ 80,187 9.5% $ 1,371,687 $90,600 $ 1,462,287 4.48

Totals 56.62 441 $ 88,651,000 $697,125 $ 846,477 100.0% $ 14,480,000 $755,861 $15,235,861 5.82

* Preliminary, subject to change.
(1) Reflects ownership status as of October 15, 2024.
(2) Based on development status as of the September 25, 2024, Date of Value. As of October 15, 2024, KB Home had commenced construction of 50 production homes. With respect to Villages MDR-2 and HDR-1, planned residential units shown are based on Exhibit 1 to the Amended Rate and Method. Development plans for such property have not been finalized and the number of units (and unit type) at buildout may differ from the number of units shown. (3) Based on the Appraisal Report, as of the Date of Value. (4) Does not reflect the application of any capitalized interest on the Bonds. Interest on a portion of the Bonds accruing through December 1, 2026 is being funded from capitalized interest. Reflects the estimated Fiscal Year 2025-26 Special Tax levy on Developed Property and Final Subdivision Property at the Assigned Special Tax rates. (5) Reflects the levy at the Assigned Special Tax rates for Developed Property. (6) Principal amount of the Bonds is allocated based on the estimated Maximum Special Tax levy at buildout. (7) Reflects overlapping general obligation and assessment debt. Allocated based on the share of the appraised value of the Taxable Property in Improvement Area No. 2, as set forth in the Appraisal Report. See Table 4 above.
(8) Also see the paragraphs above this Table 6 and immediately preceding Table 4 for information relating to the proposed SCIP CFD special tax bonds that are proposed to be issued in approximately May 2025. A portion of such special tax bonds, if issued, will be allocable to the property in the District currently owned by KB Home. As a result, the overlapping debt on these parcels could materially increase and the value-to-lien ratios could material decline assuming property values do not increase. (9) As of October 15, 2024, KB Home had 22 homes in escrow. (10) Meritage is under contract to acquire such property in two additional takedowns (27 lots in January 2025 and 53 lots in April 2025).

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

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Delinquency History
Fiscal Year 2025-26 will be the first year of the Special Tax levy. The County’s policy is that any new taxing entity or special assessment district that includes its levy on the County tax roll is qualified to be under the County’s Teeter Plan. As a result, the City expects to receive 100% of the Special Tax levy with respect to Improvement Area No. 1, without regard to the actual amount of collections. See “SECURITY FOR THE BONDS — Teeter Plan” and “SPECIAL RISK FACTORS—Teeter Plan Termination.” Debt Service Coverage
The Bonds have been sized based on the Net Special Tax Revenues from Taxable Property at buildout as set forth in Exhibit 1 to the Amended Rate and Method. There are currently no finalized development plans for the property in Village MDR-2 and Village HDR-1. Table 7 below shows the estimated Special Tax revenues at buildout based on Exhibit 1 to the Amended Rate and Method. See “SOURCES OF PAYMENT FOR THE BONDS — Special Tax — Amended and Restated Rate and Method of Apportionment of Special Tax” and Appendix A hereto for a description of the required Special Tax prepayments or increases to the Special Tax rates should the unit mix and type in Village MDR-2 and Village HDR-1 deviate from those set forth in Exhibit 1 to the Amended Rate and Method.

Table 8 below shows the estimated debt service coverage on the Bonds based on the Net Special Tax Revenues from Taxable Property at buildout and the product mix and unit count in Exhibit 1 to the Amended Rate and Method, assuming there are no Special Tax delinquencies or prepayments.

TABLE 7

CITY OF SACRAMENTO
DELTA SHORES COMMUNITY FACILITIES DISTRICT 2019-01 (IMPROVEMENTS) IMPROVEMENT AREA NO. 1

ESTIMATED SPECIAL TAX BY VILLAGE AT BUILDOUT
Land Use
Class Village
Planned
Residential Units (1)
Fiscal Year 2025-26
Assigned Special Tax
per Unit (2)
Fiscal Year 2025-
26 Estimated
Special Tax
Revenue (2)
1 LDR-1 81 $2,346.71 $ 190,084
1 LDR-2 157 2,346.71 368,434
2 MDR-1 110 1,888.84 207,773
2 MDR-2 34 1,888.84 64,221
3 HDR-1 59 270.61 15,966
Totals 441 $ 846,477

(1) There are currently no finalized development plans for the property in Village MDR-2 and Village HDR-1 and the final product mix in such Villages may differ from the numbers shown in this table. (2) On each July 1, the Assigned Special Tax rates shown (and therefore the Expected Special Tax Revenue) will increase 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.

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TABLE 8

CITY OF SACRAMENTO
DELTA SHORES COMMUNITY FACILITIES DISTRICT 2019-01 (IMPROVEMENTS) IMPROVEMENT AREA NO. 1

ESTIMATED NET DEBT SERVICE COVERAGE FROM

TAXABLE PROPERTY AT BUILDOUT

Fiscal Year
Maximum
Special Tax(1)
Priority
Administrative
Expenses
Net Maximum
Special Tax
Net Debt
Service(2) Coverage
2025-26 $846,477 $20,000 $826,477 $677,125 1.22%
2026-27 863,407 20,600 842,807 764,063 1.10
2027-28 880,675 21,218 859,457 777,750 1.10
2028-29 898,288 21,855 876,434 794,000 1.10
2029-30 916,254 22,510 893,744 809,250 1.10
2030-31 934,579 23,185 911,394 828,500 1.10
2031-32 953,271 23,881 929,390 841,500 1.10
2032-33 972,336 24,597 947,739 858,500 1.10
2033-34 991,783 25,335 966,447 874,250 1.10
2034-35 1,011,618 26,095 985,523 893,750 1.10
2035-36 1,031,851 26,878 1,004,973 911,750 1.10
2036-37 1,052,488 27,685 1,024,803 928,250 1.10
2037-38 1,073,538 28,515 1,045,022 948,250 1.10
2038-39 1,095,008 29,371 1,065,638 966,500 1.10
2039-40 1,116,909 30,252 1,086,657 983,000 1.10
2040-41 1,139,247 31,159 1,108,087 1,002,750 1.10
2041-42 1,162,032 32,094 1,129,938 1,025,500 1.10
2042-43 1,185,272 33,057 1,152,215 1,046,000 1.10
2043-44 1,208,978 34,049 1,174,929 1,064,250 1.10
2044-45 1,233,157 35,070 1,198,087 1,085,250 1.10
2045-46 1,257,820 36,122 1,221,698 1,108,750 1.10
2046-47 1,282,977 37,206 1,245,771 1,129,500 1.10
2047-48 1,308,636 38,322 1,270,314 1,152,500 1.10
2048-49 1,334,809 39,472 1,295,337 1,172,500 1.10
2049-50 1,361,505 40,656 1,320,849 1,199,500 1.10
2050-51 1,388,735 41,876 1,346,860 1,223,000 1.10
2051-52 1,416,510 43,132 1,373,378 1,248,000 1.10
2052-53 1,444,840 44,426 1,400,415 1,269,250 1.10
2053-54 1,473,737 45,759 1,427,979 1,296,750 1.10

(1) Bonds sized based on Net Special Tax Revenues from Taxable Property in Villages LDR-1, LDR-2 and MDR-1 at buildout. (2) Does not reflect the application of any capitalized interest on the Bonds. Interest on a portion of the Bonds accruing through December 1, 2026 is being funded from capitalized interest.

Source: Special Tax Consultant and the Underwriter.

SPECIAL RISK FACTORS
The purchase of the Bonds involves significant risks that are not appropriate investments for certain investors. The following is a discussion of certain risk factors which should be considered, in addition to other matters set forth herein, in evaluating the investment quality of the Bonds. The Bonds have not been rated by a rating agency. This discussion does not purport to be comprehensive or definitive and does not purport to be a complete statement of all factors which may be considered as risks in evaluating the credit quality of the Bonds. The occurrence of one or more of the events discussed below could adversely affect the ability or willingness of property owners in Improvement Area No. 1 to pay their Special Taxes when due. Such failures to pay Special Taxes could result in the inability of the City to make full and punctual payments of debt service

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on the Bonds. In addition, the occurrence of one or more of the events discussed below could adversely affect the value of the property in Improvement Area No. 1. See “—Property Values” and “— Limited Secondary Market.”
Risks of Real Estate Secured Investments Generally
The Bond owners will be subject to the risks generally incident to an investment secured by real estate, including, without limitation, (i) adverse changes in local market conditions, such as changes in the market value of real property in the vicinity of Improvement Area No. 1, the supply of or demand for competitive properties in such area, and the market value of residential property or buildings and/or sites in the event of sale or foreclosure; (ii) changes in real estate tax rates and other operating expenses, governmental rules (including, without limitation, zoning laws and laws relating to endangered species and hazardous materials) and fiscal policies; (iii) natural disasters (including, without limitation, earthquakes, fires and floods), which may result in uninsured losses; and (iv) high rate of inflation, rising interest rates and other economic trends that adversely affects consumers, whether cyclical or resulting from geopolitical events.

No assurance can be given that the Developer, KB Home, Meritage or any future builders or any future homeowners within Improvement Area No. 1 will pay Special Taxes in the future or that they will be able to pay such Special Taxes on a timely basis. See “— Bankruptcy and Foreclosure” below, for a discussion of certain limitations on the City’s ability to pursue judicial proceedings with respect to delinquent parcels.

Concentration of Ownership
Based on the ownership status of the property within Improvement Area No. 1 as of the Date of Value, the Fiscal Year 2025-26 Special Tax levy is expected to be concentrated with KB Home accounting for

47.0%, the Developer for 31.7% and Meritage for 21.3%. See “DEVELOPMENT OF PROPERTY IN IMPROVEMENT AREA NO. 1” above.

Failure of any developers currently owning property within Improvement Area No. 1, any future developers or any of their successor(s), to pay the Special Tax when due could result in a draw on the Bond Reserve Fund, and ultimately a default in payments of the principal of, and interest on, the Bonds, when due.

No assurance can be given that the Developer, KB Home, Meritage or any future merchant builders or their successors, will complete the remaining intended construction and development in Improvement Area No. 1.

See “— Failure to Develop Property.”
Initial home construction has commenced with respect to the planned for-sale products in Improvement Area No. 1. Therefore, the Special Tax will be levied on property which is presently undeveloped. In the event that the Developer, KB Home or Meritage fail to complete the intended construction and development in Improvement Area No. 1, the Special Tax will continue to be levied on undeveloped property. No assurance can be given that the Developer, KB Home, Meritage or any future merchant builders will pay the Special Tax in the future or that they will be able to pay such Special Tax on a timely basis. See “— Bankruptcy and Foreclosure” for a discussion of certain limitations on the City’s ability to pursue judicial proceedings with respect to delinquent parcels.

Failure to Develop Property
Development of property within Improvement Area No. 1 may be subject to unexpected delays, disruptions and changes which may affect the willingness and ability of the Developer, KB Home, Meritage or any other future property owner to pay the Special Tax when due. Land development is subject to comprehensive federal, State and local regulations. Approval is required from various agencies in connection with the layout and design of developments, the nature and extent of improvements, construction activity, land use, zoning, school and health requirements, as well as numerous other matters. There is always the possibility

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that such approvals will not be obtained or, if obtained, will not be obtained on a timely basis. Failure to obtain any such agency approval or satisfy such governmental requirements would adversely affect planned land development. Development of land in Improvement Area No. 1 is also subject to the availability of water.

Finally, development of land is subject to economic considerations.

The major infrastructure serving Improvement Area No. 1 as well as the on-site and in-tract infrastructure planned for the 348 for-sale products is substantially complete. However, no assurance can be given that the remaining proposed development will be partially or fully completed; and for purposes of evaluating the investment quality of the Bonds, prospective purchasers should consider the possibility that such parcels will remain unimproved.

Undeveloped or partially developed land is inherently less valuable than developed land and provides less security to the Holders should it be necessary for the City to foreclose on the property due to the nonpayment of the Special Tax. The failure to complete development in Improvement Area No. 1 as planned, or substantial delays in the completion of the development due to litigation or other causes may reduce the value of the property within Improvement Area No. 1 and increase the length of time during which the Special Tax will be payable from undeveloped property, and may affect the willingness and ability of the owners of property within Improvement Area No. 1 to pay the Special Tax when due.

There can be no assurance that land development operations within Improvement Area No. 1 will not be adversely affected by future deterioration of the real estate market and economic conditions or future local, State and federal governmental policies relating to real estate development, an increase in mortgage interest rates, the income tax treatment of real property ownership, the national economy, or other economic trends that adversely affects consumers, whether cyclical or resulting from geopolitical events. A slowdown of the development process and the absorption rate could adversely affect land values and reduce the ability or desire of the property owners to pay the Special Tax. In that event, there could be a default in the payment of principal of, and interest on, the Bonds when due.

Holders should assume that any event that significantly impacts the ability to develop land in Improvement Area No. 1 would cause the property values within Improvement Area No. 1 to decrease substantially from those estimated by the Appraiser as of the Date of Value and could affect the willingness and ability of the owners of Taxable Property within Improvement Area No. 1 to pay the Special Tax when due.

Based on current development status, the City expects to levy the Special Tax on Final Subdivision Property and Undeveloped Property in Fiscal Year 2025-26. The City will levy the Special Tax on property classified as Final Subdivision Property, and if necessary, Undeveloped Property, in future fiscal years until the Special Tax levied on Developed Property is sufficient to fund the Special Tax Requirement. Property without vertical improvements is less valuable per unit of area than property with completed vertical improvements, especially if there are no plans to develop such land or if there are severe restrictions on the development of such land. Undeveloped property also provides less security to the Holders should it be necessary for the City to foreclose on such property due to the nonpayment of the Special Tax. Furthermore, an inability to develop the land within Improvement Area No. 1 as currently proposed will make the Holders dependent upon timely payment of the Special Tax levied on undeveloped property. A slowdown or stoppage in the continued development of Improvement Area No. 1 could reduce the willingness and ability of the Developer KB Home and/or Meritage to make Special Tax payments on property that they own and could greatly reduce the value of such property in the event it has to be foreclosed upon. See “—Property Values.” Parity Taxes and Special Assessments
Property within Improvement Area No. 1 is subject to taxes and assessments imposed by other public agencies also having jurisdiction over the land within Improvement Area No. 1. See “IMPROVEMENT AREA NO. 1 — Direct and Overlapping Indebtedness.”

52 4880-8051-7687v9/022536-0033
The Special Tax and any penalties thereon will constitute a lien against the lots and parcels of land on which they will be annually imposed until they are paid. Such lien is on parity with all special taxes and special assessments levied by other agencies and is co-equal to and independent of the lien for general property taxes regardless of when they are imposed upon the same property. The Special Tax has priority over all existing and future private liens imposed on the property except, possibly, for liens or security interests held by the Federal Deposit Insurance Corporation. See “— Bankruptcy and Foreclosure.” See “IMPROVEMENT AREA NO. 1—Direct and Overlapping Indebtedness” for a discussion of the SCIP CFD which CSCDA has formed and covers property in Improvement Area No. 1 currently owned by KB Home.

The City has no control over the ability of other entities and districts to issue indebtedness secured by special taxes, ad valorem property taxes or assessments payable from all or a portion of the property within Improvement Area No. 1. In addition, the landowners within Improvement Area No. 1 may, without the consent or knowledge of the City, petition other public agencies to issue public indebtedness secured by special taxes and ad valorem property taxes or assessments. Any such special taxes or assessments may have a lien on such property on a parity with the Special Tax and could reduce the estimated value-to-lien ratios for the property within Improvement Area No. 1 described herein. See “SOURCES OF PAYMENT FOR THE BONDS” and “IMPROVEMENT AREA NO. 1 — Direct and Overlapping Indebtedness” and “—Value to Lien Ratios.”
Limited Obligations
The Bonds are not payable from the general funds of the City. Except with respect to the Net Special Tax Revenues, neither the faith and credit nor the taxing power of the City is pledged for the payment of the Bonds or related interest, and, except as provided in the Indenture, no owner of the Bonds may compel the exercise of any taxing power by the City or force the forfeiture of any City property. The principal of, premium, if any, and interest on the Bonds are not a debt of the City or a legal or equitable pledge, charge, lien or encumbrance upon any of the City’s property or upon any of the City’s income, receipts or revenues, except the Net Special Tax Revenues and other amounts pledged under the Indenture.

Insufficiency of Special Tax
Under the Amended Rate and Method, the annual amount of Special Tax to be levied on Taxable Property in Improvement Area No. 1 will generally be based on Land Use Class to which a parcel of Taxable Property is assigned. See APPENDIX A — “AMENDED AND RESTATED RATE AND METHOD OF APPORTIONMENT OF SPECIAL TAX” and “SOURCES OF PAYMENT FOR THE BONDS — Special Tax — Amended and Restated Rate and Method of Apportionment of Special Tax.” In order to pay debt service on the Bonds, it is necessary that the Special Tax be paid in a timely manner. The City will establish and fund upon the issuance of the Bonds a Bond Reserve Fund in an amount, initially, equal to the Required Bond Reserve to pay debt service on the Bonds to the extent other funds are not available. See “SOURCES OF PAYMENT FOR THE BONDS — Bond Reserve Fund.” The City will covenant in the Indenture to maintain in the Bond Reserve Fund an amount equal to the Required Bond Reserve, subject, however, to the limitation that the City may not levy the Special Tax in Improvement Area No. 1 in any fiscal year at a rate in excess of the maximum amounts permitted under the Amended Rate and Method. In addition, pursuant to the Act, under no circumstances will the Special Tax levied in any Fiscal Year against property within Improvement Area No. 1 for which an occupancy permit for private residential use has been issued be increased as a consequence of delinquency or default by the owner of any other property within Improvement Area No. 1 by more than 10% above the amount that would have been levied in such Fiscal Year had there never been any such delinquencies or defaults. As a result, if a significant number of delinquencies occur, the City could be unable to replenish the Bond Reserve Fund to the Required

53 4880-8051-7687v9/022536-0033
Bond Reserve due to the limitations on the maximum Special Tax. If such defaults were to continue in successive years, the Bond Reserve Fund could be depleted and a default on the Bonds could occur.

The City will covenant in the Indenture that, under certain conditions, it will institute foreclosure proceedings to sell any property with a delinquent Special Tax in order to obtain funds to pay debt service on the Bonds. If foreclosure proceedings were ever instituted, any mortgage or deed of trust holder could, but would not be required to, advance the amount of the delinquent Special Tax to protect its security interest. See “SOURCES OF PAYMENT FOR THE BONDS — Special Tax —Foreclosure Covenant” for provisions which apply in the event of such foreclosure and which the City is required to follow in the event of delinquencies in the payment of the Special Tax.

In the event that sales or foreclosures of property are instituted, there could be a delay in payments to owners of the Bonds (if the Bond Reserve Fund has been depleted) pending such sales or the prosecution of such foreclosure proceedings and receipt by the City of the proceeds of sale. The City may adjust the future Special Tax levied on Taxable Property in Improvement Area No. 1, subject to the limitation on the maximum Special Tax, to provide an amount required to pay interest on, principal of, and redemption premiums, if any, on the Bonds, and the amount, if any, necessary to replenish the Bond Reserve Fund to an amount equal to the Required Bond Reserve and to pay all current expenses. There is, however, no assurance that the total amount of the Special Tax that could be levied and collected against Taxable Property in Improvement Area No. 1 will be at all times sufficient to pay the amounts required to be paid by the Indenture, even if the Special Tax is levied at the maximum Special Tax rates. See “—Bankruptcy and Foreclosure” for a discussion of potential delays in foreclosure actions.

The Amended Rate and Method governing the levy of the Special Tax provides that no Special Tax shall be levied on up to 20.10 acres of Non-Residential Property, Open Space Property, Property Owner Association Property, and Public Property (as such terms are defined in the Amended Rate and Method). 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 APPENDIX A — “AMENDED AND RESTATED RATE AND METHOD OF APPORTIONMENT OF SPECIAL TAX.” If for any reason property within Improvement Area No. 1 becomes exempt from taxation by reason of ownership by a non-taxable entity such as the federal government or another public agency, subject to the limitations of the maximum authorized rates, the Special Tax will be reallocated to the remaining taxable properties within Improvement Area No. 1.

This would result in the owners of such property paying a greater amount of the Special Tax and could have an adverse impact upon the ability and willingness of the owners of such property to pay the Special Tax when due.

The Act provides that, if any property within Improvement Area No. 1 not otherwise exempt from the Special Tax is acquired by a public entity through a negotiated transaction, or by gift or devise, the Special Tax will continue to be levied on and enforceable against the public entity that acquired the property. In addition, the Act provides that, if property subject to the Special Tax is acquired by a public entity through eminent domain proceedings, the obligation to pay the Special Tax with respect to that property is to be treated as if it were a special assessment and be paid from the eminent domain award. The constitutionality and operation of these provisions of the Act have not been tested in the courts. Due to problems of collecting taxes from public agencies, if a substantial portion of land within Improvement Area No. 1 was to become owned by public agencies, collection of the Special Tax might become more difficult and could result in collections of the Special Tax which might not be sufficient to pay principal of and interest on the Bonds when due and a default could occur with respect to the payment of such principal and interest.

Impact of Economic Conditions on the Development in the District Certain events and factors which negatively affect the regional, State and national economies could have an adverse effect on the pace at which the current or future developers in Improvement Area No. 1 can complete the remaining infrastructure and future homes, and demand by, and the ability of individuals to

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purchase homes within Improvement Area No. 1. Such events and factors could include rising inflation and interest rates, persistent supply chain issues, global market instability caused by geopolitical events. Any adverse impact of the foregoing and other economic factors on the projects in Improvement Area No. 1 and the real estate market in general cannot be predicted.

Increasing Mortgage Interest Rates
Increases in mortgage interest rates could have a negative impact on the estimated absorption rates of the planned for-sale residential units in Improvement Area No. 1 described herein. With respect to entry-level households (which likely includes the market for the projects in Improvement Area No. 1), increased mortgage interest rates may adversely impact the affordability of homes and may increase mortgage payment levels for owning a lower-priced home relative to renting a residence, thereby making purchasing less attractive. With respect to move-up households, higher mortgage interest rates may impact the desire of current homeowners to move from their present home due to the fact that their present home likely has a relatively low mortgage interest rate. In addition, in such instances, a new home would likely have a higher interest rate on a new mortgage loan as well as a higher purchase price and property taxes. Such considerations may decrease the desire for move-up households to purchase a new home. The foregoing factors could reduce demand for and/or the ability to achieve the sales prices of the planned for-sale homes within Improvement Area No. 1 as described herein.

Teeter Plan Termination
The County has implemented its Teeter Plan as an alternate procedure for the distribution of certain property tax and assessment levies on the secured roll. Pursuant to its Teeter Plan, the County has elected to provide local agencies and taxing areas with full tax and assessment levies instead of actual tax and assessment collections. In return, the County is entitled to retain all delinquent tax and assessment payments, penalties and interest.

However, the County is entitled, and under certain circumstances could be required, to terminate its Teeter Plan with respect to all or part of the local agencies and taxing areas covered thereby. A termination of the Teeter Plan with respect to Improvement Area No. 1 would eliminate such protection from delinquencies in the payment of the Special Tax. See “SOURCES OF PAYMENT FOR THE BONDS — Teeter Plan.” No Representation as to Merchant Builders
No representation is made as to the experience, abilities or financial resources of KB Home, Meritage or of any other purchaser or potential purchaser of property in Improvement Area No. 1 or the likelihood that such merchant builders, purchasers or potential purchasers will be successful in developing such purchased properties within Improvement Area No. 1 beyond the current stage of development. See “DEVELOPMENT OF PROPERTY IN IMPROVEMENT AREA NO. 1.” The description of expected development by the Developer, KB Home and Meritage in this Official Statement is based on information provided to the City by such entities and the Appraiser. In making an investment decision, purchasers of the Bonds should not assume that any current or future property owners within Improvement Area No. 1 will develop such properties beyond the current stage of development.

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Natural Disasters
The market value and habitability of the property within Improvement Area No. 1 can be adversely affected by a variety of factors that cause damage to public and private improvements. Those additional factors include, without limitation, geologic conditions (such as earthquakes), topographic conditions (such as earth movements) and climatic conditions (such as droughts, fire hazard, and floods). Such events may become more frequent or extreme as a result of climate change. Certain commentators have observed that the increased intensity of recent climatic and weather events which have occurred in various parts of the world are likely caused by climate change. There can be no assurance that current methods will be successful in protecting the property in the District from such events. See “IMPROVEMENT AREA NO. 1—Flood Hazard.”
With respect to geologic conditions, building codes require that some of these factors be taken into account in the design of private improvements of the parcels, and the City has adopted the Uniform Building Code standards with regard to seismic standards. Design criteria are established upon the basis of a variety of considerations and may change, leaving previously designed improvements unaffected by more stringent subsequently established criteria. In general, design criteria reflect a balance at the time of establishment between the present costs of protection and the future costs of lack of protection, based in part upon a present perception of the probability that the condition will occur and the seriousness of the condition should it occur.

Sacramento City CouncilNovember 19, 2024

Sacramento City Council
November 19, 2024