City of Sacramento
City Council - 5PM Report
915 I Street Sacramento, CA 95814
www.cityofsacramento.org
File ID: 2024-01922 12/3/2024 Discussion Item 33.
Agreements Pertaining to the City of Sacramento Greenbriar Community Facilities District No. 2018-03 (Improvements) Improvement Area No. 2 Special Tax Bonds, Series 2024 (Two-Thirds Vote Required Waiving the 10-day Posting Requirement) and Authorize the Issuance of the City of Sacramento Greenbriar Community Facilities District No. 2018-03 (Improvements) Improvement Area No. 2 Special Tax Bonds, Series 2024 and Related Actions File ID: 2024-01922
Location: District 1, Represented by Councilmember Kaplan 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 Greenbriar Community Facilities District No. 2018-03 (Improvements) Improvement Area No. 2 Special Tax Bonds, Series 2024; and 2) adopt a Resolution authorizing the following: a) the issuance of the City of Sacramento Greenbriar Community Facilities District No. 2018-03 (Improvements) Improvement Area No. 2 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, a Continuing Disclosure Certificate and an amendment to Jones Hall’s Agreement for Bond-Counsel Services; 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-Amendment No. 1 to Agreement for Bond-Counsel Services 9-Appraisal Report prepared by Smith & Associates, Inc.
File ID: 2024-01922 12/3/2024 Discussion Item 33.
10- Appraisal Review Report prepared by BBG, Inc.
Description/Analysis
Issue Detail: Passing a Motion will waive the 10-day posting requirements of City Code section
4.04.020.C for the agreements pertaining to the City of Sacramento Greenbriar Community Facilities District No. 2018-03 (Improvements) Improvement Area No. 2 Special Tax Bonds, Series 2024 or similar designation (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 $40 million, and the proceeds will be used for the following purposes:
§ To finance the costs of acquisition and construction of certain authorized facilities including, but not limited to water, sewer, and storm drain improvements, roadways and traffic improvements, landscaping and park improvements, and school facilities, 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. 2 (IA 2) of the City of Sacramento Greenbriar Community Facilities District No. 2018-03 (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 2, 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.
File ID: 2024-01922 12/3/2024 Discussion Item 33.
Environmental Considerations:
California Environmental Quality Act (CEQA): The authorization to issue the Bonds, is a governmental fiscal activity that does not involve the approval of any physical development or activity that would have the potential for causing a significant effect on the environment. Approval is not a project requiring review under the CEQA. CEQA Guidelines sections 15378(b)(4) and 15060(c)(3).
The City prepared an environmental impact report (EIR) that evaluated the environmental effects of the Greenbriar Development Project (M05-046/P05-069). The EIR was certified by the City Council on January 29, 2008 (Resolution No. 2008-053). The City Council later certified the EIR and an addendum for modification to the previously approved project and next stage entitlements for the Greenbriar Development Project (P11-093) on May 30, 2017 (Resolution 2017-0207). 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 the EIR as required by California Environmental Quality Act (CEQA).
Sustainability: Not applicable.
Commission/Committee Action: Not applicable.
Rationale for Recommendation: The Bond Purchase Contract pertaining to the Bonds between the City of Sacramento and Piper Sandler & Co., the underwriter of the Bonds, 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, including authorized facilities to be financed by development-related impact fees payable in connection with the project to the City and other local agencies, thereby assisting the growth and development of the City generally and specifically within IA 2. Bond proceeds will be administered in accordance with the Acquisition and Shortfall Agreement (City Agreement No. 2019-1393) and Agreement to Reimburse Fees (City Agreement No. 2019-1394) inclusive of any supplemental agreements from Bond and Tax Proceeds between the City and The Greenbriar Project Owner, LLC (the Developer) (described herein), as well as various joint community facilities agreements between the City and other local agencies that may receive proceeds of the Bonds (described herein).
File ID: 2024-01922 12/3/2024 Discussion Item 33.
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 special tax levied on taxable property within IA 2, will have any obligation to pay or ensure the full and timely repayment of debt service related to the Bonds.
Interest on the Bonds will be exempt from taxation. Consistent with the Internal Revenue Service regulations for tax-exempt bonds, the weighted average life of the Bonds will not exceed 120% of the average reasonably expected economic life of the authorized facilities funded by the Bonds.
The issuance of the Bonds represents the first series of special tax bonds issued pursuant to the authorization previously established for IA 2 in the amount of $67 million. Additional bonds are anticipated to be issued on a parity basis in the future as development progresses, subject to the requirements of the Master Indenture.
Terms of the Sale
The Bonds will be issued in an amount not to exceed $40 million to finance the acquisition and construction of certain authorized 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 8, 2024), and the underwriter’s discount may not exceed 1.15% of the principal amount of the Bonds.
Good faith estimates of certain financial terms of the Bonds, as required by Government Code section 5852.1, are provided in the tables below.
(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 8, 2024.
Source: Piper Sandler & Co., the Underwriter of the Bonds
File ID: 2024-01922 12/3/2024 Discussion Item 33.
Estimated Sources and Uses of Funds
Par Amount of Bonds $37,020,000.00
Plus/Less Net Original Issue Premium / Discount969,062.15 Total Sources $37,989,062.15
Use of Funds:
Acquisition and Construction Fund $30,656,955.95
Debt Service Reserve Fund 3,234,531.20
Villages with a Final Map - Capitalized Interest through March 1, 20261,355,745.00 Villages 4, 8, 12, 1B and 14B - Capitalized Interest through December 1, 2026
1,364,610.00
Costs of Issuance(1) 1,377,220.00
Total Uses $37,989,062.15
(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 8, 2024.
Source: Piper Sandler & Co., the Underwriter of the Bonds Value to Lien
Under the Act and 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 2 of the CFD (inclusive of the Bonds and certain overlapping debt) is 3.63:1, as determined by the appraiser, Smith and Associates, Inc.
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 2, net of priority administrative expenses, and is solely the responsibility of the taxable property within IA 2. A standard debt service reserve fund will also be established for the Bonds.
Disclosure Documents for the Bonds
The Bonds will be marketed to potential investors using the Preliminary Official Statement, in substantially the form on file with the City Council. The Preliminary Official Statement is the primary offering document for the Bonds and under applicable federal securities laws, must be accurate and not omit material facts necessary for a potential investor to make an informed investment decision.
Approval of the attached resolution will approve the Preliminary Official Statement in substantially the form on file with the City Council, authorize the Treasurer to approve such changes to the Preliminary Official Statement that are in the best interests of the City, and authorize the Treasurer to execute a certificate to the effect that the Preliminary Official Statement has been “deemed final” as of the date it is released to potential investors.
The federal securities laws also require the underwriter of the Bonds to ensure that the City will provide annual updates of financial and operating data through the Municipal Securities Rulemaking
File ID: 2024-01922 12/3/2024 Discussion Item 33.
Board’s Electronic Municipal Market Access system, and notices of certain significant events (e.g., rating change notices, unscheduled draws on reserve funds, change in trustee, etc.). The Continuing Disclosure Certificate, the form of which is attached to the Preliminary Official Statement as an appendix, will be executed by the City to assist the Underwriter in meeting this requirement.
Next Steps
Assuming City Council approval of the transaction, the Preliminary Official Statement for the Bonds will be posted to potential investors shortly thereafter. Subject to market conditions, pricing of the Bonds is scheduled for December 11, 2024, with closing/funding to occur on December 19, 2024.
Local Business Enterprise (LBE): Not applicable.
RESOLUTION NO. _____
Adopted by the Sacramento City Council
December 3, 2024
AUTHORIZING (1) THE ISSUANCE OF THE FIRST SERIES OF CITY OF SACRAMENTO GREENBRIAR COMMUNITY FACILITIES DISTRICT NO. 2018-03 (IMPROVEMENTS) IMPROVEMENT AREA NO. 2 SPECIAL TAX BONDS; (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; AND (3) CERTAIN OTHER ACTIONS IN CONNECTION WITH THE BONDS
BACKGROUND:
A. The Sacramento City Council (the “City Council”) has undertaken proceedings pursuant to 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”), to form the City of Sacramento Greenbriar Community Facilities District No. 2018-03 (Improvements) (the “CFD”), to designate two improvement areas therein, including Improvement Area No. 2 of the CFD (“Improvement Area No. 2”), and to undertake change proceedings and annexation proceedings related to Improvement Area No. 2.
B. Pursuant to such proceedings, the City Council is authorized to incur bonded indebtedness for Improvement Area No. 2, secured by the special taxes levied on taxable property within Improvement Area No. 2, in the maximum principal amount of $67,000,000 (“Authorization”).
C. The City Council has determined to authorize the first series of special tax bonds under the Authorization via the issuance of its “City of Sacramento Greenbriar Community Facilities District No. 2018-03 (Improvements) Improvement Area No. 2 Special Tax Bonds, Series 2024” or similar designation (the “Bonds”).
D. The City of Sacramento (the “City”) desires to sell the Bonds to Piper Sandler & Co., as underwriter (the “Underwriter”), and the City Council has determined that a negotiated sale of the Bonds to the Underwriter under the Act will result in a lower overall cost to the City.
E. In furtherance of the City’s issuance of the Bonds, forms of the following documents have been filed with the Sacramento City Clerk (the “Clerk”) for the City Council’s consideration and approval:
A Master Indenture between the City and U.S. Bank Trust Company, National Association, as trustee (the “Trustee”), providing for the issuance of special- 2 tax bonds for Improvement Area No. 2 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 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 Bonds to the Underwriter and the Underwriter agrees to purchase the Bonds, subject to the conditions set forth therein (the “Bond Purchase Contract”).
A preliminary form of an Official Statement describing the CFD, Improvement Area No. 2 and the Bonds (the “Preliminary Official Statement”). A Continuing Disclosure Certificate obligating the City to provide certain ongoing disclosure with respect to the Bonds (the “Continuing Disclosure Certificate”).
F. The staff report accompanying this resolution contains the information that Government Code section 5852.1 requires the City Council to obtain and disclose in a public meeting before authorizing the issuance of the Bonds.
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 City Council finds that the statements in the Background are true.
Section 2. The City Council hereby authorizes and approves the issuance of the Bonds in accordance with the Indenture in an aggregate principal amount not to exceed $40,000,000.
Section 3. The City Council hereby determines that the value of the real property within Improvement Area No. 2 that will be subject to the levy of a special tax under the Act to pay debt service on the Bonds (based upon an appraisal 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 Bonds, plus the principal amount of all other bonds outstanding that are secured by a special tax levied 3 under the Act on property within Improvement Area No. 2, plus the principal amount of all other bonds outstanding that are secured by special assessments levied on property within Improvement Area No. 2. 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 that officer’s designee (the “Treasurer”) to execute and deliver the Master Indenture 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 that officer’s 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, terms of redemption and number of Bonds, and other terms of the 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 Bonds to the Underwriter in accordance with the Bond Purchase Contract upon payment by the Underwriter of the purchase price of the Bonds (the “Instructions”).
(c) The 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 Bonds must be in the form set forth in, and otherwise be in accordance with, the Indenture.
Section 6. The City Council hereby approves the Bond Purchase Contract and authorizes the Treasurer to execute and deliver the Bond Purchase Contract 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 Bonds may not exceed 6.00% and the Underwriter’s discount may not exceed 1.15% of the principal amount of the Bonds.
4 Section 7. The City Council hereby approves the Preliminary Official Statement and authorizes the Underwriter to distribute the Preliminary Official Statement. (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 CFD, Improvement Area No. 2 and the 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 the Continuing Disclosure Certificate 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 City Council hereby authorizes the City Attorney to execute Amendment No. 1 to Agreement for Bond-Counsel Services between the City and Jones Hall, A Professional Law Corporation, as bond counsel, increasing the total compensation payable thereunder.
Section 10. The Mayor, the Treasurer, the City Attorney, the Clerk, and any and all other officers of the City are hereby authorized and directed, on the City’s behalf, to do any and all things and take any and all actions, that they, or any of them, consider necessary or advisable to implement the issuance, sale, and delivery of the Bonds.
Whenever in this resolution any officer of the City is directed to execute any document or take any other action, that execution or action may be taken on behalf of that officer by any person he or she designates to act on his or her behalf if the officer is absent or unavailable. All actions previously taken by those officers with respect to the Bonds are hereby ratified, confirmed, and approved.
Section 11. This resolution takes effect when adopted.
Jones Hall Draft of Nov. 13, 2024
MASTER INDENTURE
between the
CITY OF SACRAMENTO
and
U.S. BANK TRUST COMPANY, NATIONAL ASSOCIATION,
as Trustee
Relating to the
CITY OF SACRAMENTO
GREENBRIAR COMMUNITY FACILITIES DISTRICT NO. 2018-03 (IMPROVEMENTS) IMPROVEMENT AREA NO. 2
SPECIAL TAX BONDS
Dated as of December 1, 2024
MASTER INDENTURE
This Master Indenture (the “Master Indenture”), dated as of December 1, 2024, between the City of Sacramento, a California charter city and municipal corporation (the “City”), and U.S. Bank Trust Company, 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, the Sacramento City Council (the “City Council”) has undertaken proceedings pursuant to 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”), to form the City of Sacramento Greenbriar Community Facilities District No. 2018-03 (Improvements) (the “CFD”), to designate two improvement areas therein, including Improvement Area No. 2 of the CFD (“Improvement Area No. 2”), and to undertake change proceedings and annexation proceedings related to Improvement Area No. 2; and
WHEREAS, pursuant to such proceedings, the City Council is authorized to incur bonded indebtedness for Improvement Area No. 2, secured by the special taxes levied on taxable property within Improvement Area No. 2, in the maximum principal amount of $67,000,000 (“Authorization”); and
WHEREAS, the City Council has determined to authorize the issuance of City of Sacramento Greenbriar Community Facilities District No. 2018-03 (Improvements) Improvement Area No. 2 Special Tax Bonds (the “Bonds”) in series pursuant hereto and pursuant to one or more Supplemental Indentures and to secure the Bonds in an amount not to exceed the Authorization 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 the 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, THE 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 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
2 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 Greenbriar Community Facilities District No. 2018-03 (Improvements) Improvement Area No. 2, 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.
Authorization
“Authorization” means the maximum principal amount of bonded indebtedness authorized for Improvement Area No. 2.
Bond Redemption Fund
“Bond Redemption Fund” means the City of Sacramento Greenbriar Community Facilities District No. 2018-03 (Improvements) Improvement Area No. 2, Special Tax Bonds Bond Redemption Fund established pursuant to Section 5.02 (to be maintained by the Trustee).
Bond Reserve Fund
“Bond Reserve Fund” means the City of Sacramento Greenbriar Community Facilities District No. 2018-03 (Improvements) Improvement Area No. 2, Special Tax Bonds Bond Reserve Fund established pursuant to Section 5.02 (to be maintained by the Trustee).
3 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 Greenbriar Community Facilities District No. 2018-03 (Improvements) Improvement Area No. 2 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 charter city and 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.
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
4 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 Greenbriar Community Facilities District No. 2018-03 (Improvements), 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 Greenbriar Community Facilities District No. 2018-03 (Improvements) Improvement Area No. 2, 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 or the Community Facilities District proceedings under the Act, 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 Greenbriar Community Facilities District No. 2018-03 (Improvements) Improvement Area No. 2, Special Tax Bonds Costs of Issuance Fund established pursuant to Section 2.05 (to be maintained by the Trustee).
Debt Service
“Debt Service” means, for any Bond Year, the sum of (1) the interest payable during such Bond Year on all Outstanding Bonds, assuming that all 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, 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.
5 Expense Fund
“Expense Fund” means the City of Sacramento Greenbriar Community Facilities District No. 2018-03 (Improvements) Improvement Area No. 2, Special Tax Bonds Expense Fund established pursuant to Section 5.02 (to be maintained by the Treasurer).
Expenses
“Expenses” means all expenses paid or incurred by the City for the cost of acquiring, planning, designing, inspecting or constructing the Facilities or the facilities to be financed with the Fees, including the cost of environmental evaluations, and all costs associated with the determination of the amount of the Special Tax, the levy and collection of the Special Tax and the payment of the Special Tax (including, but not limited to, the costs and expenses associated with any foreclosure-related actions or proceedings), 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 and the facilities to be financed with the Fees; all as determined in accordance with Generally Accepted Accounting Principles.
Facilities
“Facilities” means the public facilities authorized to be acquired or constructed for the Community Facilities District under the Act.
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, as and 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 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, 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 are free from all third-party claims.
Fees
“Fees” means the governmental fees authorized to be financed for or through the Community Facilities District under the Act.
6 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 No. 2
“Improvement Area No. 2” means Improvement Area No. 2 of the Community Facilities District.
Indenture
“Indenture” means the Master Indenture and all Supplemental Indentures.
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; (2) does not have a substantial financial interest, direct or indirect, in the operations of the City; and
7 (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 established by the City Council).
Lien
“Lien” means the sum of (1) the aggregate principal amount of all Bonds then Outstanding, plus (2) the aggregate principal amount of the additional Series of Bonds to be issued, plus (3) the aggregate principal amount of any bonds or other debt payable from a special assessment which is a lien against Taxable Property in Improvement Area No. 2, plus (4) a portion of the aggregate principal amount of any bonds or other debt (other than the Bonds) that are secured by special taxes to be levied on Taxable Property in Improvement Area No. 2 (the “Other Mello- Roos Debt”), which portion is equal to the aggregate principal amount of the Other Mello-Roos Debt multiplied by a fraction: (a) the numerator of which is the maximum amount of special taxes which could be levied on Taxable Property in Improvement Area No. 2 for the Other Mello-Roos Debt, and (b) the denominator of which is the total maximum amount of special taxes which could be levied for the Other Mello-Roos Debt, in each case, based upon information from the most recent available Fiscal Year.
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 December 1, 2024, between the City and the Trustee entered into under and pursuant to the Act.
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.
8 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.
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 San Francisco, 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 St. Paul, Minnesota, or such other office designated by the Trustee from time to time as its Principal Corporate Trust Office.
9 Priority Administrative Expenses
“Priority Administrative Expenses” means (i) for Fiscal Year 2025-26, $20,000, and (ii) for each subsequent Fiscal Year, an amount equal to the preceding Fiscal Year’s Priority Administrative Expenses plus 3% of such amount.
Rebate Fund
“Rebate Fund” means the City of Sacramento Greenbriar Community Facilities District No. 2018-03 (Improvements) Improvement Area No. 2, Special Tax Bonds Rebate Fund established pursuant to Section 6.03 (to be maintained by the Treasurer).
Required Bond Reserve
“Required Bond Reserve” means, as of any date of calculation, with respect to any Series of Bonds (unless otherwise specified in a Supplemental Indenture, including to create a single parity reserve fund for multiple Series of Bonds), the least of (a) 10% of the principal amount of the applicable Series of Bonds, (b) Maximum Annual Debt Service with respect to the applicable Series of Bonds, and (c) 125% of the average annual Debt Service with respect to the applicable Series of Bonds, all as determined by the City under the Code and specified in writing to the Trustee; provided, that
(1) if a parity reserve fund for multiple Series of Bonds is established, references to the applicable Series of Bonds shall mean all Bonds covered by such parity reserve fund;
(2) such requirement (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 “AA” or higher assigned by Fitch or “Aa” or higher assigned by Moody’s or “AA” or higher assigned by S&P, in each case without regard to any numerical modifier or plus or minus sign;
(3) the amount of the Required Bond Reserve shall not increase at any time except upon the issuance of a new Series of Bonds; and
(4) with respect to the issuance of any issue of Bonds, if the amount on deposit in the Bond Reserve Fund or other applicable reserve fund for a Series of Bonds 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%.
S&P
“S&P” means S&P Global Ratings, a business unit of Standard & Poor’s Financial Services LLC, a corporation duly organized and existing under and by virtue of the laws of the
10 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 “S&P” shall be deemed to refer to any other nationally recognized securities rating agency selected by the City.
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” means the City of Sacramento Greenbriar Community Facilities District No. 2018-03 (Improvements) Improvement Area No. 2 Special Tax Bonds, Series 2024.
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 Improvement Area No. 2 in accordance with the Special Tax Formula under and pursuant to the Act.
Special Tax Formula
“Special Tax Formula” means the Amended and Restated Rate and Method of Apportionment of Special Tax for Improvement Area No. 2, approved at the special election of qualified electors held in Improvement Area No. 2 on December 1, 2021, and as may be further amended or supplemented in accordance with the Act.
Special Tax Fund
“Special Tax Fund” means the City of Sacramento Greenbriar Community Facilities District No. 2018-03 (Improvements) Improvement Area No. 2, Special Tax Bonds Special Tax Fund established pursuant to Section 5.01 (to be maintained by the Treasurer).
11 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(s) 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 Improvement Area No. 2 taxable under the Act in accordance with the proceedings for the authorization of the issuance of the Bonds and the levy and collection of the Special Tax.
Treasurer
“Treasurer” means the City Treasurer of the City.
Trustee
“Trustee” means U.S. Bank Trust Company, 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 Principal Corporate Trust Office, and its successors or assigns, or any other bank or trust company having a corporate trust office in San Francisco, California 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, the 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
12 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 Greenbriar Community Facilities District No. 2018-03 (Improvements) Improvement Area No. 2 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 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, finance the Fees, refund any Outstanding Bonds, make deposits to the Bond Reserve Fund or other applicable reserve fund for a Series of Bonds or otherwise provide for the satisfaction of the Required Bond Reserve for each applicable Series of Bonds, 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 the financing of any Fees, or any contracts made by the City in connection therewith, or the
13 failure to complete the acquisition and construction of any Facilities or the financing of any Fees.
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 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 or a separate reserve fund for the applicable Series of Bonds;
14 provided, that the Required Bond Reserve for each Series of Bonds shall be satisfied at the time that such Series becomes Outstanding;
(8) The amounts, 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 in the Acquisition and Construction 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; and
(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 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:
15 (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 is hereby established in the treasury of the City a fund to be known as the 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; for the payment or reimbursement of Fees; or for the repayment of funds advanced to or for Improvement Area No. 2; provided, that any money remaining in the separate account in the Acquisition and Construction Fund created in connection with the issuance of such Series (after the completion of the payment of the costs of the acquisition and construction of the Facilities and the payment or reimbursement of Fees 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 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 writing by the City in the manner provided by law for payment of Costs of Issuance; provided, that any money remaining in the separate account in the Costs of Issuance Fund created in connection with the issuance of such Series (after the completion of the payment of the Costs of Issuance relating to such Series as specified in writing by the City to the Trustee no later than 120 days after the date of issuance of the applicable Series of Bonds) shall be withdrawn by the Trustee from the Costs of Issuance Fund and (i) with respect to the Series 2024 Bonds, transferred to the City for deposit in the Acquisition and Construction Fund and (ii) with respect to any other Series, deposited as specified in the
16 applicable Supplemental Indenture, and following such transfer or deposit, 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.
(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 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 Net Special Tax Revenues and the other funds pledged herein for such
17 payment, and that the City is not obligated to pay the Bonds except from 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 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 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
18 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 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 is appointed as
19 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 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
20 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. 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.
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. 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
21 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.
Notwithstanding anything to the contrary contained in the Indenture, 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.
Notwithstanding anything to the contrary contained in the Indenture, 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 two (2) 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.
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.
22 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 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, the Net Special Tax Revenues and any amounts pledged to the Bonds held in the Special Tax Fund or the Bond Redemption Fund. In addition, the Series 2024 Bonds shall be secured by a pledge of amounts in the Bond Reserve Fund. Each Supplemental Indenture providing for the issuance of any other Series of Bonds shall specify whether such Series of Bonds shall be secured by a pledge of amounts in the Bond Reserve Fund or a separate reserve fund established for such Series of Bonds. 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 “Remaining 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 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) Priority Administrative Expenses to Expense Fund (maintained by Treasurer). 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.
23 (2) 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, subject to the terms of the Supplemental Indenture providing for the issuance of such Series of Bonds, shall be used only to pay interest on that Series of Bonds.
(3) Bond Reserve Fund and Other Reserve Funds (if applicable) (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 and any other reserve fund established for a Series of Bonds, on a pro rata basis, such amount of money as shall be required to restore the Bond Reserve Fund or other reserve fund, as applicable, to an amount equal to the Required Bond Reserve for each Series of Bonds secured thereby. Investments held in the Bond Reserve Fund and any other reserve fund established for a Series of Bonds 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 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 par value of such investments; provided, that no deposit need be made into the Bond
24 Reserve Fund or any other reserve fund established for a Series of Bonds if the amount contained therein is at least equal to the Required Bond Reserve for each Series of Bonds secured thereby.
All money in the Bond Reserve Fund and any other reserve fund established for a Series of Bonds shall be used and withdrawn by the Trustee solely for the purpose of (i) paying the interest on or principal of each Series of Bonds secured thereby, as applicable, 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; or (iii) retiring Bonds, in whole or in part, to the extent that the amount on deposit therein 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 or any other reserve fund established for a Series of Bonds exceeds the Required Bond Reserve for each Series of Bonds secured thereby, 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 (maintained by the Treasurer). 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 either case, to the extent such Expenses were not already funded or reimbursed by Priority Administrative Expenses. 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 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 provisions of Sections 5.02(1), (2), (3) (4), shall be withdrawn from the Special Tax Fund by the Treasurer for and deposited in the 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.
25 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 proceeds of the Special Tax 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 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 is hereby
26 established in the treasury of the City a fund to be known as the 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 or any other reserve fund established for a Series of Bonds to pay any interest on or principal of any Series of Bonds.
SECTION 6.06. Protection of Security and Rights of Holders. The City will preserve and protect the security of the Bonds and the rights of the Holders and will warrant and defend their rights against all claims and demands of all persons.
SECTION 6.07. Levy and Collection of the Special Tax. The City, so long as any Bonds are Outstanding, will annually levy the Special Tax against all Taxable Land 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
27 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 and any other reserve fund established for a Series of Bonds 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 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.
28 ARTICLE VII
THE TRUSTEE
SECTION 7.01. The Trustee. U.S. Bank Trust Company, 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, California 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, California 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.
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)
29 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, as finally adjudicated by a court of competent jurisdiction, 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.
Except during the continuance of an Event of Default, the Trustee undertakes to perform only such duties as are specifically set forth in this Indenture, and no implied covenants, duties or obligations shall be read into this Indenture against the Trustee. If an Event of Default has occurred and is continuing, the Trustee shall exercise such of the rights and powers vested in it by this Indenture, and use the same degree of care and skill in their exercise, as a prudent person would exercise in the conduct of its own affairs.
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 the financing of the Fees, 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 hereunder except for its own negligence or willful misconduct, as finally adjudicated by a court of competent jurisdiction. The Trustee shall not be liable for any reasonable error of judgment made in good faith, unless it is proven that the Trustee was negligent in ascertaining the pertinent facts, and no provision hereof shall require the Trustee to expend or
30 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 not be considered in breach of or in default in its obligations hereunder or progress in respect thereto in the event of enforced delay in the performance of such obligations due to unforeseeable causes beyond its control and without its fault or negligence, including, but not limited to, Acts of God or of the public enemy or terrorists, acts of a government, acts of the other party, fires, floods, epidemics, quarantine restrictions, strikes, freight embargoes, earthquakes, explosion, mob violence, riot, inability to procure or general sabotage or rationing of labor, equipment, facilities, sources of energy, material or supplies in the open market, litigation or arbitration involving a party or others relating to zoning or other governmental action or inaction, malicious mischief, condemnation, and unusually severe weather or delays of suppliers or subcontractors due to such causes or any similar event and/or occurrences beyond the control of the Trustee.
The Trustee shall have the right to accept and act upon instructions, including funds transfer instructions (“Instructions”) given pursuant to this Indenture and delivered using Electronic Means. (“Electronic Means” shall mean the following communications methods: e- mail, facsimile transmission, secure electronic transmission containing applicable authorization codes, passwords and/or authentication keys issued by the Trustee, or another method or system specified by the Trustee as available for use in connection with its services hereunder). The City shall provide to the Trustee an incumbency certificate listing officers with the authority to provide such Instructions (“Authorized Officers”) and containing specimen signatures of such Authorized Officers, which incumbency certificate shall be amended by the City whenever a person is to be added or deleted from the listing. Such specimen signature may be in the form of a digital signature utilizing Adobe Sign or comparable method. If the City elects to give the Trustee Instructions using Electronic Means and the Trustee in its discretion elects to act upon such Instructions, the Trustee’s reasonable understanding of such Instructions shall be deemed controlling. The City understands and agrees that the Trustee cannot determine the identity of the actual sender of such Instructions and that the Trustee shall conclusively presume that directions that purport to have been sent by an Authorized Officer listed on the incumbency certificate provided to the Trustee have been sent by such Authorized Officer, assuming such presumption is reasonable. The City shall be responsible for ensuring that only Authorized Officers transmit such Instructions to the Trustee and that the City and all Authorized Officers are solely responsible to safeguard the use and confidentiality of applicable user and authorization codes, passwords and/or authentication keys upon receipt by the City. The Trustee shall not be liable for any losses, costs or expenses arising directly or indirectly from the Trustee’s reasonable reliance upon and compliance with such Instructions notwithstanding the fact that such directions conflict or are inconsistent with a subsequent written instruction. The City agrees: (i) to assume all risks arising out of the use of Electronic Means to submit Instructions to the Trustee, including without limitation the risk of the Trustee acting on unauthorized Instructions, and the risk of interception and misuse by third parties; (ii) that it is fully informed of the protections and risks associated with the various methods of transmitting Instructions to the Trustee and that there may be more secure methods of transmitting Instructions than the method(s) selected by the City; (iii) that the security procedures (if any) to be followed in connection with its transmission of Instructions provide to it a commercially reasonable degree of protection in light of its particular needs and circumstances;
31 and (iv) to notify the Trustee immediately upon learning of any compromise or unauthorized use of the security procedures.
The permissive right of the Trustee to do things enumerated in this Indenture shall not be construed as a duty and it shall not be answerable for other than its negligence or willful misconduct.
All immunities, indemnifications and releases from liability granted herein to the Trustee will extend to the directors, employees, officers and agents thereof.
The Trustee shall be under no obligation to exercise any of the rights or powers vested in it by this Indenture at the request, order or direction of any of the registered owners pursuant to the provisions of this Indenture unless such registered owners shall have offered to the Trustee security or indemnity reasonably satisfactory to the Trustee against the costs, expenses and liabilities which may be incurred therein or thereby.
The Trustee shall have no duty to review, verify or analyze any financial statements furnished to it by the City and shall hold such financial statements solely as a repository for Owners of the Bonds. The Trustee shall not be deemed to have notice of any information contained therein or any Event of Default that may be disclosed therein in any manner.
In no event shall the Trustee be responsible or liable for punitive damages of any kind whatsoever.
SECTION 7.03. Notice to the Trustee 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.
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
32 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.
All notices, approvals, consents, requests and other communications provided to or by any party hereunder must be in writing and in English, and may be signed via manual, facsimile or digital signature (including, by way of example, AdobeSign and DocuSign), including without limitation digital signatures provided by the City Manager, the Treasurer or such other digital signature providers specified in a Certificate of the City provided to the Trustee.
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. The 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 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 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. The 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
33 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 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 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.
34 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
SECTION 9.01. Events of Default and Remedies. 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 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
35 and every term, provision and covenant contained in this 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 Proceeds of Special Tax After Default. If an Event of Default shall occur and be continuing, all proceeds of the Special Tax thereafter received by the City shall be immediately transferred to the Trustee and the Trustee shall apply all proceeds of the Special Tax and any other funds thereafter received by the Trustee under any of the provisions of this Indenture as follows and in the following order:
(a) To the City, an amount equal to the Priority Administrative Expenses for the applicable Fiscal Year.
(b) 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 Indenture.
(c) 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 payment if only partially paid, or surrender thereof if fully paid) subject to the provisions of this 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.
36 (d) 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 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 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 pledged under this Indenture, pending such proceedings. All rights of action under this 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 Indenture.
SECTION 9.04. Holders’ Direction of Proceedings. Anything in this 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 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 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
37 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 Indenture or the rights of any other Holders of Bonds, or to enforce any right under this 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 Indenture.
SECTION 9.06. Absolute Obligation of the City. Nothing in Section 9.05 or in any other provision of this 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 amounts 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 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 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.
38 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 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
39 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 Proceeds of the Special Tax and Certain Other Funds. Notwithstanding anything contained herein, the City may, but shall not be required to, advance any money derived from any source of income other than Net Special Tax Revenues and the other funds pledged herein for the payment of the interest on or principal of or redemption premiums, if any, on the Bonds.
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 Net Special Tax Revenues and such other funds, and the City is not obligated to pay them except from 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 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 Net Special Tax Revenues and such other funds as provided herein.
40 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 and the Fees 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.
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. (a) All money held by the Treasurer in any fund established herein shall be invested in Legal Investments or in any other lawful investment for City funds, which by its terms matures prior to the date on which such money is required to be paid out hereunder. All money held by the Trustee in any fund established herein 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 the Trustee may conclusively rely that any investment specified in such Written Request of the City is a Legal Investment; 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.
41 (b) 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. 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.
(c) 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.
(d) All interest received on any such money so deposited or invested which exceeds the requirements of the fund from which such money was deposited or invested shall (subject to the requirements of Section 6.03) be deposited in the Bond Redemption Fund. All losses on any such money so deposited or invested shall be borne by the fund from which the deposit or investment was made.
SECTION 11.06. Waiver of Personal Liability. No member of the City Council or officer or 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
42 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 4.03 or to such securities information services or to such underwriter or first purchaser not less than twenty (20) 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 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 the Master Indenture as a whole and not to any particular article, section or subdivision hereof.
SECTION 11.12. Entire Agreement; 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 the Master Indenture and each and every other article, section, paragraph, subdivision, sentence, clause and phrase hereof and would have authorized the issuance of the
43 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. The 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. The 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 (together with email, as applicable), to the party entitled thereto at its address set forth below, or at such other address as such party may provide to the other parties in writing from time to time, namely:
If to the City:
City of Sacramento
Historic City Hall
915 I Street, 3rd Floor
Sacramento, California 95814
Attention: Debt Management Team
Email: [email protected]; [email protected] If to the Trustee:
U.S. Bank Trust Company, National Association
1 California Street, Suite 1000
San Francisco, CA 94111
Attention: Global Corporate Trust
SECTION 11.16. Effective Date of the Master Indenture. The Master Indenture shall take effect from and after its execution and delivery by the parties hereto.
44 IN WITNESS WHEREOF, the City of Sacramento has caused the Master Indenture to be signed in its name by the City Treasurer, and U.S. Bank Trust Company, National Association, as Trustee, in token of its acceptance of the trusts created hereunder, has caused the Master Indenture to be signed in its corporate name by its officer thereunto duly authorized, all as of the date and year first above written.
CITY OF SACRAMENTO
By:
John P. Colville Jr., City Treasurer
U.S. BANK TRUST COMPANY, NATIONAL
ASSOCIATION, as Trustee
By:
Authorized Officer
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 ............................................................. 12 SECTION 2.02. Conditions for the Issuance of Bonds ............................................................ 13 SECTION 2.03. Procedure for the Issuance of Bonds ............................................................. 14 SECTION 2.04. Acquisition and Construction Fund ............................................................... 15 SECTION 2.05. Costs of Issuance Fund .................................................................................. 15
ARTICLE III
TERMS AND PROVISIONS OF BONDS
SECTION 3.01. Terms of Bonds .............................................................................................. 16 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 ......................................................................... 18
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 .................................................................................... 20 SECTION 4.04. Partial Redemption of Bonds ......................................................................... 21 SECTION 4.05. Effect of Redemption of Bonds ..................................................................... 21
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 ................................................ 26 SECTION 6.07. Levy and Collection of the Special Tax ......................................................... 26 SECTION 6.08. Foreclosure of Special Tax Liens .................................................................. 27
ii
SECTION 6.09. Continuing Disclosure ................................................................................... 27 SECTION 6.10. Further Assurances......................................................................................... 27
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 ...................................................................................... 31
ARTICLE VIII
AMENDMENT OF OR SUPPLEMENT
TO THE MASTER INDENTURE
SECTION 8.01. Procedure for Amendment of or Supplement to the Master Indenture .......... 32 SECTION 8.02. Disqualified Bonds......................................................................................... 33 SECTION 8.03. Endorsement or Replacement of Bonds After Amendment or Supplement .................................................................................................... 34 SECTION 8.04. Amendment or Supplement by Mutual Consent ............................................ 34
ARTICLE IX
EVENTS OF DEFAULT AND REMEDIES
SECTION 9.01. Events of Default and Remedies .................................................................... 34 SECTION 9.02. Application of Proceeds of Special Tax After Default .................................. 35 SECTION 9.03. Trustee to Represent Holders ......................................................................... 36 SECTION 9.04. Holders’ Direction of Proceedings................................................................. 36 SECTION 9.05. Limitation on Holders’ Right to Sue .............................................................. 36 SECTION 9.06. Absolute Obligation of the City ..................................................................... 37 SECTION 9.07. Termination of Proceedings ........................................................................... 37 SECTION 9.08. Remedies Not Exclusive ................................................................................ 37 SECTION 9.09. No Waiver of Default..................................................................................... 37
ARTICLE X
DEFEASANCE
SECTION 10.01. Discharge of the Bonds .................................................................................. 38 SECTION 10.02. Unclaimed Money .......................................................................................... 39
ARTICLE XI
MISCELLANEOUS
SECTION 11.01. Liability of City Limited to Proceeds of the Special Tax and Certain Other Funds .................................................................................................... 39 SECTION 11.02. Benefits of the Master Indenture Limited to Certain Parties ......................... 40 SECTION 11.03. Successor is Deemed Included in All References to Predecessor ................. 40 SECTION 11.04. Execution of Documents by Holders ............................................................. 40 SECTION 11.05. Deposit and Investment of Money in Accounts and Funds ........................... 40 SECTION 11.06. Waiver of Personal Liability .......................................................................... 41 SECTION 11.07. Acquisition of Bonds by City ........................................................................ 41 SECTION 11.08. Content of Certificates and Reports ............................................................... 41
iii
SECTION 11.09. Notice by Mail ............................................................................................... 42 SECTION 11.10. Maintenance of Accounts and Funds ............................................................. 42 SECTION 11.11. Article and Section Headings, Gender and References ................................. 42 SECTION 11.12. Entire Agreement; Partial Invalidity .............................................................. 42 SECTION 11.13. Execution in Counterparts.............................................................................. 43 SECTION 11.14. Governing Law .............................................................................................. 43 SECTION 11.15. Notices ........................................................................................................... 43 SECTION 11.16. Effective Date of the Master Indenture .......................................................... 43
Jones Hall Draft of Nov. 13, 2024
FIRST SUPPLEMENTAL INDENTURE
between the
CITY OF SACRAMENTO
and
U.S. BANK TRUST COMPANY, NATIONAL ASSOCIATION,
as Trustee
Relating to the
$____________
CITY OF SACRAMENTO
GREENBRIAR COMMUNITY FACILITIES DISTRICT NO. 2018-03 (IMPROVEMENTS) IMPROVEMENT AREA NO. 2
SPECIAL TAX BONDS, SERIES 2024
Dated as of December 1, 2024
TABLE OF CONTENTS
Page
-i-
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 ................................................................ 3 SECTION 2.03. Redemption Prices of Series 2024 Bonds. ........................................... 5 SECTION 2.04. Form of Series 2024 Bonds.................................................................. 6 SECTION 2.05. Application of Proceeds of Sale of Series 2024 Bonds ....................... 6
ARTICLE III
MISCELLANEOUS
SECTION 3.01. Authority for First Supplemental Indenture ......................................... 7 SECTION 3.02. Terms of Series 2024 Bonds Subject to the Master Indenture............. 7 SECTION 3.03. Effective Date of First Supplemental Indenture .................................. 7
EXHIBIT A FORM OF SERIES 2024 BONDS ...................................................................... A-1
1 FIRST SUPPLEMENTAL INDENTURE
This First Supplemental Indenture (the “First Supplemental Indenture”), dated as of December 1, 2024, is between the CITY OF SACRAMENTO, a California charter city and municipal corporation (the “City”), and U.S. BANK TRUST COMPANY, 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 December 1, 2024, which authorized the issuance of City of Sacramento Greenbriar Community Facilities District No. 2018-03 (Improvements) Improvement Area No. 2 Special Tax Bonds (the “Bonds”) and provided for the issuance of the Bonds in series.
B. The City has determined to prescribe the terms, conditions, and form of $____________ aggregate principal amount of City of Sacramento Greenbriar Community Facilities District No. 2018-03 (Improvements) Improvement Area No. 2 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 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 December 1, 2024, between the City and the Trustee entered into under the Act and the Master Indenture.
“Master Indenture” means the Master Indenture dated as of December 1, 2024, between the City and the Trustee entered into under the Act.
“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 certain of the Facilities and Fees, make a deposit to the Bond Reserve Fund, fund capitalized interest on a portion of the Series 2024 Bonds accruing through December 1, 2026, and to pay the Costs of Issuance of the Series 2024 Bonds.
3 SECTION 2.02. Terms of Series 2024 Bonds.
The Series 2024 Bonds will be issued in the aggregate principal amount of $____________; will be designated the “City of Sacramento Greenbriar Community Facilities District No. 2018-03 (Improvements) Improvement Area No. 2 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, 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
*Term Bond
4 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), 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 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), 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 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), namely:
5 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.
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, upon mailed notice as provided in the Master Indenture, at the following redemption prices (expressed as a percentage of the principal amount of the 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 August 31, 20___ 103%
September 1, 20___ through August 31, 20___ 102%
September 1, 20___ through August 31, 20___ 101%
September 1, 20___, and any date thereafter 100%
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
6 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 to 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%
(a) 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 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 Proceeds of Sale of Series 2024 Bonds. At any time after the execution and delivery of this First Supplemental Indenture, the City may execute and the Trustee shall authenticate and deliver the Series 2024 Bonds upon a Written Request of the City. The proceeds of the sale of the Series 2024 Bonds in the amount of $____________ (composed of $____________ aggregate principal amount of Series 2024 Bonds, plus [net] original issue premium of $____________, 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.
(c) Third, the Trustee shall deposit $___________ in the Bond Redemption Fund to be used by the Trustee to fund capitalized interest on a portion of the Series 2024 Bonds accruing through December 1, 2026.
(d) Fourth, the Trustee shall deposit $____________ in the Series 2024 Bonds Account of the Costs of Issuance Fund, which the Trustee shall establish and hold for the Series 2024 Bonds in accordance with Section 2.05 of the Master Indenture.
7 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. Effective Date of First Supplemental Indenture. This First Supplemental Indenture takes effect from and after its execution and delivery.
8 IN WITNESS WHEREOF, the City has caused this First Supplemental Indenture to be signed in its name by the City Treasurer, and U.S. Bank Trust Company, National Association, as Trustee, in token of its 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
U.S. BANK TRUST COMPANY, NATIONAL
ASSOCIATION, as Trustee
By:
Authorized Officer
A-1
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 U.S. Bank Trust Company, National Association, as Trustee, 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
GREENBRIAR COMMUNITY FACILITIES DISTRICT NO. 2018-03 (IMPROVEMENTS) IMPROVEMENT AREA NO. 2
SPECIAL TAX BOND, SERIES 2024
Interest
Rate
Maturity
Date
Dated
as of
CUSIP
_____% September 1, 20__ December __, 2024 ______
REGISTERED OWNER: CEDE & CO.
PRINCIPAL AMOUNT: _______________________________ DOLLARS The City of Sacramento, a charter city and 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 Taxes and amounts in certain 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
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the interest rate per annum set forth above (computed on a 360-day year of twelve 30-day calendar months), payable semiannually on 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 of U.S. Bank Trust Company, National Association (the “Trustee”), in Saint Paul, Minnesota. 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 $____________ issued by the City of Sacramento for Improvement Area No. 2 of the City of Sacramento Greenbriar Community Facilities District No. 2018-03 (Improvements) (the “Community Facilities District”) located in the City, designated the “City of Sacramento Greenbriar Community Facilities District No. 2018-03 (Improvements) Improvement Area No. 2 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 December 1, 2024 (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 Greenbriar Community Facilities District No. 2018-03 (Improvements) Improvement Area No. 2 Special Tax Bonds” (the “Bonds”), and a First Supplemental Indenture (the “First Supplemental Indenture,” and together with the Master Indenture, the “Indentures”) supplemental thereto, dated as of December 1, 2024, 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). Capitalized terms used but not defined herein have the meanings given in the Indentures.
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
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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 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.
The Series 2024 Bonds are issued to provide funds to finance certain Facilities and Fees, make a deposit to the Bond Reserve Fund, fund capitalized interest on a portion of the Series 2024 Bonds accruing through December 1, 2026, and pay the Costs of Issuance of the Series 2024 Bonds 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 Net Special Taxes and amounts in the funds pledged to the Series 2024 Bonds pursuant to the Indentures, and the City is not obligated to pay them except from Net Special Taxes 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 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 Net Special Taxes and amounts in certain other funds established and pledged to the Series 2024 Bonds 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 Net Special Taxes 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, upon mailed notice as provided in the Master Indenture, at the following redemption prices (expressed as a percentage of the principal amount of the 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 August 31, 20___ 103%
September 1, 20___ through August 31, 20___ 102%
September 1, 20___ through August 31, 20___ 101%
September 1, 20___, and any date thereafter 100%
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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 to 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 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 to the date of redemption, without premium.
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 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 to the date of redemption, without premium.
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 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 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 twenty (20) 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, but neither failure to receive any such notice nor any immaterial defect contained therein shall affect the sufficiency or validity of such
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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 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 Bonds 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 in Improvement Area No. 2 of the Community Facilities District 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, 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 Expenses 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 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.
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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 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 Net Special Taxes 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 Net Special Taxes 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
U.S. BANK TRUST COMPANY, 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: ____________________
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Bond Purchase Contract | Page 1
BOND PURCHASE CONTRACT
$[PAR AMOUNT]
CITY OF SACRAMENTO
GREENBRIAR COMMUNITY FACILITIES DISTRICT NO. 2018-03
(IMPROVEMENTS)
IMPROVEMENT AREA NO. 2
SPECIAL TAX BONDS, SERIES 2024
[DATE]
City of Sacramento
915 I Street
Sacramento, California 95814
Greetings:
Piper Sandler & Co., as underwriter (the “Underwriter”), acting not as a fiduciary or agent for you, but on behalf of itself, offers to enter into this Bond Purchase Contract with the City of Sacramento (the “City”) with respect to the special tax bonds captioned above (the “Bonds”) issued by the City for the City of Sacramento Greenbriar Community Facilities District No. 2018- 03 (Improvements) (the “CFD”) with respect to Improvement Area No. 2 therein (“Improvement Area No. 2”). Upon your acceptance of this offer, this contract will be binding upon the City and the Underwriter. Terms not otherwise defined in this contract have the same meanings as set forth in the Indenture identified in Section 2(c) below.
This offer is made subject to the City’s acceptance of this contract on or before 11:59 p.m. on the date first set forth above (the “Effective Date”). At or before the City’s acceptance of this contract, the City must cause to be delivered to the Underwriter (a) a certificate from Greenbriar Phase 2, LLC, a Delaware limited liability company (“Greenbriar”) 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 “Greenbriar POS Certificate”); and (b) a certificate from Lennar Homes of California, LLC, a California limited liability company (“Lennar”), 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 “Lennar Homes POS Certificate”).
1. Purchase and Sale of Bonds. Relying on the representations, warranties, and covenants in this contract, the Underwriter shall purchase from the City, and the City shall sell to the Underwriter, on the terms and conditions set forth below, all (but not less than all) of $[____] aggregate principal amount of the Bonds at a purchase price (the “Purchase Price”) of $[____] (being an amount equal to the par amount of the Bonds of $[____], [plus/less] a [net] original issue [premium/discount] of $[____], and less an Underwriter's discount of $[___]).
2. Authorizing Instruments. The City will issue the Bonds under— (a) The Mello-Roos Community Facilities Act of 1982, as amended (the “Act”); 30544.00016\42903959.2
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 that certain First Supplemental Indenture (the “First Supplemental Indenture”), dated as of December 1, 2024 (collectively, the “Indenture”), by and between the City and U.S.
Bank Trust Company, National Association, as trustee (the “Trustee”).
3. Terms of the Bonds. The Bonds are payable solely from Net Special Tax Revenues (as that term is defined in the Indenture) of special taxes levied under the Act on Taxable Property (as that term is defined in the Second Amended and Restated RMA of Improvement Area No. 2) in Improvement Area No. 2 (the “Special Taxes”). The Bonds will mature on the dates and in the principal amounts, will bear interest at the rates, and will be subject to redemption before maturity as set forth in Exhibit A to this contract. The Underwriter shall make a bona fide public offering of all of the Bonds at the offering prices set forth in Exhibit “A.” Additional details related to the establishment of the issue price for the Bonds are set forth in Section 20 below. The Bonds are being issued to (a) pay the cost and expense of the acquisition and construction of certain public facilities and to finance certain governmental fees required in connection with the development within the District; (b) fund a reserve fund securing the Bonds; (c) pay costs of issuance of the Bonds; and (d) fund capitalized interest on the Bonds through [March 1, 2027].
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 [DATE] (the “Preliminary Official Statement”), and the City has authorized the execution, delivery, and distribution of the Final Official Statement. (c) In connection with the issuance of the Bonds, and to assist the Underwriter with complying with Rule 15c2-12, the City shall execute a continuing disclosure certificate, under which the City will provide certain financial and operating data relating to Improvement Area No. 2 as required by Rule 15c2-12 (the “Continuing Disclosure 30544.00016\42903959.2
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. 2 was validly designated as an improvement area within the CFD.
(b) Full Right, Power, and Authority. The City has complied with all provisions of applicable law, including the Act, in all matters relating to the adoption of the Resolution, the formation of the CFD and the designation of Improvement Area No. 2 therein, the incurrence of bonded indebtedness for Improvement Area No. 2, and the levy of the Special Taxes within Improvement Area No. 2. The City Council thus has the full legal right, power, and authority to adopt the Resolution, and the City has the full legal right, power, and authority—
(1) to enter into this contract, the Indenture, and the Continuing Disclosure Certificate (collectively, the “City Documents”);
(2) to issue, sell, and deliver the Bonds;
(3) to secure the Bonds in the manner contemplated in the Indenture; and (4) to carry out and consummate on its part all other transactions contemplated by the City Documents.
(c) Authorization of Documents; Consents and Approvals. Except as may be required under blue-sky laws or other securities laws of any state, all consents or approvals the City must obtain in connection with the foregoing have been obtained, and the consents or approvals so obtained are still in full force and effect. The City Council thus has duly authorized—
(1) the execution and delivery of the City Documents and the Final Official Statement, and the execution, delivery, and due performance of the City’s obligations under the Bonds and the City Documents; and
(2) the taking of any action that may be required on the part of the City to carry out, give effect to, and consummate on its part the transactions contemplated by the Bonds and the City Documents.
(d) Due Adoption of Resolution and Enforceability of Documents. The Resolution has been duly adopted by the City Council and is in full force and effect; and the City Documents, when executed and delivered by the City and the other parties, will constitute legal, valid, and binding obligations of the City, enforceable against the City in accordance with their terms, except as enforceability may be limited by bankruptcy, insolvency, or other laws affecting creditors’ rights generally or by the application of equitable principles.
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(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, Greenbriar or Lennar to the Underwriter, the City, or Disclosure Counsel; (B) concern either Greenbriar’s or Lennar’s, or their affiliates’, property ownership and proposed development of the property within the CFD and Improvement Area No. 2, or Greenbriar’s or Lennar’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, H and I to the Official Statement.
(2) The information in the Preliminary Official Statement is true in all material respects as of the date of the Preliminary Official Statement, and the information in the Final Official Statement will be true in all material respects as of the Effective Date and the Closing Date. The Preliminary Official Statement does not as of its date, and the Final Official Statement will not as of the Effective Date and the Closing Date, contain any untrue or misleading statement of a material fact relating to the City or the CFD and Improvement Area No. 2 or omit to state any material fact relating to the City or the CFD and Improvement Area No. 2 necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading.
(g) Supplements or Amendments to Official Statement. The City shall promptly notify the Underwriter in writing if, at any time before the earlier of (1) the City’s receipt of the Underwriter’s notice that the Final Official Statement is no longer required to be delivered under Rule 15c2-12, or (2) the Closing Date (defined in Section 7 below), any event occurs that is known to the City officers participating in the issuance of the Bonds and that might cause the Final Official Statement, as then amended or supplemented, to include an untrue statement of a material fact or to omit to state any material fact necessary to make the statements therein, in light of the circumstances under which they were made, not misleading. Any information the City supplies for inclusion in any amendments or supplements to the Final Official Statement must not contain any untrue statement of a material fact or omit to state any material fact necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading.
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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 30544.00016\42903959.2
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be deemed a representation and warranty by the City to the Underwriter as to the truth of the statements in the certificate.
(l) Security for the Bonds. Debt service on the Bonds will be paid solely from the Special Taxes the City receives under the Indenture and the moneys in certain funds and accounts established thereunder.
(m) Levy of Special Taxes. The Special Taxes have been and will be levied in accordance with the Second Amended and Restated Rate and Method of Apportionment of Special Tax relating to Improvement Area No. 2 and are secured by a lien on the properties within Improvement Area No. 2 on which they are levied. (n) Pledge of Special Taxes. The Indenture creates a valid pledge of, and first lien upon, the Special Taxes deposited thereunder and the moneys in certain funds and accounts established thereunder, subject in all cases to the provisions of the Indenture permitting the application thereof for the purposes and on the terms and conditions set forth therein. (o) Prior Continuing Disclosure Undertakings. Except as disclosed in the Final Official Statement, the City has complied in all material respects with previous undertakings under Rule 15c2-12.
(p) Prior Assessment and Special Tax Liens. Except as disclosed in the Final Official Statement, to the City’s current and actual knowledge there are no entities with outstanding assessment liens or special tax liens against any of the Taxable Property within Improvement Area No. 2.
6. Blue Sky. The City shall cooperate with the Underwriter (at the Underwriter’s cost) in qualifying the Bonds for offer and sale under the securities or blue-sky laws of such jurisdictions of the United States as the Underwriter may reasonably request, except that the City is not required to consent to suit or to service of process in, or to qualify to do business in, any jurisdiction. The City consents to the Underwriter’s use of the City Documents, the Preliminary Official Statement, and the Final Official Statement for complying with such securities or blue-sky laws.
7. Closing.
(a) At 9:00 a.m. (Sacramento time) on [CLOSING DATE], or at such other time or date as the City and the Underwriter may agree on (the “Closing Date”), the City shall deliver or cause to be delivered to the Underwriter the Bonds in definitive form, duly executed by the City’s authorized officers and authenticated by the Trustee, together with the other documents identified in Section 7(b) below, and the Underwriter shall accept the delivery and pay the Purchase Price of the Bonds by making a wire transfer in federal funds payable to the order of the Trustee (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 Jones Hall, A Professional Law Corporation (“Bond Counsel”). Bond Counsel will make the 30544.00016\42903959.2
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documents described in Section 9 hereof electronically available to the parties via an online deal room. The payment for the Bonds and simultaneous delivery of the Bonds to the Underwriter is the “Closing.” The Bonds must be delivered as fully registered Bonds initially in denominations of $5,000 each and any integral multiple thereof. The Bonds must be registered in the name of Cede & Co., as nominee of The Depository Trust Company, and must be made available for checking by the Underwriter at such place as the Underwriter and the Trustee agree at least twenty-four (24) hours before the Closing.
8. Termination Events. The Underwriter may cancel its obligations to purchase the Bonds if any of the following occurs between the Effective Date and the Closing Date:
(a) The House of Representatives or the Senate of the United States Congress, or a committee of either, has pending before it or favorably passes or recommends legislation that, if enacted, would have the purpose or effect of imposing federal income taxation upon revenues or other income of the general character to be derived by the City or by any similar body under the Resolution, the Indenture, or the Act, or upon interest received on obligations of the general character of the Bonds, or of causing interest on obligations of the general character of the Bonds to be includable in gross income for purposes of federal income taxation, and the legislation, in the Underwriter’s opinion, materially adversely affects the market price of the Bonds. (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 30544.00016\42903959.2
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Bonds are not exempt from the registration, qualification, or other requirements of the Securities Act of 1933 as then in effect or the Securities Exchange Act of 1934 as then in effect, or that the Resolution or the Indenture, as the case may be, is not exempt from the Trust Indenture Act of 1939 as then in effect.
(d) A stop order, ruling, regulation, or official statement by the Securities and Exchange Commission or any other governmental agency having jurisdiction of the subject matter is issued or made or any other event occurs, the effect of which is that the issuance, offering, or sale of the Bonds, or the execution and delivery of the Indenture as contemplated by this contract or by the Final Official Statement, is or would be in violation of any provision of the federal securities laws, including the Securities Act of 1933 as then in effect, the Securities Exchange Act of 1934 as then in effect, or the Trust Indenture Act of 1939 as then in effect.
(e) Any event occurs or any information becomes known to the Underwriter that causes the Underwriter to reasonably believe that the Final Official Statement as then amended or supplemented includes an untrue statement of a material fact or omits to state any material fact necessary to make the statements therein, in light of the circumstances under which they were made, not misleading.
(f) There occurs any outbreak of hostilities or any national or international calamity or crisis, including a financial crisis, the effect of which on the financial markets of the United States is such as, in the Underwriter’s reasonable judgment, would materially adversely affect the market for or market price of the Bonds. (g) There is in force a general suspension of trading on the New York Stock Exchange, the effect of which on the financial markets of the United States is such as, in the Underwriter’s reasonable judgment, would materially adversely affect the market for or market price of the Bonds.
(h) A general banking moratorium is declared by United States, New York, or California authorities.
(i) Any proceeding is pending or threatened by the Securities and Exchange Commission against the City.
(j) Additional material restrictions not in force as of the Effective Date are imposed upon trading in securities generally by any governmental authority or by any national securities exchange, and the restrictions adversely affect the Underwriter's ability to sell the Bonds.
(k) The New York Stock Exchange or other national securities exchange, or any governmental authority, imposes, as to the Bonds or obligations of the general character of the Bonds, any material restrictions not in force on the Effective Date, or increases materially those in force on the Effective Date, with respect to the extension of credit by, or the charge to the net capital requirements of, the Underwriter. (l) An amendment to the United States or California Constitution is enacted or action is taken by any federal or California court, legislative body, regulatory body, or other authority materially adversely affecting the tax status of the City or its property, income, 30544.00016\42903959.2
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or securities (or interest thereon); the validity or enforceability of the Special Taxes or the ability of the City to issue the Bonds; or the levy of any of the Special Taxes, all as contemplated by the Resolution, the Indenture, this contract, and the Final Official Statement.
9. Conditions to Closing. The Underwriter’s obligations to purchase the Bonds are subject to the City’s performance of the City’s obligations under this contract at and before the Closing, to the accuracy as of the Effective Date and as of the time of the Closing of the City’s representations and warranties in this contract, and to the following conditions, including the delivery by the City of the documents identified in this Section 9 in form and substance satisfactory to the Underwriter:
(a) At the time of Closing, (1) the Final Official Statement, the Resolution, the Indenture, the Continuing Disclosure Certificate, and this contract must be in full force and effect and must not have been amended, modified, or supplemented except as may have been agreed to in writing by the Underwriter; and (2) the CFD must have been duly formed, Improvement Area No. 2 must have been designated therein, and there must be in full force and effect all resolutions, including the Resolution, that in Bond Counsel’s opinion are necessary in connection with the transactions contemplated by this contract. (b) The Underwriter must receive the Bonds at or before the Closing. The terms of the Bonds delivered must in all instances be as described in the Final Official Statement. (c) At or before the Closing, the Underwriter must receive the following documents in the number of counterparts as are agreeable to the Underwriter and the City:
(1) Bond Counsel’s final approving opinion, dated the Closing Date and substantially in the form attached as Appendix C 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 disclosure counsel to the City, Stradling Yocca Carlson & Rauth LLP (“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, 30544.00016\42903959.2
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the financial statements or other financial, numerical, economic, demographic or statistical data, assessed or appraised valuations, or environmental matters; (ii) information relating to CUSIP numbers; (iii) information with respect to DTC and its book-entry system; (iv) information contained in the Appendices to the Final Official Statement; (v) information incorporated by reference into the Final Official Statement; and (vi) information with respect to the Underwriter or underwriting matters with respect to the Bonds, including but not limited to information under the caption “UNDERWRITING,” as to which no opinion or view need be expressed) contains an untrue statement of a material fact or omits to state a material fact required to be stated therein or necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading; and
(B) the Bonds are not subject to the registration requirements of the Securities Act of 1933, as amended, and the Indenture is exempt from qualification under the Trust Indenture Act of 1939, as amended.
(4) A letter from counsel to the Underwriter, Best Best & Krieger LLP (“Underwriter’s Counsel”), addressed to the Underwriter, in form and substance acceptable to the Underwriter.
(5) The opinion of the Sacramento City Attorney’s Office, dated the Closing Date and addressed to the Underwriter, and in substantially the form attached to this contract as Exhibit G.
(6) The Final Official Statement executed on the City’s behalf by a duly authorized officer.
(7) A certified copy of the Resolution.
(8) Specimen Bonds.
(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, Goodwin Consulting Group, Inc., Sacramento, California (“Special-Tax Consultant”), in form and substance as set forth in Exhibit D to this contract, dated as of the Closing Date. 30544.00016\42903959.2
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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 [___], independent appraisers, addressed to the City and the Underwriter, regarding its conclusions as to the appraisal report prepared by the Appraiser as stated in the Official Statement.]
(19) The Greebriar POS Certificate, delivered as of the date of the Preliminary Official Statement in the form of Exhibit I-1 to this contract.
(20) The Lennar POS Certificate, delivered as of the date of the Preliminary Official Statement in the form of Exhibit I-2 to this contract.
(21) A closing certificate of Greenbriar, in form and substance as set forth in Exhibit J- 1 to this contract, dated as of the Closing Date.
(22) A closing certificate of Lennar, in form and substance as set forth in Exhibit J-2 to this contract, dated as of the Closing Date.
(23) One or more letters of counsel to Greenbriar, in form and substance as set forth in Exhibit K-1 to this contract, dated as of the Closing Date. (24) One or more letters of counsel to Lennar, in form and substance as set forth in Exhibit K-2 to this contract, dated as of the Closing Date. (25) A certificate of the market absorption consultant, The Gregory Group 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. (26) Continuing disclosure certificates executed by each of Greenbriar and Lennar, in form and substance as set forth as Appendix H to the Final Official Statement. (27) A Blanket Letter of Representations of the City to DTC, which qualifies the Bonds for delivery via the facilities of DTC.
(28) Such additional legal opinions, certificates, proceedings, instruments, and other documents as the Underwriter or Bond Counsel may reasonably request to evidence the City’s compliance with legal requirements; the truth and accuracy, as of the time of Closing, of the City’s representations in this contract; and the City’s due performance or satisfaction at or before the time of Closing of all agreements then to be performed and all conditions then to be satisfied by the City. (d) If the City is unable to satisfy the conditions in Sections 9(a), 9(b), and 9(c) of this contract, or if the Underwriter’s obligations to purchase and accept delivery of the 30544.00016\42903959.2
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Bonds are terminated for any reason permitted by this contract, then this contract will terminate, and neither the Underwriter nor the City will be under further obligation under this contract other than their obligations to pay expenses, as provided in Section 12 of this contract, which will continue in full force and effect.
10. Conditions to the City’s Obligations. The City’s obligations under this contract are subject to the Underwriter’s performance of its obligations under this contract and the Underwriter’s delivery of an issue price certificate in form and substance reasonably satisfactory to Bond Counsel.
11. Survival of Representations, Warranties, and Agreements. All of the City’s representations, warranties, and agreements in this contract will remain operative and in full force and effect, regardless of any investigations made by or on behalf of the Underwriter, and will survive the Closing.
12. Expenses.
(a) The City shall pay or cause to be paid all reasonable expenses incident to the issuance of the Bonds and to the performance of its obligations under this contract, including (1) expense of delivery of the Bonds and this contract; (2) expense of printing the Preliminary Official Statement, the Final Official Statement, and any amendment or supplement to the Preliminary Official Statement or the Final Official Statement; (3) fees and disbursements of Bond Counsel, Disclosure Counsel, municipal advisor, and other consultants, the Special Tax Consultant, the Appraiser and the Trustee; and (4) expenses (included in the expense component of the Underwriter’s discount) incurred by the Underwriter on behalf of City’s employees which are incidental to implementing this contract, including transaction-related meals of those employees. (b) The Underwriter shall pay all advertising expenses in connection with the public offering of the Bonds and all other expenses it incurs in connection with its public offering and distribution of the Bonds, including the fees and expenses of Underwriter’s Counsel.
13. No Fiduciary Duty.
(a) The City and the Underwriter acknowledge and agree that— (1) the purchase and sale of the Bonds under this contract is an arm’s-length commercial transaction between the City and the Underwriter; (2) in connection with the purchase and sale of the Bonds and with the discussions, undertakings, and procedures leading up to the consummation of the purchase and sale of the Bonds under this contract, the Underwriter is and has been acting solely as principal and is not acting as the agent or fiduciary of the City; (3) the Underwriter has not assumed a fiduciary responsibility in favor of the City with respect to (A) the offering of the Bonds contemplated by this contract or the process leading to this contract (whether or not the Underwriter or any affiliate of the Underwriter has advised or is currently advising the City on other matters), or 30544.00016\42903959.2
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(B) any other obligation to the City with respect to the offering contemplated by this contract except the obligations expressly set forth in this contract; and (4) the City and the Underwriter have consulted their own legal, financial, and other advisors to the extent they have deemed appropriate in connection with this transaction.
(b) This Section 13 does not limit the Underwriter’s obligations of fair dealing under Municipal Securities Rulemaking Board Rule G-17.
14. Notices.
(a) To be effective, any notice or other communication given to the City under this contract must be in writing and must be delivered to the following person at the following address:
Office of the City Treasurer
Historic City Hall
915 I Street, 3rd Floor
Sacramento, California 95814
Attention: Brian Wong, Debt Manager
Email address: [email protected]
(b) To be effective, any notice or other communication to be given to the Underwriter under this contract must be in writing and must be delivered to the following person at the following address:
Piper Sandler & Co.
3626 Fair Oaks Blvd., Ste. 100
Sacramento, CA 95864
Attention: Dennis McGuire, Managing Director
15. Benefit. This contract is made solely for the benefit of the parties and their successors and assigns, and no other person, including any purchaser of the Bonds, will acquire or have any right under or by virtue of it.
16. Governing Law and Interpretation. This contract is to be governed by, and construed in accordance with, the laws of the State of California. All currency amounts set forth in this contract are in United States Dollars. The word “including” means “including but not limited to.”
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 30544.00016\42903959.2
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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 an bona fide initial public offering of all of the Bonds in compliance with federal and state securities laws, at the initial offering prices set forth on Exhibit A attached hereto and incorporated herein by reference.
Subject to the paragraphs below, the Underwriter may change the initial offering prices as it deems necessary in connection with the offering of the Bonds without any requirement of prior notice, and may offer and sell the Bonds to institutions at prices lower than those stated in Exhibit A.
(a) The following definitions apply only in this Section 20:
(1) “Public” means any person other than an Underwriter or a Related Party. (2) “Underwriter” means (A) any person who agrees under a written contract with the City (or with the lead underwriter to form an underwriting syndicate) to participate in the initial sale of the Bonds to the Public, and (B) any person that agrees under a written contract directly or indirectly with a person described in clause (A) to participate in the initial sale of the Bonds to the Public (including a member of a selling group or a party to a retail-distribution agreement participating in the initial sale of the Bonds to the Public).
(3) A purchaser of any of the Bonds is a “Related Party” to an Underwriter if the Underwriter and the purchaser are subject, directly or indirectly, to (A) at least 50% common ownership of the voting power or the total value of their stock, if both entities are corporations (including direct ownership by one corporation of another); (B) more than 50% common ownership of their capital interests or profits interests, if both entities are partnerships (including direct ownership by one partnership of another); or (C) more than 50% common ownership of the value of the outstanding stock of the corporation or the capital interests or profit interests of the partnership, as applicable, if one entity is a corporation and the other entity is a partnership (including direct ownership of the applicable stock or interests by one entity of the other).
(4) “Sale Date” means the date of execution of this contract by all parties. 30544.00016\42903959.2
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(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 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 30544.00016\42903959.2
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(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.
(Signature Page Follows)
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PIPER SANDLER & CO.
By:
Authorized Representative
Accepted and agreed to as of
the date first above written:
CITY OF SACRAMENTO
By:
John P. Colville Jr., City Treasurer
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EXHIBIT A
$[PAR AMOUNT]
CITY OF SACRAMENTO
GREENBRIAR COMMUNITY FACILITIES DISTRICT NO. 2018-03
(IMPROVEMENTS)
IMPROVEMENT AREA NO. 2
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
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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 on or after September 1, 2021, 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 (except that if any of the Bonds maturing on September 1, 20__ have been optionally or extraordinarily redeemed, the amounts of the Sinking Fund Account Payments therefor shall be reduced proportionately by the principal amount of all such Bonds so optionally or extraordinarily redeemed):
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Sinking Fund Redemption Date
(September 1) Sinking Fund Payments
†
(†Maturity)
The selection of Bonds for redemption, notice of redemption, and the effect of redemption shall be as prescribed in the Final Official Statement.
Capitalized terms not defined herein shall have the same meaning set forth in that certain Bond Purchase Contract dated [DATE], between the City and Piper Sandler & Co. or the Final Official Statement, as applicable.
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EXHIBIT B
$[PAR AMOUNT]
CITY OF SACRAMENTO
GREENBRIAR COMMUNITY FACILITIES DISTRICT NO. 2018-03
(IMPROVEMENTS)
IMPROVEMENT AREA NO. 2
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 [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 __________
CITY OF SACRAMENTO
By
John P. Colville Jr.
City Treasurer
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EXHIBIT C
$[PAR AMOUNT]
CITY OF SACRAMENTO
GREENBRIAR COMMUNITY FACILITIES DISTRICT NO. 2018-03
(IMPROVEMENTS)
IMPROVEMENT AREA NO. 2
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 that certain Bond Purchase Contract, by and between the City and Piper Sandler & Co., dated [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: ____________
CITY OF SACRAMENTO
By:
John P. Colville Jr.
City Treasurer
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EXHIBIT D
$[PAR AMOUNT]
CITY OF SACRAMENTO
GREENBRIAR COMMUNITY FACILITIES DISTRICT NO. 2018-03
(IMPROVEMENTS)
IMPROVEMENT AREA NO. 2
SPECIAL TAX BONDS, SERIES 2024
CERTIFICATE OF SPECIAL TAX CONSULTANT
The City of Sacramento has retained Goodwin Consulting Group, Inc., Sacramento, California (the “Special-Tax Consultant”) as a special tax consultant in connection with the City of Sacramento Greenbriar Community Facilities District No. 2018-03 (Improvements) (the “CFD”) with respect to Improvement Area No. 2 therein (“Improvement Area No. 2”). The Special Tax Consultant has reviewed the second amended and restated rate and method of apportionment of special tax for Improvement Area No. 2 (the “RMA”), which is set forth in Appendix A to the Official Statement (the “Official Statement”) dated [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 and Administrative Fees and Expenses, provided that the annual debt service figures in the debt service schedules in the Official Statement, which were relied upon by Special Tax Consultant, are substantially true and correct. Although the Special Tax, if levied in the maximum amounts under the special tax formula set forth in the RMA, would be levied in an amount equal to at least 110% of the projected debt service on the Bonds and Administrative Fees and Expenses, no representation is made herein as to actual amounts that will be collected in future years.
(b) All summaries of and information with respect to the RMA in the Official Statement, all information in Tables 1, 3, 4, and 5 in the Official Statement, and all other information provided by the Special Tax Consultant for inclusion in the Official Statement are true and correct as of the date of the Official Statement and as of the date hereof. (c) The aggregate value of all real property subject to the levy of the Special Tax in Improvement Area No. 2, based upon the appraisal report dated [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. 2.
Each capitalized term not defined in this certificate has the meaning given to it in the Official Statement.
Dated: ____________ GOODWIN CONSULTING GROUP, INC.
By: _____________________________________
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EXHIBIT E
$[PAR AMOUNT]
CITY OF SACRAMENTO
GREENBRIAR COMMUNITY FACILITIES DISTRICT NO. 2018-03
(IMPROVEMENTS)
IMPROVEMENT AREA NO. 2
SPECIAL TAX BONDS, SERIES 2024
CERTIFICATE OF TRUSTEE
The undersigned hereby states and certifies that they are an authorized officer of U.S. Bank Trust Company, National Association, as trustee (the “Trustee”) under that certain Master Indenture, dated as of December 1, 2024, as supplemented by that certain 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: _______________________
U.S. BANK TRUST COMPANY,
NATIONAL ASSOCIATION,
as Trustee
By
Authorized Officer
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EXHIBIT F
SUPPLEMENTAL OPINION OF BOND COUNSEL
[DATE]
Piper Sandler & Co.
Sacramento, California
$[PAR AMOUNT]
City of Sacramento
Greenbriar Community Facilities District No. 2018-03 (Improvements) Improvement Area No. 2
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 that certain Bond Purchase Contract, dated [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 Greenbriar Community Facilities District No. 2018-03 (Improvements) Improvement Area No. 2 Special Tax Bonds, Series 2024 (the “Bonds”). The Bonds are being issued pursuant to that certain Master Indenture, dated as of December 1, 2024 (the “Master Indenture”), as supplemented by that certain 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 U.S. Bank Trust Company, National Association, as trustee (the “Trustee”).
Capitalized terms not otherwise defined herein shall have the meanings ascribed thereto in the Indenture or, if not defined in the Indenture, in the Contract.
In connection with our role as bond counsel to the City, we have reviewed the Indenture; the Contract; the Tax Certificate, dated the date hereof (the “Tax Certificate”), executed by the City; opinions of counsel to the City and the Trustee; certificates of the City, the Trustee and others; and such other documents, opinions and matters to the extent we deemed necessary to render the opinions and conclusions set forth herein.
The opinions and conclusions expressed herein are based on an analysis of existing laws, 30544.00016\42903959.2
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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 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 [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 E – “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 30544.00016\42903959.2
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bond counsel to the City concerning the validity of the Bonds and certain other matters, dated the date hereof and addressed to the City, are accurate in all material respects.
This letter is furnished by us as bond counsel to the City. No attorney-client relationship has existed or exists between our firm and you in connection with the Bonds or by virtue of this letter. We disclaim any obligation to update this letter. This letter is delivered to you as Underwriter of the Bonds, is solely for your benefit as such Underwriter in connection with the original delivery of the Bonds on the date hereof, and is not to be used, circulated, quoted or otherwise referred to or relied upon for any other 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,
Jones Hall, A Professional Law Corporation
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EXHIBIT G
OPINION OF THE CITY ATTORNEY
[DATE]
Piper Sandler & Co.
Sacramento, California
Re: $[PAR AMOUNT] City of Sacramento Greenbriar Community Facilities District No. 2018-03 (Improvements) Improvement Area No. 2 Special Tax Bonds, Series 2024
Greetings:
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 that certain Master Indenture, dated as of December 1, 2024, as supplemented by that certain First Supplemental Indenture, dated as of December 1, 2024 (collectively, the “Indenture”), by and between the City and U.S. Bank Trust Company, National Association, as trustee (the “Trustee”).
We are providing this opinion to you in connection with that certain Bond Purchase Contract, dated [DATE], between the City and Piper Sandler & Co. (the “Contract”), which among other things provides for the purchase of the Bonds in the aggregate principal amount of $[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 Greenbriar Community Facilities District No. 2018-03 (Improvements) (the “CFD”) is a community facilities district duly organized and validly existing under California law, including the Mello-Roos Community Facilities Act of 1982 set out in the California Government Code commencing with Section 53311 (the “Mello-Roos Act”), and Improvement Area No. 2 of the CFD is a duly and validly designated improvement area within the CFD.
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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; 30544.00016\42903959.2
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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, Greenbriar’s, or Lennar’s financial capacity or lack of financial capacity; Greenbriar’s or Lennar’s development project within the CFD, including Improvement Area No. 2; and the state or federal laws that pertain to the tax-exempt status of the Bonds. The phrase “to our actual knowledge” does not imply that we have undertaken any independent investigation about the facts at issue, and in fact we have not done so.
Sincerely yours,
Susana Alcala Wood
City Attorney
By: ________________________________
Jeffrey L. Massey
Senior Deputy City Attorney
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EXHIBIT H
$[PAR AMOUNT]
CITY OF SACRAMENTO
GREENBRIAR COMMUNITY FACILITIES DISTRICT NO. 2018-03
(IMPROVEMENTS)
IMPROVEMENT AREA NO. 2
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. 2 of the City of Sacramento Greenbriar Community Facilities District No. 2018-03 (Improvements) with respect to Improvement Area No. 2 therein, dated [DATE] (with a date of value of September 25, 2024) ( the “Appraisal”).
The Appraisal is described and summarized in, and is set out as Appendix B to, the Preliminary Official Statement dated [DATE] (the “Preliminary Official Statement”), and the Official Statement dated [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 in the Preliminary Official Statement and the Final Official Statement was true and correct as of the date of the Appraisal; (b) since the date of the Appraisal, nothing has come to the attention of the Appraiser that would cause the Appraiser to believe that the value of the property appraised therein is less than the value reported in the Appraisal; provided, that acts and events may have occurred since the date of the Appraisal which could result in both positive and negative effects on market value of such property; and (c) that an updated Appraisal has not been completed as of the date of this certificate.
2. The Appraiser hereby consents to the use of the Appraisal in connection with the distribution and use of the Preliminary Official Statement and Final Official Statement.
Dated: ___________
SMITH & ASSOCIATES, INC.
By:
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EXHIBIT I-1
CITY OF SACRAMENTO
GREENBRIAR COMMUNITY FACILITIES DISTRICT NO. 2018-03
(IMPROVEMENTS)
IMPROVEMENT AREA NO. 2
SPECIAL TAX BONDS, SERIES 2024
CERTIFICATE OF DEVELOPER
(Greenbriar Phase 2, LLC)
[DATE]
In connection with the issuance, sale and delivery by the City of Sacramento (the “City”) with respect to the City of Sacramento Greenbriar Community Facilities District No. 2018-03 (Improvements) Improvement Area No. 2 Special Tax Bonds, Series 2024 (the “Bonds”), and pursuant to that certain Bond Purchase Contract (the “Bond Purchase Contract”) to be entered into between the City and Piper Sandler & Co., as underwriter (the “Underwriter”), the undersigned, in their capacity as a duly authorized officer or representative of Greenbriar Phase 2, LLC a Delaware limited liability company (the “Developer”), hereby certifies, on behalf of the Developer, as follows as of the date hereof:
1. The Developer is the owner of certain property (the “Property”) located within Improvement Area No. 2 (“Improvement Area No. 2”) of the City of Sacramento Greenbriar Community Facilities District No. 2018-03 (Improvements) (the “District”). The undersigned is familiar with the facts herein certified and is duly authorized and qualified to execute this Certificate of Developer (Greenbriar Phase 2, LLC) (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 30544.00016\42903959.2
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regarding the Bonds. For purposes of this Certificate, the term “Affiliates” shall not include Lennar Homes of California, LLC.
3. The Developer is a Delaware limited liability company 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 – Northlake, the District and Improvement Area No. 2,” “INTRODUCTION –Property Ownership and Development Status,” “DEVELOPMENT OF PROPERTY IN IMPROVEMENT AREA NO. 2” (other than under the caption “ – Acquisition of Lots by Lennar Homes,” for which no certification is provided), “PROPERTY OWNERSHIP - The Developer” and “CONTINUING DISCLOSURE – Developer and Lennar Homes Continuing Disclosure” (excluding any statements regarding any property owner or the property owned by a property owner other than the Developer, including Lennar Homes, and any statements that cite information from a source other than the Developer) are true and correct in all material respects and do not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements therein, in light of the circumstances under which they were made, not misleading.
5. To the Actual Knowledge of the Undersigned, the Developer is able to pay its bills as they become due and no proceedings are pending against the Developer (based upon service of process upon the Developer having been accomplished) or, to the Actual Knowledge of the Undersigned, are threatened in writing in which the Developer or any of its Affiliates may be adjudicated as bankrupt or discharged from any or all of their respective debts or obligations, or granted an extension of time to pay their respective debts or obligations, or be allowed to reorganize or readjust their respective debts, or be subject to control or supervision of the Federal Deposit Insurance Corporation.
6. Except as set forth in the Preliminary Official Statement, no action, suit, proceeding, inquiry, or investigation at law or in equity, before or by any court, regulatory agency, public board or public body is pending against the Developer or any Affiliate (with proper service of process upon the Developer or Affiliate having been accomplished) or, to the Actual Knowledge of the Undersigned, is threatened in writing against the Developer or any Affiliate (a) to restrain or enjoin the collection of the Special Taxes or other sums pledged or to be pledged to pay the principal of and interest on the Bonds, (b) to restrain or enjoin the development or sale of the Property as described in the Preliminary Official Statement, (c) in any way contesting or affecting the validity of the Special Taxes, the District, or Improvement Area No. 2, or (d) which is reasonably likely to materially and adversely affect the Developer’s ability to develop and sell the Property as described in the Preliminary Official Statement or to pay the Special Taxes due with respect to the Property (to the extent the responsibility of the Developer) prior to delinquency.
7. Except as described in the Preliminary Official Statement, to the Actual Knowledge of the Undersigned, there are no material loans outstanding and unpaid and no material lines of 30544.00016\42903959.2
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credit of the Developer or its Affiliates that are secured by an interest in the Property. To the Actual Knowledge of the Undersigned, neither the Developer nor any of its Affiliates is currently in material default on any loans, lines of credit, or other obligation related to the development of the Property (or any other project) that is reasonably likely to materially and adversely affect the Developer’s ability to develop the Property as described in the Preliminary Official Statement or to pay the Special Taxes due with respect to the Property (to the extent the responsibility of the Developer) prior to delinquency.
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. 30544.00016\42903959.2
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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. 2, 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. 2 as of September 25, 2024 (the “Date of Value”), confirming the market values of the taxable property within Improvement Area No. 2 are not less than the original values set forth in the Appraisal. To Actual Knowledge of the Undersigned, all information submitted by, or on behalf of and authorized by, the Developer to the Appraiser and contained in the sections of the Appraisal Report highlighted in yellow or circled in Exhibit A attached hereto, was true and correct in all material respects as of the Date of Value.
15. A report of The Gregory Group of Folsom, California (the “Market Absorption Consultant”), dated as of May 2024 (the “Absorption Report”), was prepared. To the Actual Knowledge of the Undersigned, all information submitted by, or on behalf of and authorized by, the Developer to the Market Absorption Consultant and contained in the sections of the Absorption Report highlighted in yellow or circled in Exhibit A attached hereto, was true and correct in all material respects as of the date of the Absorption Report
16. The Developer covenants that, while the Bonds or any refunding obligations related thereto are outstanding, the Developer and its Affiliates that it controls will not bring any action, suit, proceeding, inquiry, or investigation at law or in equity before any court, regulatory agency, public board, or public body that in any way seeks to challenge or overturn the formation of the District or the designation of Improvement Area No. 2, to challenge the adoption of the ordinance levying special taxes within Improvement Area No. 2, to invalidate the District, the designation of Improvement Area No. 2, or the Bonds, or to invalidate the special tax liens imposed under section 3115.5 of the Streets and Highways Code based on recordation of the notices of special tax lien relating thereto. The foregoing covenant shall not prevent the Developer and its Affiliates in any way from bringing any other action, suit, proceeding, inquiry or investigation at law or in equity, before any court, regulatory agency, public board or body, including, without limitation, (a) an action or suit contending that the Special Tax has not been levied in accordance with the methodologies contained in the Second Amended Rate and Method of Apportionment of Special Taxes pursuant to which Special Taxes are levied, (b) an action or suit with respect to the application or use of the Special Taxes levied and collected, or (c) an action or suit to enforce the obligations of the City under the Resolution, the Indenture, the First Supplemental Indenture, any continuing disclosure certificate, or any other agreements among the Developer or its Affiliates, and the City or to which the Developer or its Affiliates is a beneficiary. 30544.00016\42903959.2
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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 30544.00016\42903959.2
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to this Certificate. Any liability arising from or relating to this Certificate may only be asserted against the Developer.
GREENBRIAR PHASE 2, LLC,
a Delaware limited liability company
By:
Name:
Its:
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EXHIBIT A
EXCERPTS FROM THE APPRAISAL
30544.00016\42903959.2
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EXHIBIT I-2
CITY OF SACRAMENTO
GREENBRIAR COMMUNITY FACILITIES DISTRICT NO. 2018-03
(IMPROVEMENTS)
IMPROVEMENT AREA NO. 2
SPECIAL TAX BONDS, SERIES 2024
CERTIFICATE OF DEVELOPER
(Lennar Homes of California, LLC)
[DATE]
In connection with the issuance, sale and delivery by the City of Sacramento (the “City”) with respect to the City of Sacramento Greenbriar Community Facilities District No. 2018-03 (Improvements) Improvement Area No. 2 Special Tax Bonds, Series 2024 (the “Bonds”), and pursuant to that certain Bond Purchase Contract (the “Bond Purchase Contract”) to be entered into between the City and Piper Sandler & Co., as underwriter (the “Underwriter”), the undersigned, in their capacity as a duly authorized officer or representative of Lennar Homes of California, LLC, a California limited liability company (the “Developer”), hereby certifies, on behalf of the Developer, as follows as of the date hereof:
1. The Developer is the owner of certain property (the “Property”) located within Improvement Area No. 2 of the City of Sacramento Greenbriar Community Facilities District No. 2018-03 (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.
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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 Greenbriar Phase 2, LLC.
(d) “Property” means the real property located within Improvement Area No. 2 of the City of Sacramento Greenbriar Community Facilities District No. 2018-03 (Improvements) (the “District”) held in the name of Developer.
3. The Developer is a California limited liability company qualified to conduct business in the State of California and is in good standing in the State of California and has all requisite right, power and authority: (i) to execute and deliver this Certificate; and (ii) to undertake all of the transactions on its part described in the Preliminary Official Statement.
4. To the Actual Knowledge of the Undersigned, all Developer Information was true, complete, and correct in all material respects when submitted or as updated and modified and remains true, complete and correct as updated and modified as of the date hereof.
5. As of the date of the Preliminary Official Statement, the statements contained in the Preliminary Official Statement under the captions “INTRODUCTION – Northlake, the District and Improvement Area No. 2,” “INTRODUCTION – Property Ownership and Development Status,” and “DEVELOPMENT OF PROPERTY IN IMPROVEMENT AREA NO. 2—Acquisition of lots by Lennar Homes,” “—Home Construction,” and “PROPERTY OWNERSHIP – Lennar Homes of California, LLC, a California limited liability company,” 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 30544.00016\42903959.2
Bond Purchase Contract | Page I-2-3
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.
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, 30544.00016\42903959.2
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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 Second Amended and Restated Rate and Method of Apportionment of Special Taxes pursuant to which Special Taxes are levied, (b) an action or suit with respect to the application or use of the Special Taxes levied and collected, or (c) an action or suit to enforce the obligations of the City and/or the District under the Resolution, the Indenture, the First Supplemental Indenture, any continuing disclosure certificate, or any other agreements among the Developer or its Affiliates, the City and/or the District or to which the Developer or its Affiliates is a beneficiary.
12. The Developer hereby consents to the issuance of the Bonds and acknowledges and agrees that the proceeds of the Bonds will be used as described in the Official Statement.
13. The Developer shall comply with the provision of the Mello-Roos Community Facilities Act of 1982, as amended, relating to the Notice of Special Tax described in Government Code Section 53341.5 in connection with the sale of the Property, or portions thereof.
14. If, between the date hereof and the Closing Date any event occurs that relates to or affects Developer, its Affiliates, the proposed development of the Property, ownership of the Property, the Developer’s development plan, the Developer’s financing plan, the Developer’s lenders, if any, or contractual arrangements of the Developer or any Affiliates of which the Developer has actual knowledge that would cause the information under the sections of the Preliminary Official Statement indicated in Section 5 above (and subject to the limitations and exclusions contained in Section 5 hereof) to contain an untrue statement of a material fact or to omit to state a material fact necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading, the Developer shall notify the City and the Underwriter; and if, in the opinion of counsel to the City or the Underwriter, the event requires the preparation and publication of a supplement or amendment to the Preliminary Official Statement, the Developer shall reasonably cooperate with the City and the Underwriter in the preparation of an amendment or supplement to the Preliminary Official Statement in form and substance satisfactory to counsel to the City and counsel to the Underwriter.
15. The Developer shall deliver a Closing Certificate dated the date of issuance of the Bonds at the time of issuance of the Bonds, in substantially the form attached as Exhibit J-2 to the Bond Purchase Contract.
16. The undersigned has reviewed the contents of the Preliminary Official Statement. The undersigned has reviewed the contents of this certificate and has conferred with counsel to the Developer for the purpose of discussing the meaning of the contents of this certificate. 30544.00016\42903959.2
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The Developer acknowledges and understands that a variety of state and federal securities laws, including, but not limited to the Securities Act of 1933, as amended, and Rule 10b-5 promulgated under the Securities Exchange Act of 1934, as amended, may apply to the Developer and that, under some circumstances, certification as to the matters set forth in this certificate, without additional disclosures or other action, may not fully discharge all duties and obligations of the Developer under those securities laws.
17. Neither the undersigned nor the Developer makes any representation or warranty with regard to preparation of any document required for the issuance of the Bonds or the documents' compliance with any applicable federal or state law, regulation, rule or policy.
The undersigned has executed this certificate solely in their capacity as an authorized officer or representative of the Developer and they will have no personal liability arising from or relating to this certificate. Any liability arising from or relating to this certificate may only be asserted against the Developer.
LENNAR HOMES OF CALIFORNIA, LLC,
a California limited liability company
By:
Name:________________________
Its:___________________________
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EXHIBIT J-1
$[PAR AMOUNT]
CITY OF SACRAMENTO
GREENBRIAR COMMUNITY FACILITIES DISTRICT NO. 2018-03
(IMPROVEMENTS)
IMPROVEMENT AREA NO. 2
SPECIAL TAX BONDS, SERIES 2024
CLOSING CERTIFICATE OF DEVELOPER
(Greenbriar Phase 2, LLC)
[DATE]
In connection with the issuance, sale and delivery by the City of Sacramento (the “City”) with respect to the City of Sacramento Greenbriar Community Facilities District No. 2018-03 (Improvements) Improvement Area No. 2 Special Tax Bonds, Series 2024 (the “Bonds”), and in accordance with that certain Bond Purchase Contract (the “Bond Purchase Contract”) between the City and Piper Sandler & Co., as underwriter (the “Underwriter”), the undersigned, in their capacity as a duly authorized officer or representative of Greenbriar Phase 2, LLC, a Delaware limited liability company (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 (Greenbriar Phase 2, LLC) (the “Closing Certificate”) on behalf of the Developer.
2. The Developer has duly executed the Certificate of Developer (Greenbriar Phase 2, LLC), dated [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 [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 30544.00016\42903959.2
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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.
GREENBRIAR PHASE 2, LLC,
a Delaware limited liability company
By:
Name:
Its:
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EXHIBIT J-2
$[PAR AMOUNT]
CITY OF SACRAMENTO
GREENBRIAR COMMUNITY FACILITIES DISTRICT NO. 2018-03
(IMPROVEMENTS)
IMPROVEMENT AREA NO. 2
SPECIAL TAX BONDS, SERIES 2024
CLOSING CERTIFICATE OF DEVELOPER
(LENNAR HOMES OF CALIFORNIA, LLC)
[DATE]
In connection with the issuance, sale and delivery by the City of Sacramento (the “City”) with respect to the City of Sacramento Greenbriar Community Facilities District No. 2018-03 (Improvements) (the “District”) Improvement Area No. 2 of the bonds captioned above (the “Bonds”), and pursuant to that certain Bond Purchase Contract (the “Bond Purchase Contract”) between the City and Piper Sandler & Co., as underwriter (the “Underwriter”), the undersigned, in their capacity as a duly authorized officer or representative of Lennar Homes of California, LLC a California limited liability company (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 (Lennar Homes of California, LLC), dated [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 [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 30544.00016\42903959.2
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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.
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.
LENNAR HOMES OF CALIFORNIA, LLC,
a California limited liability company
By: _____________________
Name:___________________
Its: _____________________
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EXHIBIT K-1
$[PAR AMOUNT]
CITY OF SACRAMENTO
GREENBRIAR COMMUNITY FACILITIES DISTRICT NO. 2018-03
(IMPROVEMENTS)
IMPROVEMENT AREA NO. 2
SPECIAL TAX BONDS, SERIES 2024
FORM OF DEVELOPER’S COUNSEL OPINION
(Greenbriar Phase 2, LLC)
Capitalized terms used but not defined in this exhibit have the meanings given them in that certain Bond Purchase Contract, dated [DATE] (the “Contract”), between the City of Sacramento (the “City”) and Piper Sandler & Co., as underwriter (the “Underwriter”).
A. One or more letters of legal counsel that Greenbriar Phase 2, LLC, a Delaware limited liability company (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 [DATE], or the Final Official Statement, dated [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 – Northlake, the District and Improvement Area No. 2,” “INTRODUCTION –Property Ownership and Development Status,” “DEVELOPMENT OF PROPERTY IN IMPROVEMENT AREA NO. 2” (other than under the caption “— Acquisition of lots by Lennar Homes,” for which no certification is provided), “PROPERTY OWNERSHIP - The Developer,” and “CONTINUING DISCLOSURE – Developer and Lennar Homes Continuing Disclosure” (excluding any information regarding any property owner other than the Developer and any information cited from a source other than the Developer), as of dates of the Official Statement and as of the Closing Date, contained or contain any untrue statement of a material fact or omitted or omit to state a material fact necessary to make the statements therein, in light of the circumstances under which they were made, not misleading. The Lawyers need not opine as to the following: any financial statements and other financial, statistical, economic, or engineering data or forecasts, estimates, projections, assumptions, or expressions of opinion; or any information about valuation, appraisals, market absorption, archaeological, or environmental matters.
B. A letter from the Lawyers responsible for overseeing litigation concerning the Developer, addressed to the City and the Underwriter, certifying that, except as set forth in the Official Statement, no litigation that would materially and adversely affect the Developer’s ability to do either of the following is pending against the Developer (with service of process to the Developer having been accomplished) or, to the actual knowledge of the Lawyers, is threatened in writing against the Developer: (a) to undertake the Developer’s planned acquisition, development, and sale of property it owns in the CFD as contemplated by the Official 30544.00016\42903959.2
Bond Purchase Contract | Page K-1
Statement; or (b) to 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.
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EXHIBIT K-2
$[PAR AMOUNT]
CITY OF SACRAMENTO
GREENBRIAR COMMUNITY FACILITIES DISTRICT NO. 2018-03
(IMPROVEMENTS)
IMPROVEMENT AREA NO. 2
SPECIAL TAX BONDS, SERIES 2024
FORM OF DEVELOPER’S COUNSEL OPINION
(Lennar Homes of California, LLC)
Capitalized terms used but not defined in this exhibit have the meanings given them in that certain Bond Purchase Contract, dated [DATE] (the “Contract”), between the City of Sacramento (the “City”) and Piper Sandler & Co., as underwriter (the “Underwriter”).
A. One or more letters of legal counsel that Lennar Homes of California, LLC, a California limited liability company (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 [DATE], or the Final Official Statement, dated [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 – Northlake, the District and Improvement Area No. 2,” “INTRODUCTION – Property Ownership and Development Status,” “DEVELOPMENT OF PROPERTY IN IMPROVEMENT AREA NO. 2 — Acquisition of lots by Lennar Homes,” “—Home Construction,” and “PROPERTY OWNERSHIP – Lennar Homes of California, LLC, a California limited liability company,” (excluding any information regarding any property owner other than the Developer and any information cited from a source other than the Developer), as of dates of the Official Statement and as of the Closing Date, contained or contain any untrue statement of a material fact or omitted or omit to state a material fact necessary to make the statements therein, in light of the circumstances under which they were made, not misleading. The Lawyers need not opine as to the following: any financial statements and other financial, statistical, economic, or engineering data or forecasts, estimates, projections, assumptions, or expressions of opinion; or any information about valuation, appraisals, market absorption, archaeological, or environmental matters.
B. A letter from the Lawyers responsible for overseeing litigation concerning the Developer, certifying that, except as set forth in the Official Statement, no litigation that would materially and adversely affect the Developer’s ability to do either of the following is pending against the Developer (with service of process to the Developer having been accomplished) or, to the actual knowledge of the Lawyers, is threatened in writing against the Developer: (a) to undertake the Developer’s planned acquisition, development, and sale of property it owns in the CFD as contemplated by the Official Statement; or (b) to pay special taxes or ad valorem property taxes before delinquency on the property it owns in the CFD. 30544.00016\42903959.2
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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.
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EXHIBIT L
$[PAR AMOUNT]
CITY OF SACRAMENTO
GREENBRIAR COMMUNITY FACILITIES DISTRICT NO. 2018-03
(IMPROVEMENTS)
IMPROVEMENT AREA NO. 2
SPECIAL TAX BONDS, SERIES 2024
FORM OF ISSUE PRICE CERTIFICATE
The undersigned, Piper Sandler & Co. (the “Piper”), hereby certifies as set forth below with respect to the sale and issuance of the above-captioned obligations (the “Bonds”).
1. Bond Purchase Contract. On [DATE] (the “Sale Date”), Piper and the Issuer executed a Bond Purchase Contract (the “Purchase Agreement”) in connection with the sale of the Bonds. Piper has not modified the Purchase Agreement since its execution on the Sale Date.
2. Sale of General Rule Maturities. As of the date of this certificate, for each Maturity of the General Rule Maturities, the first price at which at least 10% of such Maturity was sold to the Public is the respective price listed in Schedule A.
3. [Initial Offering Price of the Hold-the-Offering-Price Maturities. (a) Piper offered the Hold-the-Offering-Price Maturities to the Public for purchase at the respective initial offering prices listed in Schedule A (the “Initial Offering Prices”) on or before the Sale Date. A copy of the pricing wire or equivalent communication for the Bonds is attached to this certificate as Schedule B. (b) As set forth in the Purchase Agreement, Piper has agreed in writing that, (i) for each Maturity of the Hold-the-Offering-Price Maturities, it would neither offer nor sell any of the Bonds of such Maturity to any person at a price that is higher than the Initial Offering Price for such Maturity during the Holding Period for such Maturity (the “hold-the-offering-price rule”), and (ii) any selling group agreement shall contain the agreement of each dealer who is a member of the selling group, and any third-party distribution agreement shall contain the agreement of each broker-dealer who is a party to the third-party distribution agreement, to comply with the hold-the-offering-price rule. Pursuant to such agreement, no Underwriter (as defined below) has offered or sold any Maturity of the Hold-the-Offering-Price Maturities at a price that is higher than the respective Initial Offering Price for that Maturity of the Bonds during the Holding Period.]
4. Defined Terms.
(a) General Rule Maturities means those Maturities of the Bonds listed in Schedule A hereto as the “General Rule Maturities.”
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(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 Piper has sold at least 10% of such Hold-the-Offering- Price Maturity to the Public at prices that are no higher than the Initial Offering Price for such Hold-the-Offering-Price Maturity.]
(d) Issuer means the City on behalf of the City of Sacramento Greenbriar Community Facilities District No. 2018-03.
(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 [DATE]. (h) Underwriter means (i) any person that agrees pursuant to a written contract with the Issuer (or with the lead underwriter to form an underwriting syndicate) to participate in the initial sale of the Bonds to the Public, and (ii) any person that agrees pursuant to a written contract directly or indirectly with a person described in clause (i) of this paragraph to participate in the initial sale of the Bonds to the Public (including a member of a selling group or a party to a third- party distribution agreement participating in the initial sale of the Bonds to the Public).
The representations set forth in this certificate are limited to factual matters only. Nothing in this certificate represents Piper’s interpretation of any laws, including specifically Sections 103 and 148 of the Internal Revenue Code of 1986, as amended, and the Treasury Regulations thereunder. The undersigned understands that the foregoing information will be relied upon by the Issuer with respect to certain of the representations set forth in its Certificate as to Arbitrage and with respect to compliance with the federal income tax rules affecting the Bonds, and by Jones Hall, A Professional Law Corporation, 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 30544.00016\42903959.2
Bond Purchase Contract | Page L-3
Internal Revenue Service Form 8038-G, and other federal income tax advice that it may give to the Issuer from time to time relating to the Bonds.
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PIPER SANDLER & CO.
By:
Authorized Signatory
By:
Authorized Signatory
Dated: __________
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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
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SCHEDULE B
TO
ISSUE PRICE CERTIFICATE
PRICING WIRES
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EXHIBIT M
$[PAR AMOUNT]
CITY OF SACRAMENTO
GREENBRIAR COMMUNITY FACILITIES DISTRICT NO. 2018-03
(IMPROVEMENTS)
IMPROVEMENT AREA NO. 2
SPECIAL TAX BONDS, SERIES 2024
CERTIFICATE OF MARKET ABSORPTION CONSULTANT
The Gregory Group, Folsom, California (the “Market Absorption Consultant”), prepared a “Market Absorption Consultant Report” for the City of Improvement Area No. 2 of the City of Sacramento Greenbriar Community Facilities District No. 2018-03 (the “CFD”), dated as of May 2024 (the “Absorption Report”). The Absorption Report is described and summarized in, and is set out as Appendix I to the Preliminary Official Statement dated [DATE] (the “Preliminary Official Statement”), and the Official Statement dated [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 Absorption Report in the Preliminary Official Statement and the Final Official Statement was true and correct as of the date of the Absorption Report; (b) since the date of the Absorption Report, nothing has come to the attention of the Market Absorption Consultant which would cause a material change to its conclusions in the Absorption Report; and (c) that a further updated 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 Absorption Report in connection with the distribution and use of the Preliminary Official Statement and Final Official Statement.
Dated: ________________
THE GREGORY GROUP
By: _____________________________
Stradling Yocca Carlson & Rauth
Draft dated November 26, 2024
4887-6204-0348v7/022536-0032
This Preliminary Official Statement and the information contained herein are subject to completion or amendment. These securities may not be sold, nor may offers to buy 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 DECEMBER __, 2024
NEW ISSUE—BOOK-ENTRY-ONLY NO RATING
In the opinion of Jones Hall, A Professional Law Corporation, San Francisco, California, Bond Counsel, subject, however to certain qualifications described herein, under existing law, the interest on the Bonds is excluded from gross income for federal income tax purposes and such interest is not an item of tax preference for purposes of the federal alternative minimum tax. Interest on the Bonds may be subject to the corporate alternative minimum tax. In the further opinion of Bond Counsel, such interest is exempt from California personal income taxes.
See “TAX MATTERS” herein.
$37,020,000*
CITY OF SACRAMENTO
GREENBRIAR COMMUNITY FACILITIES DISTRICT NO. 2018-03 (IMPROVEMENTS) IMPROVEMENT AREA NO. 2
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. 2 (‘Improvement Area No. 2”) of the City of Sacramento Greenbriar Community Facilities District No. 2018-03 (Improvements), City of Sacramento, County of Sacramento, State of California (the “District”). The City of Sacramento Greenbriar Community Facilities District No. 2018-03 (Improvements) Improvement Area No. 2 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 and to finance certain governmental fees required in connection with the development within the District; (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 by and between the City and U.S. Bank Trust Company, 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 (as defined in this Official Statement) levied on taxable parcels within Improvement Area No. 2 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 second amended rate and method of apportionment approved by the City Council of the City and the qualified electors within Improvement Area No. 2. See “SOURCES OF PAYMENT FOR THE BONDS.” Special taxes levied on taxable parcels in Improvement Area No. 1 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 semi-annually on each March 1 and September 1, commencing March 1, 2025. The Bonds will not be transferable or exchangeable except for transfer 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 H — “BOOK-ENTRY ONLY SYSTEM.”
NEITHER THE FULL 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 Jones Hall, A Professional Law Corporation, 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, 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 19, 2024. [PIPER SANDLER LOGO]
* Preliminary, subject to change.
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Dated: December __, 2024
4887-6204-0348v7/022536-0032
$37,020,000*
CITY OF SACRAMENTO
GREENBRIAR COMMUNITY FACILITIES DISTRICT NO. 2018-03 (IMPROVEMENTS) IMPROVEMENT AREA NO. 2
SPECIAL TAX BONDS, SERIES 2024
MATURITY SCHEDULE
Base CUSIP No.†:
$________
Serial Bonds
Maturity Date
(September 1)
Principal
Amount Interest Rate Yield Price CUSIP No. †
$__________ Term Bonds
$_______ __% 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 (Interim)
Katie Valenzuela, District 4
Eric Guerra, District 6
Rick Jennings II, District 7
Mai Vang, District 8
_______________________
ADMINISTRATIVE OFFICERS
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
Jones Hall, A Professional Law Corporation
San Francisco, California
Disclosure Counsel
Stradling Yocca Carlson & Rauth LLP
Municipal Advisor
Fieldman, Rolapp & Associates, Inc.
Irvine, California
Trustee
U.S. Bank Trust Company, National Association
San Francisco, California
Special Tax Consultant
Goodwin Consulting Group, Inc.
Sacramento, California
Appraiser
Smith & Associates, Inc.
Folsom, California
Market Absorption Consultant
The Gregory Group
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 “THE DISTRICT AND IMPROVEMENT AREA NO. 2” and “DEVELOPMENT OF PROPERTY IN IMPROVEMENT AREA NO. 2.”
THE ACHIEVEMENT OF CERTAIN RESULTS OR OTHER EXPECTATIONS CONTAINED IN
SUCH FORWARD-LOOKING STATEMENTS INVOLVE KNOWN AND UNKNOWN RISKS,
UNCERTAINTIES AND OTHER FACTORS WHICH MAY CAUSE ACTUAL RESULTS, PERFORMANCE
OR ACHIEVEMENTS DESCRIBED TO BE MATERIALLY DIFFERENT FROM ANY FUTURE RESULTS,
PERFORMANCE OR ACHIEVEMENTS EXPRESSED OR IMPLIED BY SUCH FORWARD-LOOKING STATEMENTS. THE CITY DOES NOT PLAN TO ISSUE ANY UPDATES OR REVISIONS TO THE FORWARD-LOOKING STATEMENTS SET FORTH IN THIS OFFICIAL STATEMENT.
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 Northlake, the District and Improvement Area No. 2 ......... 2 Property Ownership and Development Status..................... 4 Forward Looking Statements .............................................. 5 Sources of Payment for the Bonds ...................................... 5 Appraisal Report ................................................................. 7 Description of the Bonds .................................................... 7 Professionals Involved in the Offering ............................... 7 Continuing Disclosure ........................................................ 8 Bond Holders’ Risks ........................................................... 8 Other Information ............................................................... 8 THE FINANCING PLAN ...................................................... 9 Authorized Facilities and Fees ............................................ 9 Estimated Sources and Uses of Funds ................................ 9 THE BONDS .......................................................................... 9 General Provisions .............................................................. 9 Redemption ....................................................................... 10 DEBT SERVICE SCHEDULE ............................................. 13 SOURCES OF PAYMENT FOR THE BONDS .................. 15
Limited Obligations .......................................................... 15 Special Tax ....................................................................... 15 Bond Reserve Fund ........................................................... 23 Issuance of Parity Bonds ................................................... 24 Teeter Plan ........................................................................ 25 THE DISTRICT AND IMPROVEMENT AREA NO.
2 ............................................................................................ 25 General Description .......................................................... 25 Description of Authorized Facilities ................................. 27 De Facto Building Moratorium from 2008 to 2015 .......... 27 Flood Hazard .................................................................... 28 Direct and Overlapping Indebtedness ............................... 29 Estimated Fiscal Year 2024-25 Tax Burden ..................... 30 Market Absorption Study .................................................. 32 Property Values ................................................................ 33 Estimated Debt Service Coverage ..................................... 34 Value-To-Lien Ratios ....................................................... 34 Delinquency History ......................................................... 39
DEVELOPMENT OF PROPERTY IN
IMPROVEMENT AREA NO. 2 ........................................... 39 Northlake, the District and Improvement Area No. 2 ....... 39 Infrastructure Development .............................................. 43 Developer Financing Plan ................................................. 46 Acquisition of Lots by Lennar Homes .............................. 47 Home Construction ........................................................... 51 PROPERTY OWNERSHIP .................................................. 52 The Developer .................................................................. 53 Lennar Homes of California, LLC, a California
limited liability company .............................................. 54 SPECIAL RISK FACTORS ................................................. 55 Risks of Real Estate Secured Investments Generally ........ 55 Concentration of Ownership ............................................. 55 Failure to Develop Properties ........................................... 56 Limited Obligations .......................................................... 57 Insufficiency of Special Tax ............................................. 57 Impact of Economic Conditions on the
Development in the District .......................................... 58 Increasing Mortgage Interest Rates ................................... 58 Teeter Plan Termination ................................................... 59 Natural Disasters .............................................................. 59 Hazardous Substances ...................................................... 60 Payment of the Special Tax is not a Personal
Obligation of the Property Owners ............................... 61 Property Values ................................................................ 61 Parity Taxes and Special Assessments ............................. 61 Disclosures to Future Purchasers ...................................... 62 Special Tax Collections .................................................... 62 FDIC/Federal Government Interests in Properties ........... 63 Bankruptcy and Foreclosure ............................................. 64 No Acceleration Provision ............................................... 65 Loss of Tax Exemption .................................................... 65 Limited Secondary Market ............................................... 65 Proposition 218 ................................................................ 65 Litigation with Respect to Community Facilities
Districts ........................................................................ 66 Ballot Initiatives ............................................................... 67 Limitations on Remedies .................................................. 68 Potential Early Redemption of Bonds from
Prepayments or Community Facilities District
Bond Proceeds .............................................................. 68 Cyber Security .................................................................. 68 CONTINUING DISCLOSURE ........................................... 68 City Continuing Disclosure .............................................. 68 Developer and Lennar Homes Continuing
Disclosure ..................................................................... 69 TAX MATTERS .................................................................. 70 LEGAL MATTERS ............................................................. 72 ABSENCE OF LITIGATION .............................................. 72 MUNICIPAL ADVISOR ..................................................... 72 NO RATING ........................................................................ 72 UNDERWRITING ............................................................... 72 FINANCIAL INTERESTS .................................................. 73 PENDING LEGISLATION ................................................. 73 ADDITIONAL INFORMATION ........................................ 73
APPENDIX A SECOND AMENDED AND
RESTATED RATE AND METHOD
OF APPORTIONMENT OF
SPECIAL TAX ................................... A-1
APPENDIX B APPRAISAL REPORT ...................... B-1
APPENDIX C PROPOSED FORM OF OPINION
OF BOND COUNSEL ....................... C-1
APPENDIX D GENERAL INFORMATION
CONCERNING THE REGION ......... D-1
APPENDIX E SUMMARY OF CERTAIN
PROVISIONS OF THE
INDENTURE ...................................... E-1
APPENDIX F FORM OF CONTINUING
DISCLOSURE CERTIFICATE OF
THE CITY ........................................... F-1
APPENDIX G FORMS OF PROPERTY OWNERS
CONTINUING DISCLOSURE
CERTIFICATES ................................ G-1
APPENDIX H BOOK-ENTRY ONLY SYSTEM ...... H-1
APPENDIX I MARKET ABSORPTION REPORT ... I-1
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$37,020,000*
CITY OF SACRAMENTO
GREENBRIAR COMMUNITY FACILITIES DISTRICT NO. 2018-03 (IMPROVEMENTS) IMPROVEMENT AREA NO. 2
SPECIAL TAX BONDS, SERIES 2024
INTRODUCTION
The purpose of this Official Statement, which includes the cover page, the table of contents and the appendices (collectively, the “Official Statement”), is to provide certain information concerning the issuance by the City of Sacramento (the “City”) of the City of Sacramento Greenbriar Community Facilities District No. 2018-03 (Improvements) Improvement Area No. 2 Special Tax Bonds, Series 2024 (the “Bonds”) in the aggregate principal amount of $37,020,000*. The Bonds are being issued by the City with respect to Improvement Area No. 2 (“Improvement Area No. 2”) of the City of Sacramento Greenbriar Community Facilities District No. 2018-03 (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 and to finance certain governmental fees benefiting the District; (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 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 U.S. Bank Trust Company, National Association, as trustee (the “Trustee”).
The Bonds are secured under the Indenture by a pledge of and lien upon the Net Special Tax Revenues, which are the proceeds of the Special Tax levied on taxable parcels within Improvement Area No. 2, less the Priority Administrative Expenses (as such terms are defined in this Official Statement), and all amounts held in the Special Tax Fund, the Bond Redemption Fund, and the Bond Reserve Fund, as provided in the Indenture. See “SOURCES OF PAYMENT FOR THE BONDS.” Special taxes levied on taxable parcels in Improvement Area No. 1 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 E — “SUMMARY OF CERTAIN PROVISIONS OF THE INDENTURE — Definitions.”
* Preliminary, subject to change.
2 4887-6204-0348v7/022536-0032
Northlake, the District and Improvement Area No. 2
General. The District is generally coterminous with the boundaries of a new master-planned community that was initially named “Greenbriar” and has since been marketed as “Northlake.” Northlake is located on the southwestern corner of West Elkhorn Boulevard and State Highway 99. The Northlake project is located in an area of the City known as “North Natomas” and is approximately nine miles from downtown Sacramento and approximately four miles from the Sacramento International Airport.
Northlake is located to the north and east of the near-completed master planned communities of Westlake and Natomas Creek and directly adjacent to the east of the Sacramento Metro Air Park. The Sacramento Metro Air Park is an approximately 1,900-acre site that has been and continues to be developed for commercial and industrial uses. Based on current plans, Northlake will be included along the route of a light rail line that is proposed to be extended from downtown Sacramento to the Sacramento International Airport. The current expectation is that the light rail line will have a station along the major arterial roadway (Shore Vista Way (formerly Meister Way)) that traverses and bisects Northlake from east to west, and will then continue on to the Sacramento International Airport. The construction and operation of the light rail extension along Shore Vista Way will be the responsibility of the Sacramento Regional Transit District and not the City. No assurances can be made that such light rail extension will be constructed.
Northlake is currently planned to include approximately 2,314 single family homes, approximately 520 multifamily homes and approximately 40,000 square feet of commercial and retail space. Similar to the Westlake development located to the south, the Northlake development includes several acres of man-made lakes with certain homes to be situated on lakefront lots. The District consists of approximately 577 acres and is generally coterminous with the Northlake development, however two parcels within the Northlake project area are not within the boundaries of the District.
The District is divided into two improvement areas. The first phase of Northlake is generally coterminous with Improvement Area No. 1. Development in Improvement Area No. 1 is planned for 1,137 single-family for-sale homes. Home sales in Improvement Area No. 1 began in approximately January 2021 and as of October 31, 2024, Improvement Area No. 1 was substantially built-out with 1,116 of the 1,137 planned homes conveyed to individual homeowners. The development in Improvement Area No. 1 is being undertaken through an arrangement between affiliates of the Developer (as defined below) and Lennar Homes (as defined below) that is similar to the development arrangement for Improvement Area No. 2 described herein. The property in Improvement Area No. 1 is not subject to the levy of the Special Tax and is not security for the Bonds.
The development within Improvement Area No. 2 is planned for 1,177 market-rate for-sale homes, an elementary school (which is complete with the first class of students attending in the 2024-25 school year), and multi-family residential and commercial developments. The elementary school site, the multi-family residential and commercial development sites are not expected to be subject to the Special Tax levy.
Improvement Area No. 2 is also planned to include three parks totaling approximately 6.4 acres, open space and trails and approximately 21 acres of man-made lakes.
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.
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Pursuant to the Act, on October 23, 2018, the City Council adopted Resolution No. 2018-0410 (the “Resolution of Intention”), stating its intention to form the District, to designate two improvement areas therein (Improvement Area No. 1 and Improvement Area No. 2), and to authorize the levy of a special tax on the taxable property within each of the improvement areas within the District. On October 23, 2018, the City Council also adopted Resolution No. 2018-0411, stating its intention to incur bonded indebtedness in an aggregate principal amount not to exceed $50,000,000 with respect to Improvement Area No. 2 for the purpose of financing the acquisition, construction, expansion, improvement, or rehabilitation of certain public facilities to serve the area within the District and its neighboring areas. See “THE DISTRICT AND IMPROVEMENT AREA NO. 2 — Description of Authorized Facilities.”
On November 27, 2018, the City Council adopted Resolution No. 2018-0459 establishing the District and Improvement Area No. 1 and Improvement Area No. 2 therein. On November 27, 2018, an election was held within Improvement Area No. 2 at which the landowners eligible to vote approved the issuance of bonds for Improvement Area No. 2 in an amount not to exceed $50,000,000.
Subsequent to the formation of the District, the City received a petition from the Developer to amend the rate and method of special tax for Improvement Area No. 2 that was approved at the November 27, 2018 election with an Amended and Restated Rate and Method of Apportionment (the “First Amended Rate and Method”) and to increase the authorized bonded indebtedness for Improvement Area No. 2 from $50,000,000 to $67,000,000. On October 26, 2021, the City Council adopted Resolution No. 2021-0321, to initiate the process to approve the First Amended Rate and Method and to increase the authorized bonded indebtedness for Improvement Area No. 2. On November 30, 2021, the City Council adopted Resolution No. 2021-0349, calling an election for December 1, 2021, on the propositions to approve the First Amended Rate and Method and increase the authorized bonded indebtedness for Improvement Area No. 2 from $50,000,000 to $67,000,000, which propositions were unanimously approved by the Developer, as the sole qualified landowner elector within Improvement Area No. 2.
Subsequent to the change proceedings described in the preceding paragraph, the City received a petition from the Developer to further amend the First Amended Rate and Method with a Second Amended Rate and Method of Apportionment for Improvement Area No. 2 (the “Second Amended Rate and Method”) and to annex certain property to Improvement Area No. 2. On November 28, 2023, the City Council adopted Resolution No. 2023-0379, to initiate the process to approve the Second Amended Rate and Method and to annex certain property to Improvement Area No. 2. On January 9, 2024, the City Council adopted Resolution No. 2024-0008, calling an election for January 16, 2024, on the propositions to amend the First Amended Rate and Method and annex certain property to Improvement Area No. 2, which propositions were unanimously approved by the Developer, as the sole qualified landowner elector within Improvement Area No. 2 (including the property to be annexed).
On March 19, 2024, the City Council adopted Ordinance No. 2024-0004 (the “Ordinance”) which authorizes the levy of a special tax pursuant to the Second Amended Rate and Method approved at the January 16, 2024 election, a copy of which is attached hereto as APPENDIX A. A Second Amended Notice of Special Tax Lien (the “Second Notice”) was recorded in the office of the Clerk Recorder’s Office of the County of Sacramento (the “County”) on March 14, 2024 as Document No. 202403140563. The Second Notice identified two parcels that were originally in Improvement Area No. 1 that were annexed to Improvement Area No. 2 and subject to the Special Tax for Improvement Area No. 2. A Third Amended Notice of Special Tax Lien (the “Third Notice”) was recorded in the office of the Clerk Recorder’s office of the County on March 14, 2024 as Document No. 202403140564. The Third Notice identified the entire list of all parcels subject to the Special Tax for Improvement Area No. 2.
Any special taxes levied within Improvement Area No. 1 of the District are not pledged to the payment of the Bonds.
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Property Ownership and Development Status
The proposed development within Improvement Area No. 2 is the second and final phase of the Northlake master-planned community. The entity serving as master developer within Improvement Area No. 2 is Greenbriar Phase 2, LLC, a Delaware limited liability company (the “Developer”). The Developer is a wholly-owned subsidiary of Greenbriar Investor, LLC, which is a joint venture entity formed by affiliates of Integral Communities and Lennar Homes of California, LLC, a California limited liability company (“Lennar Homes”).
The Developer is responsible for the on-site and off-site backbone infrastructure necessary to complete the planned development within the District and Improvement Area No. 2 therein. As further described herein, the Developer has entered into an agreement with Lennar Homes for Lennar Homes to acquire all of the property within Improvement Area No. 2 that is planned for residential homes in phased takedowns. Pursuant to such agreement as may be amended, the Developer is required to substantially complete all in-tract infrastructure for the lots prior to the time Lennar Homes acquires such lots.
As of October 31, 2024, other than the Shore Vista Way Overcrossing improvement described herein, such backbone infrastructure was substantially complete and the Developer expects to complete all backbone infrastructure by the end of calendar year 2025 necessary to achieve buildout within Improvement Area No. 2.
The Developer has obtained all discretionary approvals required in order to complete the planned development within Improvement Area No. 2.
The Developer is required to construct a State Route 99 overcrossing that would connect Shore Vista Way (which bisects Northlake from east to west) to East Commerce Way, located offsite to the east of Northlake. Based on the development agreement for Northlake, as currently amended, the failure to meet certain timing and other requirements related to the construction of the overcrossing could impact the ability to record additional final subdivision maps within Improvement Area No. 2, which could negatively impact the projected timing of home construction and sales within Improvement Area No. 2. See “DEVELOPMENT OF PROPERTY IN IMPROVEMENT AREA NO. 2 — Entitlements and Mitigation Measures — Transportation Development Impact Fees/Shore Vista Way Overcrossing.”
As of the September 25, 2024, date of value of the Appraisal Report (as defined herein), the Developer has substantially completed the in-tract infrastructure for approximately 488 lots within Improvement Area No. 2, including for the 208 lots that Lennar Homes had acquired as of such date. The Developer expects to substantially complete the in-tract infrastructure for all residential lots by the end of 2026, and in any event, prior to the times necessary in order for the Developer to meet the takedown schedule agreed to with Lennar Homes.
The development within Improvement Area No. 2 is planned for 1,177 market-rate for-sale homes, an elementary school (which is complete with the first class of students attending in the 2024-25 school year), and multi-family residential and commercial developments. The elementary school site, the multi-family residential and commercial development sites are not expected to be subject to the Special Tax levy.
As of September 25, 2024, Lennar Homes had obtained 194 building permits within Improvement Area No. 2, consisting of building permits for 33 model homes (17 completed as of such date and 16 under construction) and 161 production homes (nine completed as of such date and 152 under construction). Lennar Homes opened six of the eight product lines planned within Improvement Area No. 2 for sale in September 2024 and expects to open the two remaining product lines for sale in January 2025.
As of November 11, 2024, Lennar Homes had completed and conveyed 19 homes to individual homeowners and had 54 homes in escrow. Lennar Homes currently expects to complete and convey all 1,177 planned homes within Improvement Area No. 2 to individual homeowners by the fourth quarter of 2028.
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See “DEVELOPMENT OF PROPERTY IN IMPROVEMENT AREA NO. 2” and “PROPERTY OWNERSHIP.”
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 “THE DISTRICT AND IMPROVEMENT AREA NO. 2,” “DEVELOPMENT OF PROPERTY IN IMPROVEMENT AREA NO. 2” and APPENDIX B — “APPRAISAL REPORT.”
THE ACHIEVEMENT OF CERTAIN RESULTS OR OTHER EXPECTATIONS CONTAINED IN
SUCH FORWARD-LOOKING STATEMENTS INVOLVES KNOWN AND UNKNOWN RISKS,
UNCERTAINTIES AND OTHER FACTORS WHICH MAY CAUSE ACTUAL RESULTS,
PERFORMANCE OR ACHIEVEMENTS 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 the Net Special Tax Revenues on a parity with the Bonds, which may be issued for purposes of funding additional eligible facilities or to refund Outstanding Bonds (the “Parity Bonds”) and any 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. 2, and, subject to the conditions set forth in the Indenture, amounts held in the Special Tax Fund, the Bond Redemption Fund and the Bond Reserve Fund. As described in this Official Statement, the Special Tax will be collected along with ad valorem property taxes on the tax bills mailed by the County. Although the Special Tax constitutes a lien on the property subject to taxation in Improvement Area No. 2, it does not constitute a personal 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. See “SOURCES OF PAYMENT FOR THE BONDS” and “SPECIAL RISK FACTORS.”
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 taxes which have been authorized pursuant to the Act to be levied against Taxable Land (as defined in the Indenture) within Improvement Area No. 2 under and pursuant to the Act and in accordance with the Second Amended Rate and Method; (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 preceding Fiscal Year’s Priority Administrative Expenses plus 3% of such amount. See “SOURCES OF PAYMENT FOR THE BONDS — Special Tax” and APPENDIX A — “SECOND AMENDED AND RESTATED RATE AND METHOD OF APPORTIONMENT OF SPECIAL TAX.” Under the Indenture, the City will pledge to pay debt service on
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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 debt service on the Bonds and any Parity Bonds are amounts held by the Treasurer in the Special Tax Fund and the amounts held in the Bond Reserve Fund, and the Bond Redemption Fund held by the Trustee under 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 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.
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. 2 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.” There is no assurance that the Taxable Property within Improvement Area No. 2 can be sold for the appraised or assessed values described in this Official Statement and in the Appraisal Report, 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. 2. See “SPECIAL RISK FACTORS — Property Values” and APPENDIX B — “APPRAISAL REPORT.”
NEITHER THE FULL 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, which may be issued for purposes of funding additional eligible facilities or to refund outstanding Bonds and any Parity Bonds. 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. 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
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No. 2, which could adversely affect the ability and willingness of the landowners to pay the Special Tax when due. See “SPECIAL RISK FACTORS — Parity Taxes and Special Assessments.” Appraisal Report
An MAI appraisal (the “Appraisal Report”) of taxable property and existing improvements within Improvement Area No. 2 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.” The Appraisal Report provides an estimated aggregate of market value for the Taxable Property within Improvement Area No. 2. As further described herein, Multi-Family Property, other than Taxable Multi-Family Property, and the property in Improvement Area No. 2 planned for Non-Residential uses, are Exempt Property (as such terms are defined in the Second Amended Rate and Method) and are not subject to the Special Tax levy. As a result, only the Villages planned for the 1,177 for-sale residential homes are included in the appraised value of the Taxable Property. As of the Date of Value, the Appraiser estimates that the aggregate market value of the Taxable Property (as defined in the Second Amended Rate and Method) within Improvement Area No. 2 was not less than $134,605,000.
The Appraisal Report is based upon a variety of assumptions and limiting conditions that are described in APPENDIX B. The City makes no representations as to the accuracy of the Appraisal Report.
See “THE DISTRICT AND IMPROVEMENT AREA NO. 2 — Property Values” and “— Projected Special Tax Levy and Value-To-Lien Ratios.” There is no assurance that any property within Improvement Area No. 2 can be sold for the estimated values set forth in the Appraisal Report or that any 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 “THE DISTRICT AND IMPROVEMENT AREA NO. 2,” “SPECIAL RISK FACTORS — Property Values” and APPENDIX B — “APPRAISAL REPORT.” 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 H. 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 H — “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 E — “SUMMARY OF CERTAIN PROVISIONS OF THE INDENTURE.” Professionals Involved in the Offering
U.S. Bank Trust Company, National Association, will act as Trustee under the Indenture. Piper Sandler & Co. is the underwriter (the “Underwriter”) of the Bonds. The validity of the Bonds and certain other legal matters are subject to the approving opinion of Jones Hall, A Professional Law Corporation, Bond
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Counsel to the City in connection with the issuance of the Bonds. Stradling Yocca Carlson & Rauth LLP 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 and for the Trustee by its counsel. Other professional services have been performed by Smith & Associates, Inc., Folsom, California, as the Appraiser, The Gregory Group, Folsom, California as Market Absorption Consultant, Fieldman, Rolapp & Associates, Inc., Irvine, California as municipal advisor to the City, Goodwin Consulting Group, Inc., Sacramento, California, as Special Tax Consultant, and BBG, Inc., Sacramento, California, as the 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.”
Continuing Disclosure
The City has agreed to provide, or cause to be provided, pursuant to Rule 15c2-12 adopted by the Securities and Exchange Commission (the “Rule”) certain financial information and operating data on an annual basis (the “City Reports”). The City has further agreed to provide, in a timely manner, notice of certain events with respect to the Bonds (the “Listed Events”). These covenants have been made in order to assist the Underwriter in complying with the Rule. The City Reports will be filed with the Electronic Municipal Market Access System (“EMMA”) of the Municipal Securities Rulemaking Board (the “MSRB”) available on the Internet at http://emma.msrb.org. Notices of Listed Events will also be filed with the MSRB. Within the last five years, the City and certain related entities have failed to comply in certain respects with prior continuing disclosure undertakings. See “CONTINUING DISCLOSURE.”
The Underwriter does not consider the Developer or Lennar Homes to be an “obligated person” with respect to the Bonds for purposes of the Rule. However, to assist in the marketing of the Bonds, the Developer and Lennar Homes have agreed to provide, or cause to be provided on EMMA, updated information with respect to the development within Improvement Area No. 2 of the District (the “Developer Reports” and together with the City Reports, the “Reports”), on a semi-annual basis and notices of certain events.
See “CONTINUING DISCLOSURE” and APPENDIX F and APPENDIX G for a description of the specific nature of the annual reports to be filed by the City, the semi-annual reports to be filed by the Developer and Lennar Homes, notices of Listed Events and the forms of the continuing disclosure undertakings pursuant to which such Reports are to be made.
Bond Holders’ Risks
Certain events could affect the ability of the City to collect the Special Tax in an amount sufficient to pay the principal of and interest on the Bonds when due. See the section of this Official Statement entitled “SPECIAL RISK FACTORS” for a discussion of certain factors which should be considered, in addition to other matters set forth herein, in evaluating an 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,
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are qualified in their entirety by references to such documents, laws and proceedings, and with respect to the Bonds, by reference to the Indenture.
Copies of the Indenture, the Appraisal Report 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 and Fees
A portion of the proceeds of the Bonds will be applied to finance the costs of the acquisition and construction of certain facilities and to finance governmental fees authorized under the Act which facilities and fees relating to the costs of such facilities, include without limitation, water, sewer and storm drain improvements, roadways and traffic improvements, landscaping and park improvements, and school facilities, in addition to other improvements authorized under the Acquisition Agreement described below. See “THE DISTRICT AND IMPROVEMENT AREA NO. 2 — Description of Authorized Facilities.” 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 semi-annually 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
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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 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 H — “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, 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
103%
102
101
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 on or after March 1, 2025, 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:
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Redemption Dates
Redemption
Price
103%
102
101
100
See the caption “SPECIAL RISK FACTORS—Potential Early Redemption of Bonds from Prepayments or Community Facilities District 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 (except that if any of the Bonds maturing on September 1, 20__ have been optionally or extraordinarily redeemed, the amounts of the Sinking Fund Account Payments therefor shall be reduced proportionately by the principal amount of all such Bonds so optionally or extraordinarily redeemed):
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 (except that if any of the Bonds maturing on September 1, 20__ have been optionally or extraordinarily redeemed, the amounts of the Sinking Fund Account Payments therefor shall be reduced proportionately by the principal amount of all such Bonds so optionally or extraordinarily redeemed):
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 (except that if any of the Bonds maturing on September 1, 20__ have been optionally or extraordinarily redeemed, the amounts of the Sinking
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Fund Account Payments therefor shall be reduced proportionately by the principal amount of all such Bonds so optionally or extraordinarily redeemed):
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 so designated. 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 20 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, and (b) to the securities information services selected by the City in accordance with the Indenture. 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.
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 two Business Days before the date specified for redemption. The Trustee will give notice of such
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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, if any, 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.
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. See “SOURCES OF PAYMENT FOR THE BONDS” and “THE BONDS — Redemption.” The Bonds have been structured such that the projected annual Net Special Tax Revenues, assuming no delinquencies, if the Special Tax is levied at the Maximum Special Tax Rates on 797 parcels which are or are expected to be within recorded final subdivision maps by the first half of calendar year 2025 – comprised of 488 parcels within recorded final subdivision maps, 210 parcels that are anticipated to be within recorded final subdivision maps by the end of calendar year 2024, and 99 parcels that are anticipated to be within recorded final subdivision maps by the end of the first half of calendar year 2025, would produce not less than 110% annual coverage on annual Debt Service on the Bonds. At buildout, the City expects to levy the Special Tax at such rates to meet the Special Tax Requirement, which may be less than the Maximum Special Tax rates. The estimated timing of final map recordation for purposes of sizing the Bonds differs from the Developer’s current expected timing with respect to such final maps.
[Remainder of Page Intentionally Left Blank]
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Date Principal Interest Total Debt Service
Total $ $ $
Source: The Underwriter.
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SOURCES OF PAYMENT FOR THE BONDS
Limited Obligations
The Bonds are payable from and secured by Net Special Tax Revenues and by amounts on deposit in the Special Tax Fund, the Bond Redemption Fund and the Bond Reserve Fund. The Bonds are not secured by monies on deposit in the Expense Fund, the Rebate Fund or the Acquisition and Construction Fund established by the Indenture.
The Indenture defines the terms: (1) “Special Tax” to mean the special tax authorized to be levied and collected annually on all Taxable Land in Improvement Area No. 2 in accordance with the Second Amended Rate and Method under and pursuant to the Act; (2) “Net Special Tax Revenues” to mean the proceeds of the Special Tax less the Priority Administrative Expenses; and (3) “Priority Administrative Expenses” to mean (i) for Fiscal Year 2025-26, $20,000, and (ii) for each subsequent Fiscal Year, an amount equal to the preceding Fiscal Year’s Priority Administrative Expenses plus 3% of such amount. See APPENDIX E — “SUMMARY OF CERTAIN PROVISIONS OF THE INDENTURE — Definitions.”
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 Second Amended Rate and Method. See “SOURCES OF PAYMENT FOR THE BONDS — Special Tax” and “SPECIAL RISK FACTORS — Proposition 218” below. The Second Amended Rate and Method apportions the total amount of the Special Tax to be collected among the Taxable Property in Improvement Area No. 2. See “—Special Tax” and APPENDIX A — “SECOND 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. 2, 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 FULL 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 Improvement Area No. 2 therein on November 27, 2018, for the purpose of financing the various public improvements and governmental fees required in connection with the proposed development within the District. In connection with certain change proceedings with respect to Improvement Area No. 2, on December 1, 2021, an election was held within Improvement Area No. 2 at which the landowners eligible to vote approved the issuance of bonds for the District with respect to Improvement Area No. 2 in an amount not to exceed $67,000,000, secured by special taxes levied on property within Improvement Area No. 2 to finance the facilities and fees. On January 16, 2024, the landowners within Improvement Area No. 2 also voted to approve the Second Amended Rate and Method which authorized the Special Tax to be levied to repay indebtedness of the District with respect to Improvement Area No. 2, including the Bonds.
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The City will covenant in the Indenture, so long as any Bonds are Outstanding, to annually levy the Special Tax against all Taxable Land in Improvement Area No. 2 in accordance with the Second Amended Rate and Method and, subject to the limitations in the Second 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, 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 taxes. See APPENDIX A — “SECOND AMENDED AND RESTATED RATE AND METHOD OF APPORTIONMENT OF SPECIAL TAX.” See also “— Collection of Special Tax; Suspension of Penalties and Interest.”
Flow of Funds. Under the Indenture, except as described below, all proceeds of the Special Tax are to be deposited in the Special Tax Fund, which is being established under the Indenture and is held and maintained in trust by the City Treasurer. The City agrees in the Indenture to deposit all proceeds of the Special Tax in the Special Tax Fund when and as received and to transfer all amounts in the Special Tax Fund into the following funds in the following order of priority:
(1) to the Expense Fund (maintained by the Treasurer) a sum equal to the Priority Administrative Expenses,
(2) to the Bond Redemption Fund (maintained by the Trustee) to pay debt service payments on all Outstanding Bonds and any Parity Bonds,
(3) to the Bond Reserve Fund (maintained by the Trustee) to the extent necessary to replenish the Bond Reserve Fund to the Required Bond Reserve and to any other reserve fund established for a Series of Parity Bonds, on a pro rata basis,
(4) to 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 either case, to the extent such Expenses were not already funded or reimbursed by Priority Administrative Expenses, and
(5) to the Community Facilities Fund to be used and withdrawn by the City for the benefit of the District in accordance with the Act
Promptly after receipt of any proceeds of the Special Tax in a Fiscal Year, the Treasurer will, 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.
At least one Business Day prior to the first day of each March and September, the Treasurer will, from the then remaining money in the Special Tax Fund, transfer to the Trustee for deposit in the Bond Redemption Fund an amount equal to the aggregate amount of interest becoming due and payable on all Outstanding Bonds and Parity Bonds on such March 1 and September 1. At least one Business Day prior to the first day in September in each year, the Treasurer will, from the then remaining money in the Special Tax Fund, transfer to the Trustee for deposit in the Bond Redemption Fund an amount equal to the aggregate amount of principal
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becoming due and payable on all Outstanding Serial Bonds on that September 1, plus the aggregate of the Sinking Fund Account Payments required by the Indenture to be made on that September 1 into the Sinking Fund Account.
All of the aforesaid payments shall be made 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 and Parity Bonds on such date, or in the event that the money in the Bond Redemption Fund on any September 1 is not equal to the amount of principal of the Bonds and Parity Bonds becoming due on such date plus the amount of the Sinking Fund Account Payments becoming due on such date, as the case may be, then such money shall be applied pro rata in such proportion as such interest and principal and Sinking Fund Account Payments bear to each other.
No deposit needs to be made into the Bond Redemption Fund if the amount of money contained in the Bond Redemption Fund is at least equal to the amount required by the Indenture to be deposited in the Bond Redemption Fund at the times and in the amounts described above.
Notwithstanding anything to the contrary in the Indenture, as soon as practicable after the receipt by the City of any prepayment of the Special Tax, the Treasurer shall (i) deposit any component thereof representing the “Remaining Facilities Amount” (as defined in the Second 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 Second Amended Rate and Method) in the Expense Fund, and (iii) transfer to the Trustee for deposit in the Bond Redemption Fund, any remaining amounts, for the extraordinary redemption of Bonds or Parity Bonds pursuant to the terms of any Supplemental Indenture. The respective amounts of the deposits and transfers described in clauses (i), (ii) and (iii) will be determined by the Treasurer.
The Special Tax levied in any fiscal year may not exceed the maximum rates authorized pursuant to the Second Amended Rate and Method. See APPENDIX A — “SECOND 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.
For additional details on the flow of funds under the Indenture, see APPENDIX E – “SUMMARY OF CERTAIN PROVISIONS OF THE INDENTURE.”
Second Amended 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 Second Amended Rate and Method which the City Council and the electors within Improvement Area No. 2 have approved. The Second Amended Rate and Method apportions the total amount of the Special Tax to be collected among the Taxable Property in the Improvement Area No. 2 as more particularly described below.
The following is a synopsis of the provisions of the Second Amended Rate and Method for Improvement Area No. 2, which should be read in conjunction with the complete text of the Second Amended Rate and Method which is attached as APPENDIX A — “SECOND AMENDED AND RESTATED RATE AND METHOD OF APPORTIONMENT OF SPECIAL TAX.” The definitions of the capitalized terms used under this caption “—Second Amended Rate and Method of Apportionment of Special Tax” are as set forth in APPENDIX A. This section provides only a summary of the Second Amended Rate and Method, and is qualified by more complete and detailed information contained in the entire Second Amended Rate and Method attached as APPENDIX A.
Classification of Parcels. On or about July 1 of each Fiscal Year, the Administrator shall identify the Special Tax Requirement for the Fiscal Year. The Administrator shall also determine the following for each
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Assessor’s Parcel: (1) the current Assessor’s Parcel Number for the Assessor’s Parcel; (2) whether it is Developed Property, Final Map Property, Undeveloped Property, Anticipated Park/School Site Property, Taxable HOA Property, Taxable Multi-Family Property, Taxable Welfare Exemption Property, Taxable Public Property, or Exempt Property; (3) for Developed Property, whether an Assessor’s Parcel is Single Family Residential Property or Non-Residential Property; and (4) for Single Family Residential Property, within which Village each Assessor’s Parcel is located and the number of Residential Units on the Assessor’s Parcel.
In addition, the Administrator shall, on an ongoing basis, monitor Tentative Map revisions, Final Maps, and condominium plans to determine if there are any proposed changes to the Expected Land Uses that would reduce the Expected Maximum Special Tax Revenues for a Village. If the Expected Maximum Special Tax Revenues will be reduced pursuant to a proposed Land Use Change, the Administrator shall apply the steps set forth in the Second Amended Rate and Method and described below.
In any Fiscal Year, if the Administrator determines that: (1) a Final Map or other map for an Assessor’s Parcel within Improvement Area No. 2 was recorded after January 1 of the prior Fiscal Year (or on any other date after which the County Assessor will not incorporate the newly created parcels into the then- current tax roll); (2) because of the date the map was recorded, the County Assessor does not yet recognize the new parcels created by the map; and (3) that one or more of the newly created parcels is in a different Development Class from other parcels created by the map, then the Administrator shall calculate the Special Tax for the property affected by recordation of the map by determining the Special Tax that applies separately to the property within each Development Class and then applying the sum of the individual Special Taxes to the Assessor’s Parcel that was subdivided by recordation of the map.
Each Fiscal Year, the Administrator shall determine the Special Tax Requirement to be collected in that Fiscal Year. The City shall then levy the Special Tax according to the following steps:
Step 1. The Special Tax will be levied Proportionately on Developed Property up to 100% of the Maximum Special Tax for each Assessor’s Parcel until the amount levied is equal to the Special Tax Requirement before applying Capitalized Interest that is available under the Indenture.
Step 2. If additional revenue is needed after Step 1 to meet the Special Tax Requirement after Capitalized Interest has been applied to reduce the Special Tax Requirement, the Special Tax will be levied Proportionately on Final Map Property up to 100% of the Maximum Special Tax for each Assessor’s Parcel of Final Map Property.
Step 3. If additional revenue is needed after Step 2 to meet the Special Tax Requirement after Capitalized Interest has been applied to reduce the Special Tax Requirement, the Special Tax will be levied Proportionately on Undeveloped Property up to 100% of the Maximum Special Tax for each Assessor’s Parcel of Undeveloped Property.
Step 4. If additional revenue is needed after Step 3 to meet the Special Tax Requirement, the Special Tax will be levied Proportionately on Anticipated Park/School Site Property up to 100% of the Maximum Special Tax for each Assessor’s Parcel of Anticipated Park/School Site Property.
Step 5. If additional revenue is needed after Step 4 to meet the Special Tax Requirement, the Special Tax will be levied Proportionately on Taxable Multi-Family Property up to 100% of the Maximum Special Tax for each Assessor’s Parcel of Taxable Multi-Family Property.
Step 6. If additional revenue is needed after Step 5, the Special Tax will be levied Proportionately on Taxable Welfare Exemption Property up to 100% of the Maximum Special Tax for each Assessor’s Parcel of Taxable Welfare Exemption Property
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Step 7. If additional revenue is needed after Step 6 to meet the Special Tax Requirement, the Special Tax will be levied Proportionately on Taxable HOA Property up to 100% of the Maximum Special Tax for each Assessor’s Parcel of Taxable HOA Property.
Step 8. If additional revenue is needed after Step 7 to meet the Special Tax Requirement, the Special Tax will be levied Proportionately on Taxable Public Property up to 100% of the Maximum Special Tax for each Assessor’s Parcel of Taxable Public Property.
Maximum Special Tax Rates. The Maximum Special Tax rates for Developed Property and Final Map Property is the greater of (i) the Special Tax rates set forth in Table 1 below (which rates will increase by two percent each Fiscal Year from the amount in effect in the previous Fiscal Year), or, (ii) the Maximum Special Tax determined pursuant to Section D as described under “— Changes to Maximum Special Tax Rates” below.
The Maximum Special Tax for Undeveloped Property, Anticipated Park/School Site Property, Taxable Multi-Family Property, Taxable HOA Property, Taxable Welfare Exemption Property, and Taxable Public Property is $32,347 per Acre for Fiscal Year 2025-26, which amount shall increase on each July 1 by an amount equal to 2.0% of the amount in effect for the prior Fiscal Year.
Changes to Maximum Special Tax Rates. The Expected Maximum Special Tax Revenues were calculated based on the Expected Land Uses at the time the change proceedings for Improvement Area No. 2 were completed on March 12, 2024. The Expected Maximum Special Tax Revenues for each Village at such time are set forth in Attachment 1 to the Second Amended Rate and Method (see Appendix A). Attachment 1 is subject to modification upon the occurrence of Land Use Changes. The Administrator shall review Final Maps, Tentative Map revisions, and other changes to land uses proposed within Improvement Area No. 2 and compare the revised land uses to the Expected Land Uses to evaluate the impact on the Expected Maximum Special Tax Revenues.
After issuance of the Bonds, if a Land Use Change is proposed or identified, the Administrator shall take the following steps:
Step 1: By reference to Attachment 1 to the Second Amended Rate and Method (which shall be updated by the Administrator each time a Land Use Change has been processed according to the Second Amended Rate and Method or a partial prepayment has been made), the Administrator shall identify the Expected Maximum Special Tax Revenues prior to the Land Use Change.
Step 2: The Administrator shall calculate the Expected Maximum Special Tax Revenues that could be collected from Taxable Property in Improvement Area No. 2 after the Land Use Change.
Step 3: If the revenues calculated in Step 2 are (i) higher than determined in Step 1 or (ii) less than those calculated in Step 1, but the reduction in Expected Maximum Special Tax Revenues does not reduce debt service coverage on Outstanding Bonds below the Required Coverage, no further action is needed, and the Administrator shall update Attachment 1 to the Second Amended Rate and Method to show the revised Expected Maximum Special Tax Revenues.
If the revenues calculated in Step 2 are less than those calculated in Step 1, and the Administrator determines that the reduction in Expected Maximum Special Tax Revenues would reduce debt service coverage on Outstanding Bonds below the Required Coverage, one of the following shall occur:
3.a. The landowner requesting the Land Use Change (the “Requesting Landowner”) may make a prepayment in an amount that will ensure that the reduced Expected Maximum Special Tax Revenues are sufficient to provide Required Coverage, as determined pursuant to Section H of the Second Amended Rate and Method. If the Requesting Landowner notifies the Administrator that
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he/she would like to remedy the reduction by making a prepayment, such prepayment must be made by the earlier of (i) 30 days from the date of delivery of the prepayment estimate or (ii) the date of issuance of any Building Permits for any Assessor’s Parcel owned by the Requesting Landowner that was Final Map Property or Undeveloped Property at the time the Administrator prepared the prepayment estimate, or
3.b. If a prepayment is not received, the Base Special Tax for each Assessor’s Parcel of Taxable Property in the area affected by the Land Use Change shall be increased proportionately until the Expected Maximum Special Tax Revenues for the area affected by the Land Use Change are the same as it was prior to the Land Use Change.
If multiple Land Use Changes are proposed simultaneously by a single landowner (which may include approval of multiple Final Maps at one time), the Administrator may consider the combined effect of all the Land Use Changes to determine if there is a reduction in Expected Maximum Special Tax Revenues. If there is a reduction, the Administrator shall increase the Maximum Special Tax proportionately in all of the Final Maps being proposed by the landowner until the aggregate amount that can be levied within the Final Maps is equal to the amount that could have been levied prior to the proposed Land Use Changes. If Land Use Changes are proposed simultaneously by multiple landowners, the Administrator shall consider the proposed Land Use Changes individually.
Notwithstanding the foregoing, once a certificate of occupancy has been issued for a Residential Unit on an Assessor’s Parcel, the Maximum Special Tax for the Assessor’s Parcel cannot be increased because of subsequent Land Use Changes that may occur within the area in which the Assessor’s Parcel is located.
Table 1 below shows the Expected Maximum Special Tax Revenues at buildout within Improvement Area No. 2 (i.e., assuming building permits have been issued for all 1,177 planned residential units), based on the Fiscal Year 2025-26 Base Special Tax rates for Developed Property and assuming no Land Use Changes after the issuance of the Bonds. If no Land Use Changes occur after the issuance of the Bonds, the Base Special Tax rates for Developed Property will be those set forth in Table 1 below, which increase by 2% per Fiscal Year.
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TABLE 1
IMPROVEMENT AREA NO. 2 OF
CITY OF SACRAMENTO
GREENBRIAR COMMUNITY FACILITIES DISTRICT NO. 2018-03 (IMPROVEMENTS)
EXPECTED LAND USES AND EXPECTED MAXIMUM SPECIAL TAX REVENUES
AT BUILDOUT
Village
Number of
Planned
Units(1)
Fiscal Year 2025-26
Base Special Tax Rates(2)
Fiscal Year 2025-26
Expected Maximum
Special Tax Revenues
at Buildout
Village 1A 64 $2,310 $147,834
Village 1B 40 2,310 92,396
Village 2 89 2,310 205,582
Village 3 11 2,995 32,946
Village 4 68 2,630 178,861
Village 5 61 2,630 160,449
Village 6 54 2,995 161,735
Village 7 26 3,269 84,993
Village 8 88 2,995 263,568
Village 9 53 3,269 173,254
Village 10 59 3,269 192,868
Village 11 44 2,630 115,734
Village 12 60 3,322 199,319
Village 13 50 3,322 166,099
Village 14 54 2,885 155,773
Village 15 29 2,885 83,656
Village 16 34 2,885 98,079
Village 17 46 2,885 132,695
Village 18 59 3,622 213,687
Village 19 49 3,622 177,469
Phase 1 - Village 14(3) 139 1,828 254,124
Total 1,177 $3,291,121
(1) Based on the expected land uses within each Village provided by the Developer as of September 25, 2024. (2) The Special Tax rates per residential unit in Table 1 above increase by 2.0% per Fiscal Year. (3) Also referred to herein as Village 14/20.
Source: Goodwin Consulting Group, Inc.
Transfer of Expected Maximum Special Tax Revenues from One Village to Another. The Expected Maximum Special Tax Revenues were determined for each Village based on the Expected Land Uses within that Village. If the expected number of Residential Units is transferred from one Village to another, the City may, in its sole discretion, allow for a corresponding transfer of Expected Maximum Special Tax Revenues between the Villages. Such a transfer shall only be allowed if: (1) all adjustments are agreed to in writing by the affected property owners and the City; and (2) there is no reduction in the total Expected Maximum Special Tax Revenues as a result of the transfer.
Exemptions. The Special Tax will not be levied in any Fiscal Year on: (1) Exempt Property, except Taxable Public Property, Taxable Multi-Family Property, Taxable Non-Residential Property, Taxable Welfare Exemption Property, and Taxable HOA Property; or (2) Prepayment Parcels that have fully prepaid the Special Tax obligation.
Notwithstanding the foregoing, if a Special Tax has been levied on an Assessor’s Parcel in any Fiscal Year, and the entire Assessor’s Parcel subsequently meets the criteria to be categorized as Exempt Property,
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the Assessor’s Parcel shall remain subject to the Special Tax levy, unless the First Bond Sale has yet to occur, in which case such property shall be categorized as Public Property, HOA Property, or Multi-Family Property, as the case may be, and the Administrator shall recalculate the Expected Maximum Special Tax Revenues based on the corresponding change in revenues.
Prepayment of Annual Special Tax. The Special Tax obligation for an Assessor’s Parcel may be prepaid in full, or in part, provided that the terms set forth under the Second Amended Rate and Method are satisfied. The Prepayment Amount is calculated as specified in Section H of the Second Amended Rate and Method attached as APPENDIX A.
Limitation on Special Tax Levy. Pursuant to Section 53321(d) of the Government Code, the Special Tax levied against any Assessor’s parcel for which an occupancy permit for private residential use has been issued shall not be increased as a consequence of delinquency or default by the owner of any other Assessor’s parcel within Improvement Area No. 2 by more than 10% above the amount that would have been levied in that Fiscal Year had there never been any such delinquencies or defaults. As a result, it is possible that the City may not be able to increase the tax levy to the Maximum Special Tax in all years. However, subject to the limitations on the City’s ability to levy the necessary amount of the Special Tax as imposed by Section 53321(d) of the Government Code, the City can levy the Special Tax on all Taxable Property to make- up all or a portion of any shortfall in the Special Tax levy, subject to the maximum Special Tax rate on such Taxable Property.
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. 2 of the District.
Although the Special Tax constitutes a lien on Taxable Property (as defined in the Second Amended Rate and Method) within Improvement Area No. 2, it does not constitute a personal indebtedness of the owners of property within Improvement Area No. 2. In addition to the obligation to pay the Special Tax, properties in Improvement Area No. 2 are subject to other assessments and special taxes as set forth under Table 2 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. 2. See “SPECIAL RISK FACTORS — Parity Taxes and Special Assessments.” There is no assurance that property owners will be financially able to pay the Special Tax or that they will pay such taxes even if financially able to do so. See “SPECIAL RISK FACTORS” below.
Foreclosure Covenant. The proceeds of delinquent amounts of the Special Tax received following a judicial foreclosure sale of parcels within Improvement Area No. 2 resulting from a landowner’s failure to pay the Special Tax when due, up to the amount of the 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.
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However, the City will covenant in the Indenture to, annually on or before October 1 of each year review the public records of the County relating to the collection of the Special Tax in order to determine the amount of the Special Tax collected in the prior Fiscal Year, and 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.
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).
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” herein. 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” herein. Although the Act authorizes the City to cause such an action to be commenced and diligently pursued to completion, the Act does not impose on the City any obligation to purchase or acquire any lot or parcel of property sold at a foreclosure sale if there is no other purchaser at such sale. The Act provides that, in the case of a delinquency, the Special Tax will have the same lien priority as is provided for ad valorem property taxes.
Bond Reserve Fund
In order to secure the payment of principal of and interest on the Bonds, the City is required, upon delivery of the Bonds, to deposit in the Bond Reserve Fund an amount equal to the Required Bond Reserve and thereafter to maintain in the Bond Reserve Fund an amount equal to the Required Bond Reserve.
The Indenture provides that the amount to be maintained in the Bond Reserve Fund as the Required Bond Reserve shall, as of any date of calculation, with respect to the Bonds and any Series of Parity Bonds (unless otherwise specified in a Supplemental Indenture, including to have the Bond Reserve Fund secure the Bonds and any other Series of Parity Bonds), the least of (a) 10% of the principal amount of the Bonds or such Series of Parity Bonds, (b) Maximum Annual Debt Service with respect to the Bonds or such Series of Parity Bonds, and (c) 125% of the average annual Debt Service with respect to the Bonds or such Series of Parity Bonds, all as determined by the City under the Internal Revenue Code of 1986, as amended (the “Tax Code”), and specified in writing to the Trustee; provided, that (1) if the Bond Reserve Fund will secure any Series of Parity Bonds, all the Bonds and such Parity Bonds shall be covered by the Bond Reserve Fund; (2) such requirement (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 “AA” or higher
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assigned by Fitch or “Aa” or higher assigned by Moody’s or “AA” or higher assigned by S&P, in each case without regard to any numerical modifier or plus or minus sign; (3) 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
(4) with respect to the issuance of any issue of Parity Bonds, if the amount on deposit in the Bond Reserve Fund or other applicable reserve fund for a Series of Parity Bonds 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 Special Tax which may be levied within Improvement Area No. 2 in accordance with the Second 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 and any other reserve fund established for a Series of Parity Bonds at the applicable 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 secured thereby, 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 secured thereby 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 E — “SUMMARY OF CERTAIN PROVISIONS OF THE INDENTURE — Allocation of Money in the Special Tax Fund.”
Issuance of Parity Bonds
The City may issue Parity Bonds to finance additional facilities or to refund any Outstanding Bonds and Parity Bonds. The City may issue Parity Bonds to finance additional facilities, subject to, among others set forth in the Indenture, the following conditions:
(a) The Net Special Tax Revenues expected to be available to the City if the Special Tax were to be levied and collected at its maximum rate and amount on all Taxable Land in Improvement Area No. 2 during each Fiscal Year that the Bonds and such 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 (b) 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 paragraph, 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 Parity Bonds 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, 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 Parity Bonds proposed to be issued and reasonably allocable to such Undeveloped
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Property, plus the principal amount of all other assessment bonds and bonds issued under the Act and reasonably allocable to such Undeveloped Property; and the term “Undeveloped Property” means all parcels of Taxable Land for which a building permit has not been issued.
Notwithstanding the foregoing, nothing contained in the Indenture limits the issuance of Parity Bonds if, after the issuance and delivery of such Parity Bonds, either (i) none of the Bonds and Parity Bonds theretofore issued will be Outstanding or (ii) the Debt Service in each Bond Year that begins after the issuance of such Parity Bonds is not increased by reason of the issuance of such Parity 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 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. 2 will be included in the County’s Teeter Plan when the Special Tax is levied. See “SPECIAL RISK FACTORS — Teeter Plan Termination.” THE DISTRICT AND IMPROVEMENT AREA NO. 2
General Description
The District was formed and Improvement Area No. 2 was designated therein in 2018 by the City Council under the Act to provide for the financing of public improvements to meet the needs of new development. The eligible electors within Improvement Area No. 2 authorized the City to incur bonded indebtedness with respect to Improvement Area No. 2 to finance certain public facilities and governmental fees to meet the needs of new development within the District, approved the Second Amended Rate and Method for Improvement Area No. 2 and authorized the levy of the Special Tax.
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The District is generally coterminous with the boundaries of a new master-planned community that was initially named “Greenbriar” and has since been marketed as “Northlake.” Northlake is currently planned to include approximately 2,314 single family homes, approximately 520 multifamily homes and approximately 40,000 square feet of commercial and retail space. The District consists of approximately 577 acres.
Northlake is planned to be developed in two phases with the first phase being generally coterminous with Improvement Area No. 1 of the District. Development in Improvement Area No. 1 is planned for 1,137 single- family for-sale homes. Home sales in Improvement Area No. 1 began in approximately January 2021 and as of October 31, 2024, Improvement Area No. 1 was substantially built-out with 1,116 of the 1,137 planned homes conveyed to individual homeowners.
The second phase of Northlake is generally coterminous with Improvement Area No. 2.
Improvement Area No. 2 consists of approximately 288 acres located to the west of State Highway 99, south of Shore Vista Way (formerly Meister Way), east of Lone Tree Road and north of the Interstate 5 Freeway.
Approximately 20 acres located on the northwestern end of Phase 1 of Northlake (non-contiguous to the balance of Improvement Area No. 2) was annexed to Improvement Area No. 2 in March 2024 (referred to herein as Village 14/20).
The development within Improvement Area No. 2 is planned for 1,177 market-rate for-sale homes, an elementary school (which is complete with the first class of students attending in the 2024-25 school year), and multi-family residential and commercial developments. The elementary school site, the multi-family residential and commercial development sites are not expected to be subject to the Special Tax levy.
Improvement Area No. 2 is also planned to include three parks totaling approximately 6.4 acres, open space and trails and approximately 21 acres of man-made lakes. The man-made lakes are substantially complete and are located toward the center/western portion of Improvement Area No. 2, with 115 homes to be situated on the lakefront lots. The Developer plans to construct pedestrian and bike trails along the lakefronts to provide common access to the lakefronts. In addition to serving as a visual amenity to the community, the lakes are designed to work in conjunction with the storm drainage system of the development. The lakes will not be available for recreational use (i.e., water sports and boating).
The Developer is responsible for the on-site and off-site backbone infrastructure necessary to complete the planned development within Improvement Area No. 2 therein. As of October 31, 2024, other than the Shore Vista Way Overcrossing improvement described below, such backbone infrastructure was substantially complete and the Developer expects to complete all backbone infrastructure necessary to achieve buildout within Improvement Area No. 2 by the end of calendar year 2025. The Developer has obtained all discretionary approvals required in order to complete the planned development within Improvement Area No.
2. As further described herein, the Developer has entered into an agreement with Lennar Homes for Lennar Homes to acquire all of the property within Improvement Area No. 2 that is planned for residential homes in phased takedowns. Pursuant to such agreement, the Developer is required to substantially complete all in-tract infrastructure for the lots prior to the time Lennar Homes acquires such lots. As of the Date of Value, the Developer has substantially completed the in-tract infrastructure for approximately 488 lots within Improvement Area No. 2, including for the 208 lots that Lennar Homes had acquired as of such date. The Developer expects to substantially complete the in-tract infrastructure for all residential lots by the end of 2026, and in any event, prior to the times necessary in order for the Developer to meet the takedown schedule agreed to with Lennar Homes. As of November 11, 2024, Lennar Homes had completed and conveyed 19 homes in Improvement Area No. 2 to individual homeowners and had 54 homes in escrow.
See “DEVELOPMENT OF PROPERTY IN IMPROVEMENT AREA NO. 2” for a description of the development status and remaining required infrastructure necessary to complete development in the District.
A detailed description of the status of the construction and ownership as of the date of the Appraisal Report is included in APPENDIX B — “APPRAISAL REPORT.”
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Water and sewer service to the property is provided by the City and the Sacramento Regional County Sanitation District, respectively. Electricity is supplied by Sacramento Municipal Utilities District and natural gas is supplied by Pacific Gas & Electric. The Northlake development is located within the Twin Rivers Unified School District.
Description of Authorized 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 the District, including such facilities which are included in the City’s and other governmental agency fee programs, in accordance with the terms of the Indenture and the Acquisition Agreement. As more fully detailed in the Acquisition Agreement, costs of such facilities, including those which are included in the City’s and other governmental agency fee programs and are eligible to be financed with the proceeds of the Bonds, consist of backbone infrastructure, including without limitation water, sewer and storm drain improvements, roadways and traffic improvements, landscaping and park improvements, and school facilities, in addition to other improvements authorized under the Acquisition Agreement. Approximately $30.7 million of the costs of such facilities or fees including the City’s, the Twin Rivers Unified School District’s, SAFCA’s, and the Sacramento Area Sewer District’s governmental fee programs are expected to be reimbursed or paid from Bond proceeds. Approximately $18.3 million of fees included within the Twin Rivers Unified School District’s, fee programs and approximately $12.4 million of City street and utility infrastructure improvements are expected to be reimbursed or paid from a portion of the proceeds of the Bonds. The costs of the facilities and fees required for development within the District in excess of available proceeds from the sale of the Bonds are expected to be paid for by the Developer. See “ESTIMATED SOURCES AND USES OF FUNDS.” See “DEVELOPMENT OF PROPERTY IN IMPROVEMENT AREA NO. 2” for a description of the infrastructure required to be constructed by the Developer in order to complete development within Improvement Area No. 2.
De Facto Building Moratorium from 2008 to 2015
In 2005, in response to revised criteria and standards relating to levees and flood protection, the United States Army Corp of Engineers (the “Corps”) and the Sacramento Area Flood Control Agency (“SAFCA”) commissioned the Natomas Levee Evaluation Study (“NLES”). The NLES final report concluded that considerable improvements were necessary along the south levee of the Natomas Cross Canal, the east levee of the Sacramento River, and the north levee of the American River. As a result of these conclusions, on July 20, 2006, the Corps issued a letter to SAFCA stating that the Corps could no longer support its original position certifying the levees in the Natomas Basin. On December 29, 2006, FEMA issued a letter to the City notifying the City that FEMA planned to update the Flood Insurance Rate Map within the Natomas Basin. On December 8, 2008, FEMA’s Revised Map became effective, placing the Natomas Basin (including the District) within a Special Flood Hazard Area (“Zone AE”). As a result of the Revised Map and the Zone AE designation, the Natomas Basin was subject to a de facto building moratorium from December 8, 2008, through June 15, 2015.
On June 10, 2014, then President Barack Obama signed the Water Resources Reform & Redevelopment Act (“WRRDA”) into law. With respect to the Natomas Basin, the WRRDA directs the Corps to strengthen 24 miles of levees surrounding the Natomas Basin (the “Natomas Levee Project”). As a result of the implementation of the Natomas Levee Project, FEMA issued a revised map and designated the area within the Natomas Basin (including the District) as Zone A99 effective June 16, 2015, which allows for the resumption of new building construction, subject to the limitations described below. According to FEMA, an area designated as Zone A99 has a 1% annual chance of a flood event (i.e., a 100-year flood) but ultimately will be protected upon completion of an under-construction federal flood-protection system. The four major requirements for that designation are (a) 50% of the critical improvements to achieve a 100-year level of flood protection have been constructed, (b) 50% of the total cost for such improvements has been expended, (c) 60% of the total cost of the improvements has been appropriated, and (d) 100% of the improvements have been
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authorized. As described below, construction of the Natomas Levee Project is currently expected to be substantially complete by the end of calendar year 2025 (see “—Flood Hazard” below).
On March 31, 2015, the City adopted an ordinance allowing for non-residential development and a limited resumption of residential development in the portion of the Natomas Basin that is within the City and designated as Zone A99 (the “Building Ordinance”). The Building Ordinance became operative on June 16, 2015, upon the revised map and Zone A99 designation by FEMA. The Building Ordinance allows non- residential development to resume with no cap and limited residential development of up to 1,000 single- family detached units and 500 multi-family attached units each calendar year. Dwelling units in excess of those limits will require City Council approval. On May 30, 2017, upon making certain required findings relating to the protection of public health and safety, consistent with actions underway to mitigate potential damage due to flood (see “—Flood Hazard” below), and promotion of orderly development within the City, the City Council adopted a resolution (Resolution No. 2017-0209) that permits the Northlake project to proceed notwithstanding the caps on residential development under the Building Ordinance.
Even though the Natomas Basin has been designated as Zone A99, the Natomas Basin will not be outside of a 100-year flood zone until the Natomas Levee Project is completed. The Corps began construction of the Natomas Levee Project in 2017 and the Natomas Levee Project is currently estimated to be substantially complete in 2025. Completion of the Natomas Levee Project provides additional protection but does not eliminate the risk of flood-related property damage within the Natomas Basin (including the property in Improvement Area No. 2).
The requirement to purchase flood insurance within Improvement Area No. 2 remains in effect even though the Natomas Basin is currently designated as Zone A99. Flood insurance is available for purchase by homeowners within the Natomas Basin. The City participates in FEMA’s national flood-insurance program community rating system, which provides flood insurance premium discounts resulting from the community’s efforts to reduce certain flood risks. Notwithstanding the foregoing, the City can make no assurances as to the continued availability of flood insurance or any discounts on premiums through the community rating system.
See “SPECIAL RISK FACTORS — Natural Disasters.
When the Natomas Levee Project is completed, the City expects that, under current FEMA criteria, the majority of the Natomas Basin will be zoned “X (shaded),” meaning an area that is subject to between a
1.0% (100-year flood zone) to 0.2% annual chance of a flood event (i.e., a 500-year flood zone). See “Flood Hazard— Compliance with State Flood Protection Requirements” below for a discussion of the State-required level of flood protection for areas within the California Central Valley (including the City).
Flood Hazard
Development in the District is subject to federal and State requirements regarding the restoration of protection against flood hazards (e.g., levees). As described below, failure to meet such federal or State requirements could delay development in Improvement Area No. 2.
Compliance with Federal Flood-Protection Requirements. As required by 44 C.F.R. § 65.14(g), the City annually submits to FEMA a certification that the Zone A99 restoration plan will be completed within a specified time. This Federal regulation also requires that the City and the cost-sharing Federal agency update the restoration plan and identify any permitting or construction problems that will delay the Natomas Levee Project’s completion beyond the deadline set out in the restoration plan previously submitted to the Federal Insurance Administrator. The FEMA Regional Office that has jurisdiction over the District makes an annual assessment and recommendation to the Federal Insurance Administrator about the viability of the restoration plan and will conduct periodic on-site inspections of the flood-protection system under restoration. Should FEMA make an adverse finding as to the viability of the restoration plan, FEMA could revise the flood map from its current Zone A99 designation, which could result in the Natomas Basin, including the Northlake project, becoming subject again to a de facto building moratorium. The City currently does not expect that any
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delays with respect to the Natomas Levee Project to result in FEMA revising the flood map from its current Zone A99 designation, thereby causing another de facto building moratorium in the Natomas Basin.
Compliance with State Flood Protection Requirements. 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 the end of calendar year 2025. An ULOP is the level of flood protection needed to withstand a flood event that has a 0.5% chance of occurring in a year (i.e., a 200-year flood). The remaining improvements that will allow the Natomas Basin to meet the State requirement for 200-year flood protection have been funded and are part of an active U.S. Army Corps of Engineers construction contract. SAFCA has informed the City that it currently expects construction of the remaining improvements necessary to meet the State requirement for 200-year flood protection to begin and be completed in calendar year 2025.
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, including the Natomas Levee Project, designed to protect the City from flood events (collectively, the “Levee Project”) are meeting specified development milestones toward providing an ULOP by 2025. The City does not manage or otherwise have any control over the construction of the Levee Project. In the latest annual progress report prepared by SAFCA (the “2024 ULOP Report”), 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 certain portions of the Levee Project could constrain attainment for affected portions of the subject basins.
If construction of a portion of the Levee Project is delayed so that the City is unable to make a finding of adequate-progress toward an ULOP for the affected basin, 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. 2 could be materially delayed.
In the 2024 ULOP Report, SAFCA estimates that construction of the remaining necessary portions of the Natomas Levee Project will be substantially complete by the end of calendar year 2025, with certain construction and documentation activities potentially extending beyond 2025. However, in the event that any portion of the Natomas Levee Project is not complete by the end of calendar year 2025, it is possible that the requirement to achieve a ULOP could delay development activities in the Natomas Basin (including the District) and such delays could be material.
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 may consider seeking a similar legislative extension if determined by the City to be advisable. 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. 2 to pay the Special Tax could be affected by the existence of other taxes and assessments imposed upon the property. These other taxes and
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assessments consist of the direct and overlapping debt in Improvement Area No. 2 and are set forth in Table 2 below (the “Debt Report”). The Debt Report sets forth those entities that have issued debt supported by special taxes, assessments or ad valorem property taxes. Table 2 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 share of any outstanding community facilities district and assessment district bonds that is allocable to land within Improvement Area No. 2. The Debt Report has been derived from data assembled and reported to the City by California Municipal Statistics, Inc. as of November 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.
TABLE 2
IMPROVEMENT AREA NO. 2 OF
CITY OF SACRAMENTO
GREENBRIAR COMMUNITY FACILITIES DISTRICT NO. 2018-03 (IMPROVEMENTS) OVERLAPPING DEBT SUMMARY AS OF NOVEMBER 1, 2024
Overlapping District
Percent
Applicable
Total
Outstanding
Bonded Debt(4)
Los Rios Community College District General Obligation Bonds 0.024% $ 83,812 Twin Rivers Unified School District General Obligation Bonds (pre-unification elementary school general obligation indebtedness)(1) 0.391 287,152 Twin Rivers Unified School District General Obligation Bonds 0.309 840,916 Sacramento Area Flood Control District Consolidated Capital Assessment District No. 2 Bonds 0.016 46,003
Sacramento Area Flood Control District Natomas Basin Local Assessment District(2) 0.044 12,726
City of Sacramento Greenbriar CFD No. 2018-03 Improvement Area No. 2 Special Tax Bonds 100.000 37,020,000*
Total $38,290,609*
Total Appraised Value(3): $ 134,605,000
Appraised Value-to-Lien Ratio 3.63:1*
* Preliminary, subject to change.
(1) Reflects general obligation bonds of elementary school districts prior to unification with the Grant Joint Union High School District to form the Twin Rivers Unified School District. (2) Assessment on developed residential property is a higher amount than on undeveloped property. As a result, the allocated debt will increase as property within Improvement Area No. 2 is developed. (3) Based on the Appraisal Report.
(4) Includes overlapping debt on all property in Improvement Area No. 2 and differs from the totals in Tables 4A, 4B and 5, which only include overlapping debt on the Taxable Property in Improvement Area No. 2.
Source: California Municipal Statistics, Inc.; Appraiser.
Estimated Fiscal Year 2024-25 Tax Burden
Table 3 below sets forth the estimated total tax obligation of single-family detached homes within the Improvement Area No. 2 based on the average base sales prices of homes as set forth in the Appraisal Report, the Fiscal Year 2024-25 Special Tax levy at the Maximum Special Tax rates on 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. 2 and may increase or decrease in future years. See “SPECIAL RISK FACTORS — Parity Taxes and Special Assessments.”
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TABLE 3
IMPROVEMENT AREA NO. 2 OF
CITY OF SACRAMENTO
GREENBRIAR COMMUNITY FACILITIES DISTRICT NO. 2018-03 (IMPROVEMENTS)
ESTIMATED TAX OBLIGATION
Villages
1 & 2
Villages
4, 5, & 11
Villages
3, 6 & 8
Villages
7, 9 & 10
Villages
12 & 13
Villages
14, 15,
16 & 17
Villages
18 & 19
Villages
14 Ph1
Assumptions
Average Base Price (1) $ 570,240 $ 619,657 $ 681,190 $ 652,990 $ 679,590 $ 751,823 $ 735,657 $ 528,740 Homeowner’s Exemption (7,000) (7,000) (7,000) (7,000) (7,000) (7,000) (7,000) (7,000) Net Expected Assessed Value $ 563,240 $ 612,657 $ 674,190 $ 645,990 $ 672,590 $ 744,823 $ 728,657 $ 521,740
Ad Valorem Taxes (2) Rate
County General 1.00000% $ 5,632 $ 6,127 $ 6,742 $ 6,460 $ 6,726 $ 7,448 $ 7,287 $ 5,217 Twin Rivers Unif GOB 0.04380 247 268 295 283 295 326 319 229 Twin Rivers Elem. GOB (3) 0.03520 198 216 237 227 237 262 256 184 Twin Rivers Elem SFID (3) 0.03380 190 207 228 218 227 252 246 176 Los Rios College GO Bond 0.02000 113 123 135 129 135 149 146 104 Grant Jt. High GOB (3) 0.01100 62 67 74 71 74 82 80 57 Total Ad Valorem Taxes 1.14380% $ 6,442 $ 7,008 $ 7,711 $ 7,389 $ 7,693 $ 8,519 $ 8,334 $ 5,968
Direct Charges (4)
SAFCA Consolidated Capital Assessment #2 $ 2 $ 2 $ 2 $ 2 $ 2 $ 2 $ 2 $ 2 Natomas Basin Local Assessment District 2 2 2 2 2 2 2 2 Sacramento Additional Library Services Tax 40 40 40 40 40 40 40 40 Sacramento Core Library Service Tax 16 16 16 16 16 16 16 16 Sacramento Services CFD No. 2018-05 278 278 278 278 278 278 278 278 Sacramento Area Flood Control Agency 11 11 11 11 11 11 11 11 North Natomas TMA CFD No. 99-01 89 89 89 89 89 89 89 89 Reclamation District No. 1000 10 10 10 10 10 10 10 10
RD 1000 Stormwater Service Fee 4 4 4 4 4 4 4 4
IA No. 2 Greenbriar CFD No. 2018-03 (5) 2,265 2,579 2,936 3,205 3,257 2,828 3,551 1,792 Total Direct Charges $ 2,716 $ 3,030 $ 3,387 $ 3,656 $ 3,708 $ 3,279 $ 4,002 $ 2,243
Total Taxes and Direct Charges (6) $ 9,158 $ 10,037 $ 11,099 $ 11,045 $ 11,401 $ 11,798 $ 12,336 $ 8,211 Percentage of Average Base Price 1.61% 1.62% 1.63% 1.69% 1.68% 1.57% 1.68% 1.55%
(1) Reflects average base sales prices based on the Appraisal Report. (2) Based on Fiscal Year 2024-25 ad valorem tax rates for the tax rate area within the District. Ad valorem tax rates are subject to change in future years. (3) Reflects general obligation bonds of elementary school districts prior to unification with the Grant Joint Union High School District to form the Twin Rivers Unified School District.
(4) Assessments are determined based on factors including, among others, benefit zone, land use and flood depth zone. (5) Reflects the Fiscal Year 2024-25 Maximum Special Tax rates on Developed Property. (6) Totals may not sum due to rounding.
Source: Sacramento County Tax Collector’s Office; Goodwin Consulting Group, Inc.; Appraiser.
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Market Absorption Study
In order to provide an independent estimate of the absorption schedule of the property within Improvement Area No. 2, the City engaged The Gregory Group of Folsom, California (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. 2.
The Market Absorption Consultant Report dated as of May 2024 is attached hereto as Appendix I (the “Market Absorption Report”). In the Market Absorption Report, the Market Absorption Consultant observes that despite the increase in mortgage rates during 2023 through the first two quarters in 2024, new-home sales increased in the first quarter of 2024. In addition, the effect of mortgage lock (where low interest rate homeowners are reluctant to sell their home with a current mortgage rate that is below 5%) incentivized potential home buyers to look to the new-home market. As a result, the increase in new buyers led to increased home prices in the second quarter of 2024 (after leveling off for the prior three quarters), recording an increase of 1.2% on a quarter-over-quarter basis and an increase of 3.4% on a year-over-year basis. The Market Absorption Report notes that a strong increase in mortgage rates, sustained higher mortgage rates and a recession in the next two to four years during the sales period of the projects in Improvement Area No. 2 could have a significant impact on absorption and this impact could result in slower sales and lower pricing than anticipated.
In reaching its estimated rate of absorption, the Market Absorption Consultant took into account factors such as the desirability of Natomas as a new-home destination, increasing new-home sales within Natomas and the Sacramento region, limited immediate future inventory in Natomas, current absorption rates for similar products in Natomas (including in Phase 1 of Northlake) and improving economic conditions within the Sacramento region and in the United States.
Based on the foregoing and information provided by the Developer that all products will open for sale in June 2024 (home sales in Improvement Area No. 2 commenced in September 2024), the Market Absorption Consultant concludes that the development within Improvement Area No. 2 can absorb 0.81 units per week per product offering with the final sales to occur in the third quarter of 2028. The following table sets forth the Market Absorption Consultant’s estimated absorption schedule for the 1,177 residential units planned for Improvement Area No. 2.
Community Villages
Total No.
of Units Units Sold Per Year
2024 2025 2026 2027 2028
Bleau 12 & 13 110 23 39 39 9 0
Crestvue 7, 9 & 10 138 23 39 39 37 0
Drifton 18 & 19 108 15 26 26 26 15
Lakelet 4, 5 & 11 173 30 52 52 39 0
Shor 1 & 2 193 30 52 52 52 7
Watersyde 3, 6 & 8 153 23 39 39 39 13
Wavmor 14 through 17 163 23 39 39 39 23
Waters Edge 14/20 139 30 52 52 5 0
1,177 197 338 338 246 58
The Market Absorption Consultant identifies potential risks that could affect the estimated absorption, including economic downturn. See “SPECIAL RISK FACTORS.” A complete copy of the Market Absorption Study is attached hereto as APPENDIX I.
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Property Values
Assessed Value. The estimated assessed value of the property within Improvement Area No. 2, as shown on the County’s assessment roll for Fiscal Year 2024-25, is approximately $67,375,274. The assessed value of the property within Improvement Area No. 2 represents the secured 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. 2 accurately reflect their respective market values.
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 certain of the property within Improvement Area No. 2, the City engaged Smith & Associates, Inc., the Appraiser, to prepare the Appraisal Report. The Appraiser has a “MAI” designation from the Appraisal Institute and has prepared numerous appraisals for the sale of land-secured municipal bonds. The Appraiser was selected by the City and has no material relationships with the City or the owners of the land within Improvement Area No. 2 other than the relationship represented by the engagement to prepare the Appraisal Report. The City instructed the Appraiser to prepare its analysis and report in conformity with City- approved guidelines and the Appraisal Standards for Land Secured Financings published in 1994 and revised in 2004 by the California Debt and Investment Advisory Commission (the “CDIAC Guidelines”). 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 of the property within Improvement Area No. 2 that is subject to the Special Tax lien, based on the hypothetical condition that the Bonds had been sold. 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 aggregate market value of the property within Improvement Area No. 2 subject to the Special Tax levy was $134,605,000. In addition, in estimating the value of the property, the Appraiser took into account the fact that the property is located in a flood zone designated as Zone A99 and the future homeowners within Improvement Area No. 2 will be required to purchase flood insurance. See “— De Facto Building Moratorium from 2008 to 2015” and “— Flood Hazard.”
Pursuant to the Second Amended Rate and Method, the property planned for the multi-family projects, commercial projects, parks and open space are not expected to be subject to the Special Tax levy. The value thereof is not included in the appraised value set forth in the Appraisal Report and no Special Tax revenues from such properties have been assumed for purposes of sizing the Bonds. See “Projected Special Tax Levy and Value-To-Lien Ratios —Tax-Exempt Parcels” below.
In estimating the market value for the Taxable Property within Improvement Area No. 2, the Appraiser used a sales comparison approach to estimate the land value per lot within each of the proposed villages within Improvement Area No. 2. The Appraiser then applied an extraction/land residual methodology, which involves deducting the home construction costs from the estimated home sales revenues to arrive at an estimated land value of a finished lot within each of the eight proposed product types within Improvement Area No. 2. The estimated home sales revenues were based on those set forth in the Market Absorption Study.
The Appraisal Report notes that the Appraiser concurs with such estimated revenues. The Appraiser then
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applied a discounted cash flow analysis which takes into account the expected revenues and expenses over the projected absorption period.
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 appraised property within Improvement Area No. 2 may be less than the amount reported in the Appraisal Report. In any case, there can be no assurance that any portion of the property within Improvement Area No. 2 would actually sell for the amount indicated by the Appraisal Report.
The Appraisal Report indicates the Appraiser’s opinion as to the market value of the appraised property in Improvement Area No. 2 as of the Date of Value and under the conditions specified in the Appraisal. 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 can be no assurance that market conditions will not change adversely in the future.
It is a condition precedent to the issuance of the Bonds that the Appraiser deliver to the City a certification to the effect that nothing has come to the attention of the Appraiser subsequent to the date of the Appraisal Report that would cause the Appraiser to believe that the value of the Taxable Property in Improvement Area No. 2 is less than the value reported in the Appraisal Report. However, the Appraiser notes 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 within Improvement Area No. 2.
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 November 12, 2024 that: (i) the data used for the Appraisal Report is adequate and reasonable; (ii) the methods and techniques used in the Appraisal Report are appropriate; (iii) the value opinions stated in the Appraisal Report are adequately supported and are credible, given the data and analyses presented (however, BBG, Inc. expresses no opinions of value as to the properties appraised in the Appraisal Report); and (iv) in BBG, Inc.’s judgment, the Appraisal Report complies with Standards 1 and 2 of the Uniform Standards of Professional Appraisal Practice and California Debt and Investment Advisory Commission appraisal guidelines.
Estimated Debt Service Coverage
The Bonds have been structured such that the projected annual Net Special Tax Revenues, assuming no delinquencies, if levied at the Maximum Special Tax Rates on 797 parcels which are or are expected to be within recorded final subdivision maps by the first half of calendar year 2025 – comprised of 488 parcels within recorded final subdivision maps, 210 parcels that are anticipated to be within recorded final subdivision maps by the end of calendar year 2024, and 99 parcels that are anticipated to be within recorded final subdivision maps by the end of the first half of calendar year 2025, would produce not less than 110% annual coverage on annual Debt Service on the Bonds. At buildout, the City expects to levy the Special Tax at such rates to meet the Special Tax Requirement, which may be less than the Maximum Special Tax rates. The estimated timing of final map recordation for purposes of sizing the Bonds differs from the Developer’s current expected timing with respect to such final maps. Subject to satisfaction of the conditions under the Indenture, the City expects that Parity Bonds will be issued to fund additional authorized facilities. See “SOURCES OF PAYMENT FOR THE BONDS— Issuance of Parity Bonds.” Value-To-Lien Ratios
Value-to-Lien Ratio. Based on the principal amount of the Bonds, the estimated appraised value-to- lien ratio within Improvement Area No. 2, including all Taxable Property (giving effect to the issuance of the
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Bonds) as of the Date of Value is approximately 3.63-to-1*. This ratio includes other land-secured debt (i.e. other community facilities districts or assessment districts) and overlapping general obligation bonds. See “— Direct and Overlapping Indebtedness” above. The aforesaid value to lien ratio is for the entire Improvement Area No. 2, however, the ratios of the value of individual lots within Improvement Area No. 2 to their respective shares of the principal amount of the Bonds can vary substantially.
As of the Date of Value, Lennar Homes had acquired 208 lots from the Developer. As of such date, the balance of the Taxable Property within Improvement Area No. 2 was owned by the Developer. Based on the acquisition of 208 lots from the Developer and assuming no additional transfer of property or development activity within Improvement Area No. 2, the Developer and Lennar Homes are estimated to be responsible for
71.2% and 28.8% of the projected Fiscal Year 2025-26 Special Tax levy, respectively. As of November 11, 2024, Lennar Homes had completed and conveyed 19 homes in Improvement Area No. 2 to individual homeowners and had 54 homes in escrow. See “DEVELOPMENT OF PROPERTY IN IMPROVEMENT AREA NO. 2 — Home Construction.”
Table 4A below sets forth the estimated value-to-lien ratio of the Taxable Property within Improvement Area No. 2 based on building permits issued and ownership status as of the Date of Value, the aggregate estimated values set forth in the Appraisal Report, the principal amount of the Bonds and overlapping debt. Table 4B sets forth the estimated value-to-lien ratio of the Taxable Property within Improvement Area No. 2 assuming full buildout, the aggregate estimated values set forth in the Appraisal Report, the principal amount of the Bonds and overlapping debt.
Table 5 below sets forth the estimated value-to-lien ratios for Taxable Property within Improvement Area No. 2 by various ranges based upon the principal amount of the Bonds and overlapping debt based on building permits issued as of the Date of Value.
Tax-Exempt Parcels. The sites expected to be classified as Multi-Family Property and Non- Residential Property under the Second Amended Rate and Method are not expected to be subject to the Special Tax levy. In addition, pursuant to the Second Amended Rate and Method, property to be used as parks, open space, approximately 21 acres of man-made lakes and public rights of way will be exempt from the Special Tax levy. For purposes of sizing the Bonds, no Special Tax levy is assumed on such property.
[Remainder of Page Intentionally Left Blank]
* Preliminary, subject to change.
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TABLE 4A
IMPROVEMENT AREA NO. 2 OF
CITY OF SACRAMENTO GREENBRIAR COMMUNITY FACILITIES DISTRICT NO. 2018-03 (IMPROVEMENTS)
MAXIMUM AND PROJECTED SPECIAL TAX LEVY AND VALUE-TO-LIEN RATIOS (DEVELOPMENT AND OWNERSHIP AS OF THE DATE OF VALUE)
Development Status and
Property Ownership (1)
Taxable
Parcels
Expected
Residential
Units (2)
Fiscal Year
2025-26
Maximum
Special Tax (3)
Fiscal Year
2025-26
Hypothetical
Special Tax
Levy (1)
Percent of
Fiscal Year
2025-26
Hypothetical
Special Tax
Levy
Appraised
Value (4)
Allocated
CFD No. 2018-03
IA 2 Bonds (5)*
Total Direct
and
Overlapping
Debt Lien (6)*
Value-to-
Lien*
Developed Property(7)
Lennar Homes of California, LLC
Model Homes(8) 17 17 $ 51,191 $ 51,191 2.7% $ 10,883,562 $ 984,683 $ 985,237 11.05 Completed Homes 9 9 25,677 25,677 1.3 5,314,584 493,913 494,183 10.75 Homes Under Construction 168 168 442,944 442,944 23.0 36,905,592 8,520,161 8,525,125 4.21 Subtotal 194 194 $ 519,813 $ 519,813 27.0% $ 52,103,738 $ 9,998,757 $ 10,004,545 5.21
Final Map Property
Lennar Homes of California, LLC 14 14 $ 35,619 $ 35,619 1.9% $ 2,621,262 $ 685,132 $ 685,568 3.82 Greenbriar Phase 2, LLC 280 280 792,578 792,578 41.2 23,081,940 15,245,477 15,254,393 1.51 Subtotal 294 294 $ 828,197 $ 828,197 43.0% $ 25,703,202 $ 15,930,610 $ 15,939,961 1.61
Undeveloped Property(9)
Greenbriar Phase 2, LLC 19 689 $ 4,075,870 $ 576,577 30.0% $ 56,798,060 $ 11,090,633 $ 11,118,145 5.11
Anticipated Park Property(10) 3 0 $ 210,517 $ 0 0.0% $ 0 $ 0 $ 1,239 0.00
Total 510 1,177 $ 5,634,397 $ 1,924,588 100.0% $ 134,605,000 $ 37,020,000 $ 37,063,890 3.63
* Preliminary, subject to change.
(1) Based on ownership and development status as of the Date of Value. (2) Based on the expected land uses within each Village as of the Date of Value. (3) Based on development status as of the Date of Value. (4) Based on the Appraisal Report.
(5) Allocated based on the hypothetical Fiscal Year 2025-26 Special Tax levy. Does not reflect the application of capitalized interest on the Bonds. (6) Includes land-secured overlapping special tax and assessment lien debt as of November 1, 2024 that is applicable to the Taxable Property in Improvement Area No. 2. Total differs from the total in Table 2, which includes overlapping debt on all property in Improvement Area No. 2. Does not include overlapping general obligation debt. See “— Direct and Overlapping Indebtedness” above. (7) As of November 11, 2024, Lennar Homes had completed and conveyed 19 homes in Improvement Area No. 2 to individual homeowners and had 54 homes in escrow. See “DEVELOPMENT OF PROPERTY IN IMPROVEMENT AREA NO. 2 — Home Construction.”
(8) Only includes completed model homes as of the Date of Value. Additional model homes were under construction as of such date. (9) All parcels of Undeveloped Property that are not the subject of Small-Lot Final Maps are the subject of a recorded Parcel Map. See “DEVELOPMENT OF PROPERTY IN IMPROVEMENT AREA NO. 2 — Infrastructure Development — Small-Lot Final Map Status” for the current schedule for recording the remaining small lot final maps. Includes parcels anticipated to be zoned as Multi-Family Property and Non-Residential Property, which are both considered Exempt Property once a building permit is issued. The value of such parcels is not included in this table and no Special Tax levy is allocated to such parcels.
(10) Such parcels were not appraised in the Appraisal Report and none of Bonds are allocated to such parcels.
Source: California Municipal Statistics; Goodwin Consulting Group, Inc.; Smith & Associates, Inc.
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TABLE 4B
IMPROVEMENT AREA NO. 2 OF
CITY OF SACRAMENTO GREENBRIAR COMMUNITY FACILITIES DISTRICT NO. 2018-03 (IMPROVEMENTS)
MAXIMUM AND PROJECTED SPECIAL TAX LEVY AND VALUE-TO-LIEN RATIOS
MAXIMUM AND PROJECTED SPECIAL TAX LEVY AND VALUE-TO-LIEN RATIOS AT BUILDOUT Development Status and
Property Ownership (1)
Taxable
Parcels
Expected
Residential
Units (2)
Fiscal Year
2025-26
Maximum
Special Tax (3)
Fiscal Year
2025-26
Maximum
Special Tax
Revenues at
Buildout (2)
Percent of
Maximum
Special Tax
Revenues at
Buildout
Appraised
Value (4)
Allocated
CFD No. 2018-03
IA 2 Bonds (5)*
Total Direct
and
Overlapping
Debt Lien (6)*
Value-to-
Lien*
Developed Property(7)
Lennar Homes of California, LLC
Model Homes(8) 17 17 $ 51,191 $ 51,191 1.6% $ 10,883,562 $ 575,824 $ 576,379 18.88 Completed Homes 9 9 25,677 25,677 0.8 5,314,584 288,832 289,101 18.38 Homes Under Construction 168 168 442,944 442,944 13.5 35,905,592 4,982,435 4,987,398 7.20 Subtotal 194 194 $ 519,813 $ 519,813 15.8% $ 52,103,738 $ 5,847,091 $ 5,852,879 8.90
Final Map Property
Lennar Homes of California, LLC 14 14 $ 35,619 $ 35,619 1.1% $ 2,621,262 $ 400,653 $ 401,088 6.54 Greenbriar Phase 2, LLC 280 280 792,578 792,578 24.1 23,081,940 8,915,277 8,924,193 2.59 Subtotal 294 292 $ 828,197 $ 828,197 25.2% $ 25,703,202 $ 9,315,930 $ 9,325,281 2.76
Undeveloped Property(9)
Greenbriar Phase 2, LLC 19 689 $ 4,075,870 $ 1,943,111 59.0% $ 56,798,060 $ 21,856,979 $ 21,884,491 2.60
Anticipated Park Property(10) 3 0 $ 210,517 $ 0 0.0% $ 0 $ 0 $ 1,239 0.00
Total 510 1,177 $ 5,634,397 $ 3,291,121 100.0% $ 134,605,000 $ 37,020,000 $ 37,063,890 3.63
* Preliminary, subject to change.
(1) Based on ownership and development status as of the Date of Value. (2) Based on the expected land uses within each Village as of the Date of Value. (3) Based on development status as of the Date of Value. (4) Based on the Appraisal Report.
(5) Allocated based on the Maximum Special Tax levy at buildout. (6) Includes land-secured overlapping special tax and assessment lien debt as of November 1, 2024 that is applicable to the Taxable Property in Improvement Area No. 2. Total differs from the total in Table 2, which includes overlapping debt on all property in Improvement Area No. 2. Does not include overlapping general obligation debt. See “— Direct and Overlapping Indebtedness” above. (7) As of November 11, 2024, Lennar Homes had completed and conveyed 19 homes in Improvement Area No. 2 to individual homeowners and had 54 homes in escrow. See “DEVELOPMENT OF PROPERTY IN IMPROVEMENT AREA NO. 2 — Home Construction.”
(8) Only includes completed model homes as of the Date of Value. Additional model homes were under construction as of such date. (9) All parcels of Undeveloped Property that are not the subject of Small-Lot Final Maps are the subject of a recorded Parcel Map. See “DEVELOPMENT OF PROPERTY IN IMPROVEMENT AREA NO. 2 — Infrastructure Development — Small-Lot Final Map Status” for the current schedule for recording the remaining small lot final maps. Includes parcels anticipated to be zoned as Multi-Family Property and Non-Residential Property, which are both considered Exempt Property once a building permit is issued. The value of such parcels is not included in this table and no Special Tax levy is allocated to such parcels.
(10) Such parcels were not appraised in the Appraisal Report and none of Bonds are allocated to such parcels.
Source: California Municipal Statistics; Goodwin Consulting Group, Inc.; Smith & Associates, Inc.
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TABLE 5
CITY OF SACRAMENTO
GREENBRIAR COMMUNITY FACILITIES DISTRICT NO. 2018-03 (IMPROVEMENTS) IMPROVEMENT AREA NO. 2
VALUE-TO-LIEN STRATIFICATION
Value-to-Lien
Taxable
Parcels
Expected
Residential
Units (1)
Fiscal Year
2025-26
Maximum
Special Tax (2)
Fiscal Year
2025-26
Maximum
Special Tax
Revenues at
Buildout
Percent of
Maximum
Special Tax
Revenues at
Buildout
Appraised
Value (3)
Allocated CFD
No. 2018-03 IA 2
Bonds (4)*
Total Direct and
Overlapping
Debt Lien (5)*
Average
Value-to-
Lien*
Greater than 8:1 74 74 $ 170,886 $ 170,886 5.2% $ 25,547,221 $ 1,922,199 $ 1,924,530 13.27 5:1 to 8:1 134 134 384,546 384,546 11.7 29,177,779 4,325,545 4,329,437 6.74 3:1 to 5:1 89 260 887,908 550,482 16.7 21,433,230 6,192,064 6,200,211 3.46 2:1 to 3:1 205 709 3,300,016 2,185,208 66.4 58,446,770 24,580,192 24,602,478 2.38 Less than 2:1 (6) 8 0 891,042 0 0.0 0 0 7,234 0.00 Total 510 1,177 $ 5,634,397 $3,291,121 100.0% $ 134,605,000 $ 37,020,000 $ 37,063,890 3.63
* Preliminary, subject to change.
(1) Based on the expected land uses within each Village as of the Date of Value. (2) Based on development status as of the Date of Value. (3) Based on the Appraisal Report.
(4) Allocated based on the Maximum Special Tax levy at buildout. (5) Includes land-secured overlapping special tax and assessment lien debt as of November 1, 2024 that is applicable to the Taxable Property in Improvement Area No. 2. Total differs from the total in Table 2, which includes overlapping debt on all property in Improvement Area No. 2. Does not include overlapping general obligation debt. See “— Direct and Overlapping Indebtedness” above.
(6) Includes the three parcels of Anticipated Park Property. Also includes parcels anticipated to be zoned as Multi-Family Property and Non-Residential Property, which are both considered Exempt Property once a building permit is issued.
Source: California Municipal Statistics; Goodwin Consulting Group, Inc.; Appraiser.
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Delinquency History
The City has not yet levied the Special Tax within Improvement Area No. 2. As a result, no delinquency history with respect to the Special Tax exists. Fiscal Year 2025-26 will be the first year of the Special Tax levy.
DEVELOPMENT OF PROPERTY IN IMPROVEMENT AREA NO. 2
The information in this section about the Developer and Lennar Homes and their respective developments within Improvement Area No. 2 has been provided by the Developer and Lennar Homes and has not been independently confirmed or verified by the Underwriter or the City. The Underwriter and the City make no representation as to the accuracy or adequacy of the information contained in this section, including, but not limited to the description of the Lennar Homes PSA, the Operating Agreement (as such terms are defined below) and any other agreement between Lennar Homes and Integral or their respective affiliates with respect to the Northlake project.
The information provided in this section has been included because it may be considered relevant to an informed evaluation and analysis of the Bonds. No assurance can be given, however, that the proposed development of the property within Improvement Area No. 2 will occur in a timely manner or in the configuration or to the density described in this Official Statement, or that the Developer, Lennar Homes, or any owners or affiliates thereof, or any other property owner described in this Official Statement will or will not retain ownership of its respective property within Improvement Area No. 2. Neither the Bonds nor the Special Tax represent personal obligations of any property owner within Improvement Area No. 2. The Bonds are secured by and payable solely from the Special Tax and amounts on deposit in certain of the funds and accounts established and maintained under the Indenture. See “SPECIAL RISK FACTORS” for a discussion of certain of the risk factors that should be considered in evaluating the investment quality of the Bonds.
Neither the Bonds nor the Special Tax are personal obligations of the property owners within Improvement Area No. 2 or any affiliate thereof and, in the event that a property owner defaults in the payment of its Special Tax, the City may proceed with judicial foreclosure, but has no direct recourse to the assets of such property owner or any affiliate thereof.
Northlake, the District and Improvement Area No. 2
General. The property in Improvement Area No. 2 is the second and final phase of a new master- planned community being developed by Greenbriar Phase 2, LLC, a Delaware limited liability company (previously defined as the “Developer”), that was initially named “Greenbriar” and has since been marketed as “Northlake.” Northlake is located on the southwestern corner of West Elkhorn Boulevard and State Highway 99, approximately nine miles from downtown Sacramento and approximately four miles from the Sacramento International Airport. Northlake is located to the north and east of the near-completed master planned communities of Westlake and Natomas Creek and directly adjacent to the east of the Sacramento Metro Air Park. The Sacramento Metro Air Park is an approximately 1,900-acre site that has been and continues to be developed for commercial and industrial uses. Based on current plans, Northlake will be included along the route of a light rail line that is proposed to be extended from downtown Sacramento to the Sacramento International Airport. The current expectation is that the light rail line will have a station along the major arterial roadway (Shore Vista Way (formerly Meister Way)) that traverses and bisects Northlake from east to west, and will then continue on to the Sacramento International Airport. The construction and operation of light rail extensions along Shore Vista Way will be the responsibility of the Sacramento Regional Transit District and not the City. See “— Entitlements and Mitigation Measures — Transportation Development Impact Fees/Meister Way Overcrossing” below for a description of an overcrossing for Shore Vista Way required to be constructed by the Developer for the Northlake project.
Northlake is currently planned to include approximately 2,314 single family homes, approximately 520 multifamily homes and approximately 40,000 square feet of commercial and retail space. Similar to the
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Westlake development located to the south, the Northlake development includes several acres of man-made lakes with certain homes to be situated on lakefront lots. The District consists of approximately 577 acres and is generally coterminous with the Northlake development, however two parcels within the Northlake project area are not within the boundaries of the District.
The District is divided into two improvement areas. The first phase of Northlake is generally coterminous with Improvement Area No. 1. Development in Improvement Area No. 1 is planned for 1,137 single-family for-sale homes. Home sales in Improvement Area No. 1 began in approximately January 2021 and as of October 31, 2024, Improvement Area No. 1 was substantially built-out with 1,116 of the 1,137 planned homes conveyed to individual homeowners. The development in Improvement Area No. 1 is being undertaken through an arrangement between affiliates of the Developer and Lennar that is similar to the development arrangement for Improvement Area No. 2 described herein. The property in Improvement Area No. 1 is not subject to the levy of the Special Tax and is not security for the Bonds.
Phase 2 of Northlake is generally coterminous with Improvement Area No. 2. Improvement Area No. 2 consists of approximately 288 acres located to the west of State Highway 99, south of Shore Vista Way (formerly Meister Way), east of Lone Tree Road and north of the Interstate 5 Freeway. Approximately 20 acres located on the northwestern end of Phase 1 of Northlake (non-contiguous to the balance of Improvement Area No. 2) was annexed to Improvement Area No. 2 in March 2024 (referred to herein as Village 14/20).
The development within Improvement Area No. 2 is planned for 1,177 market-rate for-sale homes, an elementary school (which is complete with the first class of students attending in the 2024-25 school year), and multi-family residential and commercial developments. The elementary school site and the multi-family residential and commercial development sites are not expected to be subject to the Special Tax levy.
Improvement Area No. 2 is also planned to include three parks totaling approximately 6.4 acres, open space and trails and approximately 21 acres of man-made lakes. The man-made lakes are substantially complete and are located toward the center/western portion of Improvement Area No. 2, with 115 homes to be situated on the lakefront lots. The Developer plans to construct pedestrian and bike trails along the lakefronts to provide common access to the lakefronts. In addition to serving as a visual amenity to the community, the lakes are designed to work in conjunction with the storm drainage system of the development. The lakes will not be available for recreational use (i.e., water sports and boating).
The Developer is responsible for the on-site and off-site backbone infrastructure necessary to complete the planned development within Improvement Area No. 2 therein. As of October 31, 2024, other than the Shore Vista Way Overcrossing improvement described below, such backbone infrastructure was substantially complete and the Developer expects to complete all backbone infrastructure by the end of calendar year 2025 necessary to achieve buildout within Improvement Area No. 2. See “Infrastructure Development — Backbone Infrastructure Development.”
The Developer has entered into an agreement with Lennar Homes for Lennar Homes to acquire all of the property within Improvement Area No. 2 that is planned for residential homes in phased takedowns.
Pursuant to such agreement, the Developer is required to substantially complete all in-tract infrastructure for the lots prior to the time Lennar Homes acquires such lots. See “— Acquisition of Lots by Lennar Homes” for a description of the in-tract infrastructure work that the Developer is required to substantially complete prior to the time Lennar acquires a lot. As of the Date of Value, the Developer has substantially completed the in-tract infrastructure for approximately 488 lots within Improvement Area No. 2, including for the 208 lots that Lennar Homes had acquired as of such date. The Developer expects to substantially complete the in-tract infrastructure for all residential lots by the end of 2026, and in any event, prior to the times necessary in order for the Developer to meet the takedown schedule agreed to with Lennar Homes. See “— Acquisition of Lots by Lennar Homes.” As of November 11, 2024, Lennar Homes had completed and conveyed 19 homes in Improvement Area No. 2 to individual homeowners and had 54 homes in escrow.
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For more information on the Developer and Lennar Homes, see the caption “PROPERTY OWNERSHIP.”
Development Agreement and Mitigation Requirements. Pursuant to a Development Agreement by and between the City and the Developer, as approved by the City Council by Ordinance No. 2017-0040 on May 30, 2017 (as amended to date, the “Development Agreement”), the Developer is vested with the right to develop the Northlake project with up to approximately 2,482 single family homes, approximately 528 multifamily homes and up to approximately 3,554,496 square feet of commercial and retail space, subject to compliance with the terms and conditions of the Development Agreement, which in all cases is in excess of the Developer’s current plans for development of Northlake.
The Development Agreement includes mitigation measures to be satisfied and fees to be paid in order to achieve full buildout of the Northlake project, some of which are described below. Aside from such mitigation measures to be satisfied and payment of fees as development within Northlake progresses, the Developer has satisfied all conditions of approval and has obtained all discretionary approvals from State and federal agencies in order to complete the Northlake project. Sufficient capacity for water (which is provided by the City) and sewer (which is provided by the Sacramento Area Sewer District (collection services) and the Sacramento Regional County Sanitation District (treatment services)) is available to achieve full buildout of Northlake.
Certain of the mitigation measures and fees required under the Development Agreement are described below. Aside from the habitat conservation requirements described below, the mitigation measures and fees may be financed with proceeds of the Bonds and any Parity Bonds.
Transportation Development Impact Fees/Shore Vista Way Overcrossing. The Developer is required to pay City Transportation Development Impact Fees (“TDIF”) in connection with the development of Northlake. The Development Agreement, as amended by the third amendment thereto, described below, requires that the Developer construct a State Route 99 overcrossing that would connect Shore Vista Way (which bisects Northlake from east to west) to East Commerce Way, located offsite to the east of Northlake (the “Shore Vista Way Overcrossing”).
Pursuant to an amendment to the Development Agreement effective in November 2024 (the “Third Amendment”), the Developer is required to either submit a project report with respect to the Shore Vista Way Overcrossing that is approved by the Department of Transportation of the State of California ( “Caltrans”), or provide a financial security (e.g. a bond, escrow account or letter of credit) acceptable to the City by March 14, 2025 which covers the full cost of design, permitting, construction, and construction management of the Shore Vista Way Overcrossing. If the Developer fails to meet either of the foregoing conditions, the City will withhold approval of additional final maps for the Northlake project; provided however, that if the Developer notifies the City by March 1, 2025, that it will not meet the deadline, the Developer demonstrates adequate progress toward obtaining a Caltrans-approved project report, and the City agrees that a modification of the deadline is in the best interest of the Northlake project, then the City may agree to approve additional final maps.
The Third Amendment further requires that the Developer submit 95% improvement plans for the Shore Vista Way Overcrossing to the City by November 2025. If the Developer has not already provided the financial security described above, upon the earlier of submission to the City of 95% improvement plans or November 2025, the Developer will be required to submit such financial security. If the Developer fails to timely submit 95% improvement plans or the financial security, the City will withhold approval of additional final maps for the Northlake project; provided however, that if the Developer notifies the City at least 15 days prior to the deadline that it will not meet the deadline, demonstrates adequate progress toward completing the improvement plans and submitting the financial security, and the City agrees that a modification of the deadline is in the best interest of the Northlake project, then the City may agree to approve additional final maps. Pursuant to the Third Amendment, within six months of the approval of the improvement plans with
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respect to the Shore Vista Way Overcrossing by the City and Caltrans, the Developer is required to commence construction of the Shore Vista Way Overcrossing and diligently pursue construction until completion.
The estimated cost of the Shore Vista Way Overcrossing in 2023 was approximately $24 million.
Pursuant to a funding agreement executed in connection with the Third Amendment (the “Funding Agreement”), the City agreed to allocate approximately $6.1 million from various development impact fee revenues to the cost of the Shore Vista Way Overcrossing. The Developer expects to finance its share of the costs of the overcrossing from internal funds. Approximately $10.7 million of the cost of the overcrossing may be financed from proceeds of the Bonds.
In November 2024, the City received a letter from counsel representing the developers (the “North Natomas Developers”) of certain property in the North Natomas Basin (located outside of the District) claiming that the City’s agreement to loan approximately $6.1 million of development impact fee revenues to the cost of the Shore Vista Way Overcrossing, as set forth in the Funding Agreement, is improper and constitutes a breach of the development agreement between the City and the North Natomas Developers. The letter requests that the City rescind the Funding Agreement or otherwise take action to cure such breach. The City has analyzed the foregoing claims and believes that the loan of the development impact fees to fund the overcrossing is in accordance with applicable law and does not constitute a breach of the City’s development agreement with the North Natomas Developers. Nevertheless, if the foregoing claims were to proceed to litigation, there is a possibility that a court could disagree. If the Funding Agreement were rescinded by a court holding that it constituted a breach of the development agreement with the North Natomas Developers, the Developer would still be entitled to develop Northlake. The City, however, would not have a clear path toward the construction of the Shore Vista Way Overcrossing.
School Mitigation Payments. Other than with respect to 139 proposed lots within Village 14/20 (which was annexed to Improvement Area No. 2 in March 2024), all mitigation payments (i.e. “School Fees”) have been paid to the Twin Rivers Unified School District (the “School District”). The Developer expects that approximately $18.3 million from proceeds of the Bonds may be available to reimburse the Developer for such School Fees.
A school site within Improvement Area No. 2 was sold to the School District on which there has been constructed a TK-8 elementary school. The elementary school first opened for enrollment for the 2024-25 school year.
Parks. The City requires 3.5 acres of parkland dedication per 1,000 residents of population for new development within the Natomas Basin. Pursuant to the conditions of approval for the Northlake development, the City has agreed that the Developer may satisfy the parks requirement by the following: (i) in Improvement Area No. 1, the Developer has constructed and dedicated two parks – a 12.4 acre community park and a 2.0 acre neighborhood park; and (ii) in Improvement Area No. 2, the Developer will be dedicating and building three parks totaling 6.4 acres and will be given credit for certain private recreation facilities. The Developer has commenced grading of all three park sites within Improvement Area No. 2 and expects to complete the park sites in Improvement Area No. 2 in approximately November 2025.
Habitat Conservation. The Northlake project site is located within the boundaries of the Natomas Basin Habitat Conservation Plan (NBHCP) area. Parties to the NBHCP and the related implementation agreement include the City, Sutter County, the U.S. Fish & Wildlife Service and the California Department of Fish and Wildlife. The Northlake project site is not part of the City’s NBHCP permit area. The Northlake project has stand-alone approvals and permits from the wildlife resource regulatory agencies for the project area separate from the City’s NBHCP. In 2017, the Developer requested an update to the conservation strategy for habitat preservation for the Northlake project. The conservation strategy (referred to as the Greenbriar Development Project Conservation Strategy) includes the dedication of one on-site and three off- site properties to be used as reserve lands in perpetuity. The on-site Lone Tree Canal Reserve of approximately 28 acres (approximately 15 acres of which are located within Improvement Area No. 1 and 13
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acres of which are located within Improvement Area No. 2) will be located along the western boundary of the Northlake project. The three off-site reserves total approximately 528.8 acres. The reserve lands have been, or will be, dedicated to third-party conservation easement holders as approved by the applicable State and federal agencies. The Developer was required to fund approximately $7.3 million toward the endowments to pay for the maintenance of the reserves, which amounts have been funded.
Greenbriar Fee. As part of the project approval process for the Northlake project, the Developer caused to be prepared a financing plan to fund the required backbone infrastructure, public facilities, development fees and maintenance costs for the project. The financing plan as included in the Development Agreement requires a “Greenbriar Fee” to be paid on a per-unit basis for the residential component of the Northlake project, and on a per-acre basis for any commercial component. The Greenbriar Fee is to be used to contribute to City-wide funds to finance the costs of transit facilities and programs, land acquisition and park development costs, fire services facilities and regional community center costs. The Greenbriar Fee currently ranges from $1,880 to $5,450 for residential units and between $66,212 to $88,614 per acre for commercial uses. Such impact fee is subject to an annual escalator. The Developer is responsible for the payment of such fees and expects to pay such fees when due as development within Northlake progresses. A portion of the Greenbriar Fee may be funded from proceeds of the Bonds.
Environmental Review. The environmental review process for the Northlake project began in 2006 with the preparation of a draft environmental impact report. In January 2008, the City certified the final environmental report (the “Final EIR”) and approved the Northlake project (then known as Greenbriar).
Certain modifications in the project plan have been made since the certification of the Final EIR in 2008. The Developer has since provided the required studies and information and the City has made the necessary findings such that a new environmental impact report for the Northlake project was not required as a result of such modifications. The Developer has acquired all of the required environmental permits from State and federal regulatory agencies that Developer currently believes will be required to complete the Northlake development. All appeal periods with respect to such approvals have expired.
Other Environmental/Natural Hazard Matters. As stated above, the Developer has satisfied all conditions of approval and has obtained all discretionary approvals from State and federal agencies in order to complete the Northlake 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 Lake and Streambed Agreement from the State.
Northlake is not located within an area designed by the Department of Forestry and Fire Protection of the State of California as a “Very High Fire Hazard Severity Zone.” See “THE DISTRICT AND IMPROVEMENT AREA NO. 2 — De Facto Building Moratorium from 2008 to 2015” and “—Flood Hazard.” for a description of certain flood issues within the North Natomas area, which includes Northlake.
Also see “SPECIAL RISK FACTORS — Natural Disasters.”
Infrastructure Development
Backbone Infrastructure Development. As of the Date of Value, aside from the Shore Vista Way Overcrossing, the backbone infrastructure necessary to complete the development within Improvement Area No. 2 was substantially complete. As of such date, aside from the Shore Vista Way Overcrossing, the remaining backbone infrastructure necessary to complete development within Improvement Area No. 2 included landscaping work, walls and fencing and certain water and roadway improvements. In addition, the Developer had commenced initial construction on the three parks within Improvement Area No. 2, however, the ability to obtain building permits within Improvement Area No. 2 is not conditioned on the completion thereof. Lennar Homes commenced obtaining building permits for model homes in June, 2024 and has commenced construction of model and production homes. See “— Home Construction” below.
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Through the Date of Value, the Developer has expended approximately $84.9 million on land acquisition costs and approximately $190.6 million on backbone infrastructure and related soft costs for the entire Northlake Project (i.e., Improvement Area No. 1 and Improvement Area No. 2). The land acquisition cost represents an agreed upon amount between the joint venture entities which formed the Developer. In arriving at such amount, certain considerations were taken into account, including the amount of capital contributions to be provided by the joint venture partners. As a result, such acquisition amount may not reflect the market value at the time of acquisition. The table below sets forth the actual costs incurred on development within Improvement Area No. 2 as of the Date of Value, excluding land acquisition costs. See “— Developer Financing Plan” below.
STATUS OF IMPROVEMENTS
WITHIN IMPROVEMENT AREA NO. 2
(as of September 25, 2024)
Project Description
Budgeted
Costs(2)
Costs Spent
Through
September 25, 2024
Percentage Spent
Through
September 25, 2024
Backbone Infrastructure for
Improvement Area No. 2
Grading/Earthwork $ 9,932,446 $ 9,690,000 97.56%
Sewer 4,672,055 4,667,786 99.91
Drainage 11,997,037 11,993,625 99.97
Water 8,539,118 8,320,123 97.44
Concrete/Roadwork 9,986,512 8,696,375 87.08
Landscaping 4,294,746 342,452 7.97
Walls and Fencing 2,031,067 1,206,737 59.41
Dry Utilities 6,755,523 6,316,502 93.50
Developer Soft Costs 3,652,513 3,070,503 84.07
Developer Fees 1,651,139 1,202,903 72.85
Builder Fees 16,614,317 16,583,817 99.82
Project Soft Costs 4,484,000 3,407,974 76.00
Bonds 1,101,337 1,395,596 126.72
Project Level Contingency 2,283,762 -- 0.00
Backbone Infrastructure Subtotal $87,995,571 $76,894,393 87.38%
Shore Vista Way Overcrossing $17,757,659 (1) $885,946 4.99%
Amenities for Improvement Area No. 2
Neighborhood Park $ 1,152,612 $ 176,732 15.33%
Community Park 883,209 159,165 18.02
Community Park 2,502,770 169,657 6.78
Amenities Subtotal $ 4,538,591 $ 505,554 11.14%
Total for Improvement Area No. 2: $ 110,291,821 $ 78,285,893 71.0% ___________________
(1) Amount based on estimate as set forth in the Appraisal Report, which includes an 8% cost escalation to 2023 from a 2016 cost estimate. Amount is net of $6,112,239 of the cost of the Shore Vista Way Overcrossing, which may be funded by the City pursuant to the Funding Agreement. See “—Transportation Development Impact Fees/Shore Vista Way Overcrossing” above.
(2) Excludes costs of in-tract infrastructure.
Source: The Developer.
In-Tract Infrastructure. As described below under “— Acquisition of Lots by Lennar Homes,” the Developer is required under its purchase and sale agreement with Lennar Homes to substantially complete all
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in-tract infrastructure improvements prior to the time Lennar Homes acquires the related lots. Such in-tract infrastructure improvements include driveways, sidewalks, utility laterals, retaining walls and street capping.
All wet and dry utilities are required to be stubbed to each residential lot and ready to be energized. As of the Date of Value, the Developer had spent approximately $30.6 million on in-tract infrastructure costs in Improvement Area No. 2. As of the Date of Value, in-tract infrastructure for approximately 488 lots, including those related to the 208 lots that Lennar Homes had acquired as of such date, had been substantially completed.
The Developer expects to substantially complete the in-tract infrastructure for all residential lots by the end of 2026, and in any event, prior to the times necessary in order for the Developer to meet the takedown schedule agreed to with Lennar Homes. As of the Date of Value, the Developer expects to spend an additional $41.0 million in in-tract infrastructure costs in Improvement Area No. 2 in order to bring all 1,177 residential lots within Improvement Area No. 2 to a finished status. See “— Acquisition of Lots by Lennar Homes.” Amenities. There are several amenities associated with the Northlake development. These amenities include a community center, pool, bocce ball court, an approximately 12-acre community park and an approximately two-acre neighborhood park within Improvement Area No. 1 and three parks within Improvement Area No. 2. In addition, approximately 41 acres of man-made lakes have been completed, with 20 acres within Improvement Area No. 1 and 21 acres within Improvement Area No. 2. Such lakes are bordered by pedestrian and bike trails, providing common access to the lakefronts.
Small-Lot Final Map Status. As of October 31, 2024, the Developer had recorded small-lot final maps relating to 488 of the projected 1,177 residential units within Improvement Area No. 2. As shown in the table below, the Developer expects to record the balance of the small-lot final maps for the planned residential development within Improvement Area No. 2 by the end of 2027. Pursuant to the purchase and sale agreement with Lennar Homes, the Developer is required to record a small-lot final map prior to Lennar Homes acquiring the related lots. The Villages or portions thereof which do not yet have small-lot final maps recorded are all within recorded large-lot final maps.
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SMALL LOT FINAL MAP RECORDING STATUS
(as of October 31, 2024)
Village
Number of
Planned Units/
Parcels Recording Status (Estimated Recording Date)
1A 64 October 2022
1B 40 (April 2025)
2 14 August 2022 (village south)
2 75 (2026/2027)
3 11 August 2022 (village south)
4 68 (November 2024)
5 61 August 2022 (village south)
6 54 4 (August 2022, village south) – 50 (March 2024)
7 26 August 2022 (village south)
8 6 August 2022 (village south)
8 82 (November 2024)
9 5 August 2022 (village south)
9 48 (June 2025)
10 1 August 2022 (village south)
10 58 March 2024
11 3 August 2022 (village south)
11 41 (2026/2027)
12 60 (November 2024)
13 50 (2026/2027)
14 54 (June 2025)
15 29 (2026/2027)
16 34 (2026/2027)
17 46 October 2022
18 59 October 2022
19 49 (August 2025)
14/20 80 May 2024
14/20 59 (May 2025)
Total 1,177
Source: The Developer.
Developer Financing Plan
Joint Venture. As described below under “PROPERTY OWNERSHIP—The Developer,” the Developer is a wholly-owned subsidiary of a joint venture between Integral Greenbriar, LLC, an affiliate of Integral Communities, and Len-Land West, an affiliate of Lennar Homes. Pursuant to the operating agreement of Greenbriar Investor, LLC, the parent entity of the Developer, the foregoing affiliates of Integral Communities and Lennar Homes made initial capital contributions to fund the development costs within Improvement Area No. 2. Pursuant to such operating agreement and subject to certain limitations set forth therein, Len-Land West has agreed to provide all of the additional capital contributions required for the joint venture’s operations, including the costs necessary to complete the backbone and in-tract infrastructure for the development within Improvement Area No. 2.
The total budgeted backbone and in-tract infrastructure costs and related soft costs for Improvement Area No. 2 is approximately $184.8 million. Through the Date of Value, the Developer has spent approximately $112.8 million on such costs. The Developer expects to spend an additional $31.0 million in backbone infrastructure (including the cost of the Shore Vista Way Overcrossing) and amenity costs within
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Improvement Area No. 2. As of such date, the Developer expects to spend an additional $41.0 million in in- tract infrastructure costs in order to bring all 1,177 residential lots within Improvement Area No. 2 to a finished status.
To date, the Developer has financed the costs of the development within Improvement Area No. 2 through internal funds and previously-paid off loans. The Developer expects to finance the balance of the backbone and in-tract infrastructure costs within Improvement Area No. 2 from internal funds (including any capital contributions from Len-Land West) and proceeds of the Bonds.
The following table shows the Developer’s estimated budget, as of the Date of Value, to complete the backbone and in-tract infrastructure costs for Improvement Area No. 2.
DEVELOPER BUDGET
Total Budgeted
Costs(1)
Through
September 25,
2024
Through
December 31,
2024 2025 2026 2027
Sources of Funds
Developer Internal Funds $ 137,582,124 $112,798,111 $ 4,479,239 $25,718,999 $ (6,328,282)(2) $ 914,057 Bond Proceeds 47,230,884 - 15,000,000 12,332,834 19,898,050 - Total $ 184,813,008 $112,798,111 $ 19,479,239 $38,051,833 $ 13,569,768 $ 914,057
Uses of Funds
Backbone Infrastructure $ 87,995,571 $ 76,894,393 $ 3,518,483 $ 5,753,024 $ 915,615 $ 914,056 Shore Vista Way Overcrossing(3) 15,989,491 885,946 183,074 11,258,263 3,662,207 1 Amenities 4,538,591 505,554 1,209,910 2,823,127 - -
In-Tract Infrastructure 71,625,416 30,629,055 14,422,682 17,707,722 8,865,957 - Other 4,663,939 3,883,163 145,090 509,697 125,989 - Total $ 184,813,008 $112,798,111 $ 19,479,239 $38,051,833 $ 13,569,768 $ 914,057 ___________________
(1) Excludes land acquisition costs.
(2) Represents a return of previously advanced funds by the Developer from anticipated proceeds of Parity Bonds. (3) Cost estimate provided by the Developer and differs from the estimate included in the Appraisal Report.
Source: The Developer.
Notwithstanding the belief of the Developer that it will have sufficient funds to complete its planned development in Improvement Area No. 2, no assurance can be given that sources of financing available to the Developer will be sufficient to complete the property development as currently anticipated. While the Developer has made such internal financing available in the past, there can be no assurance whatsoever of its willingness or ability to do so in the future. Neither the Developer nor any of its affiliates has any legal obligation of any kind to make any such funds available or to obtain loans. Other than pointing out the willingness of the Developer to provide internal financing in the past, the Developer has not represented in any way that it will do so in the future. If and to the extent that internal financing, loan proceeds, or bond proceeds are inadequate to pay the costs to complete the development within Improvement Area No. 2 and other financing by the Developer is not put into place, there could be a shortfall in the funds required to complete the proposed development by the Developer and portions of the project may not be developed.
Acquisition of Lots by Lennar Homes
Purchase and Sale Agreement. The Developer and Lennar Homes entered into a Purchase and Sale Agreement and Joint Escrow Instructions dated May 31, 2023, as amended from time to time (the “Lennar Homes PSA”). The Lennar Homes PSA is an agreement by which Lennar Homes has agreed to purchase all 1,177 lots planned for for-sale residential development within Improvement Area No. 2 in twenty (20) quarterly takedowns (each a “Takedown”), commencing March 2024 and ending December 2028. The number of lots to be acquired in each quarterly Takedown varies, with a high of approximately 80 lots to a low
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of approximately seven. As of the Date of Value, Lennar Homes had taken down 208 lots consisting of model and production lots.
The due diligence period under the Lennar Homes PSA has expired and Lennar Homes is now committed to purchasing all 1,177 proposed lots pursuant to the Lennar Homes PSA.
Under the Lennar Homes PSA, among other things, the Developer must do the following with respect to each Takedown of property (“Takedown Property”) at each takedown closing (“Takedown Closing”):
1. Small Lot Final Maps. The Small Lot Final Maps for the applicable Takedown Property shall have been recorded. This condition is not waivable.
2. Seller In-Tract Improvements. All in-tract infrastructure for the applicable Takedown Property must be substantially complete. The Developer has agreed to use commercially diligent efforts to satisfy the closing conditions before the applicable scheduled Takedown Closing date. The Developer will not be in default if, despite using commercially diligent efforts, the Developer fails to timely satisfy any of these closing conditions by the applicable Takedown Closing date. In the event any closing condition is not satisfied on the applicable Takedown Closing date, Lennar Homes has the right to extend the applicable Takedown Closing date for such Takedown on a day-to-day basis for the delay in satisfying such conditions. If, and only if, any Takedown is delayed by more than ten (10) days, then the Takedown Closing date for all subsequent Takedowns will be similarly extended on a day-for-day basis.
Under the Lennar Homes PSA, the Developer must conduct the “Seller Work” on the lots scheduled to close on each Takedown Closing date. The Seller Work is defined to mean the following: (a) satisfying all conditions of approval and/or development conditions imposed on the large-lot parcel relating to the lots to be taken down (including conditions relating to off-site improvements); (b) completion of the in-tract infrastructure improvements; and (c) completing all other governmental conditions of approval imposed on the Small Lot Final Maps (including conditions relating to off-site improvements). As described above, completion of all such work by the Developer is not a Takedown Closing condition; only substantial completion of the in-tract infrastructure is a condition.
The Developer and Lennar Homes will enter into a license agreement at each Takedown Closing so that the Developer may enter the Takedown Property to perform any remaining work required of the Developer on lots not completed prior to the applicable Takedown Closing date. Subject to delay as permitted by the Lennar Homes PSA, the Developer shall complete any such work not required to be completed prior to a Takedown Closing date so that, in the normal course of Lennar Homes’ sales absorption and operations, Lennar Homes is not delayed in: (a) obtaining building or occupancy permits; (b) commencing and completing construction of homes; and (c) closing escrow for the sale of completed homes to homebuyers.
If any specified work required of the Developer is not timely completed as and when required under the Lennar Homes PSA, then Lennar Homes shall be entitled to pursue any or all of the following remedies for such default as Lennar Homes’ sole and exclusive remedies: (i) the right to file an action for specific performance; (ii) the right to pursue self-help as provided in the Lennar Homes PSA; and/or (iii) the right to receive a Delivery Delay Credit (as defined below). Termination of the Lennar Homes PSA is not a remedy for the failure to satisfy the closing conditions.
Except for the right to reimbursement for self-help as provided below, Lennar Homes is not entitled to any damages for default in the performance of the work that the Developer is required to complete prior to a Takedown Closing date, as described above. If Lennar Homes elects to pursue self-help, Lennar Homes is entitled to receive reimbursement from the Developer for one hundred five percent (105%) of all actual out-of- pocket third party costs to complete such work (or applicable portion thereof).
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In the event due to the work required of the Developer not being completed or performed Lennar Homes is delayed in (a) obtaining building or occupancy permits; (b) commencing and completing construction of homes; and/or (c) closing escrow for the sale of completed homes to homebuyers, Lennar Homes will receive a credit against the purchase price in connection with the next Takedown (the “Delivery Delay Credit”) in an amount equal to interest at an agreed-upon rate per annum on the sum of: (i) the total purchase price for the affected lots, and (ii) any homebuilding hard costs and building permit fees incurred by Lennar Homes with respect to such lots. Such Delivery Delay Credit shall accrue from the date of completion of the home until the date the City issues a certificate of occupancy. In the event there are no future Takedowns to apply the Delivery Delay Credit to, the Developer shall pay the amount of any remaining Delivery Delay Credit (with the interest accrual terminating at the time of such payment by the Developer) within thirty (30) days of Lennar Homes’ written request.
The right of Lennar Homes to terminate the Lennar Homes PSA is limited as described herein. If (a) any Takedown of the Property or portion thereof is taken by condemnation or eminent domain (or is the subject of a pending or threatened taking which has not yet been consummated) (a “Condemnation”); or (b) any Takedown of the property or portion thereof is damaged or destroyed (a “Casualty”), the Developer shall notify Lennar Homes in writing of such fact promptly after obtaining knowledge thereof. Upon the occurrence of a Casualty, the Developer shall promptly repair the damage or destruction and if necessary in order for the Developer to repair such Casualty by the applicable Takedown Closing date, such Takedown Closing date for all lots in the affected Village(s) shall be delayed until ten (10) Business Days after such repairs have been completed. For avoidance of doubt, the Takedown Closing date for Villages not affected by the Casualty shall not be extended. In the case of a Condemnation, Lennar Homes shall have the right to terminate the Lennar PSA with respect to some or all of the lots affected by such Condemnation (the “Affected Lots”), by giving written notice to the Developer no later than ten (10) Business Days after Lennar Homes’ receipt of the Developer’s notice, and the applicable Takedown Closing date for any Takedown shall be extended, if necessary, to provide sufficient time for Lennar Homes to make such election. The failure by Lennar Homes to so elect in writing within such ten (10) Business Day period shall be deemed an election to terminate the Lennar PSA with respect to the Affected Lots. Upon termination of the Lennar PSA with respect to any Affected Lots, the purchase price for Villages containing such Affected Lots shall be recalculated in accordance with the Lennar Homes PSA. In addition, Lennar Homes has a limited termination right in the event the Developer is in material default of its representations, warranties, covenants or obligations under the Lennar Homes PSA which cause an applicable Closing not to occur, subject to all cure periods set forth in the Lennar Homes PSA.
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Takedown Schedule. Pursuant to the Lennar Homes PSA (as amended), Lennar Homes is currently scheduled to takedown lots from the Developer as shown in the following table. The Lennar Homes PSA may be amended from time-to-time to revise the takedown schedule as a result of, among other factors, the pace of construction and sales activity within the various Villages in Improvement Area No. 2.
Time Period
Number of Lots
to be Taken
Down by Quarter
Per Lennar
Homes PSA
2024
Q1 (3-11-24) 76(1)
Q2 (6-11-24) 68(1)
Q3 (9-11-24) 64(1)
Q4 (12-11-24) 80
2024 Total 288
2025
Q1 (3-11-25) 80
Q2 (6-11-25) 80
Q3 (9-11-25) 80
Q4 (12-11-25) 80
2025 Total 320
2026
Q1 (3-11-26) 80
Q2 (6-11-26) 80
Q3 (9-11-26) 80
Q4 (12-11-26) 80
2026 Total 320
2027
Q1 (3-11-27) 71
Q2 (6-11-27) 51
Q3 (9-11-27) 30
Q4 (12-11-27) 30
2027 Total 182
2028
Q1 (3-11-28) 24
Q2 (6-11-28) 20
Q3 (9-11-28) 16
Q4 (12-11-28) 7
2028 Total 67
Total 1,177
(1) Takedown has occurred.
Source: The Developer.
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Home Construction
No assurances can be made that Lennar Homes or any other current or future owner of taxable property within Improvement Area No. 2 will have the resources, willingness, and ability to successfully complete development activities on the property within Improvement Area No. 2. No representation is made as to the ability (financial or otherwise) of Lennar Homes or any other current or future owner of taxable property within Improvement Area No. 2 to complete development as currently planned.
Development Plan. As described above, all 1,177 lots proposed for residential development are subject to the Lennar Homes PSA to be acquired by Lennar Homes in phases. The 1,177 proposed homes within Improvement Area No. 2 have been organized into Villages for purposes of home development. Lennar Homes currently has eight product lines as further described below, all of which are continuations of Lennar Homes’ product lines in Improvement Area No. 1. As of the Date of Value, Lennar Homes has taken down 208 lots from the Developer, 33 of which are planned for model homes and 175 of which are planned for production homes.
Lennar Homes commenced construction of model homes on six of the eight product types planned within Improvement Area No. 2 in June 2024. Lennar Homes opened six product lines for sale in September 2024 and expects to open the two remaining product lines for sale in January 2025.
As of the Date of Value, Lennar Homes had obtained 194 building permits within Improvement Area No. 2, consisting of building permits for 33 model homes (17 completed as of such date and 16 under construction) and 161 production homes (nine completed as of such date and 152 under construction). Lennar Homes anticipates completing all model homes by the end of January 2025. Lennar Homes currently plans to commence construction on production homes at the time such lots are scheduled to be taken down as described in the schedule shown under “Acquisition of Lots by Lennar Homes — Takedown Schedule” above. Lennar Homes has reviewed the absorption schedule set forth under “— Market Absorption Study” and expects that its pace of home sales will be in line with such schedule.
As of November 11, 2024, Lennar Homes had completed and conveyed 19 homes in Improvement Area No. 2 to individual homeowners and had 54 homes in escrow. Lennar Homes currently expects to complete and convey all 1,177 planned homes within Improvement Area No. 2 to individual homeowners by the fourth quarter of 2028.
The following table sets forth the estimated number of lots, home sizes, minimum lot sizes and base sales prices for Lennar Homes’ eight product lines planned within Improvement Area No. 2. As shown in the table below, 115 homes are currently planned to be situated on lakefront lots.
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DEVELOPMENT PLANS BY NEIGHBORHOOD AND PLAN
Community Villages No. of Lots
Estimated
Home Size
(Sq. Ft.)
Minimum Lot
Size (Sq. Ft.)
No. of
Lakefront
Lots
Estimated
Average Base Sales
Prices
Shor 1 and 2 193 1,774 – 2,190 2,788 0 $580,240
Lakelet 4, 5 and 11 173 2,114 – 2,362 3,690 0 $629,657
Watersyde 3, 6 and 8 153 2,307 – 2,968 4,000 28 $691,190
Wavmor 14 through 17 163 2,134 – 2,786 4,500 19 $662,990
Crestvue 7, 9 and 10 138 1,797 – 3,178 4,675 15 $689,590 Bleau 12 and 13 110 2,150 – 3,180 5,000 40 $761,823
Drifton 18 and 19 108 2,282 – 3,425 5,500 13 $745,657
Waters Edge 14/20 139 1,454 – 1,907 3,690 0 $538,740 Totals 1,177 115
Source: Lennar Homes.
Lennar Homes Financing Plan. To date, Lennar Homes has financed its land acquisition and various site development costs related to its property in Improvement Area No. 2 through internally generated funds.
Lennar Homes estimates that as of October 31, 2024 it remains to incur approximately $445 million in homebuilding, builder fees, marketing, and sales costs to complete its development in Improvement Area No.
2. Lennar Homes expects to use home sales revenues and internal funding to complete its development in Improvement Area No. 2. Lennar Homes believes that it will have sufficient funds available to complete its planned development in Improvement Area No. 2 in accordance with the development schedule described in this Official Statement.
Although Lennar Homes expects to have sufficient funds available to complete its development in the District in accordance with the development schedule described in this Official Statement, there can be no assurance that amounts necessary to finance the remaining development costs will be available from Lennar Homes or any other source when needed. Neither Lennar Homes, nor any of its related entities are under any legal obligation of any kind to expend funds for the development of and construction of homes on its property in Improvement Area No. 2. Any contributions by Lennar Homes to fund the costs of such development are entirely voluntary.
If and to the extent that internal funding, including but not limited to home sales revenues, are inadequate to pay the costs to complete the planned development by Lennar Homes within Improvement Area No. 2 and other financing by Lennar Homes is not put into place, there could be a shortfall in the funds required to complete the planned development by Lennar Homes in Improvement Area No. 2.
PROPERTY OWNERSHIP
The information in this section about the Developer and Lennar Homes has been provided by Developer and Lennar Homes and has not been independently confirmed or verified by the Underwriter or the City. The Underwriter and the City make no representation as to the accuracy or adequacy of the information contained in this section.
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The Developer
General. As described above, the substantial majority of the property within Improvement Area No. 2 is owned by the Developer. All of such property owned by the Developer within Improvement Area No. 2 that is planned for residential development is subject to the Lennar Homes PSA.
The Developer is a joint venture between Integral Greenbriar, LLC, an affiliate of Integral Communities, and Len-Land West, an affiliate of Lennar Homes. See “—Integral Communities” and “— Lennar Homes of California” below. Greenbriar Investor, LLC (“Investor”) is the parent entity of the Developer. Len-Land West (“LLW”), a wholly-owned subsidiary of Lennar Homes, and Integral Greenbriar, LLC (“Integral”) are the sole members of Investor, which is governed by that certain Operating Agreement of Investor, dated as of July 11, 2019, as amended by that certain First Amendment to Operating Agreement of Investor, dated as of June 3, 2020, by that certain Second Amendment to Operating Agreement of the Company dated as of June 21, 2023 and that certain Third Amendment to Operating Agreement of Greenbriar Investor, LLC dated as of September 25, 2024 (as amended, the “Operating Agreement”).
Upon formation of Investor, each of Integral and LLW made initial capital contributions to Investor.
Subject to the maximum dollar amounts set forth in the Operating Agreement, LLW has agreed to provide all of the additional capital contributions to Investor that are currently expected to be required for Investor’s operations. Such capital contributions shall be made upon the request of Integral, acting as the managing member of Investor, when additional funds are required by Investor or any of its subsidiaries, including the Developer.
Integral, as the managing member of Investor, is acting as the development manager for the property within Improvement Area No. 2 and may take the following actions on behalf of Investor without member consent: (i) retain or engage and coordinate the services of all contractors, architects, engineers, brokers, accountants, attorneys, and other professional persons necessary or appropriate to carry out the purpose of Investor; (ii) obtain any financing approved by both members and execute, deliver and perform on behalf of Investor any note or deed of trust or any modification thereof and to execute any required security agreements with respect to tangible or personal property or other property owned by Investor and any other documents which may be required in connection with such financing, or any modifications thereof; (iii) pay from the funds of Investor all debts, expenses and obligations of Investor; (iv) if approved by both members, Integral, on behalf of Investor, shall have the power to purchase and maintain insurance on behalf of any person who is or was an agent of Investor against any liability asserted against such person and incurred by such person in any such capacity, or arising out of such person’s status as an agent, whether or not Investor would have the power to indemnify such person against such liability under the provisions of the Operating Agreement or under applicable law; (v) execute, deliver and perform such agreements and other documents as it may deem advisable for Investor purposes; (vi) perform or cause to be performed Investor’s obligations, and exercise or cause to be exercised all of Investor’s rights, under any agreement to which Investor is a party; (vii) exercise all rights, powers, remedies, duties and obligations as a member or owner of a direct or indirect ownership interest in the Developer; (viii) loan money to the Developer or any subsidiary; (ix) contribute additional cash or other assets to the Developer or any subsidiary; (x) grant, or cause the Developer to grant, easements, reservations, rights-of-way, covenants, conditions, restrictions or other encumbrances affecting all or a portion of the real property; (xi) execute, deliver and perform such agreements and other documents as it may deem advisable in connection with real property transfers permitted under the Operating Agreement; (xii) give a capital call notices in accordance with the Operating Agreement; and (xiii) amend, or cause the Developer to amend, purchase and sale agreements for the real property; provided that the amendment is materially consistent with either the purpose of Investor or the Developer or the business plan previously approved by the members, is not a material change from prior purchase and sale agreements for the real property, and does not have a materially negative effect on any member.
Integral Communities. The principals of Integral Communities have over 150 years of combined experience in the real estate development business. Many of the principals spent more than a decade growing
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Western Pacific Housing into a successful western states home building and development company.
Recognized as the 12th-largest homebuilder in the country at one time, Western Pacific was later sold to D.R.
Horton for in excess of $1 billion in market capitalization. Following the sale to D.R. Horton, the five principals formed Integral Communities.
Integral Communities creates new opportunities from underutilized or undeveloped property of land through value-added land planning, with projects that include for-sale, apartment, mixed-use and residential multi-family opportunities. Previous projects of Integral Communities include, among others, the following:
• Gateway Station – Newark, CA (580 residential units; sold to Lennar Homes). • Dublin Ranch Sub Area 3 – Dublin, CA (437 residential units; sold to Lennar Homes). • Dublin Ranch Lot 3 – Dublin, CA (123 residential units; sold to Lennar Homes). • Centre Pointe – Milpitas, CA (241 residential units; sold to D.R. Horton). • Houret – Milpitas, CA (114 residential units; sold to The New Home Company). • Riverdale – Long Beach, CA (131 residential units; as a joint venture with Brandywine Homes). • Torian – Newark, CA (547 residential units; sold to William Lyon Homes). • Palmilla – Brentwood, CA (400 residential units; sold to Pulte and William Lyon Homes). • Montecito Vista – San Jose, CA (284 residential units; sold to Taylor Morrison and Lennar Homes).
• The Fields – Milpitas, CA (1,185 for-sale and for-rent multifamily residential units; as a joint venture with Lyon Living).
• Tracy Hills – Tracy, CA (2,686 for-sale residential units; sold to Lennar Homes, Shea Homes and Meritage Homes).
Further information regarding Integral Communities is available from its website at integralcommunities.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.
Lennar Homes of California, LLC, a California limited liability company General. Lennar Homes has acquired 208 lots within Improvement Area No. 2 and is under contract to acquire the remaining lots owned by the Developer planned for residential development in Improvement Area No. 2. As previously defined in this Official Statement, “Lennar Homes” refers to Lennar Homes of California, LLC, a California limited liability company. Lennar Homes is based in Irvine, California, and has been in the business of developing residential real estate communities in California since 1996. Lennar Homes is wholly-owned by U.S. Home, LLC, a Delaware limited liability company (“U.S. Home”). U.S. Home is wholly-owned by Lennar Corporation, which is based in Miami, Florida (“Lennar Corporation”). Founded in 1954, Lennar Corporation completed its initial public offering in 1971 and listed its common stock on the New York Stock Exchange in 1972. Lennar Corporation’s Class A and Class B common stock are listed on the New York Stock Exchange under the symbols “LEN” and “LEN.B.” respectively. Lennar Corporation is one of the largest homebuilders in the United States based on home sales revenues and net earnings, and operates under a number of brand names, including Lennar Homes and U.S. Home. Lennar Corporation primarily develops residential communities both within the Lennar Corporation family of builders and through consolidated and unconsolidated partnerships in which Lennar Corporation maintains an interest.
Lennar Corporation is subject to the informational requirements of the Securities Exchange Act of 1934, as amended, and, in accordance therewith, files reports, proxy statements, and other information, including financial statements, with the Securities and Exchange Commission (the “SEC”). Such filings, particularly Lennar Corporation’s annual report on Form 10-K and its most recent quarterly report on Form 10- Q, may be inspected and copied at the public reference facilities maintained by the SEC at 450 Fifth Street, N.W., Washington, D.C. 20549 at prescribed rates. Such filings can also be accessed over the internet at the SEC’s website at www.sec.gov.
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Copies of Lennar Corporation’s Annual Report on Form 10-K and related financial statements are available from Lennar Corporation’s website at www.lennar.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. No representation is made in this Official Statement as to the accuracy or adequacy of the information contained on the internet site.
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. 2 to pay the Special Tax when due. Such failures to pay the Special Tax could result in the inability of the City to make full and punctual payments of debt service 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. 2. 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. 2, 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, Lennar Homes, any future developers or any future homeowners within Improvement Area No. 2 will pay the Special Tax on their property in the future or that they will be able to pay the Special Tax 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
As of November 11, 2024, there were 19 homes closed to individual homeowners and the balance of the property within Improvement Area No. 2 was owned by the Developer and Lennar Homes. Until a substantial number of homes are conveyed to individual homeowners or future developers, the property within Improvement Area No. 2 will be primarily owned by the Developer and Lennar Homes. See “DEVELOPMENT OF PROPERTY IN IMPROVEMENT AREA NO. 2” and “PROPERTY OWNERSHIP” above.
Failure of the Developer, Lennar Homes or any future developers within Improvement Area No. 2, 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, Lennar Homes or any future developers within Improvement Area No. 2, or their successors, will complete the remaining intended construction and development in Improvement Area No. 2. See “— Failure to Develop Properties.”
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The City expects to levy the Special Tax on Developed Property, Final Map Property, and Undeveloped Property within Improvement Area No. 2 in Fiscal Year 2025-26, which as of the date of this Official Statement, is owned by individual homeowners, the Developer and Lennar Homes. In the event that Developer and/or Lennar Homes fail to complete the intended construction and development in Improvement Area No. 2, the Special Tax will continue to be levied on Undeveloped Property and Final Map Property owned by the Developer and/or Lennar Homes. No assurance can be given that the Developer, Lennar Homes or any future developers that purchase property within Improvement Area No. 2 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 Properties
Development of property within Improvement Area No. 2 may be subject to unexpected delays, disruptions and changes which may affect the willingness and ability of the Developer, Lennar Homes, any future developers, or any 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 that such approvals will not be obtained or, if obtained, will not be obtained on a timely basis. See “DEVELOPMENT OF PROPERTY IN IMPROVEMENT AREA NO. 2.” 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. 2 is also subject to the availability of water. Finally, development of land is subject to economic considerations.
As of the date of this Official Statement, the property owned by the Developer and Lennar Homes ranged from homes under construction to mass-graded land. 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. 2 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. 2 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. 2 to pay the Special Tax when due.
There can be no assurance that land development operations within Improvement Area No. 2 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, or the national economy. 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 of Bonds should assume that any event that significantly impacts the ability to develop land in Improvement Area No. 2 would cause the property values within Improvement Area No. 2 to decrease substantially from those estimated by the Appraiser and could affect the willingness and ability of the owners of land within Improvement Area No. 2 to pay the Special Tax when due.
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The City expects to levy the Special Tax on Developed Property, Undeveloped Property, and Final Map Property in Fiscal Year 2025-26 and in future fiscal years until the Special Tax levied on Developed Property is sufficient to fund the Special Tax Requirement. Undeveloped property is less valuable per unit of area than property with improvements thereon, 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 undeveloped property due to the nonpayment of the Special Tax. Furthermore, an inability to develop the land within Improvement Area No. 2 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. 2 could reduce the willingness and ability of the Developer and Lennar Homes to make Special Tax payments on undeveloped 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.”
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 full 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 Second Amended Rate and Method, the annual amount of Special Tax to be levied on Taxable Property in Improvement Area No. 2 will generally be based on the land use category of such parcels.
See APPENDIX A — “SECOND AMENDED AND RESTATED RATE AND METHOD OF APPORTIONMENT OF SPECIAL TAX” and “SOURCES OF PAYMENT FOR THE BONDS — Special Tax — Second Amended 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 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. 2 in any fiscal year at a rate in excess of the maximum amounts permitted under the Second 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. 2 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. 2 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 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
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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. 2, 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. 2 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 Second Amended Rate and Method governing the levy of the Special Tax provides that no Special Tax shall be levied on Exempt Property (as defined in the Second Amended Rate and Method). See APPENDIX A — “SECOND AMENDED AND RESTATED RATE AND METHOD OF APPORTIONMENT OF SPECIAL TAX.” If for any reason property within Improvement Area No. 2 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. 2. 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. 2 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. 2 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. 2 can complete the remaining infrastructure and future homes, and demand by, and the ability of individuals to purchase homes within Improvement Area No. 2. Such events and factors could include rising inflation and interest rates, persistent supply chain issues, global market instability caused by geopolitical events or political instability. Any adverse impact of the foregoing and other economic factors on the projects in Improvement Area No. 2 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. 2 described herein. With respect to entry-level households (which likely includes the market for the projects in Improvement Area No. 2), increased mortgage interest rates may adversely impact the affordability of homes and may increase mortgage payment levels for
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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. 2 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.
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. 2 will be included in the County’s Teeter Plan when the Special Tax is levied. Thus, if Improvement Area No. 2 is included, the County’s Teeter Plan may protect the Holders of the Bonds from the risk of delinquencies in the payment of the Special Tax.
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. 2 would eliminate such protection from delinquencies in the payment of the Special Tax. See “SOURCES OF PAYMENT FOR THE BONDS — Teeter Plan.” Natural Disasters
The market value and habitability of the property within Improvement Area No. 2 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.
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.
Consequently, neither the absence of, nor the establishment of, design criteria with respect to any particular condition means that the applicable governmental agency has evaluated the condition and has established design criteria in the situations in which the criteria are needed to preserve value, or has established the criteria at levels that will preserve value. To the contrary, the City expects that one or more of such conditions may occur and may result in damage to improvements of varying seriousness; that the damage may entail significant repair or replacement costs; and that repair or replacement may never occur because of the cost, because repair or replacement will not facilitate habitability or other use, or because other considerations
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preclude repair or replacement. Under any of these circumstances, the actual value of the parcels might depreciate or disappear, notwithstanding the establishment of design criteria for any such condition.
Improvement Area No. 2 is located within the Natomas Basin, which is currently designated as Zone A99, meaning that, among other things, at least 50% of the improvements required to achieve 100-year flood protection have been completed. See “THE DISTRICT AND IMPROVEMENT AREA NO. 2 — De Facto Building Moratorium from 2008 to 2015” and “—Flood Hazard.” The area within the Natomas Basin has experienced flood events. For instance, in 1986, flooding caused seepage in the levees within the proximity of the Sacramento International Airport. In December 2020 and January 2023, significant rainstorms caused flooding in certain parts of the County. The area within the Natomas Basin (including Improvement Area No. 2) did not experience flooding and was not impacted by the flooding which occurred in other parts of the County. As described in this Official Statement, completion of the Levee Project does not eliminate the risk of flood-related property damage within the Natomas Basin (including Improvement Area No. 2).
In recent years, wildfires have caused extensive damage throughout the State. Certain of these fires have burned thousands of acres and destroyed hundreds and in some cases thousands of homes. In some instances entire neighborhoods have been destroyed. Several fires which occurred in recent years damaged or destroyed property in areas that were not previously considered to be at risk from such events. Additionally, property located adjacent to burn areas can be subject to mudslides and flooding, which can cause significant damage and destruction to property. Improvement Area No. 2 is not located in an area which the Department of Forestry and Fire Protection of the State of California has designated as a high fire hazard severity zone.
Hazardous Substances
The presence of hazardous substances on a parcel may result in a reduction in the value of a parcel. In general, the owners and operators of a parcel may be required by law to remedy conditions of the parcel relating to releases or threatened releases of hazardous substances. The Federal Comprehensive Environmental Response, Compensation and Liability Act of 1980, sometimes referred to as “CERCLA” or the “Superfund Act,” is the most well-known and widely applicable of these laws, but California laws with regard to hazardous substances are also stringent and similar. Under many of these laws, the owner or operator is obligated to remedy a hazardous substance condition of property whether or not the owner or operator has anything to do with creating or handling the hazardous substance. The effect, therefore, should any of the taxed parcels be affected by a hazardous substance, is to reduce the marketability and value of the parcel by the costs of remedying the condition, because the purchaser, upon becoming the owner, will become obligated to remedy the condition just as is the seller.
Further, it is possible that liabilities may arise in the future with respect to any of the parcels resulting from the existence, currently, on the parcel of a substance presently classified as hazardous but which has not been released or the release of which is not presently threatened, or may arise in the future resulting from the existence, currently, on the parcel of a substance not presently classified as hazardous but which may in the future be so classified. Further, such liabilities may arise not simply from the existence of a hazardous substance but from the method of handling such substance. All of these possibilities could significantly affect the value of a parcel that is realizable upon a delinquency and the willingness or ability of the owner of any parcel to pay the Special Tax installments.
The value of the taxable property within Improvement Area No. 2, as set forth in the various tables and elsewhere in this Official Statement, does not reflect the presence of any hazardous substance or the possible liability of the owner (or operator) for the remedy of a hazardous substance condition of the property.
The City has not independently determined whether any owner (or operator) of any of the parcels within Improvement Area No. 2 has such a current liability with respect to any such parcel; nor is the City aware of any owner (or operator) who has such a liability. However, it is possible that such liabilities do currently exist and that the City is not aware of them. It is possible that future events relating to hazardous substances or environmental issues could impact the development within Improvement Area No. 2.
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Payment of the Special Tax is not a Personal Obligation of the Property Owners An owner of a Taxable Parcel is not personally obligated to pay the Special Tax. Rather, the Special Tax is an obligation which is secured only by a lien against the Taxable Property. If the value of a Taxable Parcel is not sufficient, taking into account other liens imposed by public agencies, to secure fully the Special Tax, the City has no recourse against the property owner.
Property Values
The value of the property within Improvement Area No. 2 is a critical factor in determining the investment quality of the Bonds. If a property owner is delinquent in the payment of the Special Tax, the City’s only remedy is to commence foreclosure proceedings against the delinquent parcel in an attempt to obtain funds to pay the Special Tax. Reductions in property values due to a downturn in the economy, physical events such as earthquakes, fires or floods, stricter land use regulations, delays in development or other events will adversely impact the security underlying the Special Tax. In addition, the property in Improvement Area No. 2 is located approximately four miles from the Sacramento International Airport and no assurances can be made that such proximity to the airport will not have an impact on property values within Improvement Area No. 2 in the future. See “THE DISTRICT AND IMPROVEMENT AREA NO. 2 — Projected Special Tax Levy and Value-To-Lien Ratios.”
The Appraisal Report does not reflect any possible negative impact which could occur by reason of future slow or no growth voter initiatives, an economic downturn, any potential limitations on development occurring due to time delays, an inability of any landowner to obtain any needed development approval or permit, the presence of hazardous substances or other adverse soil conditions within Improvement Area No. 2, the listing of endangered species or the determination that habitat for endangered or threatened species exists within Improvement Area No. 2, or other similar situations.
Prospective purchasers of the Bonds should not assume that the land and improvements within Improvement Area No. 2 could be sold for the amount stated in the Appraisal Report at a foreclosure sale as a result of delinquencies in the Special Tax. In arriving at the estimate of market value of the Taxable Property within Improvement Area No. 2, the Appraiser assumes that any sale will be sold in a competitive market after a reasonable exposure time; the Appraiser also assumes that neither the buyer or seller is under duress, which is not always true in a foreclosure sale. See APPENDIX B — “APPRAISAL REPORT” for a description of other assumptions made by the Appraiser and for the definitions and limiting conditions used by the Appraiser.
Any event which causes any of the Appraiser’s assumptions to be untrue could result in a reduction of the value of the land within Improvement Area No. 2 below that which was estimated by the Appraiser.
The assessed values set forth in this Official Statement do not represent market values arrived at through an appraisal process and generally reflect only the sales price of a parcel when acquired by its current owner, adjusted annually by an amount determined by the County Assessor, generally not to exceed an increase of more than 2% per fiscal year. No assurance can be given that a parcel could actually be sold for its assessed value.
No assurance can be given that any bid will be received for a parcel with delinquencies in the Special Tax offered for sale at foreclosure or, if a bid is received, that such bid will be sufficient to pay all delinquencies in the Special Tax. See “SOURCES OF PAYMENT FOR THE BONDS — Special Tax — Foreclosure Covenant.”
Parity Taxes and Special Assessments
Property within Improvement Area No. 2 is subject to taxes and assessments imposed by other public agencies also having jurisdiction over the land within Improvement Area No. 2. See “THE DISTRICT AND IMPROVEMENT AREA NO. 2 — Direct and Overlapping Indebtedness.” Individual property owners may
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also place assessment liens on their property under the Property Assessed Clean Energy (PACE) program to finance certain renewable energy systems, energy efficiency and water conservation improvement.
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 a 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.” The City has no control over the ability of other entities and districts to issue indebtedness secured by special taxes, ad valorem taxes or assessments payable from all or a portion of the property within Improvement Area No. 2. In addition, the landowners within Improvement Area No. 2 may, without the consent or knowledge of the City, petition other public agencies to issue public indebtedness secured by special taxes and ad valorem 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. 2 described herein. See “SOURCES OF PAYMENT FOR THE BONDS” and “THE DISTRICT AND IMPROVEMENT AREA NO. 2 — Direct and Overlapping Indebtedness” and “—Projected Special Tax Levy and Value-To-Lien Ratios.” Disclosures to Future Purchasers
The willingness or ability of an owner of Taxable Property to pay the Special Tax may be affected by whether the owner (1) was given due notice of the Special Tax authorization when the owner purchased the property; (2) was informed of the amount of the Special Tax on the property should the Special Tax be levied at the maximum tax rate, and the risk of such a levy; and (3) has the ability at the time of such a levy to pay it as well as pay other expenses and obligations. The City has caused a notice of the Special Tax to be recorded in the Office of the Recorder for the County against the Taxable Property. While title companies normally refer to such notices in title reports, there can be no guarantee that such reference will be made or, if made, that a prospective purchaser or lender will consider such Special Tax obligation in the purchase of a property within Improvement Area No. 2 or lending of money thereon.