San Luis Obispo City Council
August 18, 2026

11 DEBT SERVICE SCHEDULE
The following table presents the semi-annual and Fiscal Year debt service for Outstanding Bonds following the issuance of the 2026 Bonds, excluding the 2015 Bonds. See “PLAN OF REFUNDING.”
Table 3
Debt Service Schedule*
2007 Taxable Bonds 2018 Bonds 2026 Bonds Total
Fiscal Year Debt
Date Principal Interest Total Principal Interest Total Principal Interest Total Service 9/1/2026 $1,180,000 $747,628 $1,927,628 $260,000 $408,463 $668,463 3/1/2027 — 714,759 714,759 — 401,963 401,963
9/1/2027 1,245,000 714,759 1,959,759 275,000 401,963 676,963 3/1/2028 — 680,080 680,080 — 395,088 395,088
9/1/2028 1,315,000 680,080 1,995,080 290,000 395,088 685,088 3/1/2029 — 643,451 643,451 — 387,838 387,838
9/1/2029 1,390,000 643,451 2,033,451 300,000 387,838 687,838 3/1/2030 — 604,732 604,732 — 383,338 383,338
9/1/2030 1,470,000 604,732 2,074,732 305,000 383,338 688,338 3/1/2031 — 563,785 563,785 — 378,763 378,763
9/1/2031 1,555,000 563,785 2,118,785 325,000 378,763 703,763 3/1/2032 — 520,471 520,471 — 373,888 373,888
9/1/2032 1,645,000 520,471 2,165,471 330,000 373,888 703,888 3/1/2033 — 474,649 474,649 — 368,731 368,731
9/1/2033 1,740,000 474,649 2,214,649 335,000 368,731 703,731 3/1/2034 — 426,182 426,182 — 363,288 363,288
9/1/2034 1,840,000 426,182 2,266,182 355,000 363,288 718,288 3/1/2035 — 374,928 374,928 — 357,519 357,519
9/1/2035 1,945,000 374,928 2,319,928 360,000 357,519 717,519 3/1/2036 — 320,750 320,750 — 351,444 351,444
9/1/2036 2,055,000 320,750 2,375,750 375,000 351,444 726,444 3/1/2037 — 263,508 263,508 — 345,116 345,116
9/1/2037 2,170,000 263,508 2,433,508 395,000 345,116 740,116 3/1/2038 — 203,063 203,063 — 338,450 338,450
9/1/2038 2,295,000 203,063 2,498,063 405,000 338,450 743,450 3/1/2039 — 139,136 139,136 — 331,363 331,363
9/1/2039 2,430,000 139,136 2,569,136 8,680,000 331,363 9,011,363 3/1/2040 — 71,448 71,448 — 157,763 157,763
9/1/2040 2,565,000 71,448 2,636,448 9,015,000 157,763 9,172,763 3/1/2041 — — — — — —
TOTAL** $26,840,000 $12,749,512 $39,589,512 $22,005,000 $10,277,567 $32,282,567 * Excludes the 2015 Bonds to be refunded with the 2026 Bonds. ** Row does not total due to independent rounding.

12 THE 2026 BONDS
General
The 2026 Bonds will be dated their date of original delivery, will be issued in fully registered form, in denominations of $5,000 and any integral multiple thereof and will mature on the dates and in the principal amounts and bear interest at the rates as set forth on the inside cover of this Official Statement.

Interest on the 2026 Bonds shall be payable semiannually on March 1 and September 1 of each year commencing March 1, 2027 (each, an “Interest Payment Date”). The 2026 Bonds, when issued, will be registered in the name of Cede & Co., as nominee of The Depository Trust Company, New York, New York (“DTC”). DTC will act as securities depository of the 2026 Bonds. Ownership interests in the 2026 Bonds may be purchased in bookentry only form. Purchasers will not receive securities certificates representing their interests in the 2026 Bonds purchased. Payments of principal of and interest on the 2026 Bonds will be paid by the Trustee to DTC, which is obligated in turn to remit such principal and interest to its DTC Participants for subsequent disbursement to the beneficial owners of the 2026 Bonds. See APPENDIX F–“DTC AND THE BOOK-ENTRY ONLY SYSTEM.” Interest on the 2026 Bonds will be paid on each Interest Payment Date to the persons in whose name the ownership of the 2026 Bonds is registered on the registration books maintained by the Trustee for the registration of ownership and registration of transfer of the 2026 Bonds as of the close of business on the immediately preceding Record Date, such interest to be paid by check of the Trustee mailed by first class mail, postage prepaid, on each Interest Payment Date to the Owners at their respective addresses shown on the Registration Books as of the close of business on the preceding Record Date; or by wire transfer made on such Interest Payment Date to any Owner of $1,000,000 or more in aggregate principal amount of 2026 Bonds who has requested such transfer pursuant to written notice filed with the Trustee on or before the preceding Record Date.

So long as the 2026 Bonds are registered in the name of the Cede & Co., all payments with respect to principal of, and interest on, the 2026 Bonds and all notices with respect to such 2026 Bonds will be made and given, respectively, to DTC.

Redemption Provisions
Optional Redemption for 2026 Bonds.* The 2026 Bonds maturing before September 1, 20[___] are not subject to optional redemption by the Flood Control District.

The 2026 Bonds maturing on and after September 1, 20[___] are subject, at the option of the Authority at the direction of the Flood Control District, to call and redemption from any available source of funds prior to their stated maturity on any date on or after September 1, 20[___], as a whole or in part in the order directed by the Authority, from any source of available funds, at a redemption price equal to the principal amount of the 2026 Bonds to be redeemed, without premium, plus accrued interest thereon to the date fixed for redemption.

Redemption Procedures
Notice of Redemption. Notice of redemption of the 2026 Bonds is required to be mailed by the Trustee, by first-class mail, postage prepaid, to the respective Owners of any 2026 Bonds designated for redemption at their addresses appearing on the Registration Books and to the Securities Depositories and the Information Services at least 30 days but not more than 60 days prior to the redemption date. Each notice of redemption is required to state the redemption date, the place or places of redemption, the CUSIP numbers and numbers of the 2026 Bonds to be redeemed, and in the case of 2026 Bonds to be redeemed in part only, the respective Authorized Denominations of the principal amount thereof to be redeemed. Each such notice is also required to state that on said date there will become due and payable on each of said 2026 Bonds the principal amount relating thereto or of said specified portion of the principal thereof in the case of a 2026 Bond to be redeemed in part only, plus accrued interest, if any, and through which date such interest will accrue, and that from and after such date interest thereon shall cease to accrue and shall require that such 2026 Bonds be then surrendered at the Principal Office of the Trustee.

* Preliminary; subject to change.

13 Neither the failure to receive such notice nor any defect in the notice so mailed will affect the sufficiency of the proceedings for redemption of such 2026 Bonds or the cessation of accrual of interest as of the redemption date.

Partial Redemption of Bonds. Upon surrender of any Bonds redeemed in part only, the Authority shall execute and the Trustee shall authenticate and deliver to the Owner thereof, at the expense of the Authority, a new Bond or Bonds of Authorized Denominations equal in aggregate principal amount or maturity amount, as applicable, representing the unredeemed portion of the Bonds so surrendered.

Selection of 2026 Bonds for Partial Redemption. Whenever provision is made in the Indenture for the redemption of less than all of the 2026 Bonds of a maturity, the Trustee shall select the 2026 Bonds to be redeemed from all 2026 Bonds of such maturity not previously called for redemption, as directed by the Authority, at the request of the Flood Control District, or, in the absence of such direction, by lot in any manner which the Authority in its sole discretion shall deem appropriate and fair. For purposes of such selection, all 2026 Bonds shall be deemed to be comprised of separate Authorized Denominations and such separate Authorized Denominations shall be treated as separate 2026 Bonds which may be separately redeemed.

Effect of Notice of Redemption. If notice of redemption has been duly given as specified in the Indenture and moneys for the redemption (including the interest to the applicable date of redemption and including any applicable premium) have been set aside in the Redemption Account or any of the accounts therein, the 2026 Bonds will become due and payable on said date of redemption, and upon presentation and surrender thereof at the Principal Office of the Trustee, said 2026 Bonds will be paid at the redemption price thereof, together with interest accrued and unpaid to said date of redemption and premium, if any.

If on said date of redemption, moneys for the redemption of the 2026 Bonds to be redeemed together with interest to said date of redemption shall be held by the Trustee so as to be available therefor on such date of redemption, and if notice of redemption thereof shall have been given as aforesaid and not cancelled, then from and after said date of redemption interest represented by such 2026 Bonds shall cease to accrue and become payable Purchase in Lieu of Redemption. In lieu of redemption of any 2026 Bond, amounts on deposit in the Principal Account or Redemption Account may also be used and withdrawn by the Trustee at any time, upon the Written Request of the Authorized Representative, for the purchase of such 2026 Bond at public or private sale when and at such prices (including brokerage and other charges, but excluding accrued interest, which is payable from the Interest Account) as the Authority may in its discretion determine, in accordance with all applicable laws, so long as such prices do not exceed par.

SECURITY AND SOURCES OF PAYMENT FOR THE BONDS
General
The Bonds are obligations of the Authority payable solely from and secured by the Revenues and any other amounts held in the funds and accounts established pursuant to the Indenture (except the Rebate Fund), which amounts are pledged by the Authority to secure the full and timely payment of the principal of and interest and premium, if any, of the 2026 Bonds; provided, however, that amounts on deposit in the Tax-Exempt Reserve Account are available to pay debt service solely on Tax-Exempt Bonds and amounts on deposit in the Taxable Reserve Account are available to pay debt service solely on Taxable Bonds. As defined in the Indenture, the term “Revenues” means: (i) all amounts derived from the Pledge Agreement, and (ii) investment income with respect to the funds and accounts established under the Indenture except for investment earnings on the Rebate Fund. Pursuant to the Pledge Agreement, the Flood Control District has pledged the Water Revenues received from Participants under the Delivery Contracts to the Authority for payment of the Bonds. See “–Pledge Agreement” and “–The Delivery Contracts.” Flow of Funds
Pursuant to the Indenture, the Authority has established with the Trustee a special fund designated the “Revenue Fund” which the Trustee maintains and holds in trust. Within the Revenue Fund, the Trustee will establish special accounts designated as the “Principal Account” and the “Interest Account” each of which are required to be held and maintained as separate and distinct funds and accounts. The Revenues, except for investment earnings on the Reserve Fund, are required to be promptly transferred to the Trustee by the Authority and deposited by the Trustee

14 upon receipt thereof into the “Revenue Fund” and held, disbursed, allocated and applied by the Trustee only as provided in the Indenture. On each Interest Payment Date, the Trustee is required to transfer the Revenues then in the Revenue Fund into the following funds and accounts the following amounts in the following order of priority, the requirements of each such account (including the making up of any deficiencies in any such account resulting from lack of Revenues sufficient to make any earlier required deposit) at the time of deposit to be satisfied before any deposit is made to any account subsequent in priority:

First: The Trustee shall deposit into the Interest Account an amount which, together with the amounts then on deposit therein including, with respect to amounts, if any, transferred by the Trustee from the Reserve Fund, is sufficient to cause the aggregate amount on deposit in the Interest Account to equal the amount of interest coming due and payable on the Bonds on such Interest Payment Date and any amount of interest previously due and unpaid.

Second: The Trustee shall deposit into the Principal Account, if necessary, an amount which, together with the amounts then on deposit therein, including amounts, if any, transferred from the Reserve Fund, shall be sufficient to cause the aggregate amount on deposit in the Principal Account to equal the amount of principal or mandatory sinking account payment coming due and payable on the Bonds within the Bond Year and any amount of principal previously due and unpaid.

THE 2026 BONDS ARE LIMITED OBLIGATIONS OF THE AUTHORITY PAYABLE SOLELY

FROM REVENUES OF THE AUTHORITY CONSISTING PRIMARILY OF PAYMENTS MADE BY THE

PARTICIPANTS TO THE FLOOD CONTROL DISTRICT UNDER THE DELIVERY CONTRACTS AND RECEIVED BY THE AUTHORITY PURSUANT TO THE PLEDGE AGREEMENT. THE 2026 BONDS ARE

NOT A DEBT OF THE AUTHORITY, THE FLOOD CONTROL DISTRICT, THE PARTICIPANTS, THE

COUNTY OR THE STATE OF CALIFORNIA, WITHIN THE MEANING OF ANY CONSTITUTIONAL OR STATUTORY DEBT LIMITATION. THE AUTHORITY SHALL NOT BE OBLIGATED TO PAY THE PRINCIPAL OF, OR INTEREST ON THE 2026 BONDS, EXCEPT FROM THE FUNDS PROVIDED UNDER THE INDENTURE AND THE PLEDGE AGREEMENT. NEITHER THE FULL FAITH AND

CREDIT NOR THE TAXING POWER OF THE STATE OF CALIFORNIA, OR ANY POLITICAL

SUBDIVISION THEREOF, INCLUDING THE AUTHORITY, IS PLEDGED TO THE PAYMENT OF THE PRINCIPAL OF OR INTEREST ON THE 2026 BONDS. THE AUTHORITY HAS NO TAXING POWER.

Pledge Agreement
Capitalized terms used in this section “–Pledge Agreement” and not otherwise defined shall have the meanings given to such terms as set forth in the Pledge Agreement. See also APPENDIX C–“FORMS OF PRINCIPAL LEGAL DOCUMENTS–PLEDGE AGREEMENT.”
Allocation of Water Revenues. Under the Pledge Agreement, the Flood Control District has irrevocably pledged to the Authority: (i) the Capital Projects Installment Debt Service due from each Participant, including Delinquent Debt Service Payments and interest thereon received by the Flood Control District pursuant to each Delivery Contract; (ii) Net Revenues collected from the operation of the Nacimiento Project; and (iii) all amounts on deposit in the Nacimiento Water Fund (collectively, the “Water Revenues”) to the payment of Municipal Obligations.

To date, there have been no Delinquent Debt Service Payments by the Participants. See also “–The Delivery Contracts.”
“Capital Projects Installment Debt Service” is defined in the Pledge Agreement to mean payments on debt or similar obligations incurred by the Flood Control District for the Nacimiento Project consisting of, in the aggregate, (i) principal and interest (or mandatory sinking fund payments, installments or lease or similar payments due) with respect to all Bonds at the time Outstanding in accordance with their terms, provided that capitalized interest funded from the proceeds of the Bonds need not be taken into account, (ii) annual costs of administering the Bonds, including the annual fees of the Trustee, and (iii) the costs, if any, of annual credit enhancement for the Bonds, whether or not based on a derivative structure as provided in Section 5922(a) of the Government Code.
“Municipal Obligations” is defined in the Pledge Agreement to mean the amounts due with respect to the Bonds (including the 2026 Bonds), including any amounts due to the provider of a municipal bond

15 insurance policy, an investment agreement, or any reserve surety. The Flood Control District has agreed and covenanted to maintain and hold in trust the Water Revenues separate and apart from other funds so long as any Bonds remain unpaid.
“Net Revenues” is defined in the Pledge Agreement to mean the sum of (i) the proceeds of sale by the Flood Control District of Surplus Water, (ii) revenues received by the Flood Control District from Wheeling Customers, and (iii) revenues received by the Flood Control District from the sale of Reserve Water, less the costs of making such sales and collecting said revenues.

Pursuant to the Pledge Agreement, the Flood Control District is required to withdraw amounts from the Nacimiento Water Fund five Business Days prior to each Interest Payment Date and each maturity date for the Bonds (each a “Payment Date”) for deposit into the Debt Service Fund held by the Trustee.

Any moneys on deposit in the Nacimiento Water Fund not necessary to make any of the payments required above may be expended by the Flood Control District at any time for any purpose permitted by law.

Covenants Under the Pledge Agreement. The Flood Control District covenants, among other things, to:
(i) faithfully observe and perform all agreements, conditions covenants and terms contained in the Tax Certificate in connection with the issuance of the Tax-Exempt Bonds; (ii) to preserve and protect the security and rights of the Authority to the payments due under the Delivery Contracts and defend such rights against all claims and demands of all persons; (iii) comply with and carry out all provisions of continuing disclosure agreements; and (iv) enforce its rights under each Delivery Contract in accordance with the terms thereof and use its best efforts to collect Capital Projects Installment Debt Service and Net Revenues in such time and amounts to permit payment of debt service on the Bonds in accordance with their terms.

Net Contract. The Pledge Agreement is deemed and construed to be a net contract, and the Flood Control District is required during the term of the Pledge Agreement to make the payments due, free of any deductions and without abatement, diminution or set-off whatsoever.

Limited Liability of Flood Control District. The Flood Control District is not required to pay or advance any moneys derived from any source of income other than Water Revenues, the Nacimiento Water Fund and the other funds provided in the Pledge Agreement for the payment of amounts due on the Bonds, or for the performance of any agreements or covenants required to be performed by it contained in the Pledge Agreement. The Flood Control District may, however, advance moneys for any such purpose so long as such moneys are derived from a source legally available for such purpose and may be legally used by the Flood Control District for such purpose.

THE OBLIGATION OF THE FLOOD CONTROL DISTRICT TO MAKE PAYMENTS TO THE

AUTHORITY UNDER THE PLEDGE AGREEMENT IS A SPECIAL OBLIGATION OF THE FLOOD CONTROL

DISTRICT PAYABLE SOLELY FROM WATER REVENUES, THE NACIMIENTO WATER FUND AND

OTHER FUNDS DESCRIBED IN THE PLEDGE AGREEMENT, AND DOES NOT CONSTITUTE A DEBT OF

THE FLOOD CONTROL DISTRICT OR OF THE STATE OF CALIFORNIA OR OF ANY POLITICAL

SUBDIVISION THEREOF IN CONTRAVENTION OF ANY CONSTITUTIONAL OR STATUTORY DEBT LIMITATION OR RESTRICTION.

The Delivery Contracts
Capitalized terms used in this Section “–The Delivery Contracts” and not otherwise defined shall have the meanings given to such terms as set forth in the Delivery Contracts. See also APPENDIX B–“THE DELIVERY CONTRACTS.”
General. In order to carry out and effectuate the pledge and lien contained in the Pledge Agreement, the Flood Control District agreed and covenanted that all payments made pursuant to the Delivery Contracts received by the Flood Control District are in trust and are required to be deposited when and as received into the Nacimiento Water Fund. The Flood Control District agrees and covenants to maintain and hold the Nacimiento Water Fund in trust, separate and apart from other funds so long as any Bonds remain unpaid. The Nacimiento Water Fund is maintained by the Flood Control District within the Treasury Combined Investment Pool of the County, into which the Flood

16 Control District deposits all of its Net Revenues and all payments received by the Flood Control District under each Delivery Contract from the Participants.

Pursuant to each Delivery Contract, the Participants, severally and not jointly, pledge the Capital Projects Installment Debt Service to be collected by their respective Water Enterprise and have made certain covenants with respect thereto. See APPENDIX B–“THE DELIVERY CONTRACTS.” For purposes of the Delivery Contracts, the 2026 Bonds constitute “Municipal Obligations.” The parties to each Delivery Contract respectively acknowledged that the total Nacimiento Project construction costs were $173.3 million. Each Delivery Contract is substantially similar in its material terms. For a summary of the Delivery Contracts, see APPENDIX B–“THE DELIVERY CONTRACTS.”
Each Participant covenants and agrees not to create or allow any lien or payment from the respective revenues of their Water Enterprise that is superior to the obligations of the Participant payable under the respective Water Delivery Contract. See “–Covenants Under the Delivery Contracts.” The Delivery Contracts permit Participants to create liens on or payments from its Water Enterprise subordinate to its obligations payable under its Delivery Contract. [Outstanding subordinate obligations to be confirmed/updated.] Accordingly, SLO and Templeton have each executed loans with the State Water Resources Control Board (“SWRCB”) that are payable from “net revenues” of their respective Water Systems. Payments of Capital Projects Installment Debt Service made by SLO and Templeton, and the other Participants, pursuant to their respective Delivery Contracts are payable from and secured by a pledge of gross water sales revenues. See “–Gross Pledge and Covenants of Participants.” Term of Delivery Contracts. Each Delivery Contract remains in effect throughout the term provided by the Master Water Contract; provided, that if and when, through no fault of the Flood Control District, one or more provisions of the Master Water Contract is terminated or suspended in the manner and for a cause specified in the Master Water Contract, the obligations of Flood Control District to the Participants and to the Other Participants under the Delivery Contracts and under Like-Contracts will likewise be terminated or suspended; provided, however, that the Delivery Contracts may not be terminated, suspended or rescinded so long as there remain outstanding any Municipal Obligations incurred by the Flood Control District for the Nacimiento Project, including the 2026 Bonds.

Obligation to “Take or Pay.” Neither the failure or refusal of any Participant to accept delivery of water from the Nacimiento Project to which such Participant is entitled under the Delivery Contract or the failure of the Flood Control District to deliver such water will in any way relieve any Participant of its obligations to make payments to the Flood Control District pursuant to its Delivery Contract. Each Participant is obligated to pay all amounts due under its Delivery Contract without reduction or offset of any kind, whether or not the Nacimiento Project or any part thereof is then operating or operable or its service is suspended, interfered with, reduced or curtailed or terminated in whole or in part for any reason, and the Contract Payments of such Participant are not conditional upon the performance or nonperformance by any party to the Delivery Contract, or the Like–Contracts, for any reason whatsoever, provided, however, that any savings from non-operation of the Nacimiento Project is required to be apportioned among the Participants in accordance with the respective Unit Percentage Share of the Participants.

The obligation of each Participant to make Delivery Contract Payments and other payments required to be made under the Delivery Contracts is incurred by each Participant for the benefit of holders of Municipal Obligations and is absolute and unconditional. Such payments are absolutely net, free of any deductions, and are not subject to any reduction, whether by offset, recoupment, counterclaim or others. Each Participant is required to make all such payments notwithstanding the occurrence of any act or circumstances that may constitute failure of consideration, destruction of or damage to the Nacimiento Project, commercial frustration of purpose, any change in the tax or other laws of the United States or the State, or any political subdivision thereof.

Participant’s “Step-Up” Obligations. If for any reason a Participant or any Other Participant fails to pay its share of Capital Projects Installment Debt Service under its Delivery Contract or under its Like-Contract, the amount of the resulting Debt Service Shortfall will be paid, collectively, by all Non-Delinquent Participants. If there is more than one Delinquent Participant, the amount of the Debt Service Shortfall will be the sum of the unpaid amounts for each Delinquent Participant. When such a Debt Service Shortfall occurs, the Participant will be required to increase its Contract Payments for the particular Water Year by an amount equal to its pro rata share of the Debt Service Shortfall; provided, however, that each Other Participant who is not a Delinquent Participant will be required by the Other Participant’s Like-Contract to also contribute to the Debt Service Shortfall so that the Participant, and all of the

17 Other Participants who are not Delinquent Participants, shall each contribute to the Debt Service Shortfall in a proportion determined by dividing each said Non-Delinquent Participant’s Capital Projects Installment Debt Service share (under Article 16(C)(3) of the Delivery Contract and the Like-Contracts) by the aggregate of all the Participant’s Installment Debt Service shares of all Non-Delinquent Participants, including the Participant; and provided further, that the Participant in no event will be required under this paragraph to contribute to the Debt Service Shortfall by an amount in any Water Year exceeding the amount which is 25% of the share of Capital Projects Installment Debt Service allocated to the Participant pursuant to its Delivery Contract. See Table 4 below for the share of Capital Projects Installment Debt Service allocated to each Participant. “Step-Up” to Be Exhausted Before Recourse to Debt Service Reserve Fund/Surety Bond. Shortfalls in Total Participant Contract Payments are required to be remedied under the Delivery Contracts prior to any withdrawal from the Reserve Fund or under the reserve surety bond posted for the Municipal Obligations. Drawings on or under the debt service reserve fund or reserve surety bond will be delayed until and unless insufficient moneys are available from Non-Defaulting Participants.

Participant Payments Due Under the Delivery Contracts. On or before April 1 of each Calendar Year, the Flood Control District is required to estimate the new or additional Nacimiento Project Costs for the Fiscal Year commencing on the immediately following July 1 and the result comprises the Total Participant Contract Payments due, collectively, from each Participant under its Delivery Contract and from the Other Participants under their respective Like-Contracts for the said Fiscal Year. Nacimiento Project Costs include:
 Nacimiento Project Construction Costs – Includes the costs of constructing any portion of the Nacimiento Project, including design, engineering, planning, environmental mitigation, equipping new facilities and/or construction efforts, accounting services, project administration and management, installation, grading, razing and building the Nacimiento Project, and includes the costs attributable to environmental mitigation requirements, the costs attributable to the Reserved Capacity, and costs attributable to all other construction costs.  Additional Capital Project Costs – Costs expended or incurred by the Flood Control District for Capital Projects related to the Nacimiento Project, improvements or repairs thereto undertaken by the Flood Control District in addition to the Nacimiento Project, which is an Approved Additional Project, an Emergency Project or a Required Additional Project.  Capital Projects Installment Debt Service – See “–Capital Projects Installment Debt Service.”  Master Water Contract Costs incurred following the first date upon which an allocation of ad valorem property taxes as described under the caption APPENDIX B– “THE DELIVERY CONTRACTS.”
 Capital Reserve Costs – See “–Capital Reserve Costs, and Operating and Maintenance Costs.”  Operation and Maintenance Costs – The reasonable and necessary current expenses of maintaining, repairing and operating the Nacimiento Facilities, including District administrative expenses directly attributable to the Nacimiento Facilities, but excluding the Capital Reserve Costs and the Capital Projects Installment Debt Service, all computed in accordance with generally accepted accounting principles applicable to enterprise funds of government agencies.  Variable Energy Costs – The actual energy costs incurred by the Flood Control District in conveying and delivering: (i) the Delivery Entitlement and Surplus Water to the Participants and (ii) the respective Other Delivery Entitlements and surplus water to the Other Participants as defined under their respective Like-Contracts and as set forth in the Delivery Contracts.  Other Costs – Other annual or incidental costs associated with the Nacimiento Facilities.

Nacimiento Project Costs are allocated by the Flood Control District among the Participants as described below:

Capital Projects Installment Debt Service. The Flood Control District allocates Capital Projects Installment Debt Service among all Participants, according to the proportion of Nacimiento Project Construction Costs paid by the Participant and the Other Participants, as they may be adjusted for cash contributions (see APPENDIX B–“THE DELIVERY CONTRACTS”); provided, however, that the Capital Projects Installment Debt Service is required to further be allocated into a component representing principal of and interest on the 2018 Bonds, the 2026 Bonds and other Tax-Exempt Bonds (collectively, the “Tax-Exempt Debt Service”) and a component representing the principal of and interest on the 2007 Taxable Bonds and other Taxable Bonds (collectively, the “Taxable Debt Service”).

18 Table 4
Nacimiento Capital Projects Installment Debt Service Allocation Percentage
of Total Capital
Projects
Installment
Participant Tax-Exempt Bonds* Taxable Bonds** Debt Service Atascadero Mutual Water Company 0.00% 98.74% 20.08%
City of Paso Robles 45.03 0.57 35.99
City of San Luis Obispo 52.28 0.69 41.79
Templeton Community Services District 2.69 0.00 2.14
Total 100.00% 100.00% 100.00%
* Outstanding in the principal amount of $102,165,000, immediately prior to the issuance of the 2026 Bonds. ** Outstanding in the principal amount of $26,840,000, immediately prior to the issuance of the 2026 Bonds.

Source: Flood Control District.
[Remainder of page intentionally left blank.]

19 Covenants Under the Delivery Contracts
Pledge of Gross Water Sales Revenues. Unless a Participant has paid cash as its portion of the total Nacimiento Project Construction Costs, each Participant pledges the gross water sales revenues of its respective Water Enterprise to the Participant’s obligations under the respective Delivery Contract, and covenants and agrees to establish, fix and collect rates and charges from the customers of its respective Water Enterprise at levels sufficient to produce revenues from the Participant’s Water Enterprise which are at least equal to: (i) the costs of operating and maintaining its respective Water Enterprise; plus (ii) the Contract Payments, calculated in accordance with the respective Delivery Contract, including the amounts allocated to the Participant as the Participant’s share of Capital Projects Installment Debt Service; plus (iii) the Coverage Factor (defined as 125% of each Participant’s pro rata share of the Capital Projects Installment Debt Service, calculated for each Fiscal Year) for the amounts allocated to the Participant as the Participant’s share of Capital Project Installment Debt; and (iv) under certain circumstances, the imposition of a surcharge following the occurrence of any payment default by the Participant.

Water Enterprise Operation and Maintenance
No Sale, Lease or Disposing of Participant’s Water Enterprise. Each Participant covenants and agrees not to sell, lease or otherwise dispose of its Water Enterprise or any part thereof essential to the proper operation thereof or to the earning or collection of the gross revenues of the Participant’s Water Enterprise, nor to enter into any agreement or lease which would impair the operation of the Participant’s Water Enterprise, or any part thereof necessary in order to secure adequate revenues for the payment of amounts due under the respective Delivery Contract; provided, however, that any real or personal property which has become nonfunctional or obsolete or which is not needed for the efficient operation of such Participant’s Water Enterprise may be sold or disposed of if such disposition will not have the effect of reducing revenues of the Participant’s Water Enterprise below the levels required under the respective Delivery Contract.

Participant to Maintain Participant’s Water Enterprise. Each Participant covenants and agrees to maintain and preserve its Water Enterprise in good repair and working order at all times, to operate the same in an efficient and economical manner and to pay all operation and maintenance costs of the Participant’s Water Enterprise as they become due, all in accordance with the best business judgment of the Participant.

Participant’s Budgets. Each Participant covenants and agrees to adopt and deliver a budget to the Flood Control District approved by the Participant’s governing body setting forth the amounts budgeted to be paid under the respective Delivery Contract no later than the first day of each fiscal year ending June 30.

Participant’s Covenants. Each Participant covenants and agrees to comply with, keep, observe and perform all agreements, conditions, covenants and terms, express or implied, required to be performed by the Participant contained in all contracts for the use of the Participant’s Water Enterprise and all contracts affecting or involving the Participant’s Water Enterprise to the extent that the Participant is a party thereto.

No Superior Liens or Payments. Each Participant covenants and agrees not to create or allow any lien on or payment from the revenues of the Participant’s Water Enterprise or any part thereof prior to, or superior to, the Participant’s obligations to amounts payable under the respective Delivery Contract.

Participant to Insure Water Enterprise. Each Participant covenants and agrees to procure and maintain insurance relating to the Participant’s Water Enterprise which the Participant deems advisable or necessary to protect its interests. Such insurance shall afford protection in such amounts and against such risks as are usually covered in connection with similar water enterprises in the State; provided, that the Participant is not required to procure or maintain any such insurance unless such insurance is commercially available at reasonable cost; and provided further, that any such insurance may be maintained under a self-insurance program, so long as such self-insurance program is maintained in accordance with standards and in such amounts as are then usually maintained for similar water enterprises in the State.

Participant to Pay Obligations; Observe Laws. Each Participant covenants and agrees to pay and discharge all taxes, assessments and other governmental charges which may be lawfully imposed upon the Participant’s Water

20 Enterprise or any part thereof when the same becomes due and to duly observe and conform to all valid regulations and requirements of any governmental authority relative to the operation of the Participant’s Water Enterprise that are not being contested by the Participant in good faith.

Eminent Domain. Each Participant covenants and agrees that if all or any material part of the Participant’s Water Enterprise is taken by eminent domain proceedings, or if the Participant receives any insurance proceeds resulting from a casualty loss to any material portion of the Participant’s Water Enterprise, the proceeds are required to be used by the Participant to construct or install replacements for the condemned or destroyed components of the Participant’s Water Enterprise or to prepay the Participant’s share of Capital Projects Installment Debt Service as described in the respective Delivery Contract.
[Remainder of page intentionally left blank.]

21 Table 5 presents the Fiscal Year Capital Projects Debt Service Payments to be paid by each Participant for the Taxable 2007 Bonds, the 2015 Bonds and the 2018 Bonds. See “PLAN OF REFUNDING.”
Table 5
Delivery Contract Payments
Total
Participants
Payments†
Fiscal Year Debt Service
Date AMWC Paso Robles SLO Templeton
Taxable
2007 Bonds 2015 Bonds* 2018 Bonds Total
6/30/2027 $2,371,435 $4,249,511 $4,934,717 $253,131 $11,808,794 $2,642,388 $8,095,981 $1,070,425 $11,808,794 6/30/2028 2,371,375 4,249,404 4,934,592 253,124 11,808,495 2,639,839 8,096,606 1,072,050 11,808,495 6/30/2029 2,371,100 4,248,910 4,934,019 253,095 11,807,124 2,638,530 8,095,669 1,072,925 11,807,124 6/30/2030 2,370,645 4,248,095 4,933,072 253,046 11,804,858 2,638,183 8,095,500 1,071,175 11,804,858 6/30/2031 2,371,103 4,248,915 4,934,025 253,095 11,807,139 2,638,517 8,101,522 1,067,100 11,807,139 6/30/2032 2,371,136 4,248,976 4,934,095 253,099 11,807,306 2,639,256 8,090,400 1,077,650 11,807,306 6/30/2033 2,371,291 4,249,253 4,934,417 253,115 11,808,077 2,640,120 8,095,338 1,072,619 11,808,077 6/30/2034 2,370,736 4,248,258 4,933,262 253,056 11,805,313 2,640,831 8,097,463 1,067,019 11,805,313 6/30/2035 2,371,189 4,249,069 4,934,204 253,104 11,807,566 2,641,110 8,090,650 1,075,806 11,807,566 6/30/2036 2,371,239 4,249,159 4,934,309 253,110 11,807,817 2,640,679 8,098,175 1,068,963 11,807,817 6/30/2037 2,371,119 4,248,944 4,934,058 253,097 11,807,218 2,639,259 8,096,400 1,071,559 11,807,218 6/30/2038 2,371,630 4,249,859 4,935,121 253,151 11,809,762 2,636,571 8,094,625 1,078,566 11,809,762 6/30/2039 2,370,816 4,248,402 4,933,429 253,065 11,805,712 2,637,199 8,093,700 1,074,813 11,805,712 6/30/2040 2,371,619 4,249,840 4,935,099 253,150 11,809,709 2,640,584 -- 9,169,125 11,809,709 6/30/2041 2,371,519 4,249,661 4,934,891 253,140 11,809,211 2,636,448 -- 9,172,763 11,809,211 TOTAL $35,567,952 $63,736,256 $74,013,312 $3,796,579 $177,114,100 $39,589,514 $105,242,028 $32,282,558 $177,114,100 * Expected to be refunded with the 2026 Bonds.
† Includes credits from the levy of ad valorem property taxes, special assessments or special taxes. Each Delivery Contract permits any Participant to issue obligations to fund all or a portion of its Capital Projects Installment Debt Service by levying an ad valorem tax, special assessment or special tax. See APPENDIX B-” THE DELIVERY CONTRACTS.” Source: Municipal Advisor.

22 All other costs of operating and maintaining the Nacimiento Project, including Master Water Contract Costs, and any Additional Capital Projects are allocated among the Participants pro rata based on their Delivery Entitlement Share. These allocations are calculated by the Flood Control District each Fiscal Year for the Participants, and the calculations of said allocations are made available to each Participant. The obligations of the Participants for any Approved Additional Project are established at the time of and by the agreement for each such Approved Additional Project.

Table 6
Delivery Entitlement Share
As of Fiscal Year 2025-26
Participant Acre Feet Percentage
Atascadero Mutual Water Company 3,244 20.597%
City of Paso Robles 6,488 41.194
City of San Luis Obispo 5,482 34.806
Templeton Community Services District 406 2.578
County Service Area 10, Zone A 40 0.254
Bella Vista MHP, LLC 10 0.063
SMR Mutual Water Company 80 0.508
TOTAL 15,750 100.000%
Source: Flood Control District.

During the term of the Delivery Contracts, the Flood Control District is also required to proceed with due diligence to collect Total Participant Contract Payments as and when due, and deposit amounts collected into the Nacimiento Water Fund promptly upon receipt, and apply all other amounts comprising Total Participant Contract Payments in the following order of priority:

First: To the payment of Master Water Contract Costs;
Second: To the payment of Operation and Maintenance Costs; Third: To the payment of Variable Energy Costs;
Fourth: To the payment of Additional Capital Project Costs; and Fifth: To the replenishment of Capital Reserves for the Nacimiento Project.

Capital Reserve Costs, and Operating and Maintenance Costs. Each Water Year, the Flood Control District is required to determine the amount of Capital Reserves necessary for the Nacimiento Project and allocate Capital Reserve Costs and Operation and Maintenance Costs to each Participant and to CSA 10, Bella Vista, and SMR on the basis of the Unit Percentage Share attributable to the Units used by the Flood Control District to deliver the Delivery Entitlement to the Participants, and to CSA 10, Bella Vista, and SMR. Based upon the Flood Control District’s Fiscal Year 2025-26 budget, there was apportioned to each Participant, and to CSA 10, Bella Vista, and SMR the following proportional share of the said costs (expressed as a percentage) for each of the Units used to deliver water to such Participant and to CSA 10, Bella Vista, and SMR:

23 Table 7
Capital Reserve and Operation and Maintenance Costs
For Fiscal Year 2025-26(1)
Participant Amount(2) Percent(3)
Atascadero Mutual Water Company $ 917,231 17.59%
City of Paso Robles 1,608,473 30.84
City of San Luis Obispo(4) 2,476,545 47.49
Templeton Community Services District 140,441 2.69
County Service Area 10, Zone A(5) 14,465 0.28
Bella Vista MHP, LLC(5) 3,598 0.07
SMR Mutual Water Company(5) 54,058 1.04
Total $5,214,811 100.00%
(1) Based upon the Fiscal Year 2025-26 budget.
(2) Excludes Variable Energy Costs that are billed quarterly based upon actual use, and debt service. (3) Column does not total due to rounding.
(4) The amount for the City of San Luis Obispo includes a one-time payment of $494,188 to replenish capital reserves drawn on in a previous budget year.
(5) Payments made pursuant to the CSA 10, Bella Vista, and SMR Delivery Contracts do not provide payments or security for the 2026 Bonds.

See “INTRODUCTION–The Participants.”
Source: Flood Control District.

Time and Amount of Delivery Contract Payments. Except as established in the Delivery Contracts as to Capital Projects Installment Debt Service, the Delivery Contract Payments made by the Participants to the Flood Control District commenced the first Fiscal Year during which the Delivery Entitlement became available to the Participants under the respective Delivery Contracts, and in any event, promptly following receipt by the Participants of an invoice from the Flood Control District. The Delivery Contract Payments are determined by the Flood Control District as provided in each Delivery Contract and are paid by each Participant to the Flood Control District in accordance with the respective Delivery Contract, except and to the extent each Participant is entitled to an offsetting credit as further described in the Delivery Contracts. See APPENDIX B – “THE DELIVERY CONTRACTS.” (i) On or before July 1 of each Fiscal Year, each Participant is required to pay a sum equal to 60% of the Participant’s allocation of Capital Reserve Costs, and Operation and Maintenance Costs as calculated and allocated as provided in the Delivery Contracts; and (ii) On the immediately following January 1 within each Fiscal Year, each Participant is required to pay a sum equal to 40% of the Participant’s allocation of Capital Reserve Costs and Operation and Maintenance Costs as calculated and allocated as provided in the Delivery Contracts; and (iii) On or before the 30th day following its receipt of an invoice from the Flood Control District as provided in the Delivery Contracts, each Participant is required to pay Variable Energy Costs as calculated and allocated as provided in the Delivery Contracts, for the Calendar Quarter most recently concluded; and (iv) On or before July 1 of each Fiscal Year, each Participant is required to pay a sum equal to the Participant’s allocation of Capital Projects Installment Debt Service for that Fiscal Year as calculated and allocated as provided in the Delivery Contracts; and (v) On or before July 1 of each Fiscal Year, each Participant shall pay a sum equal to the Participant’s allocation of remaining Nacimiento Project Costs, including Additional Capital Project Costs and Master Water Contract Costs as calculated and allocated as provided in the Delivery Contracts.

Gross Pledge and Covenants of Participants. Each Participant pledges under each Delivery Contract, respectively, the gross water sales revenues of the Participant’s Water Enterprise to secure the Participant’s obligations under the Delivery Contract, and covenants and agrees to establish, fix and collect rates and charges from the customers of the Participant’s Water Enterprise at levels sufficient to produce revenues from the Participant’s Water Enterprise which are at least equal to:

24 (i) The costs of operating and maintaining the Participant’s Water Enterprise; plus (ii) The Contract Payments, calculated in accordance with the Delivery Contract, including the amounts allocated to the Participant as the Participant’s share of Capital Projects Installment Debt Service; plus
(iii) The Coverage Factor (defined as 125% of each Participant’s pro rata share of the Capital Projects Installment Debt Service, calculated for each Fiscal Year) for the amounts allocated to the Participant as the Participant’s share of Capital Projects Installment Debt Service, provided, however, that there will be credited towards compliance with the Coverage Factor requirement all Available Capital Reserves of the Participant.

Under certain circumstances, the Participant may be required to pay a surcharge following the occurrence of any payment default by the Participant as provided in its Delivery Contract.

Notwithstanding the provisions of paragraph (iii) above, each Participant will be permitted to withdraw and apply Available Capital Reserves for its operational and capital needs from time to time during any water year. As defined in each Delivery Contract, the term “Available Capital Reserves” means amounts maintained by the Participant for its Water Enterprise for capital reserves, including unreserved, unrestricted working capital balances in the funds established for the Water Enterprise, including allowances for contingencies, as of each Calculation Date.

Financial Covenants under the Delivery Contract
Punctual Payment; Compliance with Documents. The Flood Control District is required to punctually pay or cause to be paid the interest and principal to become due with respect to all of the Municipal Obligations (including the Bonds), but solely from amounts paid to the Flood Control District under the Delivery Contracts, and each Participant shall punctually pay or cause to be paid the Capital Projects Installment Debt Service, in strict conformity with the terms of the Municipal Obligations (including the Bonds), the Delivery Contracts and the Legal Documents and will faithfully observe and perform all of the conditions, covenants and requirements of the Delivery Contracts and the Legal Documents including any and all supplements thereto.

Extension of Payment of Municipal Obligations. None of the Flood Control District or any Participant will directly or indirectly extend or assent to the extension of the maturity of any of the Municipal Obligations (including the Bonds) or the time of payment of any claims for interest by the purchaser or owner of such Municipal Obligations (including the Bonds) or by any other arrangement, and in case the maturity of any of the Municipal Obligations (including the Bonds) or the time of payment of any such claims for interest shall be extended, such Municipal Obligations (including the Bonds) or claims for interest shall not be entitled, in case of any default under the Legal Documents, to the benefits of the Delivery Contracts, except subject to the prior payment in full of the principal of all of the Municipal Obligations (including the Bonds) then outstanding and of all claims for interest thereon which shall not have been so extended. The Flood Control District may issue obligations or cause obligations to be issued for the purpose of refunding any outstanding Municipal Obligations (including the Bonds), and such issuance shall not be deemed to constitute an extension of maturity of the affected Municipal Obligations (including the Bonds).

Against Encumbrances. None of the Flood Control District or any Participant will create, or permit the creation of, any pledge, lien, charge or other encumbrance upon the revenues and other assets pledged under a Delivery Contract while any of the Municipal Obligations (including the Bonds) are outstanding, except the pledge created by the Legal Documents and the Delivery Contracts, any Additional Debt and any pledge, lien, charge, or other encumbrance which is subordinate to the obligations under the Delivery Contracts. Subject to this limitation and the terms of the Indenture, the Flood Control District expressly reserves the right to enter into one or more indentures or trust agreements, and reserves the right to issue other obligations or cause them to be issued for such purposes.

25 Covenants to Maintain Tax-Exempt Status of Tax-Exempt Bonds. In the event that any Tax-Exempt Bonds attributable in whole or in part to a Participant are issued and Outstanding, such Participant covenants and agrees not to use, permit the use of, or omit to use Gross Proceeds or any other amounts (or any property, the acquisition, construction or improvement of which is to be financed directly or indirectly with Gross Proceeds) in a manner that if made or omitted, respectively, would cause the interest on any of the TaxExempt Bonds to become includable in the gross income, as defined in Section 61 of the Code, of the Owner thereof for federal income tax purposes.

Nacimiento Project Shortages. In any year in which there is a shortage or interruption in water deliveries to the Participants due to drought or other temporary cause; or if there is a reduction in the supply of water from the Water Project under the Master Water Contract that threatens or causes a permanent shortage in the amount of water available for delivery to the Participants under the respective Delivery Contracts, the Flood Control District is authorized to make reductions in the Delivery Entitlement Share for each Participant.

The Flood Control District, its officers, agent or employees are not liable for any damage, direct or indirect, arising from shortages in the amount of water from the Water Project available to any Participant pursuant to its Delivery Contract caused by drought, the non-availability of water under the Master Water Contract, operation of the Water Project, operation of laws or any cause beyond the control of the Flood Control District. However, such reduction in water delivery does not entitle a Participant to make any reductions in its Capital Projects Installment Debt Service, see “–Obligation to “Take or Pay.” [Remainder of page intentionally left blank.]

26 Table 8
Nacimiento Project and Bond Legal Structure

27 Reserve Fund
The Reserve Fund is comprised of the Tax-Exempt Reserve Account and the Taxable Reserve Account. The Tax-Exempt Reserve Account secures the payment of Tax-Exempt Bonds only, including the 2018 Bonds and the 2026 Bonds, and is not available to pay debt service on any Taxable Bonds. The Taxable Reserve Account secures the payment of the 2007 Taxable Bonds only, and is not available to pay debt service on any Tax-Exempt Bonds.

The Tax-Exempt Reserve Account and the Taxable Reserve Account are funded in amounts equal to the applicable Reserve Requirement, as described below.

To date, there have been no delinquencies by any Participant in the payment of Capital Projects Installment Debt Service, and the Trustee has not drawn on the Reserve Fund as a result of any debt service delinquency.

Investment earnings on amounts in the Reserve Fund and Delinquent Debt Service Payments shall be deposited to the following funds and accounts and transferred in the following order:

First: Reimbursement to the provider of any Reserve Surety for any drawings thereunder;
Second: The Reserve Fund to the level of the Reserve Requirement; Third: The Interest Account, up to an amount sufficient to make payment on the Bonds on Tax-Exempt Bonds or Taxable Bonds, as applicable, on the next Interest Payment Date; and
Fourth: The Principal Account.

All or any portion of the applicable Reserve Requirement may be satisfied by the provision of a qualified surety bond, being a surety bond issued by an insurance company rated in one of the two highest categories (without regard to numerical or other modifiers) of any Rating Agency at the time such surety bond is obtained (a “Reserve Surety”), that, together with moneys on deposit in the applicable Reserve Account of the Reserve Fund, provides an aggregate amount equal to the applicable Reserve Requirement. In the event of replacement of cash and investments in the Tax-Exempt Reserve Account with a Reserve Surety, the Trustee is required to transfer any excess amounts then on deposit in the Tax-Exempt Reserve Account into a segregated account of the Revenue Fund, which monies are required to be applied either (i) to the payment within one year of the date of transfer of capital expenditures of the Authority or the Flood Control District permitted by law, or (ii) to the redemption of Tax-Exempt Bonds on the earliest succeeding date on which such redemption is permitted hereby, and pending such application shall be held either not invested in investment property (as defined in section 148(b) of the Code), or invested in such property to produce a yield that is not in excess of the yield on the Tax-Exempt Bonds; provided, however, that the Authority may by written direction to the Trustee cause an alternative use of such amounts if the Authority will first have obtained a written opinion of nationally recognized bond counsel substantially to the effect that such alternative use will not adversely affect the exclusion pursuant to section 103 of the Code of interest on the Tax-Exempt Bonds from the gross income of the owners thereof for federal income tax purposes. If the credit rating of the provider of any Reserve Surety is subsequently downgraded by any Rating Agency, the Authority is not required to replace such Reserve Surety.

So long as either the Tax-Exempt Reserve Account or the Taxable Reserve Account includes both cash/investments and a Reserve Surety, the Trustee shall, in the event of a Delinquent Debt Service Payment under the Pledge Agreement, apply all cash or the proceeds of investments to the payment of principal of and interest on the Bonds hereunder, prior to making a drawing against the Reserve Surety. Upon a draw on such Reserve Account of the Reserve Fund, the Trustee is required to accept Delinquent Debt Service Payments received from the Flood Control District for purposes of replenishing the applicable Reserve Account of the Reserve Fund or reimbursing the provider of the Reserve Surety.

28 Tax-Exempt Reserve Account. In the event that on any Interest Payment Date, the full amount of the interest of or principal or redemption price of the Tax-Exempt Bonds required to be deposited on such Interest Payment Date, in the Interest Account, Principal Account or Redemption Account, as applicable, is not then on deposit therein, the Trustee is required on such Interest Payment Date to withdraw from the Tax-Exempt Reserve Account an amount equal to any such deficiency and notify the Authority and the Flood Control District of any such withdrawal. All money in or available under the Tax-Exempt Reserve Account is required to be used and withdrawn by the Trustee solely for the purpose of making transfers to the Interest Account and the Principal Account, in such order of priority, in the event of any deficiency at any time in any of such Account to pay debt service on the Tax-Exempt Bonds then Outstanding, except that so long as the Authority is not in default under the Indenture, any amount in the Tax-Exempt Reserve Account in excess of the Reserve Requirement (Tax-Exempt Bonds) is required to be withdrawn from the Tax-Exempt Reserve Account semiannually at least two Business Days prior to each Interest Payment Date and be deposited in the Interest Account and credited to the obligations of the Flood Control District under the Pledge Agreement relating to the Tax-Exempt Bonds.

The term “Reserve Requirement (Tax-Exempt Bonds)” is defined in the Indenture to mean, as of any date of calculation, an amount equal to the least of (i) 125% of the average annual debt service on the Tax-Exempt Bonds for that and any subsequent Bond Year, (ii) 100% of the maximum annual debt service on the Tax-Exempt Bonds for that or any subsequent Bond Year, or (iii) 10% of the issue price of the Tax-Exempt Bonds. Upon the issuance of the 2026 Bonds, the Reserve Requirement (Tax-Exempt Bonds) is estimated to be $9,172,762.50 which is equal to 100% of the maximum annual debt service on the Tax-Exempt Bonds.

The Tax-Exempt Reserve Account is currently invested in a Forward Delivery Agreement dated September 26, 2007, as amended by the Amendment No. 1 to Forward Delivery Agreement for the Reserve Fund, dated August 19, 2015, and the Amendment No. 2 to Forward Delivery Agreement for the Reserve Fund, dated April 9, 2018, and as further amended by the Amendment No. 3 to Forward Delivery Agreement for the Reserve Fund, dated the closing date of the 2026 Bonds, each between the Authority and Truist Securities Inc., as successor in interest to SunTrust Bank. This agreement provides for payment of a guaranteed rate per annum to the Authority in an amount equal to 5.015%. The Authority has and will continue to rebate earnings in excess of the Arbitrage Yield on the TaxExempt Bonds.

Investments of Amounts on Deposit Under the Indenture
Except as otherwise provided in the Indenture, all moneys in any of the funds or accounts established pursuant to the Indenture are required be invested solely in Permitted Investments, or, if any fund or account is held by the Trustee solely in Permitted Investments, as directed in writing by an Authorized Representative of the Flood Control District two Business Days prior to the making of such investment. Moneys in any funds and accounts are required to be invested in Permitted Investments maturing not later than the date on which it is estimated that such moneys will be required for the purposes specified in the Indenture.

Permitted Investments acquired as an investment of moneys in any fund established under the Indenture are required to be credited to such fund. For the purpose of determining the amount in any fund, all Permitted Investments credited to such fund will be valued at the lesser of cost or market value exclusive of accrued interest, if any, paid as part of the purchase price thereof. See APPENDIX C–“FORMS OF PRINCIPAL LEGAL DOCUMENTS–THE INDENTURE.”
Existing Obligations of the Participants
For a discussion of existing indebtedness of each Participant, see APPENDIX A–“THE PARTICIPANTS” and the discussion under the subheadings “–Outstanding Long-Term Indebtedness” therein.

Additional Bonds
In addition to the 2026 Bonds, the Trustee shall, upon Written Request of the Authority, by a supplement to the Indenture, establish one or more other Series of Bonds secured by the pledge made under the Indenture equally and ratably with any Bonds previously issued and delivered, in such principal amount as shall be determined by the

29 Authority, but only upon compliance with the provisions of the Indenture and any additional requirements set forth in the applicable Supplemental Indenture. The Supplemental Indenture providing for the execution and delivery of such Additional Bonds shall specify the purposes for which such Additional Bonds are then proposed to be delivered, which shall be one or more of the following: (i) to provide moneys needed to provide for the Project Costs by depositing into the Project Fund the proceeds of such Additional Bonds to be so applied; (ii) to provide for the payment or redemption of Bonds theretofore Outstanding under the Indenture, by depositing with the Trustee moneys and/or investments required for such purpose under the defeasance provisions of the Indenture; or (iii) to provide moneys needed to refund or refinance all or part of any other current or future obligations of the Authority with respect to the funding of the Nacimiento Project. See APPENDIX C–“FORMS OF PRINCIPAL LEGAL DOCUMENTS.” The Indenture does not require satisfaction of any debt service coverage ratio condition to issue Additional Bonds.

Indenture Events of Default and Remedies
Events of Default. The Indenture provides the following Events of Default:
(i) if default by the Authority shall be made in the due and punctual payment of the principal of any Bonds when and as the same shall become due and payable, whether at maturity as therein expressed, by proceedings for sinking fund redemption, by acceleration, or otherwise; (ii) if default shall be made in the due and punctual payment of any installment of interest on any Bonds when and as the same shall become due and payable;
(iii) if default shall be made by the Authority in the observance of any of the other covenants, agreements or conditions on its part in the Indenture or in the Bonds contained, if such default shall have continued for a period of 30 days after written notice thereof, which grace period shall not be extended beyond 60 days, Trustee or the Owners of not less than 25% in aggregate principal amount of the Bonds at the time Outstanding; provided, however, if the failure stated in the notice can be corrected, but not within the applicable period, the Authority, the Trustee and such Owners shall not unreasonably withhold their consent to an extension of such time if corrective action is instituted by the Authority within the applicable period and diligently pursued until the default is corrected; (iv) the occurrence of an Event of Bankruptcy with respect to the Authority; and (v) the occurrence of a default under the Pledge Agreement.

Remedies Upon Default. The Bonds are subject to acceleration prior to their maturity. If an Event of Default occurs, then, and in each and every such case during the continuance of such Event of Default, the Trustee or the Owners of not less than a majority in aggregate principal amount of the Bonds at the time Outstanding shall be entitled, upon notice in writing to the Authority, to declare the principal of all of the Bonds then Outstanding, and the interest accrued thereon, to be due and payable immediately, and upon any such declaration the same shall become and shall be immediately due and payable, anything in the Indenture or in the Bonds contained to the contrary notwithstanding.

Any such declaration, however, is subject to the condition that if, at any time after such declaration and before any judgment or decree for the payment of moneys due shall have been obtained or entered, the Authority shall deposit with the Trustee a sum sufficient to pay all the principal or redemption price of and installments of interest on the Bonds payment of which is overdue, with interest on such overdue principal at the rate borne by the respective Bonds, and the reasonable charges and expenses of the Trustee, and any and all other defaults known to the Trustee (other than in the payment of principal of and interest on the Bonds due and payable solely by reason of such declaration) shall have been made good or cured to the satisfaction of the Trustee or provision deemed by the Trustee to be adequate shall have been made therefor, then, and in every such case, the Owners of not less than a majority in aggregate principal amount of the Bonds then Outstanding, by written notice to the Authority and the Trustee, or the Trustee if such declaration was made by the Trustee other than upon direction of the Bond Owners, may, on behalf of the Owners of all of the Bonds rescind and annul such declaration and its consequences and waive such default; but no such

30 rescission and annulment shall extend to or shall affect any subsequent default, or shall impair or exhaust any right or power consequent thereon.

The payments of Capital Projects Installment Debt Service due from the Participants are not subject to acceleration.

Subject to the terms of the Indenture regarding certain limitation on the Owners’ right to sue, any Owner shall have the right, for the equal benefit and protection of all Owners similarly situated:
(i) by mandamus, suit, action or proceeding, to compel the Authority and its members, officers, agents or employees to perform each and every term, provision and covenant contained in the Indenture and in the Bonds, and to require the carrying out of any or all such covenants and agreements of the Authority and the fulfillment of all duties imposed upon it by the Bond Law;
(ii) by suit, action or proceeding in equity, to enjoin any acts or things which are unlawful, or the violation of any of the Owners’ rights; or
(iii) upon the occurrence of any Event of Default, by suit, action or proceeding in any court of competent jurisdiction, to require the Authority and its members and employees to account as if it and they were the trustees of an express trust.

As provided in the Pledge Agreement, the Flood Control District covenants and agrees that it will enforce its rights under each of the Delivery Contracts, in accordance with the terms thereof, and, in particular, that it shall use its best efforts to collect Capital Projects Installment Debt Service and Net Revenues in such time and amounts as shall permit the payment of principal of and interest on the Bonds in accordance with their terms. In the event of a Debt Service Shortfall, the Flood Control District covenants and agrees to enforce its right to collect each Delinquent Debt Service Payment under the Delivery Contract with the Delinquent Participant and use its best efforts to remedy such Debt Service Shortfall by enforcing the step-up provisions of the Delivery Contracts with the Participants that are then not delinquent. As defined in the Pledge Agreement, the term “Delinquent Debt Service Payment” shall mean those payments of Capital Projects Installment Debt Service due under any Delivery Contract that are not, in fact, paid on the date upon which each payment of Capital Projects Installment Debt Service is required to be made by a Participant under a Delivery Contract (the “Due Date”). The term “Debt Service Shortfall” shall mean the aggregate amount of Delinquent Debt Service Payments due from Delinquent Participants on the Due Date in question. The term “Delinquent Participant” shall mean any Participant which fails to meet its obligation for payment for Nacimiento Project Water under any Delivery Contract, as further described in the respective Delivery Contracts. To date, there have been no Delinquent Debt Service Payments by any Participant that resulted in a Debt Service Shortfall.

The Authority has no security interest in or mortgage on any Water Enterprise operated and to be operated by a Participant or any real property of the Flood Control District or any Participant and no default under the Pledge Agreement shall result in the loss of the respective Water Enterprise or any other property of the Flood Control District or the Participants. This limitation on remedies of the Authority shall be binding on successors in interest to the Authority’s rights under the Pledge Agreement.

Limited Obligations
THE 2026 BONDS ARE LIMITED OBLIGATIONS OF THE AUTHORITY PAYABLE SOLELY

FROM REVENUES OF THE AUTHORITY CONSISTING PRIMARILY OF PAYMENTS MADE BY THE

PARTICIPANTS TO THE FLOOD CONTROL DISTRICT UNDER THE DELIVERY CONTRACTS AND RECEIVED BY THE AUTHORITY PURSUANT TO THE PLEDGE AGREEMENT. THE 2026 BONDS ARE

NOT A DEBT OF THE AUTHORITY, THE FLOOD CONTROL DISTRICT, THE PARTICIPANTS, THE

COUNTY OR THE STATE OF CALIFORNIA, WITHIN THE MEANING OF ANY CONSTITUTIONAL OR STATUTORY DEBT LIMITATION. THE AUTHORITY SHALL NOT BE OBLIGATED TO PAY THE PRINCIPAL OF, OR INTEREST ON THE 2026 BONDS, EXCEPT FROM THE FUNDS PROVIDED UNDER THE INDENTURE AND THE PLEDGE AGREEMENT. NEITHER THE FULL FAITH AND

CREDIT NOR THE TAXING POWER OF THE STATE OF CALIFORNIA, OR ANY POLITICAL

31 SUBDIVISION THEREOF, INCLUDING THE AUTHORITY, IS PLEDGED TO THE PAYMENT OF THE PRINCIPAL OF OR INTEREST ON THE 2026 BONDS. THE AUTHORITY HAS NO TAXING POWER.

The obligation of the Flood Control District to make payments to the Authority under the Pledge Agreement is a special obligation of the Flood Control District payable solely from Water Revenues and the funds described in the Pledge Agreement and does not constitute a debt of the Flood Control District or of the State of California or of any political subdivision thereof in contravention of any constitutional or statutory debt limitation or restriction. [BOND INSURANCE
Bond Insurance Policy
Concurrently with the issuance of the 2026 Bonds, [INSURER] (the “2026 Insurer”) will issue its Municipal Bond Insurance Policy for the 2026 Bonds (the “Policy”). The Policy guarantees the scheduled payment of principal of and interest on the 2026 Bonds when due as set forth in the form of the Policy included as an exhibit to this Official Statement.

The Policy is not covered by any insurance security or guaranty fund established under New York, California, Connecticut or Florida insurance law.
[TO COME]]

32 CERTAIN RISKS TO BOND OWNERS
The following information should be considered by potential investors in evaluating the credit quality of the 2026 Bonds. However, it does not purport to be an exhaustive list of the risks or other considerations which may be relevant to an investment in the 2026 Bonds. In addition, the order in which the following information is presented is not intended to reflect the relative importance of any such risks.

General
The payment of principal of and interest on the 2026 Bonds is secured solely by a pledge of the Revenues and certain funds under the Indenture. The realization of the Water Revenues sufficient to enable the Flood Control District to make the payments under the Pledge Agreement is subject to, among other things, the capabilities of management of the Flood Control District and the Participants, the ability of the Participants to provide water services to their users, and the ability of the Participants to establish and maintain water fees and charges sufficient to provide the required debt service coverage as well as pay for Operation and Maintenance Costs.

Among other matters, drought, general and local economic conditions and changes in law and government regulations (including initiatives and moratoriums on growth) could adversely affect the amount of revenues realized by the Participants and ultimately the ability of the Participants to pay their Proportionate Shares to the Flood Control District.

Statutory and Regulatory Impact
Laws and regulations governing conservation, transmission, treatment and delivery of water are enacted and promulgated by government agencies on the federal, State and local levels. Compliance with these laws and regulations may be costly, and, as more stringent standards are developed, these costs will likely increase. In addition, claims against any Participant for violations of regulations with respect to its facilities and services could be significant. Such claims would be payable from the water revenues of such Participant or from other legally available sources of such Participant.

No Obligation to Tax
The obligation of each Participant to make payments under the applicable Delivery Contract does not constitute an obligation of such Participant for which it is obligated to levy or pledge any form of taxation, or for which such Participant has levied or pledged any form of taxation. The obligation of each Participant to make payments under the applicable Delivery Contract does not constitute a debt or indebtedness of the Participants, the Authority, the State or any of its political subdivisions, within the meaning of any constitutional or statutory debt limitation.

Drought
Background. California periodically experiences droughts prompting state and local responses. For example, the water years 2020 through 2022 combined ranked as the three driest years in California’s statewide precipitation record. (A water year begins on October 1 and ends on the following September 30.) Beginning in April 2021, the Governor issued a series of drought emergency proclamations affecting various counties throughout the State, culminating in an October 19, 2021 proclamation declaring a drought state of emergency to be in effect statewide and directing all local water suppliers to implement water shortage contingency plans at a level appropriate to local conditions. On May 24, 2023, Governor Newsom issued an executive order easing water restrictions that were no longer necessary following a series of storms that ended the drought. As of June 16, 2026, according to the U.S.

Drought Monitor, certain areas of the State are in the “abnormally dry” or “moderate drought” categories, while other areas, including the County, are identified as experiencing no drought conditions.

In 2018, responding to earlier drought periods, the California Governor signed Senate Bill 606 and Assembly Bill 1668 into law. These bills relate to water conservation and drought planning and empower the State Department of Water Resources and the State of California Water Resources Control Board to adopt long-term standards for the

33 following: (i) indoor residential water use; (ii) outdoor residential water use; (iii) commercial, industrial and institutional water use for landscape irrigation; and (iv) water loss. The indoor water use standard has been defined as 55 gallons per person per day (“GPCD”) until January 2025; the standard will decrease over time to 50 GPCD in January 2030. Standards for outdoor residential water use and commercial, industrial and institutional water use for landscape irrigation are still being developed. Urban water suppliers will be required to stay within annual water budgets, based on these standards, for their service areas.

There can be no assurance that existing or future federal or State legislation and actions will not impose mandatory water supply or use restrictions, which could require the Flood Control District and the Participants to impose water use restrictions on customers of the respective Water Enterprises and thereby negatively impact Water Revenues. See also, “SECURITY AND SOURCES OF PAYMENT FOR THE BONDS–The Delivery Contracts– Obligation to “Take or Pay.”
Flood Control District. The storage capacity of the Nacimiento Reservoir is 377,900 acre feet (“AF”), with storage levels at approximately 52% or 195,985 AF as of July 10, 2026.

The Nacimiento River Watershed, which feeds the Nacimiento Reservoir, has been a reliable watershed during periods of drought. Data dating to 1958 indicate that inflows to the Nacimiento Reservoir have exceeded the 17,500 acre-feet per year (“AFY”) entitlement of the Flood Control District in every year except 1976, when just 15,041 AF of inflow was recorded. However, available storage in 1976 equal to 57,200 AF was sufficient to make up the difference.

The Flood Control District expects that it will be able to deliver the total entitlement of 15,750 AFY to the Participants. The Master Water Contract requires that downstream releases from the Nacimiento Reservoir cease when storage capacity reaches 22,300 AF (which effectively reserves that water for delivery to the Flood Control District). Since 1958, the capacity of the Nacimiento Reservoir has only declined to 22,300 AF six times, most recently in Fiscal Year 1989-90. The graph below illustrates the historic storage levels in AF of Nacimiento Reservoir since 1958.

34

35 See also, “SECURITY AND SOURCES OF PAYMENT FOR THE BONDS–The Delivery Contracts– Obligation to “Take or Pay.”
Participants. For a description of each Participant’s drought and conservation measures, see the subheading “–Drought and Conservation Measures” for each Participant in APPENDIX A–“THE PARTICIPANTS.” Climate Change
The State has historically been susceptible to wildfires and hydrologic variability. As greenhouse gas emissions continue to accumulate in the atmosphere as a result of economic activity, climate change is expected to intensify, increasing the frequency, severity and timing of extreme weather events such as coastal storm surges, drought, wildfires, floods and heat waves, and raising sea levels. The future fiscal impact of climate change on the Flood Control District or the Participants is difficult to predict, but it could be significant, and it could have a material adverse effect on the Flood Control District’s or Participants’ finances by requiring greater expenditures to counteract the effects of climate change, by changing the business and activities of the customers of the Participants’ Water Enterprises or by increasing the cost or decreasing the availability of water supplies.

Earthquakes, Floods, and Other Disasters
From time to time, the Participants are subject to natural calamities that may adversely affect economic activity in the service areas of the Participants which therefore may have a negative impact on one or more Participant’s finances. There can be no assurance that the occurrence of any natural calamity would not cause substantial interference to the Nacimiento Dam or to the Water Enterprises of the Participants, or that any Participant would have insurance or other resources available to make repairs to its Water Enterprises, possibly impacting Revenues.

Earthquake. The casualty and liability insurance of the Participants may not cover losses due to earthquake.

If there were to be an occurrence of severe seismic activity in the service areas of the Participants, there could be substantial damage to and interference with one or more Participant’s Water Enterprises, which could impact the receipt of Revenues.

Small earthquakes, in the range of magnitude 2.0 to 2.7 and smaller, occur quite often throughout and near the County. Larger earthquakes do occur occasionally, as evidenced by a magnitude 6.5 earthquake in December 2003 in the San Simeon-Hosgri fault zone approximately six miles from the community of San Simeon and the magnitude

6.0 earthquake in September 2004 on the San Andreas Fault just north of the Monterey County line. The Shoreline Fault zone, discovered in 2008, which is believed to be capable of producing a substantial earthquake, is located less than one mile off-shore from the Diablo Canyon Power Plant (the “DCPP”), a two reactor nuclear power plant operated by the Pacific Gas & Electric Company (“PG&E”) constructed in 1975.

The Los Osos Fault, which is generally adjacent to the service areas of the Participants, is identified under the State of California Alquist-Priolo Fault Hazards Act as being capable of causing surface rupture damage in the service areas of the Participants. This fault’s main strand lies near the intersection of Los Osos Valley Road and Foothill Boulevard. It is considered to present a high to very high fault rupture hazard to development and facilities in the Los Osos Valley, which lies west of the service areas of the Participants. Other faults identified as being capable of causing surface rupture damage in the vicinity of the service areas of the Participants are the West Huasna, Oceanic, and Edna Faults. These faults are considered potentially active and present a moderate fault rupture hazard.

Liquefaction. Liquefaction occurs when ground shaking causes the mechanical properties of some fine grained, saturated soils to liquefy and act as a fluid (liquefaction). In order for liquefaction to occur, three general geotechnical characteristics must be present: (i) ground water within the potentially liquefiable zone, (ii) the potentially liquefiable zone is granular and meets a specific range in grain-size distribution, and (iii) the potentially liquefiable zone is of low relative density. If those criteria are present and strong ground motion occurs, then those soils could liquefy, depending upon the intensity and duration of the strong ground motion. The larger the earthquake magnitude, and the longer the duration of strong ground shaking, the greater the potential there is for liquefaction to occur.

36 Portions of the coastal areas within the County are underlaid by sediments that may be vulnerable to liquefaction, and the majority of the pipeline and facilities of Nacimiento are located in a moderate liquefaction potential zone, and the remainder is divided between low and high moderate potential zones.

Flooding. In accordance with the National Flood Insurance Reform Act, the Federal Emergency Management Agency (“FEMA”) assesses its flood hazard map inventory at least once every five years. Portions of the County are located within zones that correspond to the boundaries of a 100-year floodplain. A 100-year floodplain is an area expected to be inundated during a flood event of the magnitude for which there is a 1% (or 1-in-100) probability of occurrence in any year.

A Flood Insurance Study[, most recently revised by FEMA for the County in June 2024,] noted that runoff in the streams is small, with appreciable flows occurring only during and immediately after precipitation. However, during large storms, streamflow increases rapidly, and flood waters can contain high amounts of debris, causing major flood damage. For many of the watercourses that are located in the service areas of the Participants, areas that may be inundated in response to 100-year storm events are located adjacent to or near the stream or river channel. Since many of the watercourses are located in mountainous or remote areas with little or no development, flooding events along these rivers and streams generally result in minimal impacts. Other watercourses that are located in the service areas of the Participants, however, have floodplains that extend well beyond the defined stream or river channel. When a flood occurs along one of these watercourses, and it is located in or near an area that is urbanized, damage to property and infrastructure can be widespread. [confirm/update]
In the southern portion of the County, Arroyo Grande Creek, San Luis Obispo Creek, and their respective tributaries, are watercourses that pass through urbanized areas and that have caused major floods. The north coast area of the County also contains a number of short, steep-gradient creeks that can experience rapid increases in water flows in response to storm events in Cambria. Santa Rosa Creek is such a watercourse that has caused significant flooding events. The largest watercourse in the inland portion of the County is the Salinas River, which is located adjacent to numerous incorporated and unincorporated communities. Although the floodplain of Salinas River can be extensive, it is generally contained within the river channel. Other major inland watercourses include the Estrella River and San Juan Creek. Due to the generally remote locations of these watercourses, flooding impacts are generally not significant.

Wildfires
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. Wildfires can also significantly impact vegetation and soils, which can adversely impact water quality within the water sources and regulating reservoirs. Areas in the County have experienced similar large and damaging wildfires in recent years.

The areas in the County face ongoing wildfire risks, with some land within the County and the Participants’ jurisdictions being categorized into the moderate, high and very high California Department of Forestry and Fire Protection (CALFIRE) Fire Hazard Severity Zones. If wildfires were to substantially damage or destroy land within the County, including facilities and systems maintained by the Flood Control District and the Participants, Water Revenues could be negatively affected.

Water Quality and PFAS
In recent years, State and federal agencies have enacted regulations concerning per- and poly-fluoroalkyl substances (“PFAS”) in drinking water. PFAS are commonly used in various consumer and industrial products such as fabrics, carpets, firefighting foams, food packaging and nonstick cookware and are known for their nonstick, waterproof, and heat and stain-resistant properties. There are over 15,000 types of individual PFAS compounds.

Perfluorooctane sulfonate (“PFOS”), perfluorooctanoic acid (“PFOA”), perfluorobutane sulfonic acid (“PFBS”), and perfluorohexane sulfonic acid (“PFHxS”) are among the synthetic organic chemicals in the group of compounds referred to as PFAS.

37 The State of California Water Resources Board’s Division of Drinking Water (the “Division”) has established and modified from time to time Notification Levels (the “NLs”) for PFOA, PFOS, PFBS, and PFHxS, respectively. NLs are non-regulatory, precautionary health-based measures for concentrations of chemicals in drinking water that warrant notification and further monitoring and assessment. Response Levels (the “RLs”) are nonregulatory, precautionary health-based measures that are set at higher levels than NLs and represent thresholds at which the Division recommends that water systems remove a water source from use or treat it if the option is available to them. Legislation that took effect on January 1, 2020 requires that water systems that receive a monitoring order from the Division and detect levels of PFAS that exceed their respective RL must either take a drinking water source out of use, treat the water or provide specific public notification they continue to supply water above the RL.

In April 2024, the U.S. Environmental Protection Agency announced final regulations establishing the first national drinking water standards for six PFAS: PFOA, PFOS, PFBS, PFHxS, perfluorononanoic acid (“PFNA”), and hexafluoropropylene oxide dimer acid (“HFPO-DA” or “GenX”). The regulations require public water systems to monitor for the regulated PFAS, notify the public if monitoring detects such PFAS at levels that exceed the regulatory standards, and reduce the levels of such PFAS in drinking water if they exceed the standards. Regulated public water systems will have until April 2027 to complete their initial monitoring for these PFAS and must include information about the results of their monitoring in their annual water quality reports to customers. Public water systems that detect PFAS above the new standards will have until April 2029 to implement solutions to reduce the PFAS to meet the standards.

In accordance with Order DW 2025-0002-DDW, issued by the California State Water Resources Control Board Division of Drinking Water on December 12, 2025, community water systems are required to monitor all active sources for PFAS to comply with the U.S. Environmental Protection Agency National Primary Drinking Water Regulations (89 Federal Register 32532; amended June 11, 2024, 89 Federal Register 49101)(U.S. EPA PFAS Rule).

Because the Nacimiento Project serves a population requiring quarterly monitoring, PFAS samples were required to be collected for four consecutive quarters, with all initial monitoring to be completed by March 31, 2027. In accordance with these requirements, the Nacimiento Project completed all required quarterly PFAS sampling during the 2026 monitoring period, with the final sampling event completed in January 2026, well in advance of the regulatory deadline. All results came back negative for all regulated PFAS compounds. The system’s initial PFAS monitoring requirements under Order DW 2025-0002-DDW are now complete. The Participants are responsible for complying with PFAS regulations when providing drinking water to each of their customers. The Participants may be subject to increases in water treatment or other Water Enterprise operating costs to meet State or federal regulations relating to PFAS, which may impact their abilities to meet payment obligations under their respective Delivery Contracts. See APPENDIX A – “THE PARTICIPANTS” for any impacts to the Participants as a result of compliance with PFAS regulations.
[Risks Associated with Bond Insurance
In the event of default of the payment of principal or interest with respect to the 2026 Bonds when all or some becomes due, any owner of the 2026 Bonds shall have a claim under the Policy for such payments. See “BOND INSURANCE” and APPENDIX G–“SPECIMEN MUNICIPAL BOND INSURANCE POLICY.” However, in the event of any acceleration of the due date of such principal by reason of mandatory or optional redemption or acceleration resulting from default or otherwise, other than any advancement of maturity pursuant to a mandatory sinking fund payment, the payments are to be made in such amounts and at such times as such payments would have been due had there not been any such acceleration. The Policy does not insure against redemption premium, if any.

The payment of principal and interest in connection with mandatory or optional prepayment of the 2026 Bonds by the Authority which is recovered by the Authority from the bond owner as a voidable preference under applicable bankruptcy law is covered by the insurance policy, however, such payments will be made by the 2026 Insurer at such time and in such amounts as would have been due absence such prepayment by the Authority unless the 2026 Insurer chooses to pay such amounts at an earlier date.

Under most circumstances, default of payment of principal and interest does not obligate acceleration of the obligations of the 2026 Insurer without appropriate consent. The 2026 Insurer may direct and must consent to any remedies and the consent of the 2026 Insurer may be required in connection with amendments to any applicable bond documents.

38 In the event the 2026 Insurer is unable to make payment of principal and interest as such payments become due under the Policy, the 2026 Bonds are payable solely from the moneys received pursuant to the applicable bond documents. In the event the 2026 Insurer becomes obligated to make payments with respect to the 2026 Bonds, no assurance is given that such event will not adversely affect the market price of the 2026 Bonds or the marketability (liquidity) for the 2026 Bonds.

The long-term insured rating on the 2026 Bonds is dependent in part on the financial strength of the 2026 Insurer and its claim paying ability. The financial strength and claims paying ability of the 2026 Insurer are predicated upon a number of factors which could change over time. No assurance is given that the long-term ratings of the 2026 Insurer and of the ratings on the 2026 Bonds insured by the 2026 Insurer will not be subject to downgrade and such event could adversely affect the market price of the 2026 Bonds or the marketability (liquidity) for the 2026 Bonds.

See “RATINGS.”
The obligations of the 2026 Insurer are contractual obligations and in an event of default by the 2026 Insurer, the remedies available may be limited by applicable bankruptcy law or state law related to insolvency of insurance companies.

Neither the Authority nor the Underwriter have made independent investigation into the claims paying ability of the 2026 Insurer and no assurance or representation regarding the financial strength or projected financial strength of the 2026 Insurer is given. Thus, when making an investment decision, potential investors should carefully consider the ability of the Authority to pay principal and interest on the 2026 Bonds and the claims paying ability of the 2026 Insurer, particularly over the life of the investment. See “BOND INSURANCE” for further information provided by the 2026 Insurer and APPENDIX G–“SPECIMEN MUNICIPAL BOND INSURANCE POLICY” for the Policy, which includes further instructions for obtaining current financial information concerning the 2026 Insurer.] Investment of Funds
All funds and accounts held under the Indenture are required to be invested in Permitted Investments as provided under the Indenture. See APPENDIX C–“FORMS OF PRINCIPAL LEGAL DOCUMENTS–THE INDENTURE” attached hereto for a summary of the definition of Permitted Investments. All investments, including the Permitted Investments and those authorized by law from time to time for investments by public agencies, contain a certain degree of risk. Such risks include, but are not limited to, a lower rate of return than expected, loss of market value and loss or delayed receipt of principal. The occurrence of these events with respect to amounts held under the Indenture or by the Participants could have a material adverse effect on the security of the 2026 Bonds.

Limitations on Remedies and Bankruptcy
In addition to the specific limitations on remedies contained in the applicable documents, the rights, obligations and remedies provided in the Indenture, the Pledge Agreement, and the Delivery Contracts are subject to bankruptcy, insolvency, reorganization, moratorium, fraudulent conveyance and other similar laws affecting creditors’ rights, to the application of equitable principles if equitable remedies are sought, and to the exercise of judicial discretion in appropriate cases and to limitations on legal remedies against public agencies in the State.

The enforcement of the remedies provided in the Indenture, the Pledge Agreement, and the Delivery Contracts could prove both expensive and time consuming. In addition, the rights and remedies provided in the Indenture, the Pledge Agreement, and the Delivery Contracts may be limited by and are subject to provisions of the federal bankruptcy laws, as now or hereafter enacted, and to other laws or equitable principles that may affect creditors’ rights. The various opinions of counsel to be delivered with respect to such documents, including the opinion of Bond Counsel (the form of which is attached as APPENDIX E), will be similarly qualified.

Cybersecurity
The Flood Control District and the Participants rely on a complex technology environment to conduct their daily operations. As a recipient and provider of personal, confidential, and sensitive information the Flood Control

39 District, the Participants, and their respective departments experience multiple cybersecurity threats which include but are not limited to, social engineering, malware, denial-of-service and other attacks on endpoints.

The Flood Control District has put several preventive measures in place to safeguard against cybersecurity threats. These measures include cybersecurity awareness training, firewalls, email filtering, web content filtering, endpoint protection, and ensuring that operating systems, network equipment, and endpoint devices are up-to-date with the latest patches. Additionally, advanced segmentation and monitoring techniques are employed to detect and respond to potential threats within the network, while real-time endpoint detection and response systems help identify and mitigate any malicious activity on devices.

The Flood Control District relies in part on information technology infrastructure and cybersecurity services administered by the County, and a cybersecurity incident affecting County systems could also affect the Flood Control District’s operations. The Flood Control District currently maintains insurance coverage with respect to certain information security and privacy liability claims through the County’s insurance program. Nonetheless, future cybersecurity attacks could affect the operation and finances of the Flood Control District.

Each of the Participants also relies on complex digital networks and systems to conduct their operations, which are potentially subject to cybersecurity threats that may affect their operations and finances, including their ability to meet payment obligations under their respective Delivery Contracts. See the subheading “ –Cybersecurity” for each Participant in APPENDIX A–“THE PARTICIPANTS.”
Limited Liability of Authority to the Owners
Except as expressly provided in the Indenture, the Authority will not have any obligation or liability to the Owners of the 2026 Bonds with respect to the payments when due by the Flood Control District pursuant to the Pledge Agreement, or with respect to the performance by the Flood Control District of other agreements and covenants required to be performed by it contained in the Pledge Agreement, or with respect to the performance by the Trustee of any right or obligation required to be performed by it contained in the Indenture.

Changes in Law
There can be no assurance that the State Legislature will not at some future time enact legislation, or that the State electorate will not adopt initiatives or approve legislation amending the State Constitution, that could amend or create laws resulting in a reduction of moneys securing or available to pay the 2026 Bonds. Additionally, future initiative measures or other legislative actions may place further limitations on the ability of the State, the Participants or local districts to increase revenues or appropriations, which could affect the ability of the Participants to implement rate increases, reduce their ability to make payments under the respective Delivery Contracts and adversely affect the security for the 2026 Bonds.

CONSTITUTIONAL AND STATUTORY LIMITATIONS ON TAXES AND APPROPRIATIONS Described below are certain measures which have impacted or may in the future impact the Participants’ Capital Projects Installment Debt Service payments.

Article XIII A of the California Constitution
On June 6, 1978, California voters approved an amendment (commonly known as both Proposition 13 and the Jarvis-Gann Initiative) to the California Constitution. This amendment, which added Article XIII A to the California Constitution, among other things affects the valuation of real property for the purpose of taxation in that it defines the full cash property value to mean “the county assessor’s valuation of real property as shown on the 1975/76 tax bill under “full cash value,” or thereafter, the appraised value of real property newly constructed, or when a change in ownership has occurred after the 1975 assessment.” The full cash value may be adjusted annually to reflect inflation at a rate not to exceed 2% per year, or a reduction in the consumer price index or comparable local data at a rate not to exceed 2% per year, or reduced in the event of declining property value caused by damage, destruction or other factors including a general economic downturn. The amendment further limits the amount of any ad valorem tax on

40 real property to 1% of the full cash value except that additional taxes may be levied to pay debt service on indebtedness approved by the voters prior to July 1, 1978, on bonded indebtedness for the acquisition or improvement of real property approved on or after July 1, 1978 by two-thirds of the votes cast by the voters voting on the proposition, and on bonded indebtedness for school facilities approved by 55% of the votes cast.

Legislation enacted by the California Legislature to implement Article XIII A provides that all taxable property is shown at full assessed value as described above. In conformity with this procedure, all taxable property value included in this Official Statement (except as noted) is shown at 100% of assessed value and all general tax rates reflect the $1 per $100 of taxable value. Tax rates for voter approved bonded indebtedness and pension liabilities are also applied to 100% of assessed value.

Future assessed valuation growth allowed under Article XIII A (new construction, change of ownership, 2% annual value growth) will be allocated on the basis of “sites” among the jurisdictions that serve the tax rate area within which the growth occurs. Local agencies and school districts will share the growth of “base” revenue from the tax rate area. Each year’s growth allocation becomes part of each agency’s allocation the following year. The County is unable to predict the nature or magnitude of future revenue sources which may be provided by the State to replace lost property tax revenues. Article XIII A effectively prohibits the levying of any other ad valorem property tax above the 1% limit except for taxes to support indebtedness approved by the voters as described above.

Article XIII A has been amended to permit reduction of the base year value in the event of declining property values caused by damage, destruction or other factors, and to provide that there would be no increase in the “base year value” in the event of reconstruction of property damaged or destroyed in a disaster if certain conditions are met, or in the event of certain transfers between parents and children, between grandparents and grandchildren, between spouses, or in certain situations where the elderly or disabled acquire new residences. If property values decline due to recessionary or other factors, the County may review the assessed values of properties. The State Revenue and Taxation Code permits county assessors who have reduced the assessed valuation of a property as a result of natural disasters, economic downturns or other factors, to subsequently “recapture” such value (up to the pre-decline value of the property) at an annual rate higher or lower than 2%, depending on the assessor’s measure of the restoration of value of the damaged property. The California courts have upheld the constitutionality of this procedure.

Article XIII B of the California Constitution
On November 6, 1979, California voters approved Proposition 4, the Gann Initiative, which added Article XIII B to the California Constitution. In June 1990, Article XIII B was amended by the voters through their approval of Proposition 111. Article XIII B of the California Constitution limits the annual appropriations of the State and any city, county, school district, authority or other political subdivision of the State to the level of appropriations for the prior fiscal year, as adjusted annually for changes in the cost of living, population and services rendered by the governmental entity. The “base year” for establishing such appropriation limit is the 1978-79 fiscal year. Increases in appropriations by a governmental entity are also permitted (i) if financial responsibility for providing services is transferred to the governmental entity, or (ii) for emergencies so long as the appropriations limits for the three years following the emergency are reduced to prevent any aggregate increase above the Constitutional limit. Decreases are required where responsibility for providing services is transferred from the government entity.

Appropriations subject to Article XIII B include generally any authorization to expend during the fiscal year the proceeds of taxes levied by the State or other entity of local government, exclusive of certain State subventions, refunds of taxes, benefit payments from retirement, unemployment insurance and disability insurance funds.

Appropriations subject to limitation pursuant to Article XIII B do not include debt service on indebtedness existing or legally authorized as of January l, 1979, on bonded indebtedness thereafter approved according to law by a vote of the electors of the issuing entity voting in an election for such purpose, appropriations required to comply with mandates of courts or the Federal government, appropriations for qualified outlay projects, and appropriations by the State of revenues derived from any increase in gasoline taxes and motor vehicle weight fees above January l, 1990 levels. “Proceeds of taxes” include, but are not limited to, all tax revenues and the proceeds to any entity of government from (i) regulatory licenses, user charges, and user fees to the extent such proceeds exceed the cost of providing the service or regulation, (ii) the investment of tax revenues and (iii) certain State subventions received by local governments. As amended by Proposition 111, the appropriations limit is tested over consecutive two-year periods. Any excess of the aggregate “proceeds of taxes” received by the County over such two-year period above the combined appropriations

41 limits for those two years is to be returned to taxpayers by reductions in tax rates or fee schedules over the subsequent two years.

As amended in June 1990, the appropriations limit for the County in each year is based on the limit for the prior year, adjusted annually for changes in the costs of living and changes in population, and adjusted, where applicable, for transfer of financial responsibility of providing services to or from another unit of government. The change in the cost of living is, at the County’s option, either (i) the percentage change in California per capita personal income, or (ii) the percentage change in the local assessment roll for the jurisdiction due to the addition of nonresidential new construction. The measurement of change in population is a blended average of statewide overall population growth, and change in attendance at local school and community college (“K-14”) districts.

Article XIII B permits any government entity to change the appropriations limit by vote of the electorate in conformity with statutory and Constitutional voting requirements, but any such voter-approved change can only be effective for a maximum of four years.

Each Participant has advised that it is of the opinion that its charges for water service are not subject to the limits of Article XIII B. Each Participant covenants in its Delivery Contract that it will prescribe rates and charges sufficient to provide payment of its Capital Projects Installment Debt Service in each year. See APPENDIX A–”THE PARTICIPANTS.”
Article XIII C and Article XIII D of the California Constitution General. On November 5, 1996, the voters of the State approved Proposition 218, known as the “Right to Vote on Taxes Act.” Proposition 218 added Articles XIII C and XIII D to the California Constitution, which contain a number of provisions affecting the ability of cities and counties to levy and collect both existing and future taxes, assessments, fees and charges.

Article XIII C. Article XIII C provides that the initiative power shall not be prohibited or otherwise limited in matters of reducing or repealing any local tax, assessment, fee or charge and that the power of initiative to affect local taxes, assessments, fees and charges shall be applicable to all local governments. Article XIII C does not define the terms “local tax,” “assessment,” “fee” or “charge.” On July 24, 2006, the Supreme Court held in Bighorn-Desert View Water Agency v. Verjil that the provisions of Article XIII C applied to rates and fees charged for domestic water use. In that decision, the Court noted that the decision did not address whether an initiative to reduce fees and charges could override statutory rate setting obligations. In any event, the County and the Flood Control District do not believe that Article XIII C grants to the voters within the County the power to repeal or reduce rates and charges in a manner that would be inconsistent with the contractual obligations of the County. No assurance can be given that the voters of the County will not, in the future, approve initiatives which seek to repeal, reduce or prohibit the future imposition or increase of assessments, fees or charges, including the fees and charges.

The interpretation and application of Proposition 218 will likely be subject to further judicial determinations, and it is not possible at this time to predict with certainty the outcome of such determinations.

Article XIII D. Article XIII D established procedural requirements for the imposition of assessments, defined to mean any levy or charge upon real property for a special benefit conferred upon real property, including standby charges. The procedural requirements include the conducting of a public hearing and an election, by mailed ballot, with notice to the record owner of each parcel subject to the assessment. If a majority of the ballots returned oppose the assessment, it may not be imposed.

Article XIII D conditions the imposition or increase of any “fee” or “charge” upon there being no written majority protest after a required public hearing and, for fees and charges other than for sewer, water, refuse collection services or storm water, voter approval. Article XIII D defines “fee” or “charge” to mean levies (other than ad valorem or special taxes or assessments) imposed by a local government upon a parcel or upon a person as an incident of the ownership or tenancy of real property, including a user fee or charge for a “property-related service.” One of the requirements of Article XIII D is that before a property related fee or charge may be imposed or increased, a public hearing upon the proposed fee or charge must be held and mailed notice sent to the record owner of each identified

42 parcel of land upon which the fee or charge is proposed for imposition. In the public hearing, if written protests of the proposed fee or charge are presented by a majority of the owners of affected identified parcel(s), an agency may not impose the fee or charge.

Article XIII D provides that nothing in Proposition 218 shall be construed to affect existing laws relating to the imposition of fees or charges as a condition of property development.

In Howard Jarvis Taxpayers Association v. City of Los Angeles, the Court of Appeal held that fees for water that are based upon metered amounts used are charges for a commodity and not related to property ownership and, consequently, Article XIII D does not apply to such fees. However, in a decision rendered in February 2004, the California Supreme Court in Richmond et al. v. Shasta Community Services District, 32 Cal. 4th 409, upheld a Court of Appeals decision that water connection fees were not property related fees or charges subject to Article XIII D, while at the same time stating in dicta that fees for ongoing water service through an existing connection were property related fees and charges. In October 2004, the California Supreme Court granted review of the decision of the Fourth District Court of Appeal in Bighorn-Desert View Water Agency v. Beringson, 120 Cal. App. 4th 891 (2004), in which the appellate court had relied on Howard Jarvis Taxpayers Association v. City of Los Angeles and rejected the Supreme Court’s dicta in Richmond et al. v. Shasta Community Services District. On March 23, 2005, the California Fifth District Court of Appeal published Howard Jarvis Taxpayers Association v. City of Fresno, 127 Cal.App.4th 914 (5th Dist. 2005), holding that an “in lieu” fee which is payable to the general fund of the City of Fresno from its water utility and which is included in the water rate structure of the city was invalid. In reaching its decision, the court concluded that the city’s water rates were “property related” fees, governed by the limitations of Article XIII D. The City of Fresno requested a review of this decision by the California Supreme Court, which denied review. On July 24, 2006, the Supreme Court ruled in Bighorn-Desert View Water Agency v. Verjil. In dicta, the Supreme Court repeated its previous dicta in Richmond et al. v. Shasta Community Services District that fees and charges for ongoing water service through an existing connection were property related fees and charges under Article XIII D.

In addition to the procedural requirements of Article XIII D, under Article XIII D all property related fees and charges, including those which were in existence prior to the passage of Proposition 218 in November 1996, must meet the following substantive standards: (i) the revenues derived from the fee or charge cannot exceed the funds required to provide the property-related service; (ii) the revenues derived from the fee or charge must not be used for any purpose other than that for which the fee or charge was imposed; (iii) the amount of a fee or charge imposed upon any parcel or person as an incident of property ownership must not exceed the proportional cost of the service attributable to the parcel; (iv) no fee or charge may be imposed for a service unless that service is actually used by, or immediately available to, the owner of the property in question, fees or charges based on potential or future use of a service are not permitted, and standby charges, whether characterized as charges or assessments, must be classified as assessments and cannot be imposed without compliance with Section 4 of Article XIII D (relating to assessments); and (v) no fee or charge may be imposed for general governmental services including, but not limited to, police, fire, ambulance or library services where the service is available to the public at large in substantially the same manner as it is to property owners.

On April 20, 2015, the California Fourth District Court of Appeal issued a decision in Capistrano Taxpayers Association, Inc. v. City of San Juan Capistrano, 235 Cal.App.4th 1493 (2015), holding that the City of San Juan Capistrano’s tiered water rates (or inclining block rates) that were in effect from February 1, 2010 through June 30, 2014 violated the requirement of Proposition 218 that a fee or charge for property-related services, such as water delivery, must be proportional to the cost of providing service. In interpreting Proposition 218, the Court of Appeal emphasized that tiered water rates, or inclining block rates, that go up progressively in relation to usage are compatible with Proposition 218. However, the court concluded that Article XIIID requires that each tier must reflect the actual costs of service for property owners falling in each of the tiers. The court further concluded that the city had the burden of proof to demonstrate compliance with Proposition 218 and that the city failed to meet its burden of proof in demonstrating that its tiered water rates corresponded to the actual costs of providing service to each tier.

In June 2021, a San Diego Superior Court ruled that Otay Water District failed to demonstrate that its tiered water rates were proportional to the cost of service attributable to each customer’s parcel, as required by Proposition 218. The Court specifically found that the rates were based on “non-cost objectives such as conservation” and that the record did not contain sufficient support for the peaking factors utilized to calculate demand and allocate costs to different tiers of usage. On appeal to the 4th District, the Court of Appeal affirmed the finding that the rates

43 do not comply with Proposition 218. Specifically, the Court of Appeal determined that (1) the tiered pricing structure was based on generalized assumptions and industry standards, rather than customer-specific data; (2) Otay improperly set certain rate components based on conservation concerns, rather than cost; and (3) the rate structure disproportionately burdened single family residential customers with a tiered rate structure, while allowing commercial and irrigation customers to utilize uniform rates.

The Authority and the Flood Control District are unable to predict the impact of a successful repeal or reduction of water rates and charges charged by any Participant on the financial condition of such Participant or the ability of such Participant to perform its obligations under its Delivery Contract. Further, the Authority and the Flood Control District are unable to predict whether the repeal or reduction of the rates and charges of any Participant would be detrimental to or inconsistent with the contractual obligations of the respective Participant. One might assert that Article XIII C cannot grant the voters within the Participants’ service area the power to repeal or reduce rates and charges in a manner which would be inconsistent with the contractual obligations of the respective Participants, giving rise to an unconstitutional impairment of contract under the U.S. Constitution and the California Constitution.

However, there can be no assurance of the availability of particular remedies adequate to protect the beneficial owners of the Bonds. Remedies available to beneficial owners of the Bonds in the event of a default by the Participants are dependent upon judicial actions which are often subject to discretion and delay and could prove both expensive and time-consuming to obtain. In addition to the specific limitations on remedies contained in the applicable documents themselves, the rights and obligations of the Flood Control District and the Participants, respectively, under the Delivery Contracts are subject to bankruptcy, insolvency, reorganization, moratorium, fraudulent conveyance and other similar laws affecting creditors’ rights, to the application of equitable principles if equitable remedies are sought, to the exercise of judicial discretion in appropriate cases and to limitations on legal remedies against public agencies in the State of California. The various opinions of counsel to be delivered with respect to such documents, including the opinion of Bond Counsel, the form of which is attached as Appendix E hereto, will be similarly qualified.

The foregoing discussion of Proposition 218 should not be considered an exhaustive or authoritative treatment of the issues.

Future Initiatives
Article XIII A, Article XIII B, Article XIII C and Article XIII D were adopted as measures that qualified for the ballot through California’s initiative process. From time to time, other initiative measures could be adopted, which may place further limitations on the ability of the State, the County or local districts to increase revenues or to increase appropriations which may affect the County’s revenues or its ability to expend its revenues.

FINANCIAL STATEMENTS
Each of Paso Robles, SLO, and Templeton has provided its audited financial statements as of the fiscal year ended June 30, 2025, and for the fiscal year ended April 30, 2025 in the case of the Atascadero Mutual Water Company. See APPENDIX A–“THE PARTICIPANTS.” No auditor has reviewed or audited this Official Statement, or undertaken procedures to consent to the inclusion of its report with respect to any of the financial statements.

CONTINUING DISCLOSURE
The Authority has determined that no financial or operating data concerning the Authority is material to any decision to purchase, hold, or sell the 2026 Bonds and the Authority will not provide such information.

Flood Control District
The Flood Control District will enter into a Continuing Disclosure Agreement with Digital Assurance Certification, L.L.C., as dissemination agent to the Flood Control District, to be dated the date of delivery of the 2026 Bonds. The Flood Control District, covenants for the benefit of the beneficial owners of the 2026 Bonds to provide certain financial information and operating data relating to the Flood Control District by no later than March 31 each year commencing with the report due on March 31, 2027 for the Fiscal Year ended June 30, 2026 (each a “Flood Control District Annual Report”), and to provide notices of the occurrence of certain specified events. The Flood

44 Control District Annual Report and notices of specified events will be filed by the Flood Control District or the dissemination agent to the Flood Control District, through the EMMA site which is maintained by the MSRB. Copies of the Flood Control District Annual Reports and notices of specified events since June 1, 2009 are available on the EMMA site. These covenants have been made in order to assist the Underwriter in complying with Securities and Exchange Commission Rule 15c2-12(b)(5) promulgated under the Securities Exchange Act of 1934 (the “Rule”). The specific nature of the financial information and operating data and the notices of specified events is set forth in APPENDIX D – “FORMS OF CONTINUING DISCLOSURE AGREEMENTS–SAN LUIS OBISPO COUNTY FLOOD CONTROL AND WATER CONSERVATION DISTRICT CONTINUING DISCLOSURE AGREEMENT.” During the past five years, due to an administrative error, the County’s Annual Comprehensive Financial Report for the Fiscal Year ended June 30, 2023, which was referenced in the 2023 Flood Control District Annual Report, was not correctly posted, notwithstanding its timely filing. The County also failed to include certain required information in its annual report for the Fiscal Year ended June 30, 2022 and failed to timely file a notice of incurrence of a financial obligation. All such filings have since been remedied.

The Participants
Each Participant has covenanted to provide certain financial and operating data relating to such Participant by no later than nine months following the end of the respective fiscal year of each Participant commencing with the report due in 2027 for its respective fiscal year ended in 2026 (each a “Participant Annual Report”). Each Participant Annual Report will be filed by the Participant or the Flood Control District, as dissemination agent to each Participant, through EMMA. The fiscal year-end for AMWC is April 30, and the fiscal year-end for Paso Robles, SLO and Templeton is June 30. The specific nature of the financial and operating data to be provided is set forth in APPENDIX D– “FORMS OF CONTINUING DISCLOSURE AGREEMENTS–PARTICIPANTS CONTINUING DISCLOSURE AGREEMENTS.”
AMWC. During the past five years, AMWC has not failed to comply in all material respects with its prior continuing disclosure obligations entered into in connection with the Rule.

Paso Robles. During the past five years, Paso Robles has not failed to comply in all material respects with its prior continuing disclosure obligations entered into in connection with the Rule.

SLO. During the past five years, SLO has from time to time failed to link certain CUSIP numbers to its timely filed audited financial statements. Such errors have been corrected.

Templeton. During the past five years, Templeton has not failed to comply in all material respects with its prior continuing disclosure obligations entered into in connection with the Rule.

TAX MATTERS
General. The delivery of the 2026 Bonds is subject to delivery of the opinion of Bond Counsel, to the effect that interest on the 2026 Bonds for federal income tax purposes under existing statutes, regulations, published rulings, and court decisions (1) will be excludable from the gross income, as defined in section 61 of the Internal Revenue Code of 1986, as amended to the date of initial delivery of the 2026 Bonds (the “Code”), of the owners thereof pursuant to section 103 of the Code, and (2) will not be included in computing the alternative minimum taxable income of the owners thereof who are individuals. The delivery of the 2026 Bonds are also subject to the delivery of the opinion of Bond Counsel, based upon existing provisions of the laws of the State of California that interest on the 2026 Bonds is exempt from personal income taxes of the State of California. The form of Bond Counsel’s anticipated opinion regarding the 2026 Bonds is included as Appendix E. The statutes, regulations, rulings, and court decisions on which such opinions will be based are subject to change.

In rendering the foregoing opinions, Bond Counsel will rely upon the representations and certifications of the Authority and the Flood Control District made in a certificate of even date with the initial delivery of the 2026 Bonds pertaining to the use, expenditure, and investment of the proceeds of the 2026 Bonds (the “Tax Certificate”) and will assume continuing compliance with the provisions of the Indenture by the Authority and the Flood Control

45 District subsequent to the issuance of the 2026 Bonds. The Indenture and the Tax Certificate contain covenants by the Authority and the Flood Control District with respect to, among other matters, the use of the proceeds of the 2026 Bonds and the facilities and equipment financed or refinanced therewith by persons other than state or local governmental units, the manner in which the proceeds of the 2026 Bonds are to be invested, the calculation and payment to the United States Treasury of any “arbitrage profits” and the reporting of certain information to the United States Treasury. Failure to comply with any of these covenants may cause interest on the 2026 Bonds to be includable in the gross income of the owners thereof from the date of the issuance of the 2026 Bonds.

Except as described above, Bond Counsel will express no other opinion with respect to any other federal, State or local tax consequences under present law, or proposed legislation, resulting from the receipt or accrual of interest on, or the acquisition or disposition of, the 2026 Bonds. Prospective purchasers of the 2026 Bonds should be aware that the ownership of tax-exempt obligations such as the 2026 Bonds may result in collateral federal tax consequences to, among others, financial institutions, life insurance companies, property and casualty insurance companies, S corporations with subchapter C earnings and profits, certain foreign corporations doing business in the United States, individual recipients of Social Security or Railroad Retirement benefits, corporations subject to the alternative minimum tax on adjusted financial statement income, individuals otherwise qualifying for the earned income tax credit, owners of an interest in a financial asset securitization investment trust (“FASIT”), and taxpayers who may be deemed to have incurred or continued indebtedness to purchase or carry, or who have paid or incurred certain expenses allocable to, tax-exempt obligations. Prospective purchasers should consult their own tax advisors as to the applicability of these consequences to their particular circumstances.

Bond Counsel’s opinion is not a guarantee of a result, but represents its legal judgment based upon its review of existing statutes, regulations, published rulings and court decisions and the representations and covenants of the Authority and the Flood Control District described above. No ruling has been sought from the Internal Revenue Service (the “IRS”) or the State of California with respect to the matters addressed in the opinion of Bond Counsel, and Bond Counsel’s opinion is not binding on the IRS or the State of California. The IRS has an ongoing program of auditing the tax-exempt status of the interest on municipal obligations. If an audit of the 2026 Bonds is commenced, under current procedures, the IRS is likely to treat the Authority as the “taxpayer,” and the owners of the 2026 Bonds would have no right to participate in the audit process. In responding to or defending an audit of the tax-exempt status of the interest on the 2026 Bonds, the Authority may have different or conflicting interests from the owners of the 2026 Bonds. Public awareness of any future audit of the 2026 Bonds could adversely affect the value and liquidity of the 2026 Bonds during the pendency of the audit, regardless of its ultimate outcome.

For taxable years beginning after 2022, the Code imposes a minimum tax of 15 percent of the adjusted financial statement income of certain large corporations, generally consisting of corporations (other than S corporations, regulated investment companies and real estate investment trusts) with more than $1 billion in average annual adjusted financial statement income, determined over a three-year period. For this purpose, adjusted financial statement income generally consists of the net income or loss of the taxpayer set forth on the taxpayer’s applicable financial statement for the taxable year, subject to various adjustments, but is not reduced for interest earned on taxexempt obligations, such as the 2026 Bonds. Prospective purchasers that could be subject to this minimum tax should consult with their own tax advisors regarding the potential impact of owning the 2026 Bonds.

Existing law may change to reduce or eliminate the benefit to bond or note holders of the exclusion of interest on the 2026 Bonds from gross income for federal income tax purposes. Any proposed legislation or administrative action, whether or not taken, could also affect the value and marketability of the 2026 Bonds. Prospective purchasers of the 2026 Bonds should consult with their own tax advisors with respect to any proposed or future changes in tax law.

Tax Accounting Treatment of Discount and Premium on Certain 2026 Bonds.

The initial public offering price of certain 2026 Bonds (the “Discount 2026 Bonds”) may be less than the amount payable on such 2026 Bonds at maturity. An amount equal to the difference between the initial public offering price of a Discount 2026 Bond (assuming that a substantial amount of the Discount 2026 Bonds of that maturity are sold to the public at such price) and the amount payable at maturity constitutes original issue discount to the initial purchaser of such Discount 2026 Bond. A portion of such original issue discount allocable to the holding period of such Discount 2026 Bond by the initial purchaser will, upon the disposition of such Discount 2026 Bond (including

46 by reason of its payment at maturity), be treated as interest excludable from gross income, rather than as taxable gain, for federal income tax purposes, on the same terms and conditions as those for other interest on the 2026 Bonds described above. Such interest is considered to be accrued actuarially in accordance with the constant interest method over the life of a Discount 2026 Bond, taking into account the semiannual compounding of accrued interest, at the yield to maturity on such Discount 2026 Bond and generally will be allocated to an initial purchaser in a different amount from the amount of the payment denominated as interest actually received by the initial purchaser during the tax year.

However, such interest may be required to be taken into account in determining the amount of the branch profits tax applicable to certain foreign corporations doing business in the United States, even though there will not be a corresponding cash payment. In addition, the accrual of such interest may result in certain other collateral federal income tax consequences to, among others, financial institutions, life insurance companies, property and casualty insurance companies, S corporations with subchapter C earnings and profits, individual recipients of Social Security or Railroad Retirement benefits, corporations subject to the alternative minimum tax on adjusted financial statement income, individuals otherwise qualifying for the earned income tax credit, owners of an interest in a FASIT, and taxpayers who may be deemed to have incurred or continued indebtedness to purchase or carry, or who have paid or incurred certain expenses allocable to, tax-exempt obligations. Moreover, in the event of the redemption, sale or other taxable disposition of a Discount 2026 Bond by the initial owner prior to maturity, the amount realized by such owner in excess of the basis of such Discount 2026 Bond in the hands of such owner (adjusted upward by the portion of the original issue discount allocable to the period for which such Discount 2026 Bond was held) is includable in gross income.

Owners of Discount 2026 Bonds should consult with their own tax advisors with respect to the determination of accrued original issue discount on Discount 2026 Bonds for federal income tax purposes and with respect to the state and local tax consequences of owning and disposing of Discount 2026 Bonds. It is possible that, under applicable provisions governing determination of state and local income taxes, accrued interest on Discount 2026 Bonds may be deemed to be received in the year of accrual even though there will not be a corresponding cash payment.

The purchase price of certain 2026 Bonds (the “Premium 2026 Bonds”) paid by an owner may be greater than the amount payable on such 2026 Bonds at maturity. An amount equal to the excess of a purchaser’s tax basis in a Premium 2026 Bond and the amount payable at maturity constitutes premium to such purchaser. The basis for federal income tax purposes of a Premium 2026 Bond in the hands of such initial purchaser must be reduced each year by the amortizable bond premium, although no federal income tax deduction is allowed as a result of such reduction in basis for amortizable bond premium. Such reduction in basis will increase the amount of any gain (or decrease the amount of any loss) to be recognized for federal income tax purposes upon a sale or other taxable disposition of a Premium 2026 Bond. The amount of premium which is amortizable each year by a purchaser is determined by using such purchaser’s yield to maturity (or, in some cases with respect to a callable 2026 Bond, the yield based on a call date that results in the lowest yield on the 2026 Bond).

Purchasers of the Premium 2026 Bonds should consult with their own tax advisors with respect to the determination of amortizable bond premium with respect to the Premium 2026 Bonds for federal income purposes and with respect to the state and local tax consequences of owning and disposing of Premium 2026 Bonds.

LITIGATION
Steinbeck Vineyards and Eidemiller
The County, the Flood Control District, CSA-16-1, Paso Robles, AMWC, San Miguel Community Services District (“SMCSD”), and Templeton were named as a defendants in two lawsuits: Steinbeck et al v. County of San Luis Obispo et al (Santa Clara Superior Court Case No. 1-14-cv-265039) and Eidemiller v. County of San Luis Obispo (Santa Clara Superior Court Case No. 1-14-cv-269212) filed by landowners who claim superior overlying groundwater water rights as against the water supplier defendants. As of the date of this Official Statement, the two cases have been consolidated and the Court has divided the case into six phases. Phase 1 concerned plaintiffs’ prima facie case for quiet title, and the Court ruled that plaintiffs met their prima facie burden by proving that they each owned land within the watershed, thereby shifting the burden to defendants to prove their affirmative defenses (e.g. basin boundaries, prescription, treaty rights and pueblo rights). Phase 2 concerned basin boundaries, including AMWC

47 and Templeton’s affirmative defense that they are located within a separate groundwater basin and a determination of the relevant exterior boundary of the basin. In this Phase, the Court ruled that AMWC and Templeton failed to prove that they pump groundwater from a basin separate from the main basin (i.e. the basin identified by the Department of Water Resources (DWR) in Bulletin 118 as the Paso Robles Area Subbasin (3-004.06)), and signed an order approving a stipulation by the parties that the boundary of the basin at issue is the outermost exterior boundary line as identified by DWR in Bulletin 118, i.e. the outermost exterior boundary line for the Paso Robles Area Subbasin (3-004.06) and the Atascadero Area Subbasin (3-004.11), recently recognized as a separate subbasin by DWR. Phase 3 concerned defendants’ (excluding AMWC who claims to be an overlying user and the Flood Control District who does not pump groundwater) affirmative defense of prescription (i.e. that they possess prescriptive water rights as against plaintiffs within the basin). In this Phase, a jury found that each of the defendants perfected their respective prescriptive groundwater rights during the years from 1981 to 1990 (the prescriptive period). Phase 4 concerned quantification of defendants’ prescriptive rights during the prescriptive period. In this Phase, the Court entered an order quantifying defendants’ prescriptive groundwater rights as follows: 1,267.70 acre-feet per year (AFY) for Paso Robles, 310 AFY for the County, 177.03 AFY for San Miguel and 308.9 AFY for Templeton. Phase 5 concerned defendants’ claim that they exercised self-help pumping during the prescriptive period. In this Phase, while the court did find that many plaintiffs met their burden of proving self-help pumping (on or around 425 parcels out of the total 754 plaintiff parcels), the Court also stressed the limitations of the ruling—e.g. the current action is not one to quantify rights or allocate pumping rights or to create a physical solution. The anticipated last phase (Phase 6) concerns SMCSD’s pueblo and treaty rights (Paso Robles recently withdrew these affirmative defenses), and trial is scheduled to commence on August 17, 2026, assuming plaintiffs’ motion for summary judgment (scheduled for hearing on July 15, 2026) is unsuccessful.

The Flood Control District does not believe that the resolution of this litigation will have a material adverse effect on the payments to be received from the affected Participants pursuant to the Delivery Contracts or the ability of the Authority to make payments, when due, on the 2026 Bonds.

Authority and Flood Control District
At the time of delivery of the 2026 Bonds, County Counsel, as Counsel to the Authority and to the Flood Control District will deliver opinions to the initial Underwriter that there is no controversy or litigation now pending against the Authority or the Flood Control District or, to the knowledge of their officers, threatened, concerning the validity of the 2026 Bonds, the Master Water Contract, the pledge of Revenues, the Indenture, the Pledge Agreement, the Delivery Contracts or any other document relating to the 2026 Bonds to which the Authority, the Flood Control District, or any Participant is or will become a party, or the performance by any of the Authority, the Flood Control District, or any Participant of its respective obligations thereunder; or to restrain or enjoin the execution and delivery of the Indenture, or the Continuing Disclosure Agreement; or in any way contesting or affecting the validity of the 2026 Bonds.

Participants
At the time of delivery of the 2026 Bonds, each Participant will deliver a certificate that there is no controversy or litigation now pending against such Participant, or to the knowledge of their officers, threatened, concerning the validity of the 2026 Bonds, the pledge of Water Revenues, the Pledge Agreement, the Delivery Contracts or any other document relating to the 2026 Bonds to which such Participant is or will become a party, or the performance by the Participant of its respective obligations thereunder; or to restrain or enjoin the execution and delivery of its Continuing Disclosure Agreement.

LEGAL MATTERS
Norton Rose Fulbright US LLP, Los Angeles, California, Bond Counsel, will render an opinion with respect to the validity of the 2026 Bonds. The form of the legal opinion proposed to be delivered by Bond Counsel is included as APPENDIX E to this Official Statement. Bond Counsel undertakes no responsibility for the accuracy, completeness, or fairness of this Official Statement. Certain legal matters will be passed upon for the Authority and the Flood Control District by County Counsel, for the Underwriter by Anzel Galvan LLP, San Francisco, California, Underwriter’s Counsel, for AMWC by [_____], [_____], California, for Paso Robles by [the Paso Robles City Attorney], for the City of San Luis Obispo by the [San Luis Obispo City Attorney], and for the Templeton Community Services District by [District Counsel].

48 Compensation paid to Bond Counsel and Underwriter’s Counsel is contingent on the delivery of the 2026 Bonds.

MUNICIPAL ADVISOR
The Authority has retained KNN Public Finance LLC, Berkeley, California, as Municipal Advisor, in connection with the authorization and delivery of the 2026 Bonds. The Municipal Advisor is not obligated to undertake, and has not undertaken to make, an independent verification or to assume responsibility for the accuracy, completeness or fairness of the information contained in this Official Statement. The Municipal Advisor is an independent advisory service and is not engaged in underwriting or trading of securities. The Municipal Advisor will receive compensation that is contingent upon the sale, issuance and delivery of the 2026 Bonds.

RATINGS
S&P Global Ratings (“S&P”) has assigned an [underlying rating of “[_____]” and an insured rating of “[_____]” to the 2026 Bonds with the understanding that the Bond Insurance Policy will be issued by the 2026 Insurer concurrently with the delivery of the 2026 Bonds]. [See “BOND INSURANCE” and APPENDIX G–”SPECIMEN MUNICIPAL BOND INSURANCE POLICY.”]
Any explanation of the significance of such ratings may only be obtained from the rating agency furnishing the same. The Authority furnished to S&P certain information and materials concerning the 2026 Bonds and the Flood Control District. Generally, rating agencies base their ratings on such information and materials and on investigations, studies and assumptions made by the rating agencies themselves. There is no assurance that any rating assigned to the 2026 Bonds by a rating agency will be maintained for any given period of time or that it will not be lowered or withdrawn entirely by such rating agency if in its judgment circumstances so warrant. Any downward revision or withdrawal of such rating may have an adverse effect on the market price or marketability of the 2026 Bonds.

UNDERWRITING
Loop Capital Markets LLC (the “Underwriter”), has agreed, subject to certain conditions precedent, to purchase the 2026 Bonds from the Authority pursuant to the terms and condition of a bond purchase agreement between the Authority and the Underwriter.

The 2026 Bonds may be offered and sold to certain dealers and others at prices lower than the offering prices stated on the inside cover hereof. The offering prices may be changed from time to time.

The Underwriter has agreed to purchase the 2026 Bonds at a purchase price equal to $_____, which represents the par amount of the 2026 Bonds, plus a [net] original issue premium in the amount of $_____, less an Underwriter’s discount in the amount of $_____. The bond purchase agreement relating to the 2026 Bonds provides that the Underwriter will purchase all of the 2026 Bonds if any are purchased, the obligation to make such purchase being subject to certain terms and conditions set forth in said bond purchase agreement, the approval of certain legal matters by counsel and certain other conditions.

MISCELLANEOUS
The foregoing and subsequent summaries or descriptions of provisions of the 2026 Bonds and the Indenture and all references to other materials not purporting to be quoted in full, are only brief outlines of some of the provisions thereof. Reference is made to said documents for full and complete statements of the provisions of such documents.

The appendices attached hereto are a part of this Official Statement.

Copies, in reasonable quantity, of the Indenture, the Pledge Agreement, and the Delivery Contracts may be obtained upon request to the principal corporate trust office of the Trustee.

The execution and delivery of this Official Statement has been duly authorized by the County.

49 SLO COUNTY FINANCING AUTHORITY
By:

Chair of the Board of Commissioners

A-1

APPENDIX A

THE PARTICIPANTS

B-1

APPENDIX B

THE DELIVERY CONTRACTS

C-1

APPENDIX C

FORMS OF PRINCIPAL LEGAL DOCUMENTS

D-1

APPENDIX D

FORMS OF CONTINUING DISCLOSURE AGREEMENTS

E-1

APPENDIX E

PROPOSED FORM OF BOND COUNSEL OPINION
[Closing Date]
SLO County Financing Authority
County Government Center
1055 Monterey Street
San Luis Obispo, California 93408
Re: $[PAR] SLO County Financing Authority (County of San Luis Obispo, California) Nacimiento Water Project Revenue Refunding Bonds, 2026 Series A
Ladies and Gentlemen:

We have acted as Bond Counsel to the SLO County Financing Authority (the “Authority”) in connection with the issuance by the Authority of its $[PAR] SLO County Financing Authority (County of San Luis Obispo, California) Nacimiento Water Project Revenue Refunding Bonds, 2026 Series A (the “2026 Bonds”). The 2026 Bonds are being issued under the provisions of the Marks-Roos Local Bond Pooling Act of 1985, constituting Article 4 of Chapter 5 of Division 7 of Title 1 (commencing with Section 6584) of the California Government Code and other applicable law (the “Bond Law”), and pursuant to an Indenture of Trust, dated as of September 1, 2007 (the “Original Indenture”), as supplemented by the First Supplemental Indenture, dated as of August 1, 2015 (the “First Supplemental Indenture”), the Second Supplemental Indenture, dated as of April 1, 2018 (the “Second Supplemental Indenture”) and the Third Supplemental Indenture, dated as of [October 1], 2026 (the “Third Supplemental Indenture” and, collectively with the Original Indenture, the First Supplemental Indenture and the Second Supplemental Indenture, the “Indenture”), each by and between the Authority and U.S. Bank Trust Company, National Association, as successor trustee (the “Trustee”).

The 2026 Bonds are limited obligations of the Authority secured under the Indenture by a pledge of Revenues and certain other moneys held under the Indenture. The Revenues consist of (a) all amounts derived from the Pledge Agreement, dated as of September 1, 2007 (the “Pledge Agreement”), by and between the San Luis Obispo County Flood Control and Water Conservation District (the “Flood Control District”) and the Authority, and (b) investment income with respect to the funds and accounts established under the Indenture, except for investment earnings on the Rebate Fund.

As Bond Counsel, we have reviewed and rely upon the Indenture and certifications of the Authority, the Flood Control District, the Trustee and others, opinions of counsel to the Authority, the Flood Control District and the Trustee, and such other documents, opinions and instruments as we deemed necessary to render the opinions set forth herein.

Capitalized terms used and not otherwise defined herein shall have the meanings ascribed thereto in the Indenture.

Based upon the foregoing, we are of the opinion that:

1. The 2026 Bonds constitute valid and binding limited obligations of the Authority as provided in the Indenture, and are entitled to the benefits of the Indenture.

2. The Indenture has been duly and validly authorized, executed and delivered by the Authority and, assuming the enforceability thereof against the Trustee, constitutes the legally valid and binding obligation of the Authority, enforceable against the Authority in accordance with its terms. The Indenture creates a valid pledge, to secure the payment of principal of and interest on the 2026 Bonds, of the Revenues and certain other amounts held by the Trustee in certain funds and accounts established pursuant to the Indenture, subject to the provisions of the Indenture permitting the application thereof for other purposes and on the terms and conditions set forth therein.

E-2

3. It is further our opinion, based upon the foregoing, that pursuant to section 103 of the Internal Revenue Code of 1986, as amended and in effect on the date hereof (the “Code”), and existing regulations, published rulings, and court decisions thereunder, and assuming continuing compliance with the provisions of the Indenture and the Tax Certificate and in reliance upon the representations and certifications of the Authority and the Flood Control District made in the Tax Certificate of even date herewith pertaining to the use, expenditure, and investment of the proceeds of the 2026 Bonds, when the 2026 Bonds are delivered to and paid for by the initial purchasers thereof, interest on the 2026 Bonds for federal income tax purposes (1) will be excludable from the gross income, as defined in section 61 of the Code, of the owners thereof, and (2) will not be included in computing the alternative minimum taxable income of the owners thereof who are individuals.

In our opinion, under existing law, interest on the 2026 Bonds is exempt from personal income taxes of the State of California.

We express no other opinion with respect to any other federal, state, or local tax consequences under present law or any proposed legislation resulting from the receipt or accrual of interest on, or the acquisition or disposition of, the 2026 Bonds. Ownership of tax-exempt obligations such as the 2026 Bonds may result in collateral federal tax consequences to, among others, financial institutions, life insurance companies, property and casualty insurance companies, certain S corporations with subchapter C earnings and profits, certain foreign corporations doing business in the United States, corporations subject to the alternative minimum tax on adjusted financial statement income, owners of an interest in a financial asset securitization investment trust, individuals otherwise qualifying for the earned income tax credit, individual recipients of Social Security or Railroad Retirement benefits, and taxpayers who may be deemed to have incurred or continued indebtedness to purchase or carry, or who have paid or incurred certain expenses allocable to, tax-exempt obligations.

The opinions expressed in paragraphs 1 and 2 above are qualified to the extent the enforceability of the 2026 Bonds and the Indenture may be limited by applicable bankruptcy, insolvency, debt adjustment, reorganization, moratorium or similar laws or equitable principles relating to or limiting creditors’ rights generally or as to the availability of any particular remedy. The enforceability of the 2026 Bonds and the Indenture is subject to the effect of general principles of equity, including, without limitation, concepts of materiality, reasonableness, good faith and fair dealing, to the possible unavailability of specific performance or injunctive relief, regardless of whether considered in a proceeding in equity or at law, and to the limitations on legal remedies against governmental entities in California. No opinion is expressed herein on the accuracy, completeness or fairness of the Official Statement or other offering material relating to the 2026 Bonds.

Our opinions are based on existing law, which is subject to change. Such opinions are further based on our knowledge of facts as of the date hereof. We assume no duty to update or supplement our opinions to reflect any facts or circumstances that may thereafter come to our attention or to reflect any changes in any law that may thereafter occur or become effective. Moreover, our opinions are not a guarantee of result and are not binding on the Internal Revenue Service or the State of California; rather, such opinions represent our legal judgment based upon our review of existing law that we deem relevant to such opinions and in reliance upon the representations and covenants referenced above.

Respectfully submitted,

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APPENDIX F

DTC AND THE BOOK-ENTRY ONLY SYSTEM
The information in this Appendix F concerning The Depository Trust Company, New York, New York (“DTC”), and DTC’s book-entry system has been obtained from DTC and the Authority and the Flood Control District take no responsibility for the completeness or accuracy thereof. The Authority and the Flood Control District cannot and do not give any assurances that DTC, Direct Participants (as defined below) or Indirect Participants (as defined below) will distribute to the Beneficial Owners (a) payments of interest, principal or premium, if any, with respect to the 2026 Bonds, (b) certificates representing ownership interest in or other confirmation of ownership interest in the 2026 Bonds, or (c) redemption or other notices sent to DTC or Cede & Co., its nominee, as the registered owner of the Bonds, or that they will do so on a timely basis, or that DTC, Direct Participants or Indirect Participants will act in the manner described in this Appendix F. The Authority and the Flood Control District are not responsible or liable for the failure of DTC or any DTC Direct or Indirect Participant to make any payment or give any notice to a Beneficial Owner with respect to the 2026 Bonds or an error or delay relating thereto. The current “Rules” applicable to DTC are on file with the Securities and Exchange Commission and the current “Procedures” of DTC to be followed in dealing with DTC’s Direct and Indirect Participants are on file with DTC.

The Depository Trust Company (“DTC”) will act as securities depository for the 2026 Bonds. The 2026 Bonds will be issued as fully-registered securities registered in the name of Cede & Co. (DTC’s partnership nominee) or such other name as may be requested by an authorized representative of DTC. One fully-registered 2026 Bond certificate will be issued in the aggregate principal amount of each maturity of the 2026 Bonds, and will be deposited with DTC.

DTC, the world’s largest securities depository, is a limited-purpose trust company organized under the New York Banking Law, a “banking organization” within the meaning of the New York Banking Law, a member of the Federal Reserve System, a “clearing corporation” within the meaning of the New York Uniform Commercial Code, and a “clearing agency” registered pursuant to the provisions of Section 17A of the Securities Exchange Act of 1934, as amended. DTC holds and provides asset servicing for over 3.5 million issues of U.S. and non-U.S. equity issues, corporate and municipal debt issues, and money market instruments (from over 100 countries) that DTC’s participants (“Direct Participants”) deposit with DTC. DTC also facilitates the post-trade settlement among Direct Participants of sales and other securities transactions in deposited securities, through electronic computerized book-entry transfers and pledges between Direct Participants’ accounts. This eliminates the need for physical movement of securities certificates. Direct Participants include both U.S. and non-U.S. securities brokers and dealers, banks, trust companies, clearing corporations, and certain other organizations. DTC is a wholly-owned subsidiary of The Depository Trust & Clearing Corporation (“DTCC”). DTCC is the holding company of DTC, National Securities Clearing Corporation and Fixed Income Clearing Corporation, all of which are registered clearing agencies. DTCC is owned by the users of its regulated subsidiaries. Access to the DTC system is also available to others such as both U.S. and non-U.S. securities brokers and dealers, banks, trust companies, and clearing corporations that clear through or maintain a custodial relationship with a Direct Participant, either directly or indirectly (“Indirect Participants”). DTC has a Standard & Poor’s rating of AA+. The DTC Rules applicable to its Participants are on file with the Securities and Exchange Commission. More information about DTC can be found at www.dtcc.com.

Purchases of 2026 Bonds under the DTC system must be made by or through Direct Participants, which will receive a credit for the 2026 Bonds on DTC’s records. The ownership interest of each actual purchaser of each 2026 Bond (“Beneficial Owner”) is in turn to be recorded on the Direct and Indirect Participants’ records. Beneficial Owners will not receive written confirmation from DTC of their purchase. Beneficial Owners are, however, expected to receive written confirmations providing details of the transaction, as well as periodic statements of their holdings, from the Direct or Indirect Participant through which the Beneficial Owner entered into the transaction. Transfers of ownership interests in the 2026 Bonds are to be accomplished by entries made on the books of Direct and Indirect Participants acting on behalf of Beneficial Owners. Beneficial Owners will not receive certificates representing their beneficial ownership interests in the 2026 Bonds, except in the event that use of the book-entry system for the 2026 Bonds is discontinued.

To facilitate subsequent transfers, all 2026 Bonds deposited by Direct Participants with DTC are registered in the name of DTC’s partnership nominee, Cede & Co. or such other name as may be requested by an authorized

F-2
representative of DTC. The deposit of 2026 Bonds with DTC and their registration in the name of Cede & Co. or such other DTC nominee do not effect any change in beneficial ownership. DTC has no knowledge of the actual Beneficial Owners of the 2026 Bonds; DTC’s records reflect only the identity of the Direct Participants to whose accounts such 2026 Bonds are credited, which may or may not be the Beneficial Owners. The Direct and Indirect Participants will remain responsible for keeping account of their holdings on behalf of their customers.

Conveyance of notices and other communications by DTC to Direct Participants, by Direct Participants to Indirect Participants, and by Direct Participants and Indirect Participants to Beneficial Owners will be governed by arrangements among them, subject to any statutory or regulatory requirements as may be in effect from time to time.

Beneficial Owners of 2026 Bonds may wish to take certain steps to augment the transmission to them of notices of significant events with respect to the 2026 Bonds, such as redemptions, defaults, and proposed amendments to the 2026 Bond documents. For example, Beneficial Owners of 2026 Bonds may wish to ascertain that the nominee holding the 2026 Bonds for their benefit has agreed to obtain and transmit notices to Beneficial Owners. In the alternative, Beneficial Owners may wish to provide their names and addresses to the Trustee and request that copies of notices be provided directly to them.

Redemption notices shall be sent to DTC. If less than all of the 2026 Bonds within a maturity are being redeemed, DTC’s practice is to determine by lot the amount of the interest of each Direct Participant in each issue to be redeemed.

Neither DTC nor Cede & Co. (nor any other DTC nominee) will consent or vote with respect to the 2026 Bonds unless authorized by a Direct Participant in accordance with DTC’s Money Market Instrument Procedures.

Under its usual procedures, DTC mails an Omnibus Proxy to the Authority as soon as possible after the record date.

The Omnibus Proxy assigns Cede & Co.’s consenting or voting rights to those Direct Participants to whose accounts 2026 Bonds are credited on the record date (identified in a listing attached to the Omnibus Proxy).

Principal, premium, redemption proceeds, and interest payments on the 2026 Bonds will be made to Cede & Co., or such other nominee as may be requested by an authorized representative of DTC. DTC’s practice is to credit Direct Participants’ accounts upon DTC’s receipt of funds and corresponding detail information from the Authority or the Trustee, on a payment date in accordance with their respective holdings shown on DTC’s records. Payments by Participants to Beneficial Owners will be governed by standing instructions and customary practices, as is the case with securities held for the accounts of customers in bearer form or registered in “street name,” and will be the responsibility of such Participants and not of DTC nor of its nominee, the Trustee or the Authority, subject to any statutory or regulatory requirements as may be in effect from time to time. Payment of principal, premium, redemption proceeds, and interest to Cede & Co. (or such other nominee as may be requested by an authorized representative of DTC) is the responsibility of the Authority or the Trustee, disbursement of such payments to Direct Participants will be the responsibility of DTC, and disbursement of such payments to the Beneficial Owners will be the responsibility of Direct and Indirect Participants.

DTC may discontinue providing its services as depository with respect to the 2026 Bonds at any time by giving reasonable notice to the Authority or the Trustee. Under such circumstances, in the event that a successor securities depository is not obtained, 2026 Bond certificates are required to be printed and delivered.

The Authority may decide to discontinue use of the system of book-entry only transfers through DTC (or a successor securities depository). In that event, 2026 Bond certificates will be printed and delivered to DTC.

The information in this section concerning DTC and DTC’s book-entry system has been provided by DTC, and neither the Authority, the Flood Control District nor the Trustee take any responsibility for the accuracy thereof.

The Authority, the Flood Control District and the Underwriter cannot and do not give any assurances that DTC will distribute to Participants or that Participants or others will distribute to the Beneficial Owners payments of principal of, premium, if any, and interest on the 2026 Bonds paid or any redemption or other notices or that they will do so on a timely basis or will serve and act in the manner described in this Official Statement. The Authority and the Flood Control District are not responsible or liable for the failure of DTC or any Direct Participant or Indirect Participant to make any payments or give any notice to a Beneficial Owner with respect to the 2026 Bonds or any error or delay relating thereto.

F-3
None of the Authority, the Flood Control District, the Underwriter or the Trustee will have any responsibility or obligation to Direct Participants, to Indirect Participants or to any Beneficial Owner with respect to (i) the accuracy of any records maintained by DTC, any Direct Participant, or any Indirect Participant; (ii) the payment by DTC or any Direct Participant or Indirect Participant of any amount with respect to the principal of or premium, if any, or interest on the 2026 Bonds; (iii) any notice that is permitted or required to be given to Holders under the Indenture; (iv) the selection by DTC, any Direct Participant or any Indirect Participant of any person to receive payment in the event of a partial redemption of the 2026 Bonds; (v) any consent given or other action taken by DTC as Bondholder; or (vi) any other procedures or obligations of DTC, Direct Participants or Indirect Participants under the book-entry system.

G-1
[APPENDIX G
SPECIMEN MUNICIPAL BOND INSURANCE POLICY]

1 CITY OF SAN LUIS OBISPO

CONTINUING DISCLOSURE AGREEMENT
This Continuing Disclosure Agreement (the “Disclosure Agreement”), dated [_________], 2026, is executed and delivered by the City of San Luis Obispo (the “Obligated Person”) and the San Luis Obispo County Flood Control and Water Conservation District (the “Flood Control District”) in connection with the execution and delivery of $[PAR] principal amount of SLO County Financing Authority (County of San Luis Obispo, California) Nacimiento Water Project Revenue Refunding Bonds, 2026 Series A (the “2026 Bonds”). The 2026 Bonds will be issued and secured pursuant to the terms of an Indenture of Trust, dated as of September 1, 2007 (the “Original Indenture”), previously supplemented and amended, and as further supplemented and amended by the Third Supplemental Indenture of Trust dated as of [October 1], 2026 (the “Third Supplemental Indenture” and together with the Original Indenture, as previously supplemented and amended, the “Indenture”), each by and between the SLO County Financing Authority (the “Authority”) and U.S. Bank Trust Company, National Association, as successor trustee (the “Trustee”).

The Obligated Person covenants and agrees on behalf of the Authority as follows:

SECTION 1. Purpose of the Disclosure Agreement. This Disclosure Agreement is being executed and delivered by the Obligated Person for the benefit of the Beneficial Owners of the 2026 Bonds and in order to assist the Participating Underwriter in complying with S.E.C. Rule 15c2-12(b)(5).

SECTION 2. Definitions. In addition to the definitions set forth in the Indenture, which apply to any capitalized term used in this Disclosure Agreement unless otherwise defined in this Section, the following capitalized terms shall have the following meanings:
“Annual Disclosure Report” shall mean any Annual Disclosure Report provided by the Obligated Person pursuant to, and as described in, Sections 3 and 4 of this Disclosure Agreement. “Beneficial Owner” shall mean any person which (a) has the power, directly or indirectly, to vote or consent with respect to, or to dispose of ownership of any Bonds (including persons holding Bonds through nominees, depositories or other intermediaries), or (b) is treated as the owner of any Bonds for federal income tax purposes.
“Disclosure Representative” shall mean the Public Works and Utilities Department Administrator of the Obligated Person or such other official as may be designated in writing to the Dissemination Agent (if other than the Obligated Person) from time to time. “Dissemination Agent” shall mean the Flood Control District, acting in its capacity as Dissemination Agent hereunder, or any successor Dissemination Agent designated in writing by the Obligated Person and which has filed with the Obligated Person a written acceptance of such designation. “Filing Date” shall mean March 31 of the Fiscal Year of the Obligated Person (or the next succeeding business day if such day is not a business day), commencing March 31, 2027. “Fiscal Year” shall mean the period beginning on July 1 of each year and ending on the next succeeding June 30, or any other twelve-month period hereafter selected and designated as the official fiscal year period of the Obligated Person and certified to the Trustee in writing by an Authorized Representative of the Obligated Person.
“MSRB” shall mean the Municipal Securities Rulemaking Board or any other entity designated or authorized by the Securities and Exchange Commission to receive reports pursuant to the Rule. Until

2 otherwise designated by the MSRB or the Securities and Exchange Commission, filings with the MSRB are to be made through the Electronic Municipal Market Access (EMMA) website of the MSRB, currently located at http://emma.msrb.org.
“Official Statement” means the Official Statement dated [_________], 2026 relating to the 2026 Bonds.
“Participating Underwriter” shall mean the original underwriter of the 2026 Bonds required to comply with the Rule in connection with offering of the 2026 Bonds. “Rule” shall mean Rule 15c2-12(b)(5) adopted by the Securities and Exchange Commission under the Securities Exchange Act of 1934, as the same may be amended from time to time.

SECTION 3. Provision of Annual Disclosure Reports.
(a) The Obligated Person shall provide, or shall cause the Dissemination Agent to provide, not later than the Filing Date, to the MSRB an Annual Disclosure Report which is consistent with the requirements of Section 4 of this Disclosure Agreement. The Annual Disclosure Report shall be submitted in electronic format, accompanied by such identifying information as is prescribed by the MSRB, and may be submitted as a single document or as separate documents comprising a package and may cross-reference other information as provided in the Disclosure Agreement. If the Fiscal Year of the Obligated Person changes, it shall give notice of such change to the Dissemination Agent not later than ten (10) business days after the occurrence of the event.
(b) Not later than fifteen (15) days prior to each Filing Date, commencing March 15, 2027, the Obligated Person shall provide the Annual Disclosure Report to the Dissemination Agent (of other than the Obligated Person). The Obligated Person shall provide, or cause the preparer of the Annual Disclosure Report to provide, a written certificate with each Annual Disclosure Report furnished to the Dissemination Agent to the effect that such Annual Disclosure Report constitutes the Annual Disclosure Report required to be furnished under the Disclosure Agreement. The Dissemination Agent may conclusively rely upon such certification and shall have no duty or obligation to review such Annual Disclosure Report. (c) The Flood Control District shall use its best efforts to assist the Obligated Person in preparing the Annual Disclosure Report for delivery to the Dissemination Agent no later than March 15 of each year.
(d) Not later than the Filing Date, the Dissemination Agent shall provide written notice confirming whether or not such Annual Disclosure Report has been furnished by the Obligated Person. (e) If the Obligated Person is unable to provide the Annual Disclosure Report to the Dissemination Agent by the Filing Date of each year commencing March 31, 2027, the Dissemination Agent shall send a notice to the MSRB in substantially the form attached as Exhibit A. (f) The Dissemination Agent shall:
(i) If not previously filed by the Obligated Person, send a notice to the MSRB if the Obligated Person is unable to provide the Annual Disclosure Report to the MSRB by the date required in subsection (a); and

3 (ii) to the extent information is known to it, file a report with the Obligated Person certifying that the Annual Disclosure Report has been provided pursuant to this Disclosure Agreement, stating the date it was provided.

SECTION 4. Content of Annual Disclosure Reports. The Annual Disclosure Report shall contain or include by reference the following:
(a) The audited financial statements of the Obligated Person prepared in accordance with generally accepted accounting principles in effect from time to time. If any of such audited financial statements are not available by the time the Annual Disclosure Report is required to be filed pursuant to Section 3(a), the Annual Disclosure Report shall contain unaudited financial statements in a format similar to the financial statements contained in the Official Statement, and the audited financial statements shall be filed in the same manner as the Annual Disclosure Report when they become available. (b) Unless otherwise provided in the audited financial statements filed on or prior to the Filing Date, financial and operating data with respect to the Obligated Person for the preceding Fiscal Year, substantially similar to the financial and operating data in the Official Statement as follows:
(i) Principal and interest payment delinquencies;
(ii) Table A3-2 Water Connections;
(iii) Table A3-3 Water Deliveries;
(iv) Table A3-4 Water Sales Revenues;
(v) Secured assessed valuation†;
(vi) Table A3-7 Operating Results;
(vii) Information concerning any revisions to the adopted rates and charges which are generally imposed by the Obligated Person upon users within the service area of its Water Enterprise; and
(viii) For any customer whose total billings in the preceding Fiscal Year represent 10% or more of Gross Revenues of the Water Enterprise: (A) the total amount of Gross Revenues derived from such customer; and (B) the percent of Gross Revenues represented by such customer for such Fiscal Year.
(c) In addition to any of the information expressly required to be provided under Sections 4(a) and 4(b), the Obligated Person shall provide such other information, if any, as may be necessary to make the required statements, in light of the circumstances under which they were made, not misleading. (d) The presentation and format of the Annual Disclosure Reports may be modified from time to time as determined in the judgment of the Obligated Person to conform to changes in accounting or disclosure principles or practices and legal requirements followed by or applicable to the Obligated Person

† This data is provided for informational purposes only. The Obligated Person is a party to a Nacimiento Project Water Delivery Entitlement Contract (the “Delivery Contract”) with the Flood Control District that permits the Obligated Person to issue additional “Municipal Obligations” to fund all or a portion of the Delivery Contract Payments with the levy of ad valorem property taxes, special assessments or special taxes. As of the date of this Disclosure Agreement, the Obligated Person had not levied any ad valorem property taxes, special assessments or special taxes to fund any of its Delivery Contract Payments.

4 to reflect changes in the business, structure, operations, legal form of the Obligated Person or any mergers, consolidations, acquisitions or dispositions made by or affecting the Obligated Person; provided that any such modifications shall comply with the requirements of the Rule.

Any or all of the items listed above may be included by specific reference to other documents, including official statements of debt issues of the Obligated Person or related public entities, which have been made available to the public on the MSRB website. The Obligated Person shall clearly identify each such other document so included by reference.

SECTION 5. Termination of Reporting Obligation. The obligations of the Obligated Person under this Disclosure Agreement shall terminate upon the legal defeasance, prior redemption or payment in full of all of the 2026 Bonds. If such termination occurs prior to the final maturity of the 2026 Bonds, the Obligated Person shall, promptly not later than ten (10) business days after the termination, give notice of such termination to the MSRB.

SECTION 6. Dissemination Agent. The Obligated Person may, from time to time, appoint or engage a Dissemination Agent to assist it in carrying out its obligations under this Disclosure Agreement, and may discharge any such Dissemination Agent, with or without appointing a successor Dissemination Agent. The Dissemination Agent may resign by providing thirty (30) days written notice to the Obligated Person.

The initial Dissemination Agent shall be the Flood Control District.

SECTION 7. Amendment; Waiver. Notwithstanding any other provision of this Disclosure Agreement, the Obligated Person may amend this Disclosure Agreement, and any provision of this Disclosure Agreement may be waived, provided that the following conditions are satisfied:
(a) If the amendment or waiver relates to the provisions of Sections 3(a), or 4, it may only be made in connection with a change in circumstances that arises from a change in legal requirements, change in law, or change in the identity, nature or status of an obligated person with respect to the 2026 Bonds, or the type of business conducted;
(b) The undertaking, as amended or taking into account such waiver, would, in the opinion of nationally recognized bond counsel, have complied with the requirements of the Rule at the time of the original execution and delivery of the 2026 Bonds, after taking into account any amendments or interpretations of the Rule, as well as any change in circumstances; (c) The amendment or waiver either (i) is approved by the Holders of the 2026 Bonds in the same manner as provided in the Indenture for amendments to the Indenture with the consent of Holders, or (ii) does not, in the opinion of a nationally recognized bond counsel, materially impair the interests of the Holders or Beneficial Owners of the 2026 Bonds; and
(d) Any amendment that modifies or increases the duties or obligations of the Dissemination Agent shall be agreed to in writing by the Dissemination Agent.

In the event of any amendment or waiver of a provision of this Disclosure Agreement, the Obligated Person shall describe such amendment in the next Annual Disclosure Report, and shall include, as applicable, a narrative explanation of the reason for the amendment or waiver and its impact on the type (or, in the case of a change of accounting principles, on the presentation) of financial information or operating data being presented by the Obligated Person. In addition, if the amendment relates to the accounting principles to be followed in preparing financial statements, (i) notice of such change shall be

5 given to the Dissemination Agent not later than ten (10) business days after the occurrence of the event, and (ii) the Annual Disclosure Report for the year in which the change is made shall present a comparison (in narrative form and also, if feasible, in quantitative form) between the financial statements as prepared on the basis of the new accounting principles and those prepared on the basis of the former accounting principles.

SECTION 8. Additional Information. Nothing in this Disclosure Agreement shall be deemed to prevent the Obligated Person from disseminating any other information, using the means of dissemination set forth in this Disclosure Agreement or any other means of communication, or including any other information in any Annual Disclosure Report, in addition to that which is required by this Disclosure Agreement. If the Obligated Person chooses to include any information in any Annual Disclosure Report in addition to that which is specifically required by this Disclosure Agreement, the Obligated Person shall have no obligation under this Agreement to update such information or include it in any future Annual Disclosure Report.

SECTION 9. Default. This Disclosure Agreement shall be solely for the benefit of the holders and beneficial owners from time to time of the 2026 Bonds. In the event of a failure of the Obligated Person to comply with any provision of this Disclosure Agreement, the Trustee may (and, at the request of the Participating Underwriter or the Holders of at least twenty-five percent (25%) aggregate principal amount of Outstanding Bonds and upon receipt of indemnity satisfactory to the Trustee, shall), or any Holder or Beneficial Owner of the 2026 Bonds may take such actions as may be necessary and appropriate, including seeking mandate or specific performance by order of a court of competent jurisdiction in San Luis Obispo County, California, to cause the Obligated Person to comply with its obligations under this Disclosure Agreement, provided that any holder or beneficial owner seeking to require the Obligated Person to comply with this Disclosure Agreement shall first provide at least thirty (30) days prior written notice to the Obligated Person of the failure of the Obligated Person, giving reasonable detail of such failure. Failure by the Obligated Person to comply with any provision of this Disclosure Agreement shall not be deemed an Event of Default under the Indenture, and the sole remedy under this Disclosure Agreement in the event of any failure of the Obligated Person to comply with the terms of this Disclosure Agreement shall be an action to compel performance. No person or entity shall be entitled to recover monetary damages under this Disclosure Agreement.

SECTION 10. Duties, Immunities and Liabilities of Dissemination Agent. The Dissemination Agent shall have only such duties as are specifically set forth in this Disclosure Agreement, and the Obligated Person agrees to indemnify and save the Dissemination Agent, its officers, directors, employees and agents, harmless against any loss, expense and liabilities which it may incur arising out of or in the exercise or performance of its powers and duties hereunder, including the costs and expenses (including attorney’s fees) of defending against any claim of liability, but excluding liabilities due to the Dissemination Agent’s negligence or willful misconduct. The Dissemination Agent shall be paid compensation by the Obligated Person for its services provided hereunder in accordance with its schedule of fees as amended from time to time and all expenses, legal fees and advances made or incurred by the Dissemination Agent in the performance of its duties hereunder. The obligations of the Obligated Person under this Section 10 shall survive resignation or removal of the Dissemination Agent and payment of the 2026 Bonds.

SECTION 11. Notices. Any notices or communications to the Obligated Person or the Dissemination Agent may be given as follows:

Obligated Person:

City of San Luis Obispo
Public Works and Utilities Department
879 Morro Street

6 San Luis Obispo, CA 93401
Attention: Public Works and Utilities Director
Phone: 805-781-7205
Dissemination Agent:

San Luis Obispo Flood Control and Water Conservation District County Government Center
1055 Monterey Street
San Luis Obispo, CA 93408
Attention: Auditor-Controller
Phone: 805-781-5043
Any person may, by written notice to the other persons listed above, designate a different address or telephone number(s) to which subsequent notices or communications should be sent.

SECTION 12. Beneficiaries. This Disclosure Agreement shall inure solely to the benefit of the Authority, the Flood Control District, the Trustee, the Dissemination Agent, the Participating Underwriter and Holders and Beneficial Owners from time to time of the 2026 Bonds, and shall create no rights in any other person or entity.

SECTION 13. Record Keeping. The Obligated Person shall maintain records of Annual Disclosure Reports, including the content of such disclosure, the name of the entities with which such disclosure was filed and the date of filing of such disclosure.

SECTION 14. Counterparts. This Disclosure Agreement may be executed in several counterparts, each of which shall be an original and all of which shall constitute but one and the same instrument.

CITY OF SAN LUIS OBISPO
By:

Authorized Officer
Accepted:

SAN LUIS OBISPO COUNTY FLOOD CONTROL
AND WATER CONSERVATION DISTRICT, as
Dissemination Agent
By:

Chairman

7 EXHIBIT A

NOTICE TO REPOSITORIES OF FAILURE TO FILE ANNUAL DISCLOSURE REPORT Name of Obligated Person: City of San Luis Obispo
Name of Bonds: SLO County Financing Authority (County of San Luis Obispo, California) Nacimiento Water Project Revenue Refunding Bonds, 2026 Series A Date of Delivery: [_________], 2026
NOTICE IS HEREBY GIVEN that the Obligated Person has not provided an Annual Disclosure Report with respect to the above-named Bonds as required by the Continuing Disclosure Agreement, dated as of [_________], 2026, with respect to the 2026 Bonds. [The Obligated Person anticipates that the Annual Disclosure Report will be filed by.]

SAN LUIS OBISPO COUNTY FLOOD CONTROL

AND WATER CONSERVATION DISTRICT
By:
[cc: Obligated Person]

Item 7b
Department: Attorney
Cost Center: 1501
For Agenda of: 8/18/2026
Placement: Public Hearing
Estimated Time: 60 Minutes
FROM: Christine Dietrick, City Attorney
Prepared By: Sadie Symens, Deputy City Attorney
SUBJECT: INTRODUCE AN ORDINANCE AMENDING THE MOBILE HOME PARK RENT STABILIZATION ORDINANCE, SLOMC CHAPTER 5.44

RECOMMENDATION
Introduce a draft Ordinance Amendment entitled, “An Ordinance of the City Council of the City of San Luis Obispo, California, Amending Chapter 5.44, Mobile Home Park Rent Stabilization Ordinance, to apply restrictions on space rent increase upon transfer (5.44.060(C)) to certain existing long-term leases and to require park owners/operators to provide notice to tenants. (5.44.143)” Attachment A

POLICY CONTEXT
Chapter 5.44 of the City’s Municipal Code regulates maximum space rent increases in mobile home parks. Until January 1, 2025, state law required local ordinances to exempt long-term leases from their mobile home rent control ordinances. As permitted by Assembly Bill 2782, the City removed the long-term lease exemption from its Mobile Home Park Rent Stabilization Ordinance (MHPRSO) on June 2, 2026, with the ordinance becoming effective July 2, 2026.

DISCUSSION
Background
The City first enacted mobile home park rent stabilization in 1981 to control the allowable increases for space rent in a mobile home park, as those terms are defined in SLOMC

5.44.020. The Mobile Home Park Rent Stabilization Ordinance (MHPRSO or RSO) has been amended twelve times, most recently in June 2026.

Mobile home parks in California are also subject to the state Mobilehome Residency Law (MRL.) The MRL is not a rent stabilization ordinance. However, a prior provision of the MRL affected rent stabilization in that it mandated exemption of all long-term leases from local rent stabilization ordinances (RSOs.) This meant that, if a local jurisdiction had an RSO, the jurisdiction was required to exempt leases longer than 12 months in duration from the protections of the RSO. (Civ. Code §798.17.) In 2020, this section of the MRL

Item 7b
was modified dramatically by Assembly Bill 2782. AB 2782, which went into effect on January 1, 2021, retroactively made an exception to the long-term lease exemption requirement for mobile home space leases entered into between February 13, 2020, and December 31, 2020, and then repealed the state law exemption requirement entirely on January 1, 2025.

The effect of AB 2782 was to eliminate, as of January 1, 2025, the state-mandated requirement that long-term leases be excluded from any local mobile home park RSOs.

In response to this change in state law, and to bring long-term mobile home park residents within the protections of the MHPRSO, the City eliminated the long-term lease exemption from the MHPRSO on June 2, 2026, with adoption of Ordinance No. 1757. This change went into effect on July 2, 2026.

Following adoption of Ordinance No. 1757, the City received correspondence from mobile home park tenant advocates and park owner representatives requesting clarification on the “retroactive” effect of the Ordinance; that is, whether long-term leases in existence as of July 2, 2026, remained exempt from the MHPRSO or were now subject to its protections going forward. (Attachment B.) In a letter dated June 1, 2026, legal counsel representing South Peak, a mobile home park within the City, asserted that application of the Ordinance to existing long-term leases would violate the Contracts and Due Process Clauses of the U.S. Constitution. Correspondence from a tenant advocate, on the other hand, indicated that failure to extend the protections of the MHPRSO to existing longterm leases would violate state law (AB 2782.) In response to these conflicting assertions, the Council met in closed session on June 16th and again on July 21st to confer with legal counsel regarding potential exposure to litigation related to the City’s potential application of Ordinance No. 1757 to existing leases. Following those discussions, staff is bringing forward a further amendment to the MHPRSO that would clarify that certain existing longterm leases, regardless of execution date, are subject to the provision of the MHPRSO that restricts space rent increase upon transfer of ownership of the mobile home.

Section 5.44.060(C) of the MHPRSO states that the maximum monthly space rent may not be increased more than ten percent of the then-existing space rent when there is a change of ownership affecting a mobile home. City staff have heard directly from mobile home park residents with long-term leases who reported being subjected to extremely significant space rent increases upon transfer (in some cases above 200%) that adversely impacted their ability to sell their units or significantly diminished the sales value of the units.

The draft Ordinance in Attachment A, if adopted, would make Section 5.44.060(C) (space rent increase upon transfer) applicable to all pre-July 2, 2026, long-term leases that either 1) are silent regarding space rent increases upon transfer, or 2) expressly allow increases above 10% (the limit in the MHPRSO.) The proposed amendment would ensure that all existing mobile home tenants, regardless of when their leases began, are protected from unreasonably high space rent increases when they sell or otherwise transfer their mobile home. The intent of this option is to expand the protections of the MHPRSO to address a concern that has actually been raised to the City, while still respecting to the fullest extent

Item 7b
reasonable the privately negotiated terms of existing private contracts. Protecting the ability of a mobile home park resident to sell their home and/or preventing exorbitant space rent increases from severely diminishing the value thereof are significant and legitimate public purposes, particularly in light of the fact that mobile homes are one of the most significant sources of affordable housing in the City.

The effect of the proposed approach would be to subject existing long-term leases to the transfer upon sale rent increase limitations of the MHPRSO, but to leave other provisions of those existing long-term lease agreements unaffected for the remainder of their current terms. Long-term leases executed on or after July 2, 2026 (and all other leases not otherwise exempted by Section 5.44.030) are subject to the full terms of the MHPRSO.

The draft Ordinance would not affect negotiated annual space rent increases in excess of MHPRSO limits of any long-term leases that were executed prior to July 2, 2026. Those rent increases would continue to be determined by the terms of the lease.

Figure 1: Applicability of MHPRSO by Lease Type
Executed before July 2, 2026 Executed on or after July 2, 2026
Silent on space rent increase
upon transfer
Subject to 5.44.060(C) Subject to MHPRSO
Expressly allows increase
above 10% upon transfer
Subject to 5.44.060(C) Subject to MHPRSO
Limit increase upon transfer
to no more than 10%
Exempt from MHPRSO Subject to MHPRSO
Other Revisions to Chapter 5.44
Vacation of Park Space
Existing language in Section 5.44.060(C) has caused confusion for some mobile home park residents and owners, particularly the language stating: “In the event of change of ownership resulting from vacation of the space, then the space rent may be adjusted to fair market rent in the community.” A park owner in the City has taken the position that “vacation of the space” means that the existing owner moves out and sells or otherwise transfers their ownership. This interpretation would render the remainder of that provision meaningless, so for the sake of clarity as to Council’s intent in protecting against unreasonable rent increases upon sale, the draft Ordinance proposes to change that language to:

In the event of change of ownership resulting from vacation of the space removal of the mobilehome from the space and
termination/abandonment of the space lease, then the space rent may be adjusted to fair market rent in the community.

Staff believes this change helps clarify that the space rent may only be increased to market if the existing mobile home is removed from the space and a new one (with a new

Item 7b
owner) moves into that space. The draft Ordinance also clarifies that a park owner would not be allowed to increase space rent to market rate if an existing mobile home is replaced by its current owner.

Required Notices by Owners
Additionally, Council has directed staff to present amendments to the Ordinance to require park owners or operators to notify their residents of this and future changes to the MHPRSO. This change is necessary because the City does not have, and cannot reasonably obtain, the contact information for every mobile home resident within the City.

Park owners and operators are in a much better position to provide this information to their residents. Staff have proposed to implement this change by adding a new section

5.44.143 to the MHPRSO. The change would require an owner to notify all residents of the Ordinance proposed herein (if adopted) and all future amendments to the MHPRSO within thirty days of the change, as well as any other changes in law or policy that affect mobile home park residents. An owner’s failure to provide the required notices, as directed by the City, could subject them to criminal penalties under Chapter 1.12 and/or administrative penalties under Chapter 1.24 of the Municipal Code.

Previous Council or Advisory Body Action
On May 5, 2026, the Council introduced an ordinance amending Chapter 5.44 to remove the long-term lease exemption from the MHPRSO prospectively. On June 2, 2026, the Council adopted Ordinance No. 1757 removing that exemption.

On June 16, 2026 and on July 21, 2026, the Council met in closed session with the City Attorney regarding anticipated litigation arising from communications from both park owners and resident advocates.

Public Engagement
The public had an opportunity to comment at the public hearing introducing Ordinance No. 1757 eliminating the long-term lease exemption from the MHPRSO and at the subsequent City Council meeting on its adoption. Notice of this public hearing was published in the New Times on July 23, 2026, as required by law, and the public will have an opportunity to provide comment both before and during the hearing.

Notices were sent on July 8, 2026, to all owners and operators (as registered with the CA Department of Housing & Community Development) of mobile home parks within the City regarding the passage of Ordinance No. 1757. The Notice advised that any further changes to the MHPRSO will be duly noticed for introduction and final adoption by the City Council.

CONCURRENCE
The Community Development Department concurs with the recommendation.

Item 7b

ENVIRONMENTAL REVIEW
The recommended action is not a “project” under the California Environmental Quality Act, as it does not have any foreseeable impact on the environment, and it is therefore exempt from environmental review.

FISCAL IMPACT
Budgeted: N/A Budget Year:

Funding Identified:

Fiscal Analysis:

Funding
Sources
Total Budget
Available
Current
Funding
Request
Remaining
Balance
Annual
Ongoing
Cost
General Fund $ N/A $ $ $
State
Federal
Fees
Other:

Total $N/A $0 $0 $0
There is no immediate fiscal impact anticipated, but subsequent investigation of alleged violations and/or enforcement action will require significant staff resource in the City Attorney and/or Community Development Department. Litigation challenging Council action would result in significant legal defense costs and reallocation of City Attorney’s Office staff resources potentially totalling tens of thousands of dollars, even if the City were to prevail, as would be expected.

Partial expansion of the MHPRSO to existing long-term leases may affect the workload of Code Enforcement officers and Administrative Hearing Officers if enforcement action is taken against park owners, but such potential impact is difficult to estimate.

ALTERNATIVES
Council may decline to introduce the Ordinance. Council may leave the MHPRSO as is, with the long-term lease exemption simply removed from the Ordinance. This will likely result in continued correspondence and/or legal threats from both park owners and resident advocates regarding its ambiguity. It may also leave long-term tenants with leases that began prior to July 2, 2026, subject to exorbitant space rent increases when they sell or otherwise transfer their mobile home to a new owner.

Item 7b
Council may direct staff to amend the Ordinance to expand applicability of the MHPRSO. Council could direct staff to return to Council for introduction an Ordinance which subjects all existing long-term leases, without regard to execution date, to all provisions of the MHPRSO. This approach could expose the City to increased litigation risk. There is litigation on this issue currently making its way through California courts and staff would recommend that the Council monitor and evaluate the final outcome of that litigation before proceeding with this alternative.

ATTACHMENTS
A - Draft Ordinance Amending Chapter 5.44, Mobile Home Park Rent Stabilization Ordinance
B - Legislative draft
C - Park Owner and Tenant representative correspondence

O ______
ORDINANCE NO. _____ (2026 SERIES)

AN ORDINANCE OF THE CITY COUNCIL OF THE CITY OF SAN LUIS OBISPO, CALIFORNIA, AMENDING CHAPTER 5.44, MOBILE HOME

PARK RENT STABILIZATION ORDINANCE, TO APPLY RESTRICTIONS ON SPACE RENT INCREASE UPON TRANSFER (5.44.060(C)) TO

CERTAIN EXISTING LONG-TERM LEASES AND TO REQUIRE PARK
OWNERS/OPERATORS TO PROVIDE NOTICE TO TENANTS (5.44.143) WHEREAS, the City’s municipal code, Chapter 5.44 (known as the Mobile Home Rent Stabilization Ordinance [MHPRSO]), limits the maximum amount a mobile home park operator may increase space rent within a mobile home park annually and upon transfer of ownership of a mobile home; and
WHEREAS, prior to July 2, 2026, long-term leases were excluded from the protections of the MHPRSO pursuant to the City’s ordinance and as previously required by state law (former Civil Code § 798.17); and
WHEREAS, a change in law in 2021 (Assembly Bill 2782) allowed local agencies to remove the long-term lease exemption from their mobile home rent stabilization ordinances; and
WHEREAS, on June 2, 2026, the City Council voted to adopt Ordinance No. 1757 (2026 Series), removing the long-term lease exemption from the MHPRSO, a change which went into effect on July 2, 2026; and
WHEREAS, as adopted, Ordinance No. 1757 only applies to leases executed on or after July 2, 2026;
WHEREAS, residency in mobile home parks provides one of few affordable housing options within the City;
WHEREAS, unlimited space rent increases upon change in ownership of a mobile home make it more difficult for tenants in mobile home parks wishing to sell their mobile home to find buyers and/or may diminish or deprive homeowners of the investment in their mobile homes by suppressing the sales value of mobilehome units sold in place, while effectively transferring value to park owners; and WHEREAS, unlimited space rent increases upon change in ownership of a mobile home erode the supply of affordable housing options for prospective buyers by significantly increasing the overall costs to purchase and occupy a mobile home if the space rent increase upon sale or transfer is unpredictable and/or unlimited; and WHEREAS, the City has a substantial interest in preventing the rapid erosion of affordable housing provided by mobile home parks that results from unlimited increases of space rent upon sale or transfer of a mobilehome in place, and in protecting mobile

Ordinance No. _____ (2026 Series) Page 2
O ______
homeowners wishing to sell their mobile homes from unlimited space rent increases upon sale that diminish or transfer the value of their investments in their units to mobilehome park owners and discourage investments in the maintenance of safe mobilehome units in the City .

NOW, THEREFORE, BE IT ORDAINED by the Council of the City of San Luis Obispo as follows:

SECTION 1. Findings. The Council hereby finds and declares the following:

1. The above recitals are true and correct and are incorporated herein by reference as the findings of the City Council.

2. The City reiterates and herein incorporates by reference its findings codified in Section 5.44.010 (Purpose and Intent) of the San Luis Obispo Municipal Code.

3. The City has received complaints from mobile home residents within the City wishing to sell their mobile homes that the park owner/operator intends to increase their space rent by two hundred percent or more and City staff have verified these claims through review of notifications of space rent increase upon sale.

4. Absent regulation by the City, tenancies exempted from the MHPRSO under Section 5.44.030 are not afforded the protection against unlimited space rent upon transfer of ownership under Section 5.44.060(C), which limits such increases to no more than ten percent (10%) of the prior space rent.

5. The City has a substantial interest in protecting and preserving the long-term availability and affordability of tenancies in mobilehome parks, and in protecting mobilehome park tenants who must sell their homes in place against the loss or significant diminution of their investments in their mobilehomes resulting from exorbitant increases in space rent upon sale or transfer of their homes.

6. The allowable increases in space rent upon transfer permitted herein are intended to and do provide landlords with reasonable returns on investments in local mobilehome parks.

7. The Council has considered various options to advance its interests set forth herein and has determined that the Ordinance herein is narrowly tailored to advance the City’s substantial interests.

SECTION 2. Chapter 5.44, Mobile Home Park Rent Stabilization, of the Municipal Code is amended by adding Subsection (F) to Section 5.44.030 as follows:

5.44.030 Exemptions.

The provisions of this chapter shall not apply to the following tenancies in mobile home parks:

A. Mobile home park spaces rented for nonresidential uses; B. Mobile home parks managed or operated by the United States Government, the state of California, or the county of San Luis Obispo;

Ordinance No. _____ (2026 Series) Page 3
O ______
C. Tenancies which do not exceed an occupancy of twenty days and which do not contemplate an occupancy of more than twenty days;
D. Tenancies for which any federal or state law or regulation specifically prohibits rent regulation;
E. Spaces in a mobile home park which sells lots for factory-built or manufactured housing, or which provides condominium ownership of such lots, but only when the dwelling unit and the underlying interest in the space it is located upon are in the same ownership.

F. Tenancies entered into before July 2, 2026, covered by leases or contracts that provide for a tenancy of more than one year (“long-term tenancy”), except as provided in Section 5.44.060(C).

SECTION 3: Chapter 5.44, Mobile Home Park Rent Stabilization, of the Municipal Code is amended by modifying Subsection (C) of Section 5.44.060 as follows:

C. The maximum monthly space rent of a tenant may be increased by the owner when there is a change of ownership affecting a mobile home. However, such increase shall not exceed ten percent of the then existing space rent and may not be relied upon any more often than once in any thirty-six-month period as the basis to increase rent. In the event of change of ownership resulting from subletting of the mobile home space as may be allowed by state law, should such become state law, then upon any such subletting the space rent may be increased up to ten percent of the then existing space rent. In the event of removal of the mobilehome from the space and termination/abandonment of the space lease, the space rent may be adjusted to fair market rent in the community. For clarity, replacement of a unit by an existing tenant who is continuing their residency within the park does not constitute removal of a mobile home for the purpose of a rent adjustment contemplated by this paragraph. Nothing in this paragraph shall preclude an adjustment as may otherwise be provided for in this chapter.

Notwithstanding the exemption for long-term tenancies that existed prior to July 2, 2026, as set forth in Section 5.44.030(F), such tenancies that are subject to leases or contracts that either: 1) do not expressly address or limit the allowable increase in space rent upon sale, transfer, or any other change of ownership of the mobile home, or 2) that expressly allow increases in space rent upon sale, transfer, or any other change of ownership of the mobile home, at a rate above ten percent (10%), are subject to this Subsection (C.)
SECTION 4: Chapter 5.44, Mobile Home Park Rent Stabilization, of the Municipal Code is amended by adding a new section 5.44.143 as follows:

5.44.143 Required notices by park owners
A. Initial Notice. Prior to execution of any agreement for a tenancy within a mobile home park, the owner or operator of a mobile home park shall provide each homeowner and tenant with a copy of this Chapter.

Ordinance No. _____ (2026 Series) Page 4
O ______
B. Notice of Amendments. Following notice by the City to a mobile home park owner or operator and within thirty (30) days of adoption of Ordinance No. [XXXX], or any subsequently noticed amendment to this Chapter, the owner or operator shall provide written notice of the amendment to each homeowner and tenant. Such notice shall be provided within thirty (30) days after any amendment becomes effective.

C. Other Notices. Whenever directed in writing by the City, the owner or operator shall provide written notice of any matter affecting mobile home park tenants, including but not limited to a change in law or a new or amended rule, policy, regulation or land use. Such notice shall be provided within thirty (35) days of mailing of such direction by the City.

D. Method of Notice. Notice as required by subsection (B) or subsection (C) shall be deemed sufficient if it is:

1. Delivered personally to the homeowner or tenant, with proof of service;

2. Mailed by first-class mail to the address of the mobile home space, with proof of service;

3. Electronically transmitted, if the homeowner or tenant has consented to receive notices electronically; and

4. Posted in a conspicuous location accessible to all homeowners and tenants within the mobile home park; posting shall supplement, and not replace, individual notice.

E. Violation. Failure to provide any notices required in this Section within the time periods and by the methods set forth herein shall be a violation of this Chapter subject to the provisions set forth in Chapter 1.12 and Chapter 1.24.

SECTION 5. Publication. Within fifteen (15) days after its passage, the city clerk shall cause a summary of this ordinance to be published at least once, with the names of those city council members voting for and against the ordinance, in a newspaper of general circulation published and circulated in the city.

SECTION 6. Severability. If any provision of this Ordinance is held invalid by a court of competent jurisdiction, such provision shall be considered a separate, distinct, and independent provision and such holding shall not affect the validity and enforceability of the other provisions of this Ordinance.

INTRODUCED on the 18th day of August 2026, and finally ADOPTED on the 1st day of September, 2026, by the Council of the City of San Luis, on the following vote:

AYES:

NOES:

ABSENT:
____________________________________
Mayor Erica A. Stewart

Ordinance No. _____ (2026 Series) Page 5
O ______
ATTEST:
____________________________________
Teresa Purrington
City Clerk
APPROVED AS TO FORM:
_____________________________________
J. Christine Dietrick
City Attorney
IN WITNESS WHEREOF, I have hereunto set my hand and affixed the official seal of the City of San Luis Obispo, California, this ______ day of ______________, 2026. ______________________________
Teresa Purrington
City Clerk

Chapter 5.44, Mobile Home Park Rent Stabilization, of the Municipal Code is amended by adding Subsection (F) to Section 5.44.030 as follows:

5.44.030 Exemptions.

The provisions of this chapter shall not apply to the following tenancies in mobile home parks:

A. Mobile home park spaces rented for nonresidential uses; B. Mobile home parks managed or operated by the United States Government, the state of California, or the county of San Luis Obispo;
C. Tenancies which do not exceed an occupancy of twenty days and which do not contemplate an occupancy of more than twenty days;
D. Tenancies for which any federal or state law or regulation specifically prohibits rent regulation;
E. Spaces in a mobile home park which sells lots for factory-built or manufactured housing, or which provides condominium ownership of such lots, but only when the dwelling unit and the underlying interest in the space it is located upon are in the same ownership.

F. Tenancies entered into before July 2, 2026, covered by leases or contracts that provide for a tenancy of more than one year (“long-term tenancy”), except as provided in Section 5.44.060(C).

Chapter 5.44, Mobile Home Park Rent Stabilization, of the Municipal Code is amended by modifying Subsection (C) of Section 5.44.060 as follows:

C. The maximum monthly space rent of a tenant may be increased by the owner when there is a change of ownership affecting a mobile home. However, such increase shall not exceed ten percent of the then existing space rent and may not be relied upon any more often than once in any thirty-six-month period as the basis to increase rent. In the event of change of ownership resulting from subletting of the mobile home space as may be allowed by state law, should such become state law, then upon any such subletting the space rent may be increased up to ten percent of the then existing space rent. In the event of change of ownership resulting from vacation of the space removal of the mobilehome from the space and termination/abandonment of the space lease, then the space rent may be adjusted to fair market rent in the community. For clarity, replacement of a unit by an existing tenant who is continuing their residency within the park does not constitute removal of a mobile home for the purpose of a rent adjustment contemplated by this paragraph. Nothing in this paragraph shall preclude an adjustment as may otherwise be provided for in this chapter.

Notwithstanding the exemption for long-term tenancies that existed prior to July 2, 2026, as set forth in Section 5.44.030(F), such tenancies that are subject to leases or contracts that either: 1) do not expressly address or limit the allowable increase in space rent upon sale, transfer, or any other change of ownership of the mobile home, or 2) that

expressly allow increases in space rent upon sale, transfer, or any other change of ownership of the mobile home, at a rate above ten percent (10%), are subject to this Subsection (C.)
Chapter 5.44, Mobile Home Park Rent Stabilization, of the Municipal Code is amended by adding a new section 5.44.143 as follows:

5.44.143 Required notices by park owners
A. Initial Notice. Prior to execution of any agreement for a tenancy within a mobile home park, the owner or operator of a mobile home park shall provide each homeowner and tenant with a copy of this Chapter.

B. Notice of Amendments. Following notice by the City to a mobile home park owner or operator and within thirty (30) days of adoption of Ordinance No. [XXXX], or any subsequently noticed amendment to this Chapter, the owner or operator shall provide written notice of the amendment to each homeowner and tenant. Such notice shall be provided within thirty (30) days after any amendment becomes effective.

C. Other Notices. Whenever directed in writing by the City, the owner or operator shall provide written notice of any matter affecting mobile home park tenants, including but not limited to a change in law or a new or amended rule, policy, regulation or land use. Such notice shall be provided within thirty (35) days of mailing of such direction by the City.

D. Method of Notice. Notice as required by subsection (B) or subsection (C) shall be deemed sufficient if it is:

1. Delivered personally to the homeowner or tenant, with a proof of service;

2. Mailed by first-class mail to the address of the mobile home space, with a proof of service;

3. Electronically transmitted, if the homeowner or tenant has consented to receive notices electronically; and

4. Posted in a conspicuous location accessible to all homeowners and tenants within the mobile home park; posting shall supplement, and not replace, individual notice.

E. Violation. Failure to provide any notices required in this Section within the time periods and by the methods set forth herein shall be a violation of this Chapter subject to the provisions set forth in Chapter 1.12 and Chapter 1.24.

1 From: Nick Pardo
Sent: Tuesday, May 12, 2026 8:58 PM
To: E-mail Council Website <[email protected]>; City_Attorney <[email protected]>; CityClerk <[email protected]>
Subject: URGENT CLARIFICATION: State Law AB 2782 and Municipal Code 5.44.030(E) Dear Mayor Stewart, City Council Members, and City Attorney Dietrick, I am writing to provide an urgent factual correction regarding the proposed amendment to Municipal Code Title 5, Chapter 5.44.030(E) regarding Mobilehome Rent Control which was discussed during Open Session on May 5th, 2026.

During the meeting (around 1:38 in the recording), Councilwoman Marx raised a question regarding whether the proposed ordinance would apply retroactively to existing leases. Assistant City Attorney Kersten responded that as written, it would not, but minimized the impact, stating the state law only applies to leases signed after February 13, 2020, and not to older leases. Under current California state law, this is no longer accurate.

While Assembly Bill 2782 did initially target leases signed on or after February 13, 2020, the legislation included a strict sunset provision for all older leases. As of January 1, 2025, California Civil Code § 798.17 was completely repealed. Consequently, state law no longer provides an exemption from local rent stabilization ordinances for any long-term leases, regardless of whether they were signed decades ago.

While I understand the legal distinction that removing Section 5.44.030(E) from our municipal code is not "retroactive" in the sense of recovering past rent increases, the critical point is that removing this loophole will allow the city's rent stabilization protections to apply prospectively to all existing leases moving forward. I urge the city to clarify this, correct the record, and ensure that all existing leases are covered by this provision moving forward.

I believe (City Attorney, please confirm) the simple removal of the exemption, coupled with state law already covers all leases moving forward, regardless of when they were signed. However, leaving

2 any ambiguity on this issue leaves long-term mobilehome residents in San Luis Obispo vulnerable to unauthorized rent increases that contradict the current protections guaranteed by state law. To remove any ambiguity, I strongly urge the city council to amend the ordinance to include one of the following:

1. A statement to the effect of: "The provisions of this chapter shall apply to all existing and future tenancies, regardless of the date of lease execution."

2. A statement directly referencing/deferring to the state statutes regarding required rent control exemptions (preferred). This method will prevent the need to update the ordinance again the next time state law changes. The current state law went into effect in 2021 but there has been a 5 year lag time to update the local statue that has put residents at risk.

Thank you for your ongoing work to align our city ordinance with state law and protect our community's residents.

Sincerely,
Nick Pardo

1 From: Nick Ubaldi <[email protected]>
Sent: Thursday, May 28, 2026 11:47 AM
To: McDonald, Whitney <[email protected]>
Cc: Stewart, Erica A <[email protected]>; E-mail Council Website <[email protected]>; Symens, Sadie <[email protected]>; Dietrick, Christine <[email protected]>; Tway, Timothea (Timmi) <[email protected]> Subject: Re: SLO Mobile Home Park RSO
Hello everyone,
I am writing to follow up on my previous email. To date, I have not received any requests for meetings.

As a local business owner and one of the stakeholders who will be directly impacted by the proposed change to the ordinance, I remain fully available and would welcome the opportunity to meet with any interested parties. I believe it would be highly valuable for decision-makers to hear firsthand from a local stakeholder on how this proposal will affect businesses like mine, as well as its potential negative impact on affordable housing in our city.

Please feel free to reach out if you would like to schedule a discussion at a time that is convenient for you. I am happy to coordinate at your earliest convenience.

Thank you for your attention to this important matter.

Best regards,
-Nick

6653 Embarcadero Dr. Ste C
Stockton, CA 95219

2 Main: (209) 932-8747
[email protected]
From: Nick Ubaldi <[email protected]>
Date: Friday, May 22, 2026 at 3:43 PM
To: Whitney McDonald <[email protected]>
Cc: Erica A Stewart <[email protected]>; E-mail Council Website <[email protected]>; Sadie Symens <[email protected]>; Christine Dietrick <[email protected]>; Timothea Tway <[email protected]>
Subject: Re: SLO Mobile Home Park RSO
Dear Mrs. McDonald,
Thank you for your prompt reply.

I have never had any issues with police response during my years of ownership. I have had several positive interactions with city officers, who have always been professional and pleasant to work with. In fact, those officers complimented us on the significant improvements at South Peak and Mathews. They expressed amazement at the transformation that has taken place and noted how challenging those parks were a decade ago. Those same officers are the ones who shared with me that they often would not respond to certain calls in those locations in the past.

I am very proud of the substantial financial and operational investment we have made to turn these parks around and I appreciated their recognition of that fact.

In turn, I want to acknowledge that the city has done an excellent job cleaning up the streets and creek embankments surrounding these properties. The removal of tent cities, encampments, and derelict RVs, which had been associated with repeated vandalism and burglaries impacting residents, is greatly appreciated.

I had hoped the progress we have made with these parks would be recognized at the city level, which is why I requested a meeting to discuss the challenges we currently face. I believe it is important to include all stakeholders in these conversations, particularly those providing much-needed affordable housing.

I did not see any mention in your email of whether you would be willing to meet. Would you be available for a discussion?
I’m ready and available to meet with anyone at the city who would be willing.

If the council or any city staff would like to meet please reach out to me directly at this email address.

Thank you,
-Nick
On May 22, 2026, at 12:59 PM, McDonald, Whitney <[email protected]> wrote:

Good afternoon, Mr. Ubaldi.

I am forwarding your email to our entire City Council, as this matter involves an item on the June 2, 2026 City Council agenda that our entire City Council will consider. While I do not believe our staff have misinterpreted or misled the City Council in any way concerning the Municipal Code amendments proposed for adoption, I have also copied our City Attorney and Community

3 Development Director for their review of the information you have provided below in case any additional clarifications are needed for the Council’s consideration of this item on June 2nd.

Finally, I would like to respond to one particular claim raised in your email. To be clear, in no event do San Luis Obispo Police Officers ever refuse to respond to calls for service. This is true of calls for service to your park and of every other street and neighborhood in our City.

Sincerely,
Whitney McDonald
pronouns (she/hers)
City Manager
City Administration
990 Palm, San Luis Obispo, CA 93401-3934
E [email protected]
T 805.781.7114
C 805.550.8349
slocity.org
Stay connected with the City by signing up for e-notifications From: Nick Ubaldi <[email protected]>
Sent: Friday, May 22, 2026 9:27 AM
To: Stewart, Erica A <[email protected]>; McDonald, Whitney <[email protected]> Subject: SLO Mobile Home Park RSO

Dear Mayor and City Manager,

I am writing with urgent concern regarding the proposed amendments to the City’s mobile home park rent stabilization ordinance, specifically the elimination of the long-term leasing provision. As a long-standing business owner in both the City and County of San Luis Obispo, I strongly believe this change would be detrimental. City staff appears to be misinterpreting what AB 2782 did . That legislation removed the longterm lease exemption from state law; it did not outlaw it. The state returned full discretion to local jurisdictions. The City is not required to remove long-term leasing; the decision remains yours.

Long-term leases are not a loophole, as City staff has characterized them. This is a talking point advanced by resident activists that is misleading the Council. Rather, they serve as an essential safety valve within the ordinance. They function as mutually agreed-upon rent controls that clearly establish future rent terms for both parties, allowing park owners to address rising costs the current rent structure does not fully accommodate, while continuing to protect existing residents. Without this provision, sustainable
operation becomes extremely difficult and park closures are likely, further straining the region’s affordable housing supply.

The current ordinance has operated successfully for over thirty years exactly as prior City Councils intended. It does not require revision. Removing the long-term leasing provision now would reverse commitments that property owners have relied upon since its adoption.

South Peak provides a compelling example of its value. Ten years ago, it was a derelict property where police often refused to respond to calls. Through nearly $10 million in private investment, made possible by long-term leases, South Peak was transformed it into a clean, well-maintained community that preserves affordable housing the City might otherwise have lost. Today, ninety percent of our residents hold long-term leases, many of whom received contractual discounts at purchase of up to $35,000 per home in direct reliance on the ordinance.

4 We do not believe the City has authority to terminate these existing, lawfully executed leases mid-term.

While the City could decline new long-term leases going forward (despite the negative impact such a policy would have on the City’s affordable housing stock), canceling existing contracts would raise serious legal issues.

Market space rents in San Luis Obispo average approximately $1,500 per month. Our existing tenants pay roughly $600 on average, with turnover increases capped at just $60 under the current 10% limit, while our operating costs continue to outpace CPI.

We respectfully urge the City to maintain the existing ordinance, including the long-term leasing framework that has benefited both residents and the broader community for decades.

I am happy to provide supporting data and am available to meet in person or via Zoom to discuss this matter further. Would you be willing to take a 30 minute meeting?

-Nick

6653 Embarcadero Dr. Ste C
Stockton, CA 95219
Main: (209) 932-8747
[email protected]

1 From: Nick Pardo
Sent: Saturday, May 30, 2026 9:00 PM
To: E-mail Council Website <[email protected]>; City_Attorney <[email protected]>; CityClerk <[email protected]>; City_Attorney <[email protected]>; CityClerk <[email protected]>; Stewart, Erica A <[email protected]>; Shoresman, Michelle <[email protected]>; Marx, Jan <[email protected]>; Boswell, Mike <[email protected]>; Francis, Emily <[email protected]> Subject: Re: URGENT CLARIFICATION: State Law AB 2782 and Municipal Code 5.44.030(E) Dear Mayor Stewart, City Council Members, and City Attorney Dietrick, I am writing to follow up on the email I sent earlier this month regarding the proposed amendment to Municipal Code Title 5, Chapter 5.44.030(E). I have not yet received a response or confirmation regarding this critical legal clarification.

To briefly reiterate, during the May 5th Open Session, the Assistant City Attorney stated that state law rent control exemptions apply to older long-term leases. This is factually incorrect. As of January 1, 2025, the sunset provision in Assembly Bill 2782 took full effect, completely repealing California Civil Code § 798.17. There is no longer any state-level exemption from local rent stabilization for long-term leases, regardless of the date they were signed.

I am pressing this issue because the ambiguity matters. Corporate park owners, such as Harmony Communities, have a documented history of aggressively exploiting any silence in local ordinances to push through unauthorized rent increases that far exceed CPI.

By simply deleting the exemption from the municipal code without adding a declaratory statement, the city leaves a vacuum of legislative intent. Park owners will inevitably claim that the amendment only applies to new leases, forcing vulnerable residents into expensive legal battles to prove otherwise.

We can prevent this entirely by ensuring the ordinance explicitly states one of the following:
* "The provisions of this chapter shall apply to all existing and future tenancies, regardless of the date of lease execution."
* A direct reference to the updated state statutes for rent control exemptions, ensuring automatic compliance with state law moving forward.

2 Could the City Attorney's office please confirm receipt of this correspondence and clarify that the current amendment does in fact apply protection to *all* long term leases, consistent with State Law intent, and also if the city intends to add explicit protective language to the ordinance moving forward? Thank you for your time, your service to our city, and your dedication to protecting San Luis Obispo's mobilehome residents.

Sincerely,
Nick Pardo
On May 12, 2026, at 20:58, Nick Pardo wrote:

Dear Mayor Stewart, City Council Members, and City Attorney Dietrick, I am writing to provide an urgent factual correction regarding the proposed amendment to Municipal Code Title 5, Chapter 5.44.030(E) regarding Mobilehome Rent Control which was discussed during Open Session on May 5th, 2026.

During the meeting (around 1:38 in the recording), Councilwoman Marx raised a question regarding whether the proposed ordinance would apply retroactively to existing leases. Assistant City Attorney Kersten responded that as written, it would not, but minimized the impact, stating the state law only applies to leases signed after February 13, 2020, and not to older leases. Under current California state law, this is no longer accurate.

While Assembly Bill 2782 did initially target leases signed on or after February 13, 2020, the legislation included a strict sunset provision for all older leases. As of January 1, 2025, California Civil Code § 798.17 was completely repealed. Consequently, state law no longer provides an exemption from local rent stabilization ordinances for any long-term leases, regardless of whether they were signed decades ago.

While I understand the legal distinction that removing Section 5.44.030(E) from our municipal code is not "retroactive" in the sense of recovering past rent increases, the critical point is that removing this loophole will allow the city's rent stabilization protections to apply prospectively to all existing leases moving forward. I urge the city to clarify this, correct the record, and ensure that all existing leases are covered by this provision moving forward.

I believe (City Attorney, please confirm) the simple removal of the exemption, coupled with state law already covers all leases moving forward, regardless of when they were signed. However, leaving any ambiguity on this issue leaves long-term mobilehome residents in San Luis Obispo vulnerable to unauthorized rent increases that contradict the current protections guaranteed by state law. To

3 remove any ambiguity, I strongly urge the city council to amend the ordinance to include one of the following:

1. A statement to the effect of: "The provisions of this chapter shall apply to all existing and future tenancies, regardless of the date of lease execution."

2. A statement directly referencing/deferring to the state statutes regarding required rent control exemptions (preferred). This method will prevent the need to update the ordinance again the next time state law changes. The current state law went into effect in 2021 but there has been a 5 year lag time to update the local statue that has put residents at risk.

Thank you for your ongoing work to align our city ordinance with state law and protect our community's residents.

Sincerely,
Nick Pardo

DOWDALL LAW OFFICES

A P R O F E S S I O N A L C O R P O R A T I O N

A T T O R N E Y S A T L A W
284 NORTH GLASSELL STREET Area Code 714
Writer’s Direct Dial: FIRST FLOOR TELEPHONE 532.2222
ORANGE, CALIFORNIA 92866-1409 FACSIMILE 532.3238
[email protected]
I N REPLY REFER T O:

Terry R. Dowdall
714-532-2222
June 1, 2026
Via Electronic Mail:

[email protected], [email protected], [email protected], [email protected], [email protected], [email protected]
City Council of the City of San Luis Obispo
San Luis Obispo City Hall
990 Palm Street
San Luis Obispo, CA 93401
RE: Request to Forbear until the Law Is Vetted for its Unintended Consequences:

Item 5k: "Update to Mobile Home Park Rent Stabilization Ordinance to remove long-term lease exemption for state law compliance."
Dear Gentlepersons:

These offices represent the owners and operators of South Peak, a mobilehome park located in the city of San Luis Obispo, and I write on their behalf.

It has come to my attention that the city Council is in the process of the promulgation of “ORDINANCE NO. 1757 (2026 SERIES)AMENDING TITLES 5, 16, AND 17 OF THE

MUNICIPAL CODE REGARDING ACCESSORY DWELLING UNITS, JUNIOR ACCESSORY

DWELLING UNITS, URBAN LOT SPLITS, MOBILE HOMES, AND OTHER CLARIFICATIONS AND CHANGES TO REGULATIONS.”
According to the staff report, one objective of the amendment is as follows: “Update to Mobile Home Park Rent Stabilization Ordinance to remove long term lease exemption for state law compliance.” The amendment would rescind §5. 44. 030 (E.) which states:

E. Tenancies covered by leases or contracts which provide for a tenancy of more than a year, but only for the duration of such lease or contract. Upon the expiration of or other termination of any such lease or contract, this chapter shall immediately be applicable to the tenancy. No rent increases other than that allowed under the provisions of the lease shall be allowed during the duration of such a lease or contract.

Please be advised that this proposed amendment is preempted by the Mobilehome Residency Law (Division 2, Part 2, Title 2, Chapter 2.5 of the California Civil Code, Civil Code §§798, et seq.) (Hereinafter “MRL”), specifically, inter alia, Civil Code §798.18 (a) which states as follows:

DOWDALL LAW OFFICES

A P R O F E S S I O N A L C O R P O R A T I O N

A T T O R N E Y S A T L A W
City Council
June 1, 2026
Page -2-
“A homeowner shall be offered a rental agreement for (1) a term of 12 months, or (2) a lesser period as the homeowner may request, or (3) a longer period as mutually agreed upon by both the homeowner and management.”
The MRL provides express and implied lease protection against intrusion by governmental interdiction. Long-term leases represent a legally binding agreement supported by express authorization of the MRL and constitutional contract clauses of state and federal constitutions. The amendment would, inter alia, violate the Contracts and Due Process Clauses of the U.S. Constitution by retroactively and unlawfully impairing existing contractual obligations.

Rental agreements with a term of more than “12 months” by “mutual agreement” in this case are supported by financial commitments from the park owner with monetary value of more than $30,000.

Truncating new agreements and/or the rescission of existing long-term leases would completely eviscerate the discrete and fully vested property right based on existing law, including all value and benefits to landlord and tenant alike. Further, the long-term leases in effect at this time contain arbitration clauses based upon the Federal Arbitration Act (FAA). The FAA does not permit the unilateral rescission of federal arbitration clauses by municipalities, properly adopted under the terms of federal law (pursuant to the supremacy clause).

The park owner has sought to confer with city staff regarding this issue without success. On behalf of the park operator and owner, demand is respectfully made to forbear from the passage of the proposed amendment at this time, for purposes of the legal vetting not been undertaken to date. In this regard, such a forbearance may well avoid needless cost to all parties for the pursuit of legal remedies.

Please be advised that all rights are reserved while invitation to further dialogue is pending.

Thank you for your attention to the foregoing. Please feel free to contact this office if there are any further questions or comments.

Very truly yours
/s/
Terry R. Dowdall
for

DOWDALL LAW OFFICES, APC
cc: Mobilehome Park Owners of the City of San Luis Obispo, WMA SAN_LUIS_OBISPO_C_ATTY_JU_1_2026_v_7.wpd

1 From: Dietrick, Christine <[email protected]>
Sent: Monday, June 1, 2026 4:43 PM
To: Nancy Gomez <[email protected]>; McDonald, Whitney <[email protected]>; Symens, Sadie <[email protected]>; Tway, Timothea (Timmi) <[email protected]> Cc: Jason Dilday <[email protected]>; Matt Davies <[email protected]>; Terry Dowdall <[email protected]>
Subject: RE: Request to Forbear
Bcc: CC
Dear Mr. Dowdall:

I have reviewed your letter and am seeking some clarification of your position. The Ordinance introduced by the City Council on May 5 and scheduled for adoption tomorrow night neither requires nor prohibits any particular lease term, so I am unclear as to the relevance of Civil Code Section 798.18 to the action before the Council. The ordinance as currently presented does nothing more or less than remove an exemption from the City’s Mobilehome Park Rent Stabilization Ordinance that was previously required by state law and is no longer required, due to a change in state law. In other words, the City ordinance amendments are in exact alignment with the state statutory discretion provided by state law, not preempted by state law.

It appears your concern relates to the application of the current ordinance amendment to leases that were executed prior to its introduction. The City has not currently asserted that existing leases would be affected by the ordinance as presented, so I am aware of no legal reason that the Council could not proceed with adoption of the ordinance as introduced. Please advise if you are asserting authority that would preclude the Council’s action, but the authority you have cited has no application to the ordinance amendments currently before the Council.

Your client’s argument that the Council should make a different policy decision, i.e., to maintain an exemption that is no longer required by state law, and contravening arguments submitted by local park residents that the Council should make findings and additional amendments to make the amendments applicable to existing long term leases were received and certainly can be considered by the Council, but neither of those actions is reflected in the version of the ordinance currently on the Council’s agenda.

Best,
Christine
Christine Dietrick
pronouns she/her/hers
City Attorney

2 City Attorney's Office
990 Palm Street, San Luis Obispo, CA 93401-3249
E [email protected]
T 805.781.7140
slocity.org
Stay connected with the City by signing up for e-notifications The information contained in this e-mail message is intended only for the CONFIDENTIAL use of the designated addressee named above. The information transmitted is subject to the attorney-client privilege and/or represents confidential attorney work product. Recipients should not file copies of this email with publicly accessible records. If you are not the designated addressee named above or the authorized agent responsible for delivering it to the designated addressee, you received this document through inadvertent error and any further review, dissemination, distribution or copying of this communication by you or anyone else is strictly prohibited. IF YOU RECEIVED THIS

COMMUNICATION IN ERROR, PLEASE NOTIFY US IMMEDIATELY BY TELEPHONING THE SENDER NAMED ABOVE AT (805) 781-7140. Thank you.

From: Nancy Gomez <[email protected]>
Sent: Monday, June 1, 2026 2:54 PM
To: McDonald, Whitney <[email protected]>; Stewart, Erica A <[email protected]>; E-mail Council Website <[email protected]>; Symens, Sadie <[email protected]>; Dietrick, Christine <[email protected]>; Tway, Timothea (Timmi) <[email protected]>
Cc: Jason Dilday <[email protected]>; Matt Davies <[email protected]>; Terry Dowdall <[email protected]>
Subject: Request to Forbear
Good afternoon,
Attached please find correspondence from attorney Terry Dowdall.

Thank you,
Nancy Gomez
Paralegal
6653 Embarcadero Drive, Ste. C
Stockton, CA 95219
Direct: (209)926-7457
Main: (209)932-8747
[email protected]

1 From: Nick Pardo
Sent: Thursday, June 4, 2026 11:22 PM
To: Francis, Emily <[email protected]>
Cc: Dietrick, Christine <[email protected]>; Stewart, Erica A <[email protected]>; Marx, Jan <[email protected]>; CityClerk <[email protected]>; City_Attorney <[email protected]>; E-mail Council Website <[email protected]>
Subject: Re: URGENT CLARIFICATION: State Law AB 2782 and Municipal Code 5.44.030(E) Dear Vice Mayor Francis, Mayor Stewart, and City Council Members, Thank you for getting back to me, Emily. I was very happy to see that Ordinance 1757 was officially passed during the Tuesday, June 2nd City Council meeting.

One final note I wanted to settle on is that, while I did push for more explicit language in my earlier emails, I want to make it clear that what the city just accomplished with Ordinance 1757 was "enough." My primary goal in all this was to ensure the city is fully aligned on the fact that Ordinance 1757, as adopted, does indeed protect all long-term leaseholders moving forward for future rent increases, regardless of when those contracts were originally signed. As noted previously, the Assistant City Attorney’s comments on May 5th run counter to established legal precedent. Under California law, a municipality does not require explicit "retroactive" language for a repealed exemption to immediately bring existing contracts under its purview for future actions. The simple deletion of the exemption clause was legally sufficient. You did it!
What our community needs now is a unified understanding of exactly what this ordinance accomplished.

If a resident bound by an older long-term lease approaches the city because a park owner is imposing a rent hike that violates Chapter 5.44, staff must be prepared to look at the facts and confidently enforce the code. If the city misinterprets its own newly amended ordinance, it will leave some of our most vulnerable residents exposed to predatory corporate practices.

Thank you all again for your time.

Sincerely,
Nick Pardo

2 On Sat, May 30, 2026, 9:51 PM Francis, Emily <[email protected]> wrote:

Nick,
Thank you for the follow up email. Apologies for the delayed response. We had a great deal of correspondence over the last two weeks. I appreciate you bringing this back to the top of the inbox. I will connect with the City Attorney’s office and ensure that our intent is clear in the updates that were made during the May 5th hearing.

Take care and thank you for your advocacy for residents of the mobile home parks.

Emily
From: Nick Pardo
Sent: Saturday, May 30, 2026 9:00 PM
To: E-mail Council Website <[email protected]>; City_Attorney <City [email protected]>; CityClerk <[email protected]>; City_Attorney <City [email protected]>; CityClerk <[email protected]>; Stewart, Erica A <[email protected]>; Shoresman, Michelle <[email protected]>; Marx, Jan <[email protected]>; Boswell, Mike <[email protected]>; Francis, Emily <[email protected]> Subject: Re: URGENT CLARIFICATION: State Law AB 2782 and Municipal Code 5.44.030(E)

Dear Mayor Stewart, City Council Members, and City Attorney Dietrick,

I am writing to follow up on the email I sent earlier this month regarding the proposed amendment to Municipal Code Title 5, Chapter 5.44.030(E). I have not yet received a response or confirmation regarding this critical legal clarification.

To briefly reiterate, during the May 5th Open Session, the Assistant City Attorney stated that state law rent control exemptions apply to older long-term leases. This is factually incorrect. As of January 1, 2025, the sunset provision in Assembly Bill 2782 took full effect, completely repealing California Civil Code § 798.17. There is no longer any state-level exemption from local rent stabilization for long-term leases, regardless of the date they were signed.

3 I am pressing this issue because the ambiguity matters. Corporate park owners, such as Harmony Communities, have a documented history of aggressively exploiting any silence in local ordinances to push through unauthorized rent increases that far exceed CPI.

By simply deleting the exemption from the municipal code without adding a declaratory statement, the city leaves a vacuum of legislative intent. Park owners will inevitably claim that the amendment only applies to new leases, forcing vulnerable residents into expensive legal battles to prove otherwise.

We can prevent this entirely by ensuring the ordinance explicitly states one of the following:
* "The provisions of this chapter shall apply to all existing and future tenancies, regardless of the date of lease execution."
* A direct reference to the updated state statutes for rent control exemptions, ensuring automatic compliance with state law moving forward.

Could the City Attorney's office please confirm receipt of this correspondence and clarify that the current amendment does in fact apply protection to *all* long term leases, consistent with State Law intent, and also if the city intends to add explicit protective language to the ordinance moving forward?

Thank you for your time, your service to our city, and your dedication to protecting San Luis Obispo's mobilehome residents.

Sincerely,

Nick Pardo

On May 12, 2026, at 20:58, Nick Pardo < wrote:

4 Dear Mayor Stewart, City Council Members, and City Attorney Dietrick, I am writing to provide an urgent factual correction regarding the proposed amendment to Municipal Code Title 5, Chapter 5.44.030(E) regarding Mobilehome Rent Control which was discussed during Open Session on May 5th, 2026.

During the meeting (around 1:38 in the recording), Councilwoman Marx raised a question regarding whether the proposed ordinance would apply retroactively to existing leases. Assistant City Attorney Kersten responded that as written, it would not, but minimized the impact, stating the state law only applies to leases signed after February 13, 2020, and not to older leases. Under current California state law, this is no longer accurate.

While Assembly Bill 2782 did initially target leases signed on or after February 13, 2020, the legislation included a strict sunset provision for all older leases. As of January 1, 2025, California Civil Code § 798.17 was completely repealed. Consequently, state law no longer provides an exemption from local rent stabilization ordinances for any long-term leases, regardless of whether they were signed decades ago.

While I understand the legal distinction that removing Section 5.44.030(E) from our municipal code is not "retroactive" in the sense of recovering past rent increases, the critical point is that removing this loophole will allow the city's rent stabilization protections to apply prospectively to all existing leases moving forward. I urge the city to clarify this, correct the record, and ensure that all existing leases are covered by this provision moving forward.

I believe (City Attorney, please confirm) the simple removal of the exemption, coupled with state law already covers all leases moving forward, regardless of when they were signed. However, leaving any ambiguity on this issue leaves long-term mobilehome residents in San Luis Obispo vulnerable to unauthorized rent increases that contradict the current protections guaranteed by state law. To remove any ambiguity, I strongly urge the city council to amend the ordinance to include one of the following:

1. A statement to the effect of: "The provisions of this chapter shall apply to all existing and future tenancies, regardless of the date of lease execution."

2. A statement directly referencing/deferring to the state statutes regarding required rent control exemptions (preferred). This method will prevent the need to update the ordinance again the next time state law changes. The current state law went into effect in 2021 but there has been a 5 year lag time to update the local statue that has put residents at risk.

5 Thank you for your ongoing work to align our city ordinance with state law and protect our community's residents.

Sincerely,
Nick Pardo

DOWDALL LAW OFFICES

A P R O F E S S I O N A L C O R P O R A T I O N

A T T O R N E Y S A T L A W
284 NORTH GLASSELL STREET A rea C ode 714
Writer’s Direct Dial: FIRST FLOOR TELEPHONE 532.2222
ORANGE, CALIFORNIA 92866-1409 FAC SIM ILE 532.3238
[email protected]
I N R E P L Y R E F E R T O :

Drew D. Helms
[email protected]
#10739
July 6, 2026
Christine Dietrick
City Attorney's Office
990 Palm Street
San Luis Obispo, CA 93401-3249
[email protected]
RE: Amendment to Mobilehome Park Rent Stabilization Ordinance Dear Ms. Dietrich:

I understand that the City of San Luis Obispo passed the amendment to remove the exemption from the City’s Mobilehome Park Rent Stabilization Ordinance, and that the amendment went into effect July 2nd.

The purpose of this letter is simply to confirm that the City does not assert that existing leases are affected by this amendment, as stated in your email to Mr. Dowdall on June 1 (Subject: “RE:

Request to Forbear”). Relying on your representation in that email, it is the understanding of this office and our client that this amendment does not apply retroactively to leases executed prior to the amendment for their duration.

Thank you for your attention to the foregoing. If you have any further comments, or if I have misstated your prior communication or the City’s position, please feel free to contact the undersigned.

Very Truly Yours,
Drew D. Helms
For
DOWDALL LAW OFFICES, A.P.C.
cc: Client
C:\Users\drewh\Dowdall Law\Dowdall Law - Documents\_Ana\1 Harmony Matters\South Peak v. City of San Luis Obispo #10739\Correspondence\26-07-06_ City Attorney re RCO Amendment_DDHv2.wpd
Please note: This letter shall not be construed as accepting or admitting any of the statements in correspondence or documents to which this letter responds which are not specifically addressed here.

1 Symens, Sadie
From: Nick Pardo
Sent: Monday, July 20, 2026 11:59 AM
To: Francis, Emily
Cc: Dietrick, Christine; Stewart, Erica A; Marx, Jan; CityClerk; City_Attorney; E-mail Council Website Subject: Re: URGENT CLARIFICATION: State Law AB 2782 and Municipal Code 5.44.030(E) Follow Up Flag: Follow up
Flag Status: Flagged
Dear Mayor Stewart, Vice Mayor Francis, City Council Members, and City Attorney Dietrick, I am writing to request clarification regarding the City’s official stance on Ordinance 1757 and provide clarification on core legal precedent ahead of your Closed Session (Item 1.b) tomorrow, July 21.

I have reviewed the July 6 letter to City Attorney Dietrick from Drew D. Helms of Dowdall Law Offices. Mr.

Helms asserts:
"Relying on your representation in that email [June 1], it is the understanding of this office and our client that this amendment does not apply retroactively to leases executed prior to the amendment for their duration."
As I warned in my earlier correspondences, the distinction here is critical:
• Retroactive Application: Attempting to claw back or penalize rent increases that occurred before Ordinance 1757 was passed. The city is correctly not doing this. • Prospective Application to Existing Contracts: Applying the newly updated Chapter 5.44 to future rent increases on existing leases.

Applying a repealed exemption to future actions on existing contracts is prospective, not retroactive.

When California Civil Code § 798.17 expired on January 1, 2025, the state removed its mandate that forced municipalities to exempt long-term leases (including existing ones), returning full authority to the city to regulate all mobilehome leases. San Luis Obispo explicitly exercised this authority by passing Ordinance 1757 and deleting Section 5.44.030(E) from the municipal code.

By deleting Section 5.44.030(E), the City Council deliberately removed its local exemption for long-term leases. Under standard principles of statutory interpretation, the plain text of the amended code is what governs. Because the updated ordinance contains no carve-out or "grandfather" clause to exempt existing leases from prospective application, the overarching rent stabilization rules now apply to all leases, regardless of when they were executed. The statutory weight of the enacted code supersedes any informal email correspondence, such as the June 1st email referenced by Dowdall. This strict reliance on the plain text follows the exact same precedent that occurred at the state level.

When park owners sued to block the prospective application of the state's repeal to existing leases, the Sacramento Superior Court firmly rejected their request to halt the law (Western Manufactured Housing Communities Association v. State of California, Case No. 34-2022- 00332244). The judge ruled: "Plaintiffs fail to show irreparable harm to them absent a preliminary injunction and further fail to show a likelihood that they will succeed on the merits of the Contracts Clause and Due Process Claims."

2 If the city allows Dowdall Law Offices' July 6th letter to stand uncorrected, corporate park owners will use the City Attorney's June 1st email as administrative precedent to illegally hike rents on existing leaseholders, forcing our most vulnerable residents into court.

I strongly urge the City Attorney’s Office to immediately issue a written response to Dowdall Law Offices clarifying the following:
• Ordinance 1757 does not seek retroactive clawbacks of past rent. • However, because the city council explicitly deleted the local exemption (Section 5.44.030(E)), the city’s rent stabilization ordinance applies prospectively to all future rent increases for all leases, regardless of the date of execution.

Please confirm receipt of this email and advise on how the city intends to correct the public record with Dowdall Law Offices. The community is relying on you to enforce the protections you just passed.

Sincerely,
Nick Pardo
On Thu, Jun 4, 2026 at 11:21 PM Nick Pardo > wrote:

Dear Vice Mayor Francis, Mayor Stewart, and City Council Members, Thank you for getting back to me, Emily. I was very happy to see that Ordinance 1757 was officially passed during the Tuesday, June 2nd City Council meeting.

One final note I wanted to settle on is that, while I did push for more explicit language in my earlier emails, I want to make it clear that what the city just accomplished with Ordinance 1757 was "enough." My primary goal in all this was to ensure the city is fully aligned on the fact that Ordinance 1757, as adopted, does indeed protect all long-term leaseholders moving forward for future rent increases, regardless of when those contracts were originally signed. As noted previously, the Assistant City Attorney’s comments on May 5th run counter to established legal precedent. Under California law, a municipality does not require explicit "retroactive" language for a repealed exemption to immediately bring existing contracts under its purview for future actions. The simple deletion of the exemption clause was legally sufficient. You did it!
What our community needs now is a unified understanding of exactly what this ordinance accomplished. If a resident bound by an older long-term lease approaches the city because a park owner is imposing a rent hike that violates Chapter 5.44, staff must be prepared to look at the facts and confidently enforce the code. If the city misinterprets its own newly amended ordinance, it will leave some of our most vulnerable residents exposed to predatory corporate practices.

Thank you all again for your time.

Sincerely,

3 Nick Pardo
On Sat, May 30, 2026, 9:51 PM Francis, Emily <[email protected]> wrote:

Nick,
Thank you for the follow up email. Apologies for the delayed response. We had a great deal of correspondence over the last two weeks. I appreciate you bringing this back to the top of the inbox. I will connect with the City Attorney’s office and ensure that our intent is clear in the updates that were made during the May 5th hearing.

Take care and thank you for your advocacy for residents of the mobile home parks.

Emily
From: Nick Pardo
Sent: Saturday, May 30, 2026 9:00 PM
To: E-mail Council Website <[email protected]>; City_Attorney <City [email protected]>; CityClerk <[email protected]>; City_Attorney <City [email protected]>; CityClerk <[email protected]>; Stewart, Erica A <[email protected]>; Shoresman, Michelle <[email protected]>; Marx, Jan <[email protected]>; Boswell, Mike <[email protected]>; Francis, Emily <[email protected]> Subject: Re: URGENT CLARIFICATION: State Law AB 2782 and Municipal Code 5.44.030(E)

Dear Mayor Stewart, City Council Members, and City Attorney Dietrick,

I am writing to follow up on the email I sent earlier this month regarding the proposed amendment to Municipal Code Title 5, Chapter 5.44.030(E). I have not yet received a response or confirmation regarding this critical legal clarification.

To briefly reiterate, during the May 5th Open Session, the Assistant City Attorney stated that state law rent control exemptions apply to older long-term leases. This is factually incorrect. As of January 1, 2025, the sunset provision in Assembly Bill 2782 took full effect, completely repealing California Civil Code § 798.17. There is no longer any state-level exemption from local rent stabilization for long-term leases, regardless of the date they were signed.

4 I am pressing this issue because the ambiguity matters. Corporate park owners, such as Harmony Communities, have a documented history of aggressively exploiting any silence in local ordinances to push through unauthorized rent increases that far exceed CPI.

By simply deleting the exemption from the municipal code without adding a declaratory statement, the city leaves a vacuum of legislative intent. Park owners will inevitably claim that the amendment only applies to new leases, forcing vulnerable residents into expensive legal battles to prove otherwise.

We can prevent this entirely by ensuring the ordinance explicitly states one of the following:
* "The provisions of this chapter shall apply to all existing and future tenancies, regardless of the date of lease execution."
* A direct reference to the updated state statutes for rent control exemptions, ensuring automatic compliance with state law moving forward.

Could the City Attorney's office please confirm receipt of this correspondence and clarify that the current amendment does in fact apply protection to *all* long term leases, consistent with State Law intent, and also if the city intends to add explicit protective language to the ordinance moving forward?

Thank you for your time, your service to our city, and your dedication to protecting San Luis Obispo's mobilehome residents.

Sincerely,

Nick Pardo

On May 12, 2026, at 20:58, Nick Pardo > wrote:

5 Dear Mayor Stewart, City Council Members, and City Attorney Dietrick, I am writing to provide an urgent factual correction regarding the proposed amendment to Municipal Code Title 5, Chapter 5.44.030(E) regarding Mobilehome Rent Control which was discussed during Open Session on May 5th, 2026.

During the meeting (around 1:38 in the recording), Councilwoman Marx raised a question regarding whether the proposed ordinance would apply retroactively to existing leases. Assistant City Attorney Kersten responded that as written, it would not, but minimized the impact, stating the state law only applies to leases signed after February 13, 2020, and not to older leases. Under current California state law, this is no longer accurate.

While Assembly Bill 2782 did initially target leases signed on or after February 13, 2020, the legislation included a strict sunset provision for all older leases. As of January 1, 2025, California Civil Code § 798.17 was completely repealed. Consequently, state law no longer provides an exemption from local rent stabilization ordinances for any long-term leases, regardless of whether they were signed decades ago.

While I understand the legal distinction that removing Section 5.44.030(E) from our municipal code is not "retroactive" in the sense of recovering past rent increases, the critical point is that removing this loophole will allow the city's rent stabilization protections to apply prospectively to all existing leases moving forward. I urge the city to clarify this, correct the record, and ensure that all existing leases are covered by this provision moving forward.

I believe (City Attorney, please confirm) the simple removal of the exemption, coupled with state law already covers all leases moving forward, regardless of when they were signed. However, leaving any ambiguity on this issue leaves long-term mobilehome residents in San Luis Obispo vulnerable to unauthorized rent increases that contradict the current protections guaranteed by state law. To remove any ambiguity, I strongly urge the city council to amend the ordinance to include one of the following:

1. A statement to the effect of: "The provisions of this chapter shall apply to all existing and future tenancies, regardless of the date of lease execution."

2. A statement directly referencing/deferring to the state statutes regarding required rent control exemptions (preferred). This method will prevent the need to update the ordinance again the next time state law changes. The current state law went into effect in 2021 but there has been a 5 year lag time to update the local statue that has put residents at risk.

6 Thank you for your ongoing work to align our city ordinance with state law and protect our community's residents.

Sincerely,
Nick Pardo