Form of Preliminary Official Statement (available in the City Clerk's Office) — Santa Clarita City Council, September 27, 2022

Draft of 9/21/22
PRELIMINARY OFFICIAL STATEMENT DATED OCTOBER __, 2022

This Preliminary Official Statement and the information contained herein are subject to completion or amendment. Under no circumstance shall this Preliminary Official Statement constitute an offer to sell or a solicitation of an offer to buy, nor shall there be any sale of these securities in any jurisdiction in which such offer, solicitation or sale would be unlawful.

NEW ISSUE - FULL BOOK ENTRY RATING: S&P: “___”
(See “RATING” herein.)
In the opinion of Norton Rose Fulbright US LLP, Los Angeles, California, Bond Counsel, under existing statutes, regulations, rulings and judicial decisions, and assuming compliance with certain covenants in the documents pertaining to the Bonds and requirements of the Internal Revenue Code of 1986, as amended, as described herein, interest on the Bond s is not included in the gross income of the owners thereof for federal income tax purposes. In the further opinion of Bond Counsel, interest on the Bond s is not treated as an item of tax preference for purposes of the alternative minimum tax. Bond Counse l is also of the opinion that, under existing law, interest on the Bonds is exempt from personal income taxes of the State of California. See “TAX MATTERS” herein.

SANTA CLARITA PUBLIC FINANCING AUTHORITY

$[Series A principal amount]*
Lease Revenue Bonds
(Energy Efficiency Program)
Series 2022A
(Green Bonds)
$[Series B principal amount]*
Lease Revenue Bonds
(Energy Efficiency Program)
Series 2022B
(Green Bonds)

Dated: Date of Delivery Due: As shown on the inside cover For the purpose of providing funds to pay for a portion of the costs of financing certain energy efficiency improvements associated with City of Santa Clarita (the “City”) buildings and facilities, and to pay the costs of issuing bonds , the Santa Clarita Public Financing Authority (the “Authority”) is issuing (i) its Lease Revenue Bond s (Energy Efficiency Program), Series 2022A (Green Bonds) (the “Series A Bonds”), pursuant to an Indenture, dated as of October 1, 2020, by and between the Authority and U.S. Bank Trust Compa ny, National Association (formerly known as U.S. Bank National Association) , as trustee (the “Trustee”), as supplemented by the First Supplemental Indenture, dated as of October 1, 2022, by and between the Authority and the Trustee (collectively, the “Seri es A Indenture”), and (ii) its Lease Revenue Bonds (Energy Efficiency Program), Series 2022B (Green Bonds) (the “ Series B Bonds ,” and, together with the Series A Bonds, the “Bonds”), pursuant to an Indenture, dated as of June 1, 2016, by and between the Authority and the Trustee, as supplemented by the First Supplemental Indenture, dated as of October 1, 2022, by and between the Authority and the Trustee (collectively, the “Series B Indenture”). See “PLAN OF FINANCE” herein. The Bonds are being issued as fully registered bonds and, when executed and delivered, will be registered in the name of Cede & Co., as nominee of The Depository Trust Company, New York, New York (“DTC ). The Bonds will be issued in denominations of $5,000 or any integral multiple thereof. DTC will act as securities depository of the Bonds. Individual purchases of Bonds will be made in book-entry form only. Payments of principal of and interest on the Bonds are to be made to purchasers by DTC through DTC Participa nts. Purchasers will not receive physical delivery of the Bonds purchased by them. See APPENDIX F – “BOOK-ENTRY SYSTEM.” Interest on the Bonds is payable on June 1 and December 1 of each year, commencing December 1, 2022.

The Bonds are subject to optional, mandatory and extraordinary redemption prior to their stated maturities, as described herein. See “DESCRIPTION OF THE BONDS – Redemption” herein.

The Series A Bonds are payable from and secured by Series A Revenues pledged under the Series A Indenture. “Series A Revenues” means primarily all Base Rental Payments (including prepayments) payable by the City pursuant to that certain Lease Agreement, dated as of October 1, 2020, by and between the Authority and the City, as amended and supplemented by the First Supplement to Lease Agreement, dated as of October 1, 2022 (as amended, the “CUBE Lease”). Pursuant to the CUBE Lease, the City will lease certain real property described herein (the “ CUBE Site”) and the recreational facility building and improvements located thereon (collectively, the “CUBE Leased Property”) from the Authority. The Series B Bonds will be issued by the Authority on a parity with the 2020 Bonds (as defined herein). The City is required under the CUBE Lease to make Base Rental Payments in each year in consideration for the use of the CUBE Leased Property from any source of legally available funds, in an amount sufficient to pay the annual principal of and interest on the 2020 Bonds, the Series A Bonds and any additional bonds under the Series A Indenture . The 2020 Bonds and the Series A Bonds and any additional bonds are collectively referred to herein as the “CUBE Bonds.” The Series B Bonds are payable from and secured by Series B Revenues pledged under the Series B Indenture. “Series B Revenues” means primarily all Base Rental Payments (including prepayments) payable by the City pursuant to that certain Lease Agreement, dated as of June 1, 2016, by and between the Authority and the City, as amended and supplemented by the First Supplement to Lease Agreement , dated as of October 1, 2022 (as amended, the “City Hall Lease ”). Pursuant to the City Hall Lease, the City will lease certain real property described herein (the “City Hall Site”) and the City Hall building and improve ments located thereon (collectively, the “City Hall Leased Property”) from the Authority. The Series B Bonds will be issued by the Authority on a parity with the 2016 Bonds (as defined herein). The City is required under the City Hall Lease to make Base Rental Payments in each year in consideration for the use of the City Hall Leased Property from any source of legally available funds, in an amount sufficient to pay the annual principal of and interest on t he 2016 Bonds, the Series B Bonds and any additional bonds under the Series B Indenture. The 2016 Bonds and the Series B Bonds and any additional bonds are collectively referred to herein as the “City Hall Bonds.” The Revenues, including Base Rental Payments, collected under one Indenture are not available to pay debt service on the Bonds of the other Indenture.

The City’s obligation to make applicable Base Rental Payments under the City Hall Lease or the CUBE Lease is subject to abatement in the event of substantial interference with the use and possession of all or a part of the City Hall Leased Property or

* Preliminary, subject to change.

CUBE Leased Property, as applicable. See “RISK FACTORS – Abatement” herein. The City has covenanted in each Lease to take such action as may be necessary to include and maintain all applicable Base Rental Payments in its annual budget and to make the necessary appropriations therefor, subject to such abatement.

The Bonds are special obligations of the Authority and, as and to the extent set forth in the applicable Indenture, are payable solely from and secured by a first lien on and pledge of the applicable Revenues, as provided in each Indenture. All of the Series A Bonds are equally secured by a pledge of, and charge and lien upon, all of the Series A Revenues (other than deposits to th e Rebate Fund) (as defined by the Series A Indenture), and such Series A Revenues (other than deposits to such Rebate Fund) constitute a trust fund for the security and payment of the principal of and interest on the 2020 Bonds and the Series A Bonds. All of the Series B Bonds are equally secured by a pledge of, and charge and lien upon, all of the Series B Revenues (other than deposits to the Rebate Fund) (as defined by the Series B Indenture) , and such Series B Revenues (other than deposits to such Rebate Fund) constitute a trust fund for the security and payment of the principal of and interest on the 2016 Bonds and the Series B Bonds. The full faith and credit of the Authority is not pledged for the payment of the principal of or interest or premium (if any) on the Bonds. The Bonds are not secured by a legal or equitable pledge of, or charge, lien or encumbrance upon, any of the property of the Authority or any of its income or receipts, except such Revenues, as applicable, and such other moneys and securities as provided in each related Indenture.

This cover page contains certain information for general reference only. It is not intended to be a summary of the security or terms of this issue. Investors must read the entire Official Statement to obtain information essential to the making of an informed investment decision. Capitalized terms used and not otherwise defined herein shall have the meanings given in the Indentures or the Leases (each as herein after defined ) or in APPENDIX C – “SUMMARY OF CERTAIN PROVISIONS OF THE PRINCIPAL LEGAL DOCUMENTS.”
The Bonds are offered when, as and if issued and accepted by the Underwriter, subject to the approving opinion of Norton Rose Fulbright US LLP , Los Angeles, California, Bo nd Counsel to the Authority. Certain legal matters will be passed on for the Authority by Norton Rose Fulbright US LLP , Los Angeles, California, Disclosure Counsel and for the City and the Authority by Burke, Williams and Sorensen, LLP, Los Angeles, California, as City Attorney and Authority Counsel. It is anticipated that the Bonds will be available for delivery through the book-entry facilities of DTC on or about October __, 2022. [UNDERWRITER LOGO]
Dated: October ___, 2022

MATURITY SCHEDULE

SANTA CLARITA PUBLIC FINANCING AUTHORITY
(Base CUSIP† 80169P)

$[Series A principal amount]*
Lease Revenue Bonds (Energy Efficiency Program) Series 2022A (Green Bonds)

Maturity
Date
(June 1)
Principal
Amount
Interest
Rate Yield CUSIP†
Maturity
Date
(June 1)
Principal
Amount
Interest
Rate Yield CUSIP†

$____________ ______% Series A Term Bond due June 1, 20__, Priced to Yield ______% CUSIP†: _______

$[Series B principal amount]*
Lease Revenue Bonds (Energy Efficiency Program) Series 2022B (Green Bonds)

Maturity
Date
(December 1)
Principal
Amount
Interest
Rate Yield CUSIP†
Maturity
Date
(December 1)
Principal
Amount
Interest
Rate Yield CUSIP†

$____________ ______% Series B Bond due December 1, 20__, Priced to Yield ______% CUSIP†: _______

C: Priced to call at par on the optional redemption date of December 1, 20__.

† CUSIP® is a registered trademark of the American Bankers Association. CUSIP data herein are provided by CUSIP Global Services, managed by FactSet Research Systems Inc. on behalf of the American Bankers Association. CUSIP numbers have been assigned by an independent company not affiliated with the Authority and are included solely for the convenience of the holders of the Bonds. None of the Authority, its Municipal Advisor or the Underwriter is responsible for the selection or use of these CUSIP numbers and no representation is made as to their correctness on the Bonds or as indicated above. The CUSIP number for a specific bond is subject to being changed after the issuance of the bonds as a result of various subsequent actions including, but not limited to, a refunding in whole or in part of such maturity or as a result of the procurement of secondary market portfolio insurance or other similar enhancement by investors that is applicable to all or a portion of such bonds.

* Preliminary, subject to change.

SANTA CLARITA PUBLIC FINANCING AUTHORITY

CITY COUNCIL/BOARD OF DIRECTORS
Laurene F. Weste, Mayor/Chairperson
Jason Gibbs, Mayor Pro Tem/Vice-Chairperson
Cameron Smyth, Councilmember/Board Member
Marsha McLean, Councilmember/Board Member
William Miranda, Councilmember/Board Member

____________________

CITY OFFICIALS
Kenneth W. Striplin, Ed.D., City Manager/Executive Director Frank Oviedo, Assistant City Manager
Carmen Magaña, City Treasurer/Treasurer
Mary Cusick, City Clerk/Secretary
Joseph M. Montes, City Attorney/Authority Counsel

____________________

SPECIAL SERVICES

Municipal Advisor
Columbia Capital Management, LLC
Carlsbad, California

Bond Counsel and Disclosure Counsel
Norton Rose Fulbright US LLP
Los Angeles, California

Trustee
U.S. Bank Trust Company, National Association
Los Angeles, California

GENERAL INFORMATION ABOUT THIS OFFICIAL STATEMENT
Use of Official Statement. This Official Statement is submitted in connection with the sale of the Bonds referred to herein and may not be reproduced or used, in whole or for any other purpose.

Estimates an d Forecasts. When used in this Official Statement and in any continuing disclosure by the Authority or City in any press release and in any oral statement made with the approval of an authorized officer of the Authority or City, the words or phrases “will likely result”, “are expected to”, “will continue”, “is anticipated”, “estimate”, “project”, “forecast”, “expect”, “intend” and similar expressions identify “forward looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Such statements are subject to risks and uncertainties that could cause actual results to differ materially from those contemplated in such forward -looking statements. Any forecast is subject to such uncertainties. Inevitably, some assumptions used t o develop the forecasts will not be realized and unanticipated events and circumstances may occur. Therefore, there are likely to be differences between forecasts and actual results, and those differences may be material. The information and expressions of opinion herein are subject to change without notice, and neither the delivery of this Official Statement nor any sale made hereunder shall, under any circumstances, give rise to any implication that there has been no change in the affairs of the Authority or City since the date hereof.

Particularly because of the evolving nature of the current COVID -19 public health crisis described herein, no assurance can be given that any estimates of future impact described herein will be achieved, and actual results may differ materially from the potential impact described herein. All projections, forecasts, estimates, assumptions and other forward-looking statements herein are expressly qualified in their entirety by this cautionary statement.

Limit of Offering. No dealer, broker, salesperson or other person has been authorized by the Authority or the Underwriter to give any information or to make any representations other than those contained herein and, if given or made, such other information or representation must not be relied upon as having been authorized by any of the foregoing. This Official Statement does not constitute an offer to sell or the solicitation of an offer to buy nor shall there be any sale of the Bonds by a person in any jurisdiction in which it is unlawful for such person to make such an offer, solicitation or sale. This Official Statement is not to be construed as a contract with the purchasers of the Bonds.

Preparation of this Official Statement. The information contained in this Official State ment has been obtained from sources that are believed to be reliable, but this information is not guaranteed as to accuracy or completeness. The Underwriter has provided the following sentence for inclusion in this Official Statement: The Underwriter has r eviewed the information in this Official Statement in accordance with, and as part of, its responsibilities to investors under the federal securities laws as applied to the facts and circumstances of this transaction, but the Underwriter does not guarantee the accuracy or completeness of such information.

The information and expressions of opinions herein are subject to change without notice and neither delivery of this Official Statement nor any sale made hereunder shall, under any circumstances, create an y implication that there has been no change in the affairs of the City or the Authority since the date hereof. All summaries of the Indentures, the Site Lease s, the Leases , the Assignment Agreement s (as such terms are defined herein), or other documents referred to in this Official Statement, are made subject to the provisions of such documents, respectively, and do not purport to be complete statements of any or all of such provisions.

THE BONDS HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS

AMENDED, IN RELIANCE UPON AN EXCEPTION FROM THE REGISTRATION REQUIREMENTS CONTAINED IN SUCH ACT. THE BONDS HAVE NOT BEEN REGISTERED OR QUALIFIED UNDER THE SECURITIES LAWS OF ANY STATE.

Public Offering Prices. The Underwriter may offer and sell the Bonds t o certain dealers and dealer banks and banks acting as agent at prices lower than the public offering prices stated on the inside cover page of this Official Statement, and the Underwriter may change those public offering prices from time to time.

Website. The City of Santa Clarita maintains a website. However, the information maintained on the website is not a part of this Official Statement and should not be relied upon in making an investment decision with respect to the Bonds.

TABLE OF CONTENTS
Page

i
INTRODUCTION ....................................................................................................................................... 1 Purpose of the Bonds ...................................................................................................................... 1 The City of Santa Clarita ................................................................................................................ 3 Security for the Bonds .................................................................................................................... 3 Leased Property .............................................................................................................................. 5 No Debt Service Reserve ................................................................................................................ 5 Existing General Fund Debt and Additional Bonds ........................................................................ 5 COVID-19 ...................................................................................................................................... 6 Continuing Disclosure .................................................................................................................... 6 Further Information ......................................................................................................................... 6 DESCRIPTION OF THE BONDS .............................................................................................................. 6 General ............................................................................................................................................ 7 Redemption ..................................................................................................................................... 7 Selection of Bonds for Redemption .............................................................................................. 10 Notice of Redemption ................................................................................................................... 10 Partial Redemption of Bonds ........................................................................................................ 10 Effect of Redemption .................................................................................................................... 10 SECURITY AND SOURCES OF PAYMENT FOR THE SERIES A BONDS ....................................... 11 General .......................................................................................................................................... 11 Limited Obligation ........................................................................................................................ 12 No Debt Service Reserve .............................................................................................................. 12 Abatement of CUBE Base Rental Payments ................................................................................ 12 Insurance Coverages ..................................................................................................................... 12 Additional Bonds .......................................................................................................................... 12 Parity Debt .................................................................................................................................... 14 Maintenance, Utilities, Taxes and Assessments ........................................................................... 14 Substitution and Release of Property ............................................................................................ 14 SECURITY AND SOURCES OF PAYMENT FOR THE SERIES B BONDS ....................................... 16 General .......................................................................................................................................... 16 Limited Obligation ........................................................................................................................ 16 No Debt Service Reserve .............................................................................................................. 17 Abatement of City Hall Base Rental Payments ............................................................................ 17 Insurance Coverages ..................................................................................................................... 17 Additional Bonds .......................................................................................................................... 17 Parity Debt .................................................................................................................................... 19 Maintenance, Utilities, Taxes and Assessments ........................................................................... 19 Substitution and Release of Property ............................................................................................ 19 EXISTING GENERAL FUND INDEBTEDNESS ................................................................................... 20 PLAN OF FINANCE ................................................................................................................................. 21 General .......................................................................................................................................... 21 Bonds Designation as Green Bonds .............................................................................................. 22 2022 Project .................................................................................................................................. 23 2022 Project for Leased Property ................................................................................................. 25 CUBE Leased Property ................................................................................................................. 25 City Hall Leased Property ............................................................................................................. 29

TABLE OF CONTENTS
(continued)
Page

ESTIMATED SOURCES AND USES OF FUNDS ................................................................................. 31 DEBT SERVICE REQUIREMENTS ........................................................................................................ 32 THE AUTHORITY ................................................................................................................................... 35 THE CITY ................................................................................................................................................. 35 General .......................................................................................................................................... 35 Budgetary Process and Administration ......................................................................................... 35 General Fund ................................................................................................................................. 36 COVID-19 Pandemic .................................................................................................................... 39 Budgeted Revenues and Expenditures .......................................................................................... 40 Management Discussion of Financial Performance ...................................................................... 43 Capital Improvement Program ...................................................................................................... 43 Appropriations Limit .................................................................................................................... 43 Financial Statements ..................................................................................................................... 43 Fiscal Policies ............................................................................................................................... 44 Taxable Property and Assessed Valuation .................................................................................... 44 Largest Taxpayers ......................................................................................................................... 48 Other Local Taxes ......................................................................................................................... 48 Other Revenue Sources ................................................................................................................. 50 Employee Relations and Collective Bargaining ........................................................................... 50 Risk Management ......................................................................................................................... 50 City Investment Policy and Portfolio ............................................................................................ 51 Outstanding Indebtedness of the City ........................................................................................... 52 Direct and Overlapping Debt ........................................................................................................ 52 Employee Retirement Plan ........................................................................................................... 54 Post-Retirement Medical Benefits (OPEB) .................................................................................. 61 Deferred Compensation Plan/Defined Contribution Plan ............................................................. 63 Redevelopment Agencies .............................................................................................................. 63 Impact of State of California Budget ............................................................................................ 64 Information Regarding Federal Budget ........................................................................................ 65 RISK FACTORS ....................................................................................................................................... 66 Substitution of Property ................................................................................................................ 66 Base Rental Payments Are Not Debt; Bonds are Limited Obligations ......................................... 66 Abatement ..................................................................................................................................... 67 Economic Condition in Local, State and National Economies ..................................................... 67 Impacts and Potential Impacts of COVID-19 on the City ............................................................ 68 City Pension and OPEB Obligations ............................................................................................ 68 Risk of Uninsured Loss ................................................................................................................. 68 Self-Insurance ............................................................................................................................... 69 Eminent Domain ........................................................................................................................... 69 Bankruptcy .................................................................................................................................... 69 No Liability of Authority to the Owners ....................................................................................... 70 No Limitation on Incurring Additional Obligations ..................................................................... 70 Seismic Factors ............................................................................................................................. 70 Risk of Structural and Wildland Fire ............................................................................................ 71 Risk of Floods ............................................................................................................................... 72 Drought ......................................................................................................................................... 72

TABLE OF CONTENTS
(continued)
Page

iii

Hazardous Substances ................................................................................................................... 74 Green Bonds ................................................................................................................................ 74 Climate Change ............................................................................................................................. 74 Risks Related to Taxation in California ........................................................................................ 75 Future Initiatives ........................................................................................................................... 78 Limitations on Remedies .............................................................................................................. 78 Remedies on Default ..................................................................................................................... 79 Early Redemption Risk ................................................................................................................. 79 Investment Risk ............................................................................................................................ 79 No Debt Service Reserve .............................................................................................................. 79 Loss of Tax Exemption ................................................................................................................. 79 IRS Examination of Tax-Exempt Bonds ...................................................................................... 80 Secondary Market Risk ................................................................................................................. 80 Other Factors ................................................................................................................................. 80 RATING .................................................................................................................................................... 81 UNDERWRITING .................................................................................................................................... 81 CONTINUING DISCLOSURE ................................................................................................................. 81 TAX MATTERS ........................................................................................................................................ 82 Tax Exemption .............................................................................................................................. 82 Tax Accounting Treatment of Original Premium and Original Issue Discount ........................... 83 Information Reporting and Backup Withholding ......................................................................... 84 State Tax Exemption ..................................................................................................................... 84 Future Developments .................................................................................................................... 84 LITIGATION ............................................................................................................................................. 85 LEGAL OPINION ..................................................................................................................................... 85 MUNICIPAL ADVISOR ........................................................................................................................... 85 FINANCIAL STATEMENTS ................................................................................................................... 85 MISCELLANEOUS .................................................................................................................................. 86 EXECUTION AND DELIVERY .............................................................................................................. 86

APPENDIX A – GENERAL INFORMATION ABOUT THE CITY OF SANTA CLARITA ......... A-1 APPENDIX B – AUDITED FINANCIAL STATEMENTS OF THE CITY OF SANTA CLARITA FOR THE FISCAL YEAR ENDED JUNE 30, 2021 .............. B-1 APPENDIX C – SUMMARY OF CERTAIN PROVISIONS OF THE PRINCIPAL LEGAL DOCUMENTS ........................................................................................... C-1 APPENDIX D – FORM OF CONTINUING DISCLOSURE CERTIFICATE .................................. D-1 APPENDIX E-1– SERIES A BONDS - FORM OF OPINION OF BOND COUNSEL ................... E-1-1 APPENDIX E-2– SERIES B BONDS - FORM OF OPINION OF BOND COUNSEL.................... E-2-1 APPENDIX F – BOOK-ENTRY SYSTEM ........................................................................................ F-1

VICINITY MAP

2 OFFICIAL STATEMENT

SANTA CLARITA PUBLIC FINANCING AUTHORITY
$[Series A principal amount]*
Lease Revenue Bonds
(Energy Efficiency Program)
Series 2022A
(Green Bonds)
$[Series B principal amount]*
Lease Revenue Bonds
(Energy Efficiency Program)
Series 2022B
(Green Bonds)

This Official Statement, including the cover page and the appendices hereto, is provided to furnish information in connection with the sale and delivery of the $ [Series A principal amount] * Santa Clarita Public Financing Authority Lease Revenue Bonds (Energy Efficiency Program) , Series 2022A (Green Bonds) (the “ Series A Bonds”) , and the $[Series B principal amount] * Santa Clarita Public Financing Authority Lease Revenue Bonds (Energy Efficiency Program), Series 2022B (Green Bonds) (the “Series B Bonds,” and together with the Series A Bonds, the “Bonds”) . Capitalized terms used and not otherwise defined herein shall have the meanings given in the respective Indenture or Lease (each as h ereinafter defined) or in APPENDIX C – “SUMMARY OF CERTAIN PROVISIONS OF THE PRINCIPAL LEGAL DOCUMENTS.”

INTRODUCTION
This introduction is not a summary of this Official Statement, and is qualified by the more complete and detailed information contained in the entire O fficial Statement and the documents described or summarized herein. The sale of the Bonds to potential investors is made only by means of the entire Official Statement.

Purpose of the Bonds
The 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 (the “Bond Law”).

The Series A Bonds are being issued pursuant to an Indenture, dated as of October 1, 2020 (the “Original Series A Indenture”), as supplemented by the First Supplemental Indenture, dated as of October 1, 2022 (the “Series A Supplemental Indenture,” and together with the Original Series A Indenture, the “Series A Indenture”), each by and between the Authority and the Trustee. Proceeds of the Series A Bonds will be used for certain energy efficiency improvements associated with buildings and facilities owned by the City of Santa Clarita, California (the “City”), includin g but not limited to, heat ing, ventilation, and air conditioning (“HVAC”), lighting, water conservation, solar, and refrigeration improvements (the “2022 Project”), and pay the costs of issuing the Series A Bonds.

The Series B Bonds are being issued pursu ant to an Indenture, dated as of June 1, 2016 (the “Original Series B Indenture”), as supplemented by the First Supplemental Indenture, dated as of October 1, 2022 (the “Series B Supplemental Indenture,” and together with the Original Series B Indenture, the “Series B Indenture”), each by and between the Santa Clarita Public Financing Authority (the “Authority”) and U.S. Bank Trust Company, National Association (formerly known as U.S. Bank National Association), as

* Preliminary, subject to change.

3 trustee (the “Trustee”). Proceeds of the Series B Bonds will also be used to finance a portion of the costs of the 2022 Project, consisting of certain energy efficiency improvements associated with buildings and facilities owned by the City, including but not limited to, HVAC, lighting, water conservation, solar, and refrigeration improvements , and to pay the costs of issuing the Series B Bonds. See “ESTIMATED SOURCES AND USES OF FUNDS” and “PLAN OF FINANCE” herein.

The City of Santa Clarita
The City is a general law city, incorporated in 1987. The City is located in the Santa Clarita Valley, which is comprised of the communities of Canyon Country, Newhall, Saugus, and Valencia, within Los Angeles County (the “County”), 35 miles northwest of Los Angeles and 40 miles east of the Pacific Ocean.

The City encompasses an area of approximately 70.8 7 square miles and, as of January 1, 2022, had an estimated population of approximately 228,835 as reported by the California Department of Finance. The City operates under a Council Manager form of municipal government. The City Council is comprised of five council members, elected biannually at large to four-year staggered terms. The City provides general government services either with its own employ ees or through contracts. See Appendix A for further information with respect to the City.

Security for the Bonds
Security for the Series A Bonds. Pursuant to a Site and Facility Lease, dated as of October 1, 2020 (the “CUBE Site Lease”), by and between t he City and the Authority, the Authority leases from the City certain real property consisting of a recreational facility located on at 27745 Smyth Drive within the City and the improvements located thereon (the “CUBE Leased Property”). See “– CUBE Leased Property” below. Pursuant to a Lease Agreement, dated as of October 1, 2020 (the “2020 Lease”), by and between the Authority as lessor, and the City as lessee, the Authority leases the CUBE Leased Property to the City.

On October 22, 2020, the Authority issued its $10,645,000 Lease Revenue Bonds (Recreational Facility) Series 2020A (the “2020A Bonds”), currently outstanding in the principal amount of $10,645,000, and its $3,625,000 Federally Taxable Lease Revenue Bonds (Recreational Facility) Series 2020A-T (the “2020A- T Bonds,” and together with the 2020A Bonds, the “2020 Bonds”), currently outstanding in the principal amount of $2,790,000, secured by base rental payments made by the City under the 2020 Lease.

The Original Series A Indenture provides for the issuance of one or more series of additional bonds, subject to amendment to the 2020 Lease to increase the base rental payments made by the City under the 2020 Lease. The Series A Bonds constitute additional bonds under the Series A Indenture and ar e issued on a parity with the 2020 Bonds.

Pursuant to the 2020 Lease, as amended by the First Amendment to Lease Agreement, dated as of October 1, 2022 (as amended, the “CUBE Lease”), the City will pay to the Authority base rental payments (the “CUBE Base Rental Payments”) in amounts equal to scheduled debt service on the 2020 Bonds and the Series A Bonds. Pursuant to an Assignment Agreement, dated as of October 1, 2020 (the “CUBE Assignment Agreement”), by and between the Authority and the Trustee, the Authority has assigned, as further security for its obligations to make timely payment of principal of and interest on the 2020 Bonds and the Series A Bonds, to the Trustee for the benefit of the Owners thereof certain of the Authority’s rights under the C UBE Lease, including the right to receive CUBE Base Rental Payments. Under the CUBE Lease, in addition to CUBE Base Rental Payments, the City has agreed to pay annual incidental costs and expenses incurred by the Authority or the Trustee relating to the CUBE Lease. All of the 2020 Bonds and the Series A Bonds are equally secured by a pledge of, and charge and lien upon, all of the Series A Revenues (other than deposits to the Rebate Fund created by the Series A Indenture), and such Series A Revenues (other than deposits to such Rebate Fund) constitute a trust fund for the security and payment of the principal of and interest on the 2020 Bonds and the Series A Bonds.

4 Security for the Series B Bonds. Pursuant to a Site and Facility Lease, dated as of June 1, 2016 (the “City Hall Site Lease”), by and between the City and the Authority, the Authority leases from the City certain real property consisting of the City Hall of the City located at 23920 Valencia Boulevard within the City and the improvements located thereon (the “City Hall Leased Property ”). See “– City Hall Leased Property” below. Pursuant to a Lease Agreement, dated as of June 1, 2016 (the “2016 Lease”), by and between the Authority as lessor, and the City as lessee, the Authority leases the City Hall Leased Property to the City. On June 22, 2016, the Authority issued its $10,320,000 Lease Revenue Refunding Bonds (Golden Valley Road) Series 2016A (the “2016 Bonds”), currently outstanding in the principal amount of $7,930,000, secured by base rental payments made by the City under the 2016 Lease.

The Original Series B Indenture provides for the issuance of one or more series of additional bonds, subject to amendment to the 2016 Lease to increase the base rental payments made by the City und er the 2016 Lease. The Series B Bonds constitute additional bonds under the Series B Indenture and are issued on a parity with the 2016 Bonds.

Pursuant to the 2016 Lease, as amended by the First Amendment to Lease Agreement, dated as of October 1, 2022 (as amended, the “ City Hall Lease”), the City will pay to the Authority base rental payments (the “City Hall Base Rental Payments”) in amounts equal to scheduled debt service on the 2016 Bonds and the Series B Bonds. Pursuant to an Assignment Agreement, dated as of June 1, 2016 (the “City Hall Assignment Agreement”), by and between the Authority and the Trustee, the Authority has assigned, as further security for its obligations to make timely payment of principal of and interest on the 2016 Bonds and the Series B Bonds, to the Trustee for the benefit of the Owners thereof certain of the Authority’s rights under the City Hall Lease, including the right to receive City Hall Base Rental Payments. Under the City Hall Lease, in addition to City Hall Base Rental Payments, the City has agreed to pay annual incidental costs and expenses incurred by the Authority or the Trustee relating to the City Hall Lease. All of the 2016 Bonds and the Series B Bonds are equally secured by a pledge of, and charge and lien upon, all of the Series B Revenues (other than deposits to the Rebate Fund created by the Series B Indenture), and such Series B Revenues (other than deposits to such Rebate Fund) constitute a trust fund for the security and payment of the principal of and interest on the 2016 Bonds and the Series B Bonds.

General Security. The Series A Bonds are payable solely from and secured by Series A Revenues pledged under the Series A Indenture. The Series B Bonds are payable solely from and secured by Series B Revenues pledged under the Series B Indenture.

The provisions of the Series A Indenture and the Series B Indenture are substantially similar , and references to “an Indenture” or “each Indenture” herein shall refer to each of the Series A Indenture and the Series B Indenture, individually, but not both cumulatively . The Series A Indenture and the Series B Indenture are referred to cumulatively herein as the “Indentures.” “Revenues” under each Indenture mean (i) all Base Rental Payments payable by the City pursuant to the applicable Lease (including prepayments), (ii) any proceeds of the applicable Bonds issued under such Indenture deposited with the Trustee and all moneys on deposit in the funds and accounts (other than the Rebate Fund) established under such Indenture, (iii) investment income with respect to such moneys held by the Trustee and (iv) any insurance proceeds or condemnation awards received by or payable to the Trustee relating to the Base Rental Payments relating to such Bonds. See “SECURITY AND SOURCES OF PAYMENT FOR THE BONDS” herein.

The obligation of the City to make Base Rental Payments under each Lease is an unsecured obligation of the City, payable from any legally available funds. Pursuant to each Lease, the City has covenanted to take such action as may be necessary to annually budget and appropriate sufficient funds to make all rental payments required to be made under such Lease, subject only to abatement as provided therein.

5 The Bonds are special obligations of the Authority and, as and to the extent set forth in the applicable Indenture, are payable solely from and secured by a first lien on and pledge of the Revenues as provided in such Indenture.

The full faith and credit of the Authority is not pledged for the payment of the principal of or interest or premium (if any) on the Bonds. The Bonds are not secured by a legal or equitable pledge of, or charge, lien or encumbrance upon, any of the property of the Authority or any of its income or receipts, except the Revenues and such other moneys and securities as provided in the applicable Indenture.

The City provides a broad range of services, including highway, street, drainage, sewer, and infrastructure construction and maintenance; planning and zoning; and parks, recreation and cultural activities. Sheriff and animal control services are provided under contract with the County, whereas fire protection, water, sanitation, and school s are funded by speci al districts not under City control. Other regularly contracted services include refuse and recycling collection, landscaping and public transit services.

Leased Property
CUBE Leased Property. The CUBE Leased Property, also referred to herein as the Recreational Facility, consists of an approximately 4.4 acre parcel and an approximately 93,000 square foot recreational facility located at 27745 Smyth Drive within the City. The City purchased the CUBE Leased Property on October 2, 2020 from Arena Development Group, LLC, a California limited liability company, for the purchase price of $14,200,000. The facility was originally constructed in 2000 and included three ice rinks, a lobby, arcade, kitchen, food/concession area, locker rooms, offices, training center and pro shop and was known as the Ice Station Valencia ice rink. Following the acquisition of the facility, and during closure due to the COVID -19 Pandemic, the City renovated the facility and reopened it as “ The CUBE - Ice and Entertainment Center, Powered by FivePoint Valencia ” on April 12, 2021. See “THE PLAN OF FINANCE” herein.

City Hall Leased Property. The City Hall Leased Property consists of the Ci ty Hall building and approximate 3-acre site located at 23920 Valencia Boulevard in the City. The three story, 74,325- square foot City Hall building was constructed in 1986. See “THE PLAN OF FINANCE” herein.

No Debt Service Reserve
The Authority has not undertaken to fund any debt service reserve to secure the payment of debt service on the Bonds.

Existing General Fund Debt and Additional Bonds
Not including the Bonds, t he Authority currently has five (5) lease revenue bond issuances outstanding which are secured by lease payments payable by the City from the City’s General Fund, including the 2016 Bonds and the 2020 Bonds, and the City may in the future issue or incur other obligations payable from the City’s General Fund. See “SECURITY AND SOURCES OF PAYMENT FOR BONDS – Existing General Fund Indebtedness” herein. In addition, p ursuant to the Series A Indenture and the CUBE Lease, the Authority may issue additional bonds payable on a parity with the 2020 Bonds and the Series A Bonds so long as c ertain conditions precedent are satisfied. Likewise, pursuant to the Series B Indenture and the City Hall Lease, the Authority may issue additional bonds payable on a parity with the 2016 Bonds and the Series B Bonds so long as certain conditions precedent are satisfied. See “SECURITY AND SOURCES OF PAYMENT FOR BONDS – Additional Bonds” herein.

6 COVID-19
The global outbreak of the novel coronavirus COVID -19 (“COVID-19”), a respiratory disease declared to be a pandemic (the “Pandemic”) by the World Health O rganization, significantly affected the national capital markets and national, state and local economies. The actual impact of COVID -19 on the City, its economy and its finances have been dependent on events, including events outside of the control of the City, and actions by the federal government, the State and the County. The City has experienced a strong recovery from the economic disruption created by the COVID -19 Pandemic notwithstanding significant labor shortages, supply chain issues, and increases in material and operational costs. For further information concerning the potential effects of the Pandemic on the City, see “THE CITY.” 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 Bonds and the Authority will not provide any such information.

The City has agreed to provide, with respect to the Bonds, or cause to be provided, to the Municipal Securities Rulemaking Board’s Electroni c Municipal Market Access system (the “EMMA System”), certain annual financial information and operating data relating to the City and, in a timely manner, notice of certain enumerated events. These covenants have been made in order to assist the Underwri ter in complying with Rule 15c2 -12, as amended (the “Rule”) adopted by the U.S. Securities and Exchange Commission (the “SEC”) under the Securities Exchange Act of 1934, as amended. See “CONTINUING DISCLOSURE” herein and APPENDIX D – “FORM OF CONTINUING DISCLOSURE CERTIFICATE” for a description of the annual reports and notices of enumerated events to be provided by the City.

Further Information
For important information regarding the budget and financial operations of the City, see the section captioned “THE CITY - Budgeted Revenues and Expenditures.” For important information regarding the current and potential impact of the COVID-19 Pandemic on the finances and operations of the City, see “RISK FACTORS -Impacts and Potential Impacts of COVID-19 on the City.” Certain other demographic, financial and other information with respect to or affecting the City is contained elsewhere in APPENDIX B and in the City ’s Annual Comprehensive Financial Report for the year ended June 30, 2021 and Independent Auditor’s Report, which are incorporated by reference therein.

Brief descriptions of the Bonds, the Indenture s, the L eases, the Site Leases , the Assignment Agreements and other documents and information are included in this Official Statement. Such descriptions and information do not purport to be comprehensive or definitive, and are qualified in their entirety by reference to the forms thereof. See APPENDIX C - “SUMMARY OF CERTAIN PROVISIONS OF THE PRINCIPAL LEGAL DOCUMENTS” for further information regarding the Cit y’s obligations under the Leases. See “RISK FACTORS” herein for certain factors that may affect the payment of and security for the Bonds.

DESCRIPTION OF THE BONDS
Each Indenture is applicable solely to the related Series of Bonds. Each Indenture, each Lease, and each Series of Bonds is substantially similar to the other Indenture , other Lease and the other Series of Bonds, and, as such, the description of the Series A Indenture, the CUBE Lease and the Series A Bonds is representative of the Series B Indenture, the City Hall Lease and the Series B Bonds . References to the “Indenture,” the “Lease” and the “Bonds” below should be read accordingly. For example, the

7 “Indenture,” should be read to mean either the Series A Indenture or the Series B Inde nture, but not both Indentures collectively. Similarly, references to the “Lease” or “Leased Property” should be read to mean either the CUBE Lease and CUBE Leased Property or the City Hall Lease and City Hall Leased Property, but not both Leases and Leased Properties. Likewise, references to the “Bonds” should be read to mean either the Series A Bonds or the Series B Bonds , but not both the Series A Bonds and the Series B Bonds collectively. Additionally, references to “Base Rental Payments” should be rea d to mean Base Rental Payments under either the CUBE Lease or the City Hall Lease, but not the Leases collectively.

Differences between each Indenture , Lease, and the Series A Bonds and the Series B Bonds are expressly noted below.

General
The Bonds will be dated their date of delivery and issued in the aggregate principal amount and bear interest at the rates per annum and mature on the dates set forth on the inside cover page of this Official Statement. Interest on the Bonds will be payable semiannually on June 1 and December 1 of each year (each an “Interest Payment Date”), commencing December 1, 2022. Each Bond will bear interest from the Interest Payment Date next preceding the date of authentication thereof unless (i) it is executed a fter the fifteenth calendar day of the month immediately preceding an Interest Payment Date, in which case interest will accrue from such Interest Payment Date, or (ii) it is authenticated on or before November 15, 2022, in which event interest will accrue from the date of initial delivery of the Bonds. If, at the date of authentication of any Bond, interest thereon is in default, such Bond will bear interest from the Interest Payment Date to which interest has previously been paid or made available for payment on such outstanding Bond, or if no interest has been paid, from the date of initial delivery of the Bonds. Interest on the Bonds will be computed on the basis of a 360-day year of twelve 30-day months.

The Bonds are being issued as fully registered bonds and, when executed and delivered, will be registered in the name of Cede & Co., as nominee of The Depository Trust Company, New York, New York (“DTC”). The Bonds will be issued in denominations of $5,000 or any integral multiple thereof.

Individual purchases of Bonds will be made in book-entry form only. Payments of principal of and interest on the Bonds are to be made to purchasers by DTC through DTC Participants. Purchasers will not receive physical delivery of the Bonds purchased by them. See APPENDIX F – “BOOK-ENTRY SYSTEM.” Redemption
Extraordinary Redemption.

Extraordinary Redemption of the Series A Bonds . The Series A Bonds and the 2020 Bonds are subject to redemption prior to their respective maturity dates, as a whole or in part on a pr o rata basis, on any date from prepayments of the Base Rental Payments made by the City pursuant to the CUBE Lease out of funds received by the City due to a taking of the CUBE Leased Property or any portion thereof under the power of eminent domain or from insurance proceeds received by the City due to damage to or destruction of the CUBE Leased Property or any portion thereof, under the circumstances and upon the conditions and terms prescribed in the Series A Indenture and in the CUBE Lease. Redemption of the Series A Bonds pursuant to this paragraph will be made at a redemption price equal to the sum of the principal of the Series A Bonds to be redeemed plus accrued but unpaid interest thereon to the date fixed for redemption, without premium. See “SECURITY AND SOURCES OF PAYMENT FOR THE BONDS – Insurance Coverages” herein.

Extraordinary Redemption of the Series B Bonds. The Series B Bonds and the 2016 Bonds are subject to redemption prior to their respective maturity dates, as a whole or in part on a pro rata basis, on

8 any date from prepayments of the Base Rental Payments made by the City pursuant to the City Hall Lease out of funds received by the City due to a taking of the City Hall Leased Property or any portion thereof under the power of eminent domain or from insurance proceeds received by the City due to damage to or destruction of the City Hall Leased Property or any portion thereof, under the circumstances and upon the conditions and terms prescribed in the Series B Indenture and in the City Hall Lease. Redemption of the Series B Bonds pursuant to this paragraph will be made at a redemption price equal to the sum of the principal of the Series B Bonds to be redeemed plus accrued but unpaid interest thereon to the date fixed for redemption, without premium. See “SECURITY AND SOURCES OF PAYMENT FOR THE BONDS – Insurance Coverages” herein.

Optional Redemption.

Optional Redemption of the Series A Bonds. The Series A Bonds maturing on or after June 1, 20__ are subject to redemption prior to their respective maturity dates as a whole or in part on any d ate on or after June 1, 20__, in any order deemed reasonable by the Authority, and by lot within a maturity, from prepayments of CUBE Base Rental Payments made at the option of the City pursuant to the CUBE Lease, at a redemption price equal to the principal amount of the Series A Bonds to be redeemed, plus accrued but unpaid interest thereon to the date fixed for redemption, without premium.

The 2020A Bonds, which are parity to the Series A Bonds, are subject to optional redemption on or after June 1, 2028 as provided in the Series A Indenture. The Series 2020A-T Bonds, which are parity to the Series A Bonds, are subject to optional make-whole redemption prior to June 1, 2030 as provided in the Series A Indenture.

Optional Redemption of the Series B Bonds. The Series B Bonds maturing on or after December 1, 20__ are subject to redemption prior to their respective maturity dates as a whole or in part on any date on or after December 1, 20__, in any order deemed reasonable by the Authority, and by lot within a maturity, from prepayments of City Hall Base Rental Payments made at the option of the City pursuant to the C ity Hall Lease, at a redemption price equal to the principal amount of the Series B Bonds to be redeemed, plus accrued but unpaid interest thereon to the date fixed for redemption, without premium.

The 2016 Bonds maturing on or after December 1, 2027, which are parity to the Se ries B Bonds, are subject to optional redemption on or after December 1, 2026 as provided in the Series B Indenture Mandatory Sinking Account Redemption.

Mandatory Sinking Account Redemption of the Series A Bonds . The Series A Term Bonds maturing on June 1, 20__ and June 1, 20___ shall be subject to mandatory redemption, in part by lot, from sinking account payments set forth in the following schedule s on June 1, in each year shown below until maturity, at a redemption price equal to the principal amo unt thereof to be redeemed (without premium), together with interest accrued thereon to the date fixed for redemption.

Series A Term Bonds Maturing June 1, 20__
Redemption Date
(June 1)
Principal Amount
To be Redeemed

9 _________________
* Maturity
Series A Term Bonds Maturing June 1, 20__
Redemption Date
(June 1)
Principal Amount
To be Redeemed

_________________
* Maturity
Mandatory Sinking Account Redemption of the Series B Bonds. The Series B Term Bond maturing on December 1, 20___ and December 1, 20___, shall be subject to mandatory redemption, in part by lot, from sinking account payments set forth in the following schedule s on December 1, in each year shown below until maturity, at a redemption price equal to the principal amount thereof to be redeemed (without premium), together with interest accrued thereon to the date fixed for redemption.

Series B Bonds Maturing December 1, 20__
Redemption Date
(December 1)
Principal Amount
To be Redeemed

_________________
* Maturity
Series B Term Bonds Maturing December 1, 20__
Redemption Date
(December 1)
Principal Amount
To be Redeemed

_________________
* Maturity
Adjustment of Sinking Account Payments. If some but not all of the Term Bonds of a Series have been redeemed pursuant to mandatory or optional redemptions, the total amount of sinking account payments to be made subsequent to such redemption will be reduced in an amount equal to the principal amount of the Term Bonds of such Series so redeemed by reducing each such future sinking account payment on a pro rata basis (as nearly as practicable) in integral multiples of $5,000, as will be designated pursuant to written notice filed by Authority with the Trustee. In the event of any reductions in the amount of sinking account payments due as a result of some but not all of the Bonds of a Series being redeemed pursuant to extraordinary or optional redemptions, the Authority will provide the Trustee with a revised schedule reflecting such reductions.

10 Selection of Bonds for Redemption
Whenever provision is made in the Indenture for the optional redemption of less than all of the Bonds of a Series, the Trustee shall select the Bonds of such Series to be redeemed from all Bonds of that series not previously called for redemption, in such maturities as the Authority shall designate (and by lot within any maturity). For purposes of such selection, all Bonds of a Series will be deemed to be comprised of separate $5,000 portions and such portions shall be treated as separate Bonds, which may be separately redeemed.

Notice of Redemption
The Trustee on behalf and at the expense of the Authority will mail (by first class mail or other means acceptable to the recipient thereof) notice of any redemption to the respective Owners designated for redemption at their respective addresses appearing on the Registration Books, to the Securities Depositories and to one or more Information Services, at least twenty (20) but not more than sixty (60) days prior to the date fixed for redemption; provided, however, that neither failure to receive any such notice so mailed nor any defect therein shall affect the validity of the proceedings for the redemption of such Bonds or the cessation of the accrual of interest thereon. Such notice shall state the date of the notice, the redemption date, the redemption place and the redemption price and shall designate the CUSIP num bers, the Bond numbers and the maturity or maturities (in the event of redemption of all of the Bonds of such maturity or maturities in whole) of the Bonds to be redeemed, and shall require that such Bonds be then surrendered at the Trust Office of the Tru stee for redemption at the redemption price, giving notice also that further interest on such Bonds will not accrue from and after the redemption date. Such notice shall further state, if so determined by the Authority, that such notice may be rescinded at any time prior to the redemption date.

Neither the Authority nor the Trustee shall have any responsibility for any defect in the CUSIP number that appears on any Bond or in any redemption notice with respect thereto, and any such redemption notice may contain a statement to the effect that CUSIP numbers have been assigned by an independent service for convenience of reference and that neither the Authority nor the Trustee shall be liable for any inaccuracy in such numbers.

Any notice given pursuant to the preceding paragraph may be conditional and/or rescinded by written notice given to the Trustee by the Authority and the Trustee shall provide notice of such rescission as soon thereafter as practicable in the same manner, and to the same recipients, as not ice of such redemption was given pursuant to the Indenture.

Partial Redemption of Bonds
If only a portion of any Bond is called for redemption, then upon surrender of such Bond 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 the same Series, interest rate and maturity date, in aggregate principal amount equal to the unredeemed portion of the Bond being redeemed.

Effect of Redemption
From and after the date fixed for redemption, if funds available for the payment of the principal of, premium, if any, and interest on the Bonds so called for redemption shall have been duly provided, such Bonds so called shall cease to be entitled to any benefit under the Indenture other than the right to receive payment of the redemption price, and no interest shall accrue thereon from and after the redemption date.

All moneys held by or on behalf of the Trustee for the payment of principal of or interest or premium on

11 Bonds, whether at redemption or maturity, shall be held in trust for the account of the Owners thereof and the Trustee shall not be required to pay Owners any interest on, or be liable to Owners for any interest earned on, moneys so held.

SECURITY AND SOURCES OF PAYMENT FOR THE SERIES A BONDS
General
Pursuant to the Series A Indenture, the Series A Bonds will be secured by a first lien on and pledge of all of the Series A Revenues, including all of the moneys in the Lease Revenue Fund, including the Interest Account, the Principal Account and the Redemption Account, and the Insurance and Condemnation Fund established thereunder.

The Base Rental Payments relating to the CUBE Lease (the “CUBE Base Rental Payments”) will be paid by the City in an amount sufficient to pay the principal of and interest on the 2020 Bonds, the Series A Bonds and any additional bonds issued under the Series A Indenture on each Interest Payment Date.

Under the CUBE Lease, in addition to CUBE Base Rental Payments, the City has agreed to pay Additional Rental Payments in such amounts in each year as shall be required for the payment of all costs and expenses (not otherwise paid for or provided for out of the proceeds of sale of the Series A Bonds) incurred by the Authority or the Trustee in connection with the execution, performance or enforcement of the CUBE Lease or the assignment thereof, the Series A Indenture, or the Authority’s or the Trustee’s interest in the CUBE Leased Property, including, but not limited to, all fees, costs and expenses, all administrative costs of the Authority relating to the CUBE Leased Property (including, without limiting the generality of the foregoing, salaries and wages of employees, over head, insurance premiums, taxes and assessments (if any), expenses, compensation and indemnification of the Trustee payable by the Authority under the Series A Indenture), fees of auditors, accountants, attorneys or engineers, and all other reasonable and necessary administrative costs of the Authority or charges required to be paid by it to comply with the terms of the Series A Bonds or of the Series A Indenture.

The City has agreed in the CUBE Lease to take such action as may be necessary to include all CUBE Base Rental Payments and Additional Rental Payments due under the CUBE Lease in its annual budget and to make the necessary annual appropriations for all such CUBE Base Rental Payments and Additional Rental Payments, subject only to abatement as provided in the CUBE Lease. The covenants on the part of the City contained in the CUBE Lease are duties imposed by law and it will be the duty of each and every public official of the City to take such action and do such things as are required by law in the performance of the official duty of such officials to enable the City to carry out and perform the covenants and agreements in the CUBE Lease agreed to be carried out and performed by the City.

Pursuant to the Assignment Agreement relating to the Series A Indenture, the Authority will assign, as further security for its obligations to make timely payment of principal of and interest on the Series A Bonds to the Trustee for the benefit of the Series A Bond Owners certain of the Authority’s rights under the CUBE Lease, including the right to receive CUBE Base Rental Payments. Not less than fifteen (15) Business Days preceding each June 1 and December 1, the City is required to pay to the Trustee the CUBE Base Rental Payments coming due on the next succeeding June 1 and December 1, respectively, from any legally available sources.

12 Limited Obligation
The Series A Bonds are special obligations of the Authority and, as and to the extent set forth in the Series A Indenture, are payable solely from and secured by a f irst lien on and pledge of the Series A Revenues as provided in the Series A Indenture. All of the Series A Bonds and the 2020 Bonds are equally secured by a pledge of, and charge and lien upon, all of the Series A Revenues (other than deposits to the Rebate Fund created by the Series A Indenture), and the Series A Revenues (other than deposits to the Rebate Fund created by the Indenture) constitute a trust fund for the security and payment of the principal of and interest on the Series A Bonds and the 2020 Bonds. The full faith and credit of the Authority is not pledged for the payment of the principal of or interest or premium (if any) on the Series A Bonds. The Series A Bonds are not secured by a legal or equitable pledge of, or charge, lien or encumbrance upon, any of the property of the Authority or any of its income or receipts, except the Series A Revenues and such other moneys and securities as provided in the Series A Indenture.

No Debt Service Reserve
The Authority has not undertaken to fund any debt service reserve to secure the payment of debt service on the Series A Bonds.

Abatement of CUBE Base Rental Payments
The City’s obligation to pay CUBE Base Rental Payments is subject to abatement during any period in which by reason of any damage, destruction or condemnation there is substantial interference with the beneficial use by the City of the CUBE Leased Property or any portion thereof. Such abatement may be in an amount such that the resulting CUBE Base Rental Payments in any year during which such interference occurs or continues do not exceed the fair rental value of the portions of the CUBE Leased Property as to which such damage, destruction or taking do not substantially interfere with the City’s use and right of possession, as evidenced by a Certificate of the City. Such abatement shall continue for the period commencing with the date of such interference and ending with the restoration of the CUBE Leased Property to tenantable condition. See “RISK FACTORS – Abatement” herein.

Insurance Coverages
Pursuant to the CUBE Lease, the City will obtain one or more California Land Title Association title policies insuring the City’s and Authority’s interest in the CUBE Leased Property. The CUBE Lease requires that the City maintain rental interruption insurance in an amount not less than the maximum remaining scheduled CUBE Base Rental Payments in any twenty-four (24) month period to insure against loss of use of the CUBE Leased Property caused by perils covered by required casualty insurance, casualty insurance against loss or damage to any or all of the CUBE Leased Property, w orkers’ compensation insurance, and comprehensive general liability coverage against claims for damages including death, personal injury, bodily injury or property damage arising from operations involving the CUBE Leased Property. While the City currently maintains earthquake insurance , the CUBE Lease does not require the City to obtain or maintain earthquake insurance on the CUBE Leased Property. For additional information regarding insurance coverages required by the CUBE Lease, see APPENDIX C – “SUMMARY OF CERTAIN PROVISIONS OF THE PRINCIPAL LEGAL DOCUMENTS – The Lease – Insurance.” Additional Bonds
The Authority has agreed pursuant to the Series A Indenture that no additional bonds, notes or indebtedness shall be issued or incurred that are payable out of the Series A Revenues in whole or in part, other than Additional Bonds as provided in the Series A Indenture. However, the City may issue or incur

13 other obligations payable from the City’s General Fund. The parties to the CUBE Lease have acknowledged that the annual fair rental value of the CUBE Leased Property is equal to or greater than the maximum annual CUBE Base Rental Payments and it is possible that the CUBE Lease will be amended to release a portion of the CUBE Leased Property or increase the CUBE Base Rental Payments for the purpose of Additional Bonds. See “RISK FACTORS – No Limitation on Incurring Additional Obligations” herein.

The Authority and the Trustee may by execution of a Supplemental Indenture, without the consent of the Owners, provide for the issuance and delivery of Additional Bonds in one or more series. Upon the Request of the Authority, the Trustee may authenticate and deliver Additional Bonds in an aggregate principal amount authorized by such Supplemental Indenture. The proceeds of such Additional Bonds may be used for any purpose, including for the purpose of refunding Outstanding Bonds. Such Additional Bonds may only be issued upon compliance by the Authority with the provisions of the Series A Indenture, and subject to the following specific conditions, which are made conditions precedent to the issuance of any such Additional Bonds:
(a) The Authority will not be in default under the Series A Indenture or any Supplemental Indenture, as evidenced by a Certificate of the Authority, and the City will not be in default under the CUBE Lease, as evidenced by a Certificate of the City;
(b) A Supplemental Indenture may provide for the funding of a debt service reserve for such Additional Bonds;
(c) The Additional Bonds will be payable as to principal on June 1 of each year in which principal is due and will be payable as to interest on each Interest Payment Date; (d) The aggregate principal amount of Series A Bonds issued and at any time Outstanding under the Series A Indenture or under any Supplemental Indenture will not exceed any limit imposed by law, by the Series A Indenture or by any Supplemental Indenture, as evidenced by a Certificate of the Authority and the City;
(e) The CUBE Lease will have been amended so as to increase the base rental payments payable by the City thereunder by an aggregate amount equal to the principal and interest due and payable on such Additional Bonds, payable at such times and in such manner as may be necessary to provide for the payment of the principal and interest on such Additional Bonds, as evidenced by a Certificate of the City;
(f) The Supplemental Indenture will provide redemption dates and/or for the mandatory redemption of Additional Bonds in amounts sufficient to provide for payment of the Additional Bonds when the applicable CUBE Base Rental Payments are due; and (g) The Supplemental Indenture will prescribe the form or forms of such Additional Bonds, and subject to the provisions hereof, will provide for the distinctive designation, denominations, dates, principal payment dates, interest payment dates, interest rates, provisions for redemption, and places of payment for principal and interest.

Any Additional Bonds will be on a parity with, and each Owner thereof will have the same rights upon an Event of Default as the Owner of, any other Series A Bonds issued and delivered under the Series A Indenture, except as otherwise provided in the Supplemental Indenture under which Additional Bonds are issued.

14 Parity Debt
The Series A Bonds constitute Additional Bonds under the Series A Indenture and are issued by the Authority on a parity with 2020 Bonds.

Maintenance, Utilities, Taxes and Assessments
During such time as the City or any assignee or sublessee thereof is in possession of the CUBE Leased Property, all maintenance and repair, ordinary or extraordinary, of the CUBE Leased Property will be the responsibility of the City, and the City will pay for, or otherwise arrange for the payment of, (a) all utility services supplied to the CUBE Leased Property, (b) the cost of operation of the CUBE Leased Property, and (c) the costs of maintenance of and repair to the CUBE Leased Property resulting from ordinary wear and tear or want of care on the part of the City. The City will, at the City’s sole cost and expense, keep and maintain the CUBE Leased Property clean and in a safe and good condition and repair.

The Authority has no obligation to alter, remodel, improve, repair, decorate, or paint the CUBE Leased Property or any part thereof.

The City will comply with all statutes, ordinances, reg ulations, and other requirements of all governmental entities that pertain to the occupancy or use of the CUBE Leased Property. The Authority has no responsibility or obligation whatsoever to construct any improvements, modifications or alterations to the CUBE Leased Property.

The Authority and the City contemplate that the CUBE Leased Property will be used for public purposes by the City and, therefore, that the CUBE Leased Property will continue to be exempt from all taxes presently assessed and levied w ith respect to real and personal property. In the event that the use, possession or acquisition by the Authority or the City of the CUBE Leased Property is found to be subject to taxation in any form, the City will pay during the term of the CUBE Lease, as the same respectively become due, all taxes and governmental charges of any kind whatsoever that may at any time be lawfully assessed or levied against or with respect to the CUBE Leased Property and any other property acquired by the City in substitution for, as a renewal or replacement of, or a modification, improvement or addition to the CUBE Leased Property; provided, that with respect to any governmental charges or taxes that may lawfully be paid in installments over a period of years, the City will be obligated to pay only such installments as are accrued during such time as the CUBE Lease is in effect.

Substitution and Release of Property
The City will have, so long as the CUBE Lease is in effect, the option at any time and from time to time, to substitute other real property (the “Substitute Property”) for any portion of the CUBE Leased Property (the “Former Property”) or release any identifiable real property and/or improvement s currently constituting the Leased Property (in such case, Substitute Property will mean the Former Property less any portion released pursuant to the CUBE Lease); provided, that the City will satisfy all of the following requirements, which are conditions precedent to such substitution:
(a) No default under the CUBE Lease or Event of Default under the Series A Indenture will have occurred and be continuing;
(b) The City will file with the Authority and the Trustee, and cause to be recorded in the office of the County Recorder, sufficient memorialization of amendments to the CUBE Lease and the CUBE Site Lease with a description of such Substitute Property which deletes therefrom the description of the Former Property;

15 (c) The City will obtain an extended Ca lifornia Land Title Association (“CLTA”) policy of title insurance insuring the City’s fee or leasehold estate in such Substitute Property, the City’s leasehold estate under the CUBE Lease, and the Authority’s leasehold estate under the CUBE Site Lease in such Substitute Property, subject only to Permitted Encumbrances, in an amount not less than the aggregate principal amount of the Outstanding Series A Bonds and 2020 Bonds ; provided, however, that this requirement will not apply to Substitute Property tha t consists only of Former Property less any released portion;
(d) The City will provide a Certificate of the City to the Authority and to the Trustee that such Substitute Property constitutes property which the City is permitted to lease under the laws of the State; (e) The substitution of the Substitute Property will not cause the City to violate any of its covenants, representations and warranties made in the CUBE Lease; (f) The City will file with the Authority and the Trustee a Certificate of the City or other evidence which establishes that the annual fair rental value of the Substitute Property after substitution or release will be at least equal to 100% of the maximum amount of the CUBE Base Rental Payments becoming due in the then current fiscal yea r or in any subsequent fiscal year and the useful economic life of the Substitute Property will be at least equal to the maximum remaining term of the CUBE Lease; and (g) The City will furnish to the Trustee an opinion of Bond Counsel addressed to the Trustee, the City and the Authority to the effect that the substitution or release is permitted under the CUBE Lease and will not in and of itself (i) impair the validity and enforceability of the CUBE Lease or (ii) impair the exclusion of interest on the Series A Bonds, the 2020 Bonds and, if applicable, any Additional Bonds from the gross income of the owners thereof for federal income tax purposes.

Upon the satisfaction of all such conditions precedent, and upon the City delivering to the Authority and the Trustee a Certificate of the City certifying that the conditions set forth in subsections (a), (c) and (e) above have been satisfied, the Term of the CUBE Lease will thereupon end as to the CUBE Leased Property and will thereupon commence as to the Substitute Property, and all references to the CUBE Leased Property will apply with full force and effect to the Substitute Property. The City will not be entitled to any reduction, diminution, extension or other modification of the CUBE Base Rental Payments whatsoever as a result of any substitution or removal under the CUBE Lease. [The parties to the CUBE Lease have acknowledged that the annual fair rental value of the CUBE Leased Property is in excess of the maximum annual CUBE Base Rental Payments and it is likely that the CUBE Lease will be amended to release a portion of the Leased Property or increase the CUBE Base Rental Payments for the purpose of Additional Bonds. Without substituting or releasing any of the CUBE Leased Property, the City and the Authority may amend the CUBE Lease to increase the amount of CUBE Base Rental Payment payable t hereunder for the purpose of allowing the Authority to issue Additional Bonds pursuant to the Ser ies A Indenture; provided the City will provide the Trustee and the Authority (i) a Certificate of the City certifying that the value of the CUBE Leased Property will not be less than the aggregate principal amount of the Outstanding Series A Bonds, 2020 Bonds and Additional Bonds to be issued, and (ii) a new or amended extended CLTA policy of title insurance in an amount not less than the aggregate principal amount of the Outstanding Series A Bonds, 2020 Bonds and Additional Bonds to be issued.]

16 SECURITY AND SOURCES OF PAYMENT FOR THE SERIES B BONDS General
Pursuant to the Series B Indenture, the Series B Bonds will be secured by a first lien on and pledge of all of the Series B Revenues, including all of the moneys in the Lease Revenue Fund, including t he Interest Account, the Principal Account and the Redemption Account, and the Insurance and Condemnation Fund established thereunder.

The Base Rental Payments relating to the City Hall Lease (the “City Hall Base Rental Payments”) will be paid by the City in an amount sufficient to pay the principal of and interest on the 2016 Bonds, the Series B Bonds and any additional bonds issued under the Series B Indenture on each Interest Payment Date.

Under the City Hall Lease, in addition to City Hall Base Rental Payments, the City has agreed to pay Additional Rental Payments in such amounts in each year as shall be required for the payment of all costs and expenses (not otherwise paid for or provided for out of the proceeds of sale of the Series B Bonds) incurred by the Authority or the Trustee in connection with the execution, performance or enforcement of the City Hall Lease or the assignment thereof, the Series B Indenture, or the Authority’s or the Trustee’s interest in the City Hall Leased Property, includin g, but not limited to, all fees, costs and expenses, all administrative costs of the Authority relating to the City Hall Leased Property (including, without limiting the generality of the foregoing, salaries and wages of employees, overhead, insurance premiums, taxes and assessments (if any), expenses, compensation and indemnification of the Trustee payable by the Authority under the Series B Indenture), fees of auditors, accountants, attorneys or engineers, and all other reasonable and necessary administrative costs of the Authority or charges required to be paid by it to comply with the terms of the Series B Bonds or of the Series B Indenture.

The City has agreed in the City Hall Lease to take such action as may be necessary to include all City Hall Base Rental Payments and Additional Rental Payments due under the City Hall Lease in its annual budget and to make the necessary annual appropriations for all such City Hall Base Rental Payments and Additional Rental Payments, subject only to abatement as provided in the City Hall Lease. The covenants on the part of the City contained in the City Hall Lease are duties imposed by law and it will be the duty of each and every public official of the City to take such action and do such things as are required by law in the performance of the official duty of such officials to enable the City to carry out a nd perform the covenants and agreements in the City Hall Lease agreed to be carried out and performed by the City.

Pursuant to the Assignment Agreement relating to the Series B Indenture, the Authority will assign, as further security for its obligations to make timely payment of principal of and interest on the Series B Bonds to the Trustee for the benefit of the Series B Bond Owners certain of the Authority’s rights under the City Hall Lease, including the right to receive City Hall Base Rental Payments. Not less than fifteen (15) Business Days preceding each June 1 and December 1, the City is required to pay to the Trustee the City Hall Base Rental Payments coming due on the next succeeding June 1 and December 1, respectively, from any legally available sources.

Limited Obligation
The Series B Bonds are special obligations of the Authority and, as and to the extent set forth in the Series B Indenture, are payable solely from and secured by a first lien on and pledge of the Series B Revenues as provided in the Series B Indenture. All of the Series B Bonds and the 2016 Bonds are equally secured by a pledge of, and charge and lien upon, all of the Series B Revenues (other than deposits to the Rebate Fund created by the Series B Indenture), and the Series B Revenues (other than deposits to the

17 Rebate Fund created by the Indenture) constitute a trust fund for the security and payment of the principal of and interest on the Series B Bonds and the 2016 Bonds. The full faith and credit of the Authority is not pledged for the payment of the principal of or interest or premium (if any) on the Series B Bonds. The Series B Bonds are not secured by a legal or equitable pledge of, or charge, lien or encumbrance upon, any of the property of the A uthority or any of its income or receipts, except the Series B Revenues and such other moneys and securities as provided in the Series B Indenture.

No Debt Service Reserve
The Authority has not undertaken to fund any debt service reserve to secure the paym ent of debt service on the Series B Bonds.

Abatement of City Hall Base Rental Payments
The City’s obligation to pay City Hall Base Rental Payments is subject to abatement during any period in which by reason of any damage, destruction or condemnation there is substantial interference with the beneficial use by the City of the City Hall Leased Property or any portion thereof. Such abatement may be in an amount such that the resulting City Hall Base Rental Payments in any year during which such interference occurs or continues do not exceed the fair rental value of the portions of the City Hall Leased Property as to which such damage, destruction or taking do not substantially interfere with the City’s use and right of possession, as evidenced by a Certificat e of the City. Such abatement shall continue for the period commencing with the date of such interference and ending with the restoration of the City Hall Leased Property to tenantable condition. See “RISK FACTORS – Abatement” herein.

Insurance Coverages
Pursuant to the City Hall Lease, the City will obtain one or more California Land Title Association title policies insuring the City’s and Authority’s interest in the City Hall Leased Property. The City Hall Lease requires that the City maintain rental interruption insurance in an amount not less than the maximum remaining scheduled City Hall Base Rental Payments in any twenty-four (24) month period to insure against loss of use of the City Hall Leased Property caused by perils covered by required casualty insurance, casualty insurance against loss or damage to any or all of the City Hall Leased Property, workers’ compensation insurance, and comprehensive general liability coverage against claims for damages including death, personal injury, bodily injury or property damage arising from operations involving the City Hall Leased Property. While the City currently maintains earthquake insurance, the City Hall Lease does not require the City to obtain or maintain earthquake insurance on the City Hall Leased Property. For additional information regarding insurance coverages required by the City Hall Lease, see APPENDIX C – “SUMMARY OF CERTAIN PROVISIONS OF THE PRINCIPAL LEGAL DOCUMENTS – The Lease – Insurance.”
Additional Bonds
The Authority has agreed pursuant to the Series B Indenture that no additional bonds, notes or indebtedness shall be issued or incurred that are payable out of the Series B Revenues in whole or in part, other than Additional Bonds as provided in the Series B Indenture. However, the City may issue or incur other obligations payable from the City’s General Fund. The parties to the City Hall Lease have acknowledged that the annual fair rental value of the City Hall Leased Property is equal to or greater than the maximum annual City Hall Base Rental Payments and it is possible that the City Hall Lease will be amended to release a portion of the City Hall Leased Property or increase the City Hall Base Rental Payments for the purpose of Additional Bonds. See “RISK FACTORS – No Limitation on Incurring Additional Obligations” herein.

18 The Authority and the Trustee may by execution of a Supplemental Indenture, without the consent of the Owners, provide for the issuance and delivery of Additional Bonds in one or more series. Upon the Request of the Authority, the Trustee may authenticate and deliver Additional Bonds in an aggregate principal amount authorized by such Supplemental Indenture. The proceeds of such Additional Bonds may be used for any purpose, including for the purpose of refunding Outstanding Bonds. Such Additional Bonds may only be issued upon compliance by the Authority with the provisions of the Series B Indenture, and subject to the following specific conditions, which are made condition s precedent to the issuance of any such Additional Bonds:
(a) The Authority will not be in default under the Series B Indenture or any Supplemental Indenture, as evidenced by a Certificate of the Authority, and the City will not be in default under the City Hall Lease, as evidenced by a Certificate of the City;
(b) A Supplemental Indenture may provide for the funding of a debt service reserve for such Additional Bonds;
(c) The Additional Bonds will be payable as to principal on December 1 of each year in which principal is due and will be payable as to interest on each Interest Payment Date; (d) The aggregate principal amount of Series B Bonds issued and at any time Outstanding under the Series B Indenture or under any Supplemental Indenture will not exceed any limit imposed by law, by the Series B Indenture or by any Supplemental Indenture, as evidenced by a Certificate of the Authority and the City;
(e) The City Hall Lease will have been amended so as to increase the base rental payments payable by the City thereunder by an aggregate amount equal to the principal and interest due and payable on such Additional Bonds, payable at such times and in such manner as may be necessary to provide for the payment of the principal and interest on such Additional Bonds, as evidenced by a Certificate of the City;
(f) The Supplemental Indenture will provide redemption dates and/or for the mandatory redemption of Additional Bonds in amounts sufficient to provide for payment of the Additional Bonds when the applicable City Hall Base Rental Payments are due; and (g) The Supplemental Indenture will prescribe the form or forms of such Additional Bonds, and subject to the provisions hereof, will provide for the distinctive designation, denominations, dates, principal payment dat es, interest payment dates, interest rates, provisions for redemption, and places of payment for principal and interest.

Any Additional Bonds will be on a parity with, and each Owner thereof will have the same rights upon an Event of Default as the Owner of, any other Series B Bonds issued and delivered under the Series B Indenture, except as otherwise provided in the Supplemental Indenture under which Additional Bonds are issued.

19 Parity Debt
The Series B Bonds constitute Additional Bonds under the Series B Indenture and are issued by the Authority on a parity with 2016 Bonds.

Maintenance, Utilities, Taxes and Assessments
During such time as the City or any assignee or sublessee thereof is in possession of the City Hall Leased Property, all maintenance and repair, ordinary or extraordinary, of the City Hall Leased Property will be the responsibility of the City, and the City will pay for, or otherwise arrange for the payment of, (a) all utility services supplied to the C ity Hall Leased Property, (b) the cost of operation of the City Hall Leased Property, and (c) the costs of maintenance of and repair to the City Hall Leased Property resulting from ordinary wear and tear or want of care on the part of the City. The City w ill, at the City’s sole cost and expense, keep and maintain the City Hall Leased Property clean and in a safe and good condition and repair. The Authority has no obligation to alter, remodel, improve, repair, decorate, or paint the City Hall Leased Property or any part thereof.

The City will comply with all statutes, ordinances, regulations, and other requirements of all governmental entities that pertain to the occupancy or use of the City Hall Leased Property. The Authority has no responsibility or obligation whatsoever to construct any improvements, modifications or alterations to the City Hall Leased Property.

The Authority and the City contemplate that the City Hall Leased Property will be used for public purposes by the City and, therefore, that the City Hall Leased Property will continue to be exempt from all taxes presently assessed and levied with respect to real and personal property. In the event that the use, possession or acquisition by the Authority or the City of the City Hall Leased Property is found to be subject to taxation in any form, the City will pay during the term of the City Hall Lease, as the same respectively become due, all taxes and governmental charges of any kind whatsoever that may at any time be lawfully assessed or levied against or with respect to the City Hall Leased Property and any other property acquired by the City in substitution for, as a renewal or replacement of, or a modification, improvement or addition to the City Hall Leased Property; provided, that with respect to any governmental charges or taxes that may lawfully be paid in installments over a period of years, the City will be obligated to pay only such installments as are accrued during such time as the City Hall Lease is in effect.

Substitution and Release of Property
The City will have, so long as the City Hall Lease is in effect, the option at any time and from time to time, to substitute other real property (the “Substitute Property”) for any portion of the City Hall Leased Property (the “Former Property”) or release any identifiable real property and/or improvements currently constituting the Leased Property (in such case, Substitute Property will mean the Former Property less any portion released pursuant to the City Hall Lease); provided, that the City will satisfy all of the following requirements, which are conditions precedent to such substitution:
(a) No default under the City Hall Lease or Event of Default under the Series B Indenture will have occurred and be continuing;
(b) The City will file with the Authority and the Trustee, and cause to be recorded in the office of the County Recorder, sufficient memorialization of amendments to the City Hall Lease and the City Hall Site Lease with a description of such Substitute Property which deletes therefr om the description of the Former Property;

20 (c) The City will obtain an extended California Land Title Association (“CLTA”) policy of title insurance insuring the City’s fee or leasehold estate in such Substitute Property, the City’s leasehold estate under the City Hall Lease, and the Authority’s leasehold estate under the City Hall Site Lease in such Substitute Property, subject only to Permitted Encumbrances, in an amount not less than the aggregate principal amount of the Outstanding Series B Bonds and 2016 Bond s; provided, however, that this requirement will not apply to Substitute Property that consists only of Former Property less any released portion;
(d) The City will provide a Certificate of the City to the Authority and to the Trustee that such Substitute Property constitutes property which the City is permitted to lease under the laws of the State; (e) The substitution of the Substitute Property will not cause the City to violate any of its covenants, representations and warranties made in the City Hall Lease; (f) The City will file with the Authority and the Trustee a Certificate of the City or other evidence which establishes that the annual fair rental value of the Substitute Property after substitution or release will be at least equal to 100% o f the maximum amount of the City Hall Base Rental Payments becoming due in the then current fiscal year or in any subsequent fiscal year and the useful economic life of the Substitute Property will be at least equal to the maximum remaining term of the City Hall Lease; and (g) The City will furnish to the Trustee an opinion of Bond Counsel addressed to the Trustee, the City and the Authority to the effect that the substitution or release is permitted under the City Hall Lease and will not in and of itself ( i) impair the validity and enforceability of the City Hall Lease or (ii) impair the exclusion of interest on the Series B Bonds, the 2016 Bonds and, if applicable, any Additional Bonds from the gross income of the owners thereof for federal income tax purposes.

The parties to the City Hall Lease have acknowledged that the annual fair rental value of the City Hall Leased Property is in excess of the maximum annual City Hall Base Rental Payments and it is likely that the City Hall Lease will be amended to release a portion of the Leased Property or increase the City Hall Base Rental Payments for the purpose of Additional Bonds. Without substituting or releasing any of the City Hall Leased Property, the City and the Authority may amend the City Hall Lease to increase the amount of City Hall Base Rental Payment payable thereunder for the purpose of allowing the Authority to issue Additional Bonds pursuant to the Series B Indenture; provided the City will provide the Trustee and the Authority (i) a Certificate of the City certifying that the value of the City Hall Leased Property will not be less than the aggregate principal amount of the Outstanding Series B Bonds, 2016 Bonds and Additional Bonds to be issued, and (ii) a new or amended extended CLTA policy of title insurance in an amount not less than the aggregate principal amount of the Outstanding Series B Bonds, 2016 Bonds and Additional Bonds to be issued.

EXISTING GENERAL FUND INDEBTEDNESS
On June 22, 2016, the Authority issued the 2016 Bonds in the principal amount of $10,320,000, secured by base rental payments made by the City under the City Hall Lease, which debt service payments

21 are payable from the City’s General Fund and are due on June 1 and December 1 of each year through 2035.

The unpaid balance as of June 30, 2022, was $7,930,000.

Also on June 22, 2016, the Authority issued its Lease Revenue Bonds (Open Space and Parkland Acquisition Program) Series 2016B (t he “Series 2016B Bonds”) in the principal amount of $14,020,000, secured by base rental payments made by the City under a lease of the Aquatics Center and Sports Complex of the City located at 20870 Centre Pointe Parkway within the City, which debt service payments are payable from the City’s General Fund (but are being funded from the City’s assessment revenue from its Open Space Preservation District) and are due on April 1 and October 1 of each year through 2037. The unpaid balance as of June 30, 2022, was $12,020,000.

On June 27, 2019, the Authority issued its Lease Revenue Bonds (Sheriff Station Project), Series 2019 (the “Series 2019 Bonds”) in the principal amount of $25,850,000, secured by base rental payments made by the City under a lease of the sheriff station located at 26201 Golden Valley Road within the City, which debt service payments are payable from the City’s General Fund and are due on June 1 and December 1 of each year through June 1, 2049. The unpaid principal balance as of June 30, 2022, was $25,345,000.

On October 22, 2020, the Authority issued the 2020A Bonds in the principal amount of $10,645,000, secured by base rental payments made by the City under the CUBE Lease, which debt service payments are payable from the City’s General Fund and are due on June 1 and December 1 of each year through June 1, 2050. The unpaid principal balance as of June 30, 2022, was $10,645,000.

Also on October 22, 2020, the Authority issued the 2020A -T Bonds in the principal amount of $3,625,000, secured by base rental payments made by the City under the CUBE Lease, which debt service payments are payable from the City’s General Fund and are due on June 1 and December 1 of each year through June 1, 2030. The unpaid principal balance as of June 30, 2022, was $2,790,000. See “THE CITY – Outstanding Indebtedness of the City.”

PLAN OF FINANCE
General
Proceeds of the Series A Bonds will be used to finance a portion of the costs of the 2022 Project, and pay the costs of issuing the Series A Bonds.

Proceeds of the Series B Bonds will be used to finance a portion of the costs of the 2022 Project, and pay the costs of issuing the Series B Bonds.

In August 2012, the City completed its Climate Action Plan (CAP) as part of the One Valley One Vision (OVOV) general plan process. OVOV serves as the new general plan document for the City. The State requires all cities that create a new general plan document to consider its impacts on greenhouse gas emissions. In order to do so, cities must complete a CAP. The CAP must achieve the emission reduction goals outlined by the Global Warming Solutions Act of 2006 (AB 32). AB 32 requires that statewide greenhouse gas emissions must be reduced to 1990 levels by the year 2020. Measures identified in the City’s CAP will not only meet but exceed the State’s AB 32 greenhouse gas emission reduction mandate.

A large portion of the greenhouse gas emissions reductions would be achieved by the decrease in vehicle miles traveled in the City via changes in land use patterns and a greater emphasis of transit and alternative transportation programs. Other significant reductions are due to the creation or acquisition of new vegetated space in line with the goals of the City’s Open Space Preservation District and water use measures.

Applying estimated reductions from CAP measures shows that the resulting 2020 net emissions are

22 expected to be approximately 4% below the 2005 baseline level. The reduction represents a level that is 17% below the 2020 business‐as‐usual (BAU) emissions level and is consistent with the overall Statewide Goals of AB 32.

The 2022 Project, also known as the “ City of Santa Clarita Energy Infrastructure Modernization Program,” was approved by the Council on September 27, 2022, and will help the City to make significant progress in reducing greenhouse gas emissions and meeting the Statewide Goals of AB 32. By reducing energy consumption 4,567,659 kWh per year, the City will reduce greenhouse gas emissions by 3,322 metric tons annually. Per the City’s 2021 Climate Action Plan, the City’s municipal operations contributed 2% of the City’s total greenhouse gas emissions. The reduction of 3,322 MTCO2 annually through the 2022 Project will represent a 9.62% reduction in the City’s contribution of CO2 annually and a 9.68% reduction compared to the projected 2020 BAU MTCO2 levels. The energy saved through the 2022 Project efforts is enough to power 646 Santa Clarita homes every year and the equivalent of taking 716 gas-powered off the road every year. Further, the City will b e converting to renewable sources of power at its highest energy using sites and parks including six sites of solar photovoltaic and three sites of solar thermal.

As part of the Santa Clarita 2025 Strategic Plan, the City Council identified a goal of compl eting energy efficiency upgrades to all City facilities. The intent of completing these upgrades is to save money, reduce greenhouse gas emissions, and meet growing energy demand. By investing in efficient infrastructure, the City will achieve substantial long-term energy cost savings and demonstrate environmental leadership. To achieve this objective, a Request for Proposals (RFP) was posted on June 14, 2021, seeking a qualified energy services company capable of developing and implementing projects that are consistent with the City’s desire to deliver the best and most cost-efficient municipal services. On November 9, 2021, Climatec, LLC., Anaheim, California (“Climatec”), was selected to develop an energy efficiency audit inclusive of a viable comprehensive energy conservation plan. Climatec conducted comprehensive site assessments identifying energy efficiency improvement measures and developed the preliminary and final scope and plan. Climatec will implement the final program with the construction of the improvements. Following acceptance of the improvements, Climatec will measure and verify savings.

The 2022 Project will promote operational efficiencies by modernizing and centralizing the controls for outdated irrigation systems at City par ks and outdated HVAC systems at City facilities. The 2022 Project is expected to result in utility savings. Additionally, installation of solar infrastructure at City facilities now will allow the City to be grandfathered into the Net Energy Metering (NE M) 2.0 program, which allows the City to receive bill credits for the excess electricity that the solar panels will produce. The 2022 Project also demonstrates the City’s commitment to environmental stewardship.

Bonds Designation as Green Bonds
The Bonds are designated as “Green Bonds” to allow investors to invest directly in bonds that finance environmentally beneficial projects. Proceeds of the Bonds are being used to finance a portion of the 2022 Project. See “General” and “2022 Project” below.

The terms “Green Bonds” and “green project” are neither defined in nor related to provisions in either Indenture or otherwise defined under State or federal laws. The use of such terms herein is for identification purposes only and is not intended to provide or imply that an owner of the Bonds is entitled to any additional security other than as provided in the Indentures. The purpose of labeling the Bonds as “Green Bonds” is, as noted, to allow owners of the Bonds to invest directly in bonds that are expected to finance environmentally beneficial projects. The repayment obligations of the City with respect to the Bonds are not conditioned on the satisfaction of any certification relating to the status of the Bonds as Green Bonds. Neither the Authority nor the City assumes any obligation to ensure that the projects funded with

23 the proceeds of the Bonds comply with any legal or other principles of green projects as such principles may evolve over time.

No representation is made as to the suitability of the Bonds to fulfill environmental criteria required by prospective investors. Each potential purchaser of the Bonds should determine for itself the relevance of the information contained or referred to herein or in the Indentures regarding the use of proceeds and its purchase of the Bonds should be based upon such investigation as it deems necessary. See “RISK FACTORS – Green Bonds.”
2022 Project
The analysis of City facilities identified opportunities for Energy Conservation Measures (ECM) at 36 different sites. Most of the sites are proposed to receive high efficiency HVAC modernizations, modern building automated systems (BAS), and lighting upgrades. Some of the sites will receive solar energy generating structures in the parking lots. In addition to those improvements, the CUBE Leased Property will receive a new roof, and high efficiency improvements to the ice refrigeration system.

The 2022 Project consists of financing certain energy efficiency improvements associated with City buildings and facilities, including but not limited to, HVAC, lighting, water conservation, solar, and refrigeration improvements. The total cost for the 2022 Project is $35.1 million, of which approximately $15 million will be funded with cash initially , with $3 million reimbursed from a n expected C alifornia Energy Commission Loan. The remaining amount of approximately $20 million would be financed from proceeds of the Bonds.

Below is a list of the estimated turnkey price for the 2022 Project to be completed by Climatec.

Construction is scheduled to commence in 2023 and is estimated to take approximately 24 months to complete.

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24 CITY OF SANTA CLARITA

ENERGY EFFICIENCY MODERNIZATION PROGRAM

RENEWABLE ENERGY PROJECTS
Estimated
Turnkey Price
Solar Parking Structures $8,541,583
Energy Storage 2,004,379
Pool Solar Thermal 363,764

TOTAL RENEWABLE ENERGY PROJECTS $10,909,726

OTHER PROJECTS
Estimated
Turnkey Price
High Efficiency HVAC Modernizations $5,527,360
Building Automation Systems (BAS) 1,112,286
Interior and Exterior Lighting 3,046,768
Sports Field Lighting 5,534,786
Building Envelope (Window Improvements) 181,118
Building Envelope (Roofing & Insulation) 2,562,040
Smart Irrigation Systems 831,300
Ice Rink Refrigeration Systems + Upsizing 4,671,218
Electrical Upgrades (Transformers) 752,865

TOTAL OTHER PROJECTS $24,219,741

ALL PROJECTS COMBINED $35,129,467
Source: City of Santa Clarita; Climatec Report.

Below is a summary of the estimated detailed scope of work throughout all of the facilities:

ESTIMATED SCOPE OF WORK
High Efficiency HVAC at 15 sites Ventilation and filtration improvements at __ sites Building Automated Systems (BAS) at 24 sites Existing BAS integration at 1 site Sports field LED lighting at 7 sites Interior LED lighting at 27 sites Exterior LED lighting at 36 sites Occupancy sensors at 30 sites Roof replacement at 1 site Window film at 2 sites
Solar at 6 sites Solar thermal water heating at 3 sites Battery storage systems at 2 sites Smart irrigation controllers at 24 sites Efficient water heaters at 1 site Upgraded ice rink refrigeration at 1 site New dehumidification system at 1 site Ice Purification System at 1 site Efficient transformers at 14 sites
Source: City of Santa Clarita; Climatec Report.

25 2022 Projects for Leased Property
The table below lists the portion of the 2022 Project and the energy efficiency improvements planned for the CUBE Leased Property and the City Hall Leased Property. The City does not anticipate interruption in occupancy for the CUBE Leased Property or the City Hall Leased Property or abatement of Base Rental Payments due to the installation of the improvements.

CITY OF SANTA CLARITA

ENERGY EFFICIENCY MODERNIZATION PROGRAM

LEASED PROPERTY

The CUBE

City Hall

TOTAL
New Building Automation Systems & Integrations $ 188,770 $ 293,831 $ 482,601 High Efficiency HVAC Modernizations 1,749,549 1,298,293 3,047,842 High Efficiency Interior & Exterior Lighting 102,028 331,318 433,346 Solar Parking St ructures 2,028,348 1,069,586 3,097,937 Energy Storage System - 845,614 845,614
Window Improvements - 113,539 113,539
New Roofing & Insulation 1,963,826 - 1,963,826
High Efficiency Refrigeration System 3,580,529 - 3,580,529 High Efficiency Transformers 79,548 164,868 244,416
Engineering & Design 485,366 297,638 783,004
Project Management & Supervision 319,856 135,863 455,719 SITE SUBTOTALS $10,497,819 $4,550,549 $15,048,373
Source: City of Santa Clarita. Climatec ____

CUBE Leased Property
The CUBE Leased Property, or Recreational Facility, consists of an approximately 4.4 acre parcel at 27745 Smyth Drive within the City, along with a 92,751 square foot recreational facility located thereon owned by the City. The Recreational Facility was purchased by the City on October 2, 2020 for $14,200,000 from Arena Development Group, LLC, and renamed “The CUBE- Ice and Entertainment Center, Powered by FivePoint Valencia.”
The Recreational Facility was originally constructed in 2000 and included three ice rinks (Olympic, NHL, and Figure Skating), a lobby, arcade, kitchen, food/concession area, locker rooms, offices, training center and pro shop. The CUBE supports ice sports, business meetings, conferences, tradeshows and other recreational type activities and events that benefit the City. To date, the City has spent approximately $[3] million to repair, improve and rehabilitate the CUBE. As indi cated previously, $10.5 million additional improvements associated with the City’s Energy Efficiency Modernization Program are anticipated to be made to the CUBE.

The present zoning of the CUBE Leased Property allows for retail commercial, warehouse uses , clean industrial uses, offices related to industrial use, research and development. The Recreational Facility exceeds the parking requirement with 328 parking spaces, including 7 accessible spaces and 1 van accessible space. The Recreational Facility is a concrete block and stucco, single -story building with a mezzanine (type II construction), and the minimum roofing classification for this building is Class B, built

26 in December 2000. The Recreational Facility includes 71,286± square feet on the ground f loor with 21,465± square feet of mezzanine space. The building has 3,500± square feet of office space, including mercantile space and a meeting room, 30 feet of roof height, central air conditioning, twelve restrooms and sprinklers. The roof is composition covered with skylights.

Along with hockey, ice skating, curling, special events and other recreational activities at the CUBE, recent events that have taken place at the CUBE include the United States Figure Skating 2022 National Solo Dance Final hosted by The Figure Skating Club of Southern California and a Community Day in which first responders, veterans, and up to four of their family members had admission and public skate fees waived, along with free skate lessons and meet-and-greet with Bailey and the Los Angeles Kings Crew for the public. Upcoming events include the UCLA Men's Ice Hockey Team's first home game at The Cube and the Holiday Tree Lighting Ceremony and two holiday shows.

The City, based upon insurance coverage estimates, values the Recr eational Facility at more than $27 million not including the land value of the site which encompasses over four (4) acres. The City estimates that the total value of the real property comprising the CUBE Leased Property is at least equivalent to the principal amount of the 2020 Bonds and the Series A Bonds.

None of the CUBE Leased Property is located in a 100 year flood plain or fire hazard zone.

The CUBE Leased Property is leased from the City to the Authority pursuant to the CUBE Site Lease and the Auth ority then leases it back to the City pursuant to the CUBE Lease. Under the CUBE Lease, the City is required to maintain the CUBE Leased Property in working order.

The City covenants in the CUBE Lease to obtain and maintain certain insurance with specif ied minimum coverages for the CUBE Leased Property. See “SECURITY AND SOURCES OF PAYMENT OF THE BONDS – Insurance Coverages” and APPENDIX C – “SUMMARY OF CERTAIN PROVISIONS OF THE PRINCIPAL LEGAL DOCUMENTS – The Lease – Insurance.” The City has a blanket insurance policy for real property issued through the California Joint Powers Insurance Authority (“CAJPIA”). See “THE CITY – Risk Management” herein.

Pursuant to the CUBE Lease, the City has the right to substitute alternate real property or improvements for the CUBE Leased Property, release existing property or add additional real property or improvements to the CUBE Leased Property. See “SECURITY AND SOURCES OF PAYMENT FOR THE BONDS – Substitution and Release of Property” herein.

27 CUBE LEASED PROPERTY

28 CUBE – EXTERIOR

CUBE INTERIOR

29 City Hall Leased Property
The City Hall Leased Property consists of the City Hall building and City Hall site located at 23920 Valencia Boulevard in the City of Santa Clarita. The three story, 74,325-square foot City Hall building was constructed in 1986 for an approximate cost of $8.65 million. The City Hall building and adjacent parking are located on an approximate 3-acre site. The City Hall houses the City Manager’s Office, Administrative Services, Community Development, Human Resources & Library Services, Neighborhood Services and Public Works departments as well as the Council C hambers. The building also serves as an Emergency Operations Center. As indicated previously, $4.5 million additional improvements as sociated with the City’s Energy Efficiency Modernization Program are anticipated to be made to City Hall.

The City Hall building is made of steel frame construction on a concrete foundation, brick veneer, metal stud exterior walls and marble floors at th e ground level. The building contains a sprinkler system.

The City Hall building sustained damage as a result of the January 1994 Northridge Earthquake and as a result was repaired and retrofitted for approximately $4.6 million in 1994. The City did not have use of the building for approximately 100 days during that time. In 2014, City Hall was retrofitted with steel braced frames and seismic dampers after new structural research on steel moment frame systems was completed.

This new design meets the more stringent code requirements for an emergency operations center (structural Risk Category IV).

The City, based upon insurance coverage estimates, values the City Hall at more than $23 million not including the land value of the site which encompasses over three (3) acres. The City estimates that the total value of the real property comprising the City Hall Leased Property is at least equivalent to the principal amount of the 2016 Bonds and the Series B Bonds.

None of the City Hall Leased Property is located in a 100 year flood plain.

The City Hall Leased Property is leased from the City to the Authority pursuant to the City Hall Site Lease and the Authority then leases it back to the City pursuant to the City Hall Lease. Under the City Hall Lease, the City is required to maintain the City Hall Leased Property in working order.

The City covenants in the City Hall Lease to obtain and maintain certain insurance with specified minimum coverages for the City Hall Leased Property. See “SECURITY AND SOURCES OF PAYMENT OF THE BONDS – Insurance Coverages” and APPENDIX C – “SUMMARY OF CERTAIN PROVISIONS OF THE PRINCIPAL LEGAL DOCUMENTS – The Lease – Insurance.” The City has a blanket insurance policy for real property issued through CAJPIA. See “THE CITY – Risk Management” herein.

Pursuant to the City Hall Lease, the City has the right to substitute alternate real property or improvements for the City Hall Leased Property, release existing property or add additional real property or improvements to the City Hall Leased Property. See “SECURITY AND SOURCES OF PAYMENT FOR THE BONDS – Substitution and Release of Property” herein.

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30 CITY HALL LEASED PROPERTY

31 ESTIMATED SOURCES AND USES OF FUNDS
The estimated sources and uses of funds are as follows:

Sources: Series A Bonds Series B Bonds

Principal amount of Bonds
Plus/less Net Premium/Discount
Total Sources

Uses:

Deposit to Project Fund
Costs of Issuance(1)
Total Uses

(1) Costs of issuance include legal, trustee, rating agency, and municipal advisor fees, printing costs, underwriter’s discount, and other costs incurred in connection with the issuance of the Bonds.

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32 DEBT SERVICE REQUIREMENTS
The following table sets forth the debt service requirements for the Series A Bonds and the Series B Bonds, assuming mandatory sinking payments.

Fiscal Year
Ending
June 30
Series A Bonds Series B Bonds
Total Principal Interest Principal Interest
2023
2024
2025
2026
2027
2028
2029
2030
2031
2032
2033
2034
2035
2036
2037
2038
2039
2040
2041
2042
2043
2044
2045
2046
2047
2048
2049
2050
2051
2052
Totals
Note: Principal is paid on June 1 for the Series A Bonds and on December 1 for the Series B Bonds.

33 SERIES A INDENTURE

CUBE BASE RENTAL PAYMENTS
Fiscal Year
Ending
June 30
2020A Bonds 2020A-T Bonds Series A Bonds
TOTAL Principal Interest Principal Interest Principal Interest 2023
2024
2025
2026
2027
2028
2029
2030
2031
2032
2033
2034
2035
2036
2037
2038
2039
2040
2041
2042
2043
2044
2045
2046
2047
2048
2049
2050
2051
2052
Totals

34 SERIES B INDENTURE

CITY HALL BASE RENTAL PAYMENTS
Fiscal Year
Ending
June 30
2016 Bonds Series B Bonds
Total Principal Interest Principal Interest
2023
2024
2025
2026
2027
2028
2029
2030
2031
2032
2033
2034
2035
2036
2037
2038
2039
2040
2041
2042
2043
2044
2045
2046
2047
2048
2049
2050
2051
2052
Totals

35 THE AUTHORITY
The Santa Clarita Public Financing Authority (the “Authority”) was established pursuant to a Joint Exercise of Powers Agreement dated as of July 9, 1991, as amended on May 10, 2016 (the “JPA Agreement”), by and among the City, the City as successor agency to the Redevelopment Agency of the City of Santa Clarita (the “Successor Agency”), and the Santa Clarita Parking Authority, in accordance with the provisions of Articles 1, 2 and 4 of Chapter 5 of Division 7 of Title 1 of the California Government Code (the “Joint Powers Law”). The Successor Agency is no longer a member of the Authority.

The Authority was created for the purpose of assisting in the financing and refinancing of public capital improvements for the City and its related entities. Under the Ma rks-Roos Local Bond Pooling Act of 1985, Section 6854 et seq. of the State Government Code, the Authority has the power to purchase bonds issued by any local agency at public or negotiated sale and may sell such bonds to public or private purchasers at public or negotiated sale. The Authority is governed by a five -member Board of Directors which consists of the City Council of the City. The Chair of the Authority is the Mayor of the City, and the Vice Chair of the Authority is the Mayor Pro Tem of the City. The City Manager acts as its Executive Director, the City Clerk acts as its Secretary, and the Treasurer of the City acts as its Treasurer.

The Authority has no taxing power. The Authority and the City are each separate and distinct legal entities, and the debts and obligations of one such entity are not debts or obligations of the other entity.

THE CITY
General
The City is located in the County of Los Angeles (the “County”), 35 miles northwest of Los Angeles and 40 miles east of the Pacific Ocean. The City encompasses an area of approximately 70.87 square miles and, as of January 1, 20 22, had an estimated population of approximately 228,835 according to the California Department of Finance . See APPENDIX A – “GENERAL INFORMATION ABOUT THE CITY OF SANTA CLARITA.” A copy of the City’s audited financial statements for the fiscal year ended June 30, 2021 is attached hereto as APPENDIX B.

Budgetary Process and Administration
The City uses the following procedures when establishing the budgetary data reflected in its financial statements:
• The fiscal year of the City begins on the first day of July of each year and ends on the thirtieth day of June the following year.
• At such date as the City Manager determines, each department head must furnish to the City Manager an estimate of revenues and expenditures for such department for the ensuing fiscal year, detailed in such manner as may be prescribed by the City Manager. In preparing the proposed budget, the City Manager reviews the estimates, holds conferences thereon with the respective department heads as necessary, and may revise the estimates as he may deem advisable. • In June, the City Manager submits to the City Council the proposed budget as prepared by him. After reviewing and making such revisions as it deems advisable, the City Council determines the time for the holding of a public hearing thereon and causes to be published a notice thereof not less than ten days prior to the hearing date. Copies of the proposed budget are available for inspection by the public in the office of the City Clerk at least ten days prior to the hearing. • At the conclusion of the public hearing, the City Council further considers the proposed budget and makes any revisions thereof that it deems advisable and on or before June 30 it adopts

36 the budget with revisions, if any, by the affirmative vote of at least a majority of the total members of the Council.
• From the effective date of the budget, the several amounts stated as proposed expenditures become appropriated to the several departments, offices and agencies for the objects and purposes named, provided that the City Manager may transfer funds from one object or purpose to another within the same fund, department, office or agency. All appropriations lapse at the end of the budget period to the extent that they have not been expended or lawfully encumbered. At any public meeting after the adoption of the budget, the City Council may amend or supplement the budget by motion adopted by the affirmative vote of at least a majority of the total members of the City Council.

The City Council employs, at the beginning of each fiscal year, an independent certified public accounting firm which, at such time or times as specified by the City Council, at least annually, at such other times as such firm shall determine, examines the books, records, inventories and reports of all officers and employees who receive, control, handle or disburse public funds and of all such other officers, employees or departments as the City Council may direct. As soon as practicable after the end of the fiscal year, a report is submitted by such firm to the City Council and a copy of the financial statements as of the close of the fiscal year is published.

Budgetary control is maintained through a mid- year budget review and an adjustment process.

Budgetary adjustments are considered within the framework of the adopted budget and the City Council directions, goals and policies. The budget as adopted by the City Council can be amended during the fiscal year if necessary and proper by action of the City Council.

General Fund
The following tables summarize the audited financial statements for the City’s General Fund for the Fiscal Years ended June 30, 2017 June through 30, 2021. This information should be read in conjunction with APPENDIX B – “AUDITED FINANCIAL STATEMENTS OF THE CITY OF SANTA CLARITA FOR FISCAL YEAR ENDED JUNE 30, 2021.”
Table 1 sets forth the City’s General Fund balance sheet based upon audited financial statem ents for Fiscal Years ended June 30, 2017 through June 30, 2021. Table 2 sets forth the City’s General Fund revenues, expenditures and changes in fund balances based upon audited financial statements for Fiscal Years ended June 30, 2017 through June 30, 2021.

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37 TABLE 1

CITY OF SANTA CLARITA

GENERAL FUND BALANCE SHEET
As of June 30

2017 2018 2019 2020 2021
Assets
Cash and investments $152,219,199 $153,380,261 $173,685,562 $162,888,188 $178,159,980 Accounts receivable 729,681 676,014 533,922 531,858 533,530 Interest receivable 688,378 782,857 990,697 656,656 349,271 Taxes receivable 9,163,168 9,958,518 9,995,980 9,776,995 12,431,517 Loan receivable - - - - 110,000
Notes to RDA Successor Agency 9,462,202 9,440,601 9,553,358 9,751,533 8,914,740 Prepaid costs 126,097 275,867 391,457 545,181 391,738
Due from other governments 405,775 103,765 100,000 172,619 202,153 Due from other funds 4,380,533 3,838,034 4,366,894 9,798,811 4,580,961 Advances to other funds 17,256,104 13,828,350 11,779,557 10,164,307 8,023,848 Deposits from others - - - - 60,000
Restricted Assets – cash and
investments w/ fiscal agents - - 25,000,000 23,064,395 9,644,574 Total Assets $194,431,137 $192,284,267 $236,397,427 $227,350,543 $223,402,312 Liabilities and Fund Balance
Liabilities:

Accounts payable and accrued liabilities $7,976,998 $ 7,351,373 $ 10,630,416 $ 13,229,763 $14,116,987 Deposits payable 17,744,541 17,074,062 13,490,241 3,649,753 3,141,882 Due to other governments 7,700,000 7,700,000 7,700,000 7,837,500 7,700,000 Unearned revenues 695,630 723,600 1,064,906 157,119 519,787 Total Liabilities $ 34,117,169 $ 32,849,035 $ 32,885,563 $ 24,874,135 $ 25,478,656 Deferred inflows of resources
Unavailable (deferred) revenues $ 11,298,702 $ 11,253,355 $ 11,549,625 $ 12,035,171 $ 9,929,517 Total deferred inflows of resources $ 11,298,702 $ 11,253,355 $ 11,549,625 $ 12,035,171 $ 9,929,517

Fund Balance:

Nonspendable $ 15,742,945 $ 12,390,885 $ 12,050,141 $ 9,810,973 $ 7,474,892 Restricted - - - 23,063,669 9,644,574
Committed - - - - -
Assigned 79,367,084 88,674,761 120,981,128 97,293,470 110,906,093 Unassigned 53,905,237 47,116,231 58,930,970 60,273,125 59,968,580 Total Fund Balance $149,015,266 $148,181,877 $191,962,239 $190,441,237 $187,994,139

Total Liabilities and Fund Balance $194,431,137 $192,284,267 $236,397,427 $227,350,543 $223,402,312

Source: City of Santa Clarita Annual Comprehensive Financial Reports.

38 TABLE 2

CITY OF SANTA CLARITA

GENERAL FUND

STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE FOR THE YEAR ENDED JUNE 30
2017 2018 2019 2020 2021
Revenues:

Taxes $81,462,981 $ 84,657,643 $ 87,434,427 $87,376,087 $ 97,704,484 Licenses and permits 7,408,357 7,688,342 9,951,586 7,538,878 11,498,980 Intergovernmental 241,992 377,151 203,119 3,182,624(1) 270,827 Charges for services 8,397,274 8,756,356 8,178,848 6,816,474 6,345,677 Investment income 537,605 277,852 6,580,274 6,667,123 128,498 Fines and forfeitures 706,870 794,423 1,219,536 795,648 621,214 Other revenue 61,788 363,978 230,675 305,285 1,359,092 Total Revenues $98,816,867 $102,915,745 $113,798,465 112,682,119 $117,928,772

Expenditures:

Current:

General government $15,097,325 $23,789,790(3) $19,913,852 $20,951,250 $17,962,178 Public safety 23,306,998 24,793,460 26,444,456 27,938,688 28,378,605

Recreation and community
services 20,283,686 21,068,481 14,997,717 13,553,813 13,567,831 Public works 21,541,973 21,141,020 20,976,185 35,630,112 51,655,008 Community development 5,989,628 6,475,435 6,750,603 6,821,630 6,553,126 Neighborhood Services 593,591 715,633 - 742,142 -

Administration and
personnel services - - - - 67,889
Capital Outlay 341,442 6,794,657 175,092 1,665,450 14,904,104 Debt service -
Principal retirement - - - - -
Interest and fiscal charges - - - - Total Expenditures $87,154,643 $104,778,476 $89,257,905 $107,303,085 $133,088,741

Excess (Deficiency) of
Revenues Over (Under )
Expenditures $11,662,224 ($1,862,731) $24,540,560 $ 5,379,034 ($15,159,969)

Other Financing Sources (Uses):

Contributions from property
owners - - - $ 2,647,000 -
Capital leases acquired - - - - $ 164,970
Transfers in $1,384,023 $4,451,281 $30,939,545(4) 2,491,902 26,626,984 Transfers out (1) (5,175,897) (3,421,939) (11,699,743) (12,038,938) (14,079,083) Total Other Fin. Sources (Uses) (3,791,874) 1,029,342 19,239,802 (6,900,036) 12,712,871 Net change in fund balance $7,870,350 $(833,389) $43,780,362 $ (1,521,002) $ (2,447,098)

Fund Balance, July 1 $141,144,916 $149,015,266 $148,181,877 $191,962,239 $190,441,237

Fund Balance, June 30 $149,015,266 $148,181,877 $191,962,239 $190,441,237 $187,994,139

(1) Increase due to $2.7 million received from the LA County Flood Control District for the City’s Mint Canyon channel improvements at the new Canyon Country Community Center.

Source: City of Santa Clarita Annual Comprehensive Financial Reports (footnote added).

39 COVID-19 Pandemic
The spread of the strains of coronavirus which are collectively called SARS -CoV-2, which cause the disease known as COVID-19 (“COVID-19”), and local, State and federal actions in response to COVID- 19, have impacted the City’s operations and finances. In response to the increasing number of COVID-19 infections and fatalities, health officials and experts recommended, and some governments mandated, a variety of responses ranging from travel bans and social distancing practices to complete shutdowns of certain services and facilities. The World Health Organization declared the COVID -19 outbreak to be a pandemic and, on March 4, 2020, as part of the State’s response to address the outbreak, the Governor declared a state of emergency. On March 13, 2020, the Pr esident declared a national emergency, freeing up funding for federal assistance to state and local governments. Many school districts across the State temporarily closed some or all school campuses (including schools within the City) in response to local and State directives or guidance.

On March 19, 2020, the Governor issued Executive Order N-33-20, a mandatory Statewide shelter- in-place order applicable to all non -essential services. Certain aspects of the shelter -in-place directives were extended in definitely until indicators for modifying the stay -at-home order were met. The County also declared a state of emergency in response to the COVID-19 outbreak. On May 4, 2020, the Governor issued an executive order informing local health jurisdictions and industry sectors that they could gradually re-open under new modifications and guidance provided by the State. A phased re -opening of various sectors was underway beginning in mid -2020 in accordance with a four -stage re-opening plan that ended with a full reopening of the economy on June 15, 2021. Although pursuant to the re -opening plan certain restrictions on activities were eased, restrictions were also re- imposed in various jurisdictions as local conditions warranted, and such restrictions may be renewed as the pandemic continues.

On March 27, 2020, the President signed the $2.2 trillion Coronavirus Aid, Relief, and Economic Stabilization Act (the “CARES Act”) which provided, among other measures, $150 billion in financial aid to states, tribal govern ments and local governments to provide emergency assistance to those most significantly impacted by COVID -19. Under the CARES Act, local governments were eligible for reimbursement of certain costs which were expended to address the impacts of the pandemic.

On March 11, 2021, the President signed the American Rescue Plan Act of 2021 (the “ARP Act”), a $1.9 trillion economic stimulus package that was designed to help the United States’ economy recover from the adverse impacts of the COVID-19 pandemic.

The effects of the COVID-19 outbreak and governmental actions responsive to it have altered the behavior of businesses and people in a manner that has had significant negative impacts on global and local economies. In addition, financial markets in the United States and globally have experienced significant volatility attributed to COVID-19 concerns. The outbreak resulted in increased pressure on State finances as budgetary resources were directed towards containing the pandemic and tax revenues sharply decli ned in early 2020. Identified cases of COVID -19 and deaths attributable to the COVID -19 outbreak continue to occur throughout the United States, including the County.

In response to the COVID -19 outbreak, the City employed aggressive actions to ensure b usiness continuity and seamless service to its customers and ratepayers. The City temporarily modified its operations to implement remote work opportunities for employees, provided services online, closed the City’s administrative building to the public and deferred several non-essential capital improvement projects.

In order to transition City employees to working from home, the City procured additional hardware, established secure access to City computer systems and remote access to City telephone systems, and deployed tele-conferencing applications. In addition, large gatherings of City personnel at any one time were prohibited for much of 2020 and early 2021 per health officer orders. City Council meetings occurred via teleconference, and public comment and participation for City Council meetings were also conducted via teleconference and electronic means. With improvements in local case rates, the City has resumed

40 normal operations and activities while complying with public health orders and Califor nia Occupational Safety and Health Administration COVID-19 Prevention Plan mandates.

The City has not experienced and does not at this time foresee a future negative impact on the execution of City services as a result of the COVID 19 pandemic. The City has worked diligently to provide its employees with personal protective equipment and voluntary access to screening and vaccinations.

However, there can be no assurance that absences of employees or City leadership due to COVID -19 will not adversely impact City operations.

The COVID -19 pandemic is ongoing, and the duration and severity of the outbreak and the economic and other actions that may be taken by governmental authorities to contain the outbreak or to treat its impact are uncertain. The actual impact of COVID-19 on the City, its economy, and its budget and finances will heavily depend on future events, including future events outside of the control of the City, and actions by the County, the State and federal government as well as nations across the world. The City does not currently expect that the COVID-19 pandemic will have a material adverse effect on the City’s ability to pay the Base Rental Payments.

Although the City’s revenues have returned to pre-pandemic levels, changes in health officer orders could have future impacts to the City including increased costs and challenges to the public health system in and around the City, cancellations of public events and disruption of the regional and local economy.

The City’s revenues potentially mo st affected by changes in health officer orders are recreation and community services revenues, and transit occupancy tax revenues.

The City’s Operating General Fund revenues and expenses were not materially affected by the COVID-19 outbreak in any of Fisc al Years 2020 through 2022. When evaluating the City’s Operating General Fund revenues before transfers in and overhead reimbursement, General Fund revenues were $110,953,725 in Fiscal Year 2018-19, decreased by $4.2 million to $106,802,248 in Fiscal Year 2019-20, increased by $10.2 million in Fiscal Year 2020-21 to $117,051,884, and in Fiscal Year 2021-22 unaudited actuals reflect an increase of $7.4 million to $124,481,847. Federal ARPA funds were utilized to cover the City’s General Fund revenue losses. When evaluating the City’s Operating General Fund expenditures before transfers out, General Fund expenditures were $80,916,916 in Fiscal Year 2018-19, decreased $555 thousand to $80,360,953 in Fiscal Year 2019- 20, decreased $470 thousand to $79,890,312 in Fiscal Year 2020-21, and in Fiscal Year 2021- 22 unaudited actuals increased by $6.3 million to $86,217,757. The fluctuations in General Fund expenditures were driven by the current health officer orders in effect, which significantly impacted the amount of recreation and community services programming that could be offered by the City.

The City has received approximately $90 million in COVID -19 related funding from the federal government: $43.5 million transit-related funding ($21.6 million American Rescue Plan Act (ARPA), $18.3 million Coronavirus Aid, Relief, and Economic Security Act (CARES), $3.7 million Coronavirus Response and Relief Supplemental Appropriation Act (CRRSA)); $36.1 million ARPA, of which $15 million was allocated to revenue loss; $5.2 m illion Rental Assistance; $2.3 million CARES (CDBG -CV); and $78 thousand Coronavirus Emergency Supplemental Funding (CESF). The receipt of significant transit-related COVID funding has relieved other transportation funds for use on the City’s various transportation projects, including the City’s annual overlay and slurry projects.

Budgeted Revenues and Expenditures
Table 3 includes the City’s General Fund adopted final budget and actual results for the Fiscal Years 2020/21 and 2021/22. Throughout the year, budget changes may be authorized by City Council and therefore variances between the budget and actual expenditures are common.

41 The City General Fund Budget includes programs which are provided on a largely city-wide basis.

The programs and services are financed primarily by the City’s share of sales tax, property tax, revenues from the State and/or federal government, and charges for services provided.

Budgetary control is maintained through a mid-year budget review and ongoing adjustments. The City’s unassigned fund balance for the General Fund has ranged between $47 million to $60 million during the last five fiscal years. The City’s stated budget policy is to maintain an operating reserve of 20% of annual General Fund expenditures to be used for one-time unanticipated expenditure requirements and local disaster. At June 30, 2021, the unassigned fund balance in the General Fund was almost $60 million, exceeding the operating reserve of $18.76 million. An operating reserve of $19.8 million is maintained as a part of the fiscal year 2022/23 budget.
2021/22 Budget. The 2021/22 Adopted Budgeted General Fund included a 4% increase in property tax revenues and a 22% increase in sales tax revenues. General Fund sales tax revenue continues to be one of the largest revenue source to operate general governmental functions, accounting for 33% or $39 million as projected in the 2021/22 budget. Property tax revenues account for 34% of the General Fund budget, or $41 million, in 2021/22. This increase is in proportion to the growth of assessed valuation citywide.

Development revenues are projected to increase 8% to $9.7 million. 2022/23 Budget. Table 3 provides information on the Current General Fund Budget for fiscal year 2022/23.

The City adopted the fiscal year 2022/23 budget on June 28, 2022 (the “22/23 Budget”). The City Council conducted a Public Hearing for the budget on June 14 and June 28. Despite projected declines in certain economically-sensitive tax revenues such as transient occupancy, and sales taxes, the 22/23 Budget estimates overall increase in General Fund revenue of 10.8% over the prior year original adopted budget.

The following are some of the assumptions included in the 22/23 Budget and a description of the associated risks should those assumptions not materialize:
• At the time the 22/23 Budget was adopted, sales tax revenue was anticipated to increase by 18.5% over the 2021/22 original adopted budget and transient occupancy tax revenue assumed a 50% increase with new and existing hotels.
• The 22/23 Budget assumes growth in property tax receipts, as as sessed valuation is projected to increase. Over the longer term, this tax could be affected by any recession if it spills over into the housing market. The most acute risk is likely to be the documentary transfer tax, which assumes the recent modest growth will stop, but does not include any decline in this historically volatile revenue source.

None of the fiscal year 2022/23 revenue forecasts have been updated since the 2 2/23 Budget was adopted. The 22/ 23 Budget includes adequate funding to pay for all existing labor agreements and associated salary increases, and includes only $2.6 million in new operating appropriations for critical contractual agreements. The budget includes a $ 10.2 million transfer to the City’s Facilities Fund for use on future facility needs and maintains a $315,656 surplus.

The 22/23 Budget is also exposed to risks to special fund revenues, which could be further reduced if the economic impacts of the COVID -19 response extend for longer than expected. Special funds that derive their revenues from sales tax and gas tax are at particular risk. The 2 2/23 Budget attempted to anticipate these risks and revenues will be evaluated and adjusted during the City’s mid-year budget review as needed.

42 General Fund sales tax revenues continue to be one of the largest revenue source to operate general governmental functions, accounting for 35% or $46.2 million in the 22/23 Budget. Property tax revenues account for 33% of the 22/23 Budget, or $44.4 million.

The following table presents the 22/23 Budget and the adopted budgets for the two preceding fiscal years. With respect to both the historical budgetary information and the projected budgetary information set forth below, it is not possible to predict whether the trends set forth in the tables will continue in the future.

TABLE 3

CITY OF SANTA CLARITA

GENERAL FUND COMPARISON FOR FISCAL
YEARS ENDED JUNE 30, 2021 AND JUNE 30, 2022 AND CURRENT BUDGET FOR FISCAL YEAR ENDED JUNE 30, 2023

Final Adopted
Budget
2020-21
Actual Results
2020-21
Final
Budget
2021-22
Unaudited
2021-22
Current Budget
2022-23

REVENUES
Taxes $ 89,479,675 $ 97,704,484 $103,658,191 $108,146,383 $106,513,746 Licenses and permits 9,771,235 11,498,980 8,491,924 9,738,087 8,318,931 Intergovernmental 1,653,944 270,827 190,533 230,507 131,309 Charges for services 5,366,528 6,345,677 10,786,747 11,654,032 9,515,618 Investment income 2,449,478 128,498 2,155,571 (4,847,743) 2,540,409 Fines and forfeitures 634,650 621,214 835,425 832,503 920,000 Other revenue 8,150,403 1,359,092 9,371,326 9,656,096 8,718,016 Total Revenues $117,505,913 $117,928,772 $135,489,717 $135,409,865 $136,658,029

EXPENDITURES
Operating:

Personnel 47,151,977 40,933,746 47,776,533 43,988,921 43,847,152 Operating 47,457,393 38,665,320 52,022,838 47,514,453 58,165,169 Capital Outlay 16,817 13,788 132,573 79,852 918,497
Capital Improvement Projects:

Personnel 194,356 - 12,389 -
Operating(1) 48,148,854 38,701,207 11,433,366 7,952,635 14,150,939 Capital Outlay 17,774,875 14,580,324 482,475 300,630 124,104 Total Expenditures $160,549,915 $133,088,741 $111,847,785 $99,848,880 $117,205,861

Excess (Deficiency) of Revenues
Over (Under) Expenditures $ (43,044,002) $ (15,159,969) $ 23,641,932 $ 35,560,985 $ 19,452,168

OTHER FINANCING SOURCES (USES):

Capital leases acquired 164,970 57,365,935 57,315,992 17,008,632 Transfer in 17,506,566 26,626,984 (63,948,736) (62,281,146) (37,389,409) Transfers (out) (15,582,586) (14,079,083) (6,582,801) (4,965,154) (20,380,777) Total Other financing sources (uses) $ 1,923,980 $ 12,712,871 $ 17,059,131 $ 30,595,831 $ (928,609)

Net Change in Fund Balance $ (41,120,022) $ (2,447,098) $ 57,365,935 $ 57,315,992 $ 17,008,632

Fund Balance at Beginning of Year $190,441,237 $187,994,139

Fund Balance at End of Year $187,994,139 $218,589,970

(1) Reductions due to appropriated funds for projects which were not spent in such fiscal year.

Source: City of Santa Clarita Annual Comprehensive Financial Report 2019-20 and City Finance Department.

43 Management Discussion of Financial Performance
The City management’s discussion and analysis of the financial activities of the City for the fiscal year ended June 30, 2021 is presented in the City’s audited financial statements for the fiscal year ended June 30, 2021 attached hereto as APPENDIX B – “AUDITED FINANCIAL STATEMENTS OF THE CITY OF SANTA CLARITA FOR THE FISCAL YEAR ENDED JUNE 30, 2021.” Capital Improvement Program
The City is considering a number of future capital projects, whose financing sources may include the City’s General Fund, future lease revenue debt, grants, special taxes or assessment or lease payments payable from the City’s General Fund. The City prepares a five-year capital improvement program (“CIP”) which includes potential capital projects that reflect the desires of the community, as well as projects that address operational and maintenance needs of the City. The City’s 20 22/23-2026/27 CIP consist s of improvements and projects totaling $84,652,994 for fiscal year 202 2/23 and lists $ 226,185,290 of improvements and projects for fiscal years 202 4-27. Subject to the City’s Fiscal Policies, s ome of these improvements and projects will ultimately be financed by the City’s General Fund.

Appropriations Limit
Section 7910 of the Government Code of the State requires the City to adopt a formal appropriations limit for each fiscal year. The City’s appropriations limit for fiscal year 2021/22 was $471,334,679. The City’s appropriations limit for fiscal year 2022/23 is $508,593,284. The appropriations limit is not expected to have any impact on the ability of the City to budget and appropriate the Base Rental Payments and Additional Rental Payments as required by the Leases.

Financial Statements
All governmental funds are accounted for using the modified accrual basis of accounting. The City’s revenues are recognized when they become measurable and available as net current assets.

Expenditures are generally recognized under the modified accrual basis of accounting when the related fund liability is incurred. The exception to this general rule is principal and interest on general long -term debt, which is recognized when due. Some debts and obligations may be payable from self -supporting enterprises or revenue sources other than property taxation. Special assessment bonds are not included in the tabulation; lease revenue obligations payable from the General Fund or equivalent sources are included.

All proprietary funds are accounted for using the accrual basis for accounting. Revenues are recognized when they are earned, and expenses are recognized when they are incurred. Receivables are recorded and determined at the time of consumption, and unbill ed receivables are not recorded. See APPENDIX B – “AUDITED FINANCIAL STATEMENTS OF THE CITY OF SANTA CLARITA FOR THE FISCAL YEAR ENDED JUNE 30, 2021.”
The City retained the firm of Eide Bailly LLP, Certified Public Accountants, Rancho Cucamonga, California, to examine the general purpose financial statements of the City as of and for the year ended June 30, 2021. The City is the recipient of the GFOA Certificate of Achievement for Excellence in Financial Reporting for the last thirty fiscal years. The audited combined financial statements of the City are available on the City’s website at https://www.santa-clarita.com/city-hall/departments/administrative- services/annual-financial-reports. The information presented in the City’s website is not part of this Official Statement and should not be relied on in making investment decisions with respect to the Bonds.

44 Fiscal Policies
The City has developed a set of fiscal policies (the “Fiscal Policies”), which are reviewed and adopted annually by the City Council as part of its budgetary approval process, that the City uses to guide its fiscal decision making. The Fiscal Policies provide guidance relating to the following:
• Cash Management Policy includes an annually adopted investment policy and investment selection procedures.
• Budget Policies and Procedures is a comprehensive summary of budget and capital improvement plan responsibilities, prep aration, policies and adjustment procedures. In particular, the current budget policy states the City will maintain the operating reserves at 20% of annual General Fund Expenditures.
• Debt Management Policy sets forth certain debt management objectives fo r the City, and establishes overall parameters for issuing and administering the City’s debt. • Post-Issuance Compliance Policy sets forth procedures and guidelines in order to comply with certain federal tax requirements applicable to tax -exempt bonds and other debt obligations subsequent to the issuance of such debt, including the monitoring of the use of bond proceeds, arbitrage yield restrictions and rebate and record retention. • Continuing Disclosure Procedures Policy sets forth the procedures for compliance with continuing disclosure undertakings and related filings, including annual report and material events notices.
• Annual Audit Policy requires an annual audit by a qualified independent accountant of the books of account, financial records, inventories and reports of all City officers and employees involved in the handling of financial matters. • Financial Structure Policy sets forth the a ccounting system and budgetary controls, including fund designations and classifications.
• Risk Management Policy describes the risk management program which provides centralized services to all City departments for risk management, loss control, and safety.

The complete Fiscal Policies can be found within the City’s budget for the Fiscal Year ending June 30, 202 3. Information on the Budget may be found on the City’s website: https://www.santa- clarita.com/city-hall/departments/city-manager-s-office/city-budget. The information presented in the City’s website is not part of this Official Statement and should not be relied on in making inv estment decisions with respect to the Bonds.

Taxable Property and Assessed Valuation
Property tax revenues account for 33% of the 2022/23 General Fund budget, or $44.4 million. The County Assessor’s office makes changes to the City’s property tax roll da ily to reflect transfers in ownership, new construction, assessment appeals, parcel splits and changes.

Taxes are levied for each fiscal year on taxable real and personal property which is situated in the City as of the preceding January 1. For assessment and collection purposes, property is classified either as “secured” or “unsecured,” and is listed accordingly on separate parts of the assessment roll. The “secured roll” is that part of the assessment roll containing State assessed property and real pro perty having a tax lien which is sufficient, in the opinion of the assessor, to secure payment of the taxes. Other property is assessed on the “unsecured roll.”

45 Property taxes on the secured roll are due in two installments, on November 1 and February 1 o f the fiscal year. If unpaid, such taxes become delinquent on December 10 and April 10, respectively, and a 10% penalty attaches to any delinquent payment. In addition, property on the secured roll with respect to which taxes are delinquent is sold to the State on or about June 30 of the fiscal year. Such property may thereafter be redeemed by payment of the delinquent taxes and the delinquency penalty, plus a redemption penalty of l½% per month to the time of redemption. If taxes are unpaid for a period of five years or more, the property is deeded to the State and then is subject to sale by the County Tax Collector.

Property taxes on the unsecured roll are due as of the January 1 lien date and become delinquent, if unpaid on August 31. A 10% penalty attaches to delinquent taxes on property on the unsecured roll, and an additional penalty of l½% per month begins to accrue on November 1 of the fiscal year. The City has four ways of collecting unsecured personal property taxes: (1) a civil action against the taxpayer; (2) filing a certificate in the office of the County Clerk specifying certain facts in order to obtain a judgment lien on certain property of the taxpayer; (3) filing a certificate of delinquency for record in the County Recorder’s Office, in order to obtain a lien on certain property of the taxpayer; and (4) seizure and sale of personal property, improvements or possessory interests belonging or assessed to the assessee.

In an attempt to mitigate the effects of the COVID -19 pandemic on Stat e property taxpayers, on May 6, 2020, the Governor signed Executive Order N -61-20 (“Order N-61-20”). Under Order N -61-20, certain provisions of the State Revenue and Taxation Code were suspended until May 6, 2021 to the extent that they required a tax col lector to impose penalties, costs or interest for the failure to pay secured or unsecured property taxes, or to pay a supplemental bill, before the date that such taxes become delinquent.

Such penalties, costs and interest were cancelled under the conditi ons provided for in Order N -61-20, including if the property is residential real property occupied by the taxpayer or the real property qualifies as a small business under certain State laws, the taxes were not delinquent prior to March 4, 2020, the taxpayer files a claim for relief with the tax collector and the taxpayer demonstrates economic hardship or other circumstances that have arisen due to the COVID -19 pandemic or due to a local, state, or federal governmental response thereto. See the caption “— COVID-19 Outbreak.” The City did not receive material amounts of property tax payments for Fiscal Years 2020 or 2021 later than usual as a result of Order N-61-20.

State law also provides for the supplemental assignment and taxation of property as of the occurrence of a change in ownership or completion of new construction. Collection of taxes based on supplemental assessments occurs throughout the year. Taxes due are prorated according to the amount of time remaining in the tax year.

An initiative measure (the “Split Roll Initiative”) to amend Article XIIIA of the State Constitution qualified for the State’s November 2020 ballot. Although it was not adopted by State voters, the Split Roll Initiative would have based property taxes for commercial and industrial properties on periodic analyses of market values beginning in tax year 2020- 21. Such market values would have been reassessed by the applicable county assessor’s office at least once every three years. The Split Roll Initiative included exceptions for businesses with a total market value of less than $2 million (adjusted for inflation), which would have continued to be subject to property taxes based on purchase price, and exempted from property tax assessments up to $500,000 of the value of person al property, or all personal property for businesses with fewer than 50 employees. Although the Split Roll Initiative was not adopted, there can be no assurance that a similar initiative will not be brought before voters in the future. The City is unable to predict how the adoption of such a future initiative would affect the receipt of property tax revenues.

City taxes are assessed and collected by Los Angeles County at the same time and on the same rolls as are County, school and special district taxes.

46 State law exempts $7,000 of the full cash value of an owner-occupied dwelling, but this exemption does not result in any loss of revenue to local agencies, since the State reimburses local agencies for the value of the exemptions.

For the 2022 assessment roll, the City was the f ifth largest city in assessed valuation within the County. The following table represents the most recent ten-year history of assessed valuation in the City, including State-reimbursed exemptions. Based on the County’s estimate of countywide growth in assessed value and other data, the City assumed 7.7% growth in its property tax base in the f iscal year 2022/23 budget.

TABLE 4

CITY OF SANTA CLARITA
Assessed Valuation
(000s)
January 1
Valuation Date

Local Secured

Utility

Unsecured

Total
2013 23,410,799 3,696 854,976 24,269,472
2014 25,220,113 3,696 888,132 26,111,942
2015 26,473,499 3,696 853,667 27,330,863
2016 27,622,848 3,696 797,363 28,423,909
2017 29,903,220 4,576 819,549 30,727,345
2018 31,627,924 4,576 848,468 32,480,968
2019 34,319,756 4,284 850,777 35,174,818
2020 36,094,271 4,284 884,857 36,983,412
2021 37,521,627 4,429 864,658 38,390,715
2022 40,422,359 4,429 929,940 41,356,729
Source: Los Angeles County Assessor.

The following table represents the breakdown for assessed valuation of the City among the types of different property for the last five fiscal years.

47 TABLE 5

CITY OF SANTA CLARITA

ASSESSED VALUATION BY PROPERTY TYPE
FOR THE YEAR ENDED JUNE 30
(000s)
2019 2020 2021 2022 2023
Type:

Residential

$25,140,365 $27,571,753 $29,068,019 $30,326,102 $32,800,203 Commercial 3,557,018 3,681,744 3,866,268 3,980,147 4,083,237 Industrial 1,861,079 1,878,969 1,955,686 2,031,709 2,360,064 Vacant Land 593,952 702,751 677,706 644,262 646,601
All Others 1,328,554 1,339,600 1,415,733 1,408,495 1,466,624 Total $32,480,968 $35,174,817 $36,983,412 $38,390,715 $41,356,729 Source: City of Santa Clarita Finance Department.

Beginning in 1978/79, Proposition 13 and its implementing legislation provided for each county to levy (except for levies to support prior voter -approved indebtedness) and collect all property taxes, and prescribed how levies on county-wide property values are to be shared with local taxing entities within each county. The secured property tax levies and year -end delinquencies for 2012/13 through 2020/21 are reflected on the following table.

TABLE 6

CITY OF SANTA CLARITA
Secured Tax Charges and Delinquencies

Year

Total Current Levy
Amount Paid
June 30
Percent Delinquent
June 30
2012/13 $18,634,850 $18,297,746 1.8%
2013/14 21,446,963 21,128,332 1.5
2014/15 23,131,317 22,795,838 1.5
2015/16 24,304,887 23,957,604 1.4
2016/17 25,483,385 25,178,564 1.2
2017/18 27,299,254 26,957,834 1.3
2018/19 28,692,974 28,469,759 0.8
2019/20 30,653,870 30,235,002 1.4
2020/21 32,544,160 32,250,334 0.9
Source: County of Los Angeles, Department of Auditor-Controller.

48 Largest Taxpayers
The following table lists the major taxpayers in the City in terms of their 20 21/22 assessed valuation.

TABLE 7

CITY OF SANTA CLARITA
Principal Property Taxpayers
2021/22

Owner/Taxpayer

No. of
Parcels

Total Assessed Value
% of Total
City Assessed
Value

Valencia Town Center Venture LP 17 $ 413,396,760 1.08% Park Sierra Properties 15 149,873,887 0.39
Bel Valencia LLC 9 142,173,982 0.37
WESCO IV LLC 2 128,369,714 0.33
Saugus Colony Limited 19 126,951,335 0.33
IVT River Oaks Valencia LLC 7 120,885,522 0.31
EQR Valencia LLC 218 112,632,436 0.29
EQR The Oaks LLC 28 110,316,781 0.29
ARC SLSTCCA001 LLC 4 106,591,121 0.28
Valencia Biomedical Park LLC 11 89,978,322 0.23 Subtotal 330 $ 1,501,169,860 3.91%
All Others $33,752,327,642 96.09%
TOTAL $38,440,677,490 100.00%
Source: LA County Assessor 2021/22 Combined Tax Rolls.

Other Local Taxes
In addition to ad valorem taxes on real property, the City receives the following local taxes:

Sales and Use Taxes. Sales tax is collected and distributed by the State Board of Equalization.

Each local jurisdiction receives an amount equal to one percent of taxable sales within their jurisdiction.

Franchise Taxes. The City collects a franchise tax on its cable television, trash collection and utility franchises.

Business License Fees. Business licenses are offered by the County. The County issues business licenses and remits business license fee revenues to the City.

Transient Occupancy Taxes. The City levies a 10% transient occupancy tax on hotel and motel bills. See “LIMITATIONS ON TAX REVENUE – Proposition 62” herein.

Property Transfer Taxes. A documentary stamp tax is assessed for recordation of real property transfers.

49 The following table shows the tax revenues of the General Fund for the past three fiscal years and the budgeted amounts for 2022/23.

TABLE 8

CITY OF SANTA CLARITA
Tax Revenues By Source
Actual Actual Unaudited Current Budget
2019/20 2020/21 2021/22 2022/23
Sales and Use Tax $36,621,145 $43,197,889 $49,476,922 $46,200,000 Property Taxes 38,263,709 40,947,926 42,113,398 44,385,486 Franchise Taxes 8,139,163 9,099,789 9,038,242 8,953,260 Real Property Transfer Tax 1,418,026 2,010,033 2,354,997 2,500,000 Transient Occupancy Tax 2,726,113 2,275,383 4,874,977 4,200,000 Motor Vehicle Tax in Lieu 172,619 162,773 255,972 255,000 Satellite Wagering Tax 35,312 10,690 31,875 20,000

Total General Fund Tax $87,376,087 $97,704,482 $108,146,383 $106,513,746

Source: City of Santa Clarita.

Sales and use taxes provide one of the major sources of revenues to the General Fund, comprising approximately 37% of the City’s 2021/22 year-end General Fund revenues and approximately 46% of such General Fund taxes. A sales tax is imposed on retail sales or consumption of personal property. The statewide sales tax rate is established by the State Legislature.

In Los Angeles County the sales tax rate is 9. 50%. 7. 25% is collected and administered by the State on taxes collected within the City as follows:

State General Fund……………………………… 5.00%
Proposition 172 (public safety use)……………. 0.50%
County Health/Welfare…………………………... 0.50%
County Transportation ………………………….. 0.25%
City………………………………………………… 1.00%
The 1.00% sales tax revenue is collected by the State and deposited monthly into the City’s General Fund.

Of the remaining 2.25% Los Angeles County sales tax , 2.00% is authorized locally und er Propositions A and C and Measures M and R for transportation including bus, rail and some streets and road projects. These funds are collected by the State but administered by the Los Angeles County Metropolitan Transportation Authority. A portion of the se funds are returned to the c ities for use on approved projects. 0.25% is authorized under Measure H for homeless projects.

At the time the fiscal year 202 2/23 Budget was adopted, sales tax revenue was anticipated to increase by 0.4% over 2021/22 estimates. Sales tax revenues for fiscal year 20 21/22 at the time of the 2022/23 budget adoption were $46 million; however, unaudited actual sales tax revenues for 2021/22 exceeded estimates by approximately $3.5 million.

50 For fiscal 2021/22, the top ten sales tax producers represented 26% of the total sales tax, while the top twenty-five sales tax producers represented 43% of the total sales tax.

Other Revenue Sources
Licenses and Permits. These City General Fund revenues consist primarily of business license taxes and building construction permit fees.

Fines, Forfeitures and Penalties. These City General Fund revenues include parking citations, municipal court fines, asset seizure proceeds and other fines for municipal code violations.

Use of Money an d Property. These City General Fund revenues consist primarily of investment earnings.

Charges for Services. The City charges recording fees, booking fees, court filing fees, plan checking, building inspection, waste collection and other municipal services.

Employee Relations and Collective Bargaining
The City has a collective bargaining agreement with the Service Employees International Union (SEIU) Local 721. [The contract’s term is July 1, 2019 through June 30, 2022].

Risk Management
The City joined the California Joint Powers Insurance Authority (“CJPIA”) in July 2021. CJPIA is a joint powers authority formed under California Government Code Section 6500 that serves public agencies in California as a self-insurance risk pool. Through CJPIA, the City is self-insured up to $100,000 for all third-party, general liability claims. The City maintains a $10,000 property damage deductible for all first-party property damage claims, and a $2,500 deductible for all auto damage claims. For workers’ compensation coverage, the City is self-insured up to $250,000. General liability claims over $100,000 and up to $50,000,000, property damage claims over $10,000 and up to $500,000,000, and workers’ compensation claims over $250,000 and up to $10,000,000 are covered by CJPIA. The annual membership contribution is $2,018,612 for the property/liability program and the workers’ compensation program (based on estimated wages). On June 30, 2022, $_______________ was accrued by the City for general liability claims, and $_________ was accrued for workers’ compensation claims and judgments. These accruals represent estimates of amounts to be paid for incurred and reported claims and incurred but not reported claims based on past experience and modified for current trends and information.

In addition to general liability, property, and worker’s compensation policies, the City maintains coverages for cyber liability, crime liability, pollution liability, underground storage tank liability, and earthquake damage - all of which have reasonable self-insured retentions.

The City maintains earthquake coverage on many of its public buildings and while the City intends to insure the CUBE Leased Property and the City Hall Leased Property initially, neither Lease requires the City to obtain or maintain earthquake insurance on its related Leased Property.

No assurances can be given that the City’s security and operational control measures will ensure against any and all cybersecurity threats and attacks. A cybersecurity incident or breach could damage the City’s Information Technology systems and cause disruption to City services and operations. The cost of any such disruption or remedying damage caused by future attacks could be substantial. The City will continue to assess cyber threats and protect its data and systems.

51 City Investment Policy and Portfolio
The City has adopted policies and procedures for the management of the investment of unexpended funds for the City itself and for ot her entities of the City, including the Authority, for which the City provides financial management services. The three basic objectives of the policies and procedures are:
safety of invested funds, maintenance of sufficient liquidity to meet cash flow needs and attainment of the maximum yield possible consi stent with the first two objectives. The most recently revised Investment Policy for the City was adopted on May 11, 2021, and is effective for fiscal years 21/22 and 22/23. Under the City’s Investment Policy and in accordance with the Government Code, the City may invest in the following types of investments: bankers acceptances to a maximum term of 180 days; commercial paper to a maximum maturity of 270 days; “A” rated corporate notes; certificates of deposit; obligations of the United States Treasury; repurchase agreements to a maximum term of 1 year; obligations of the State; municipal bonds; mutual funds; the Local Agency Investment Fund (LAIF) managed by the State Treasurer, the Los Angeles County Pooled Investment Fund (LACPIF) administered by the Los Angeles County Treasurer and Tax Collector and a Local Government Investment Pool (LGIP).

In accordance with the Government Code, the City requires certain collateralizatio n for public deposits in banks and savings and loans, and has long- established safekeeping and custody procedures.

Currently, PFM Asset Management assists the City in managing its investment portfolio.

Estimated investments as of August 31, 2022 in all fu nds of the City had a weighted average maturity of 545 days and were comprised of the following:

Principal % of
Type Amount Total
Local Agency Investment Fund $ 74,782,611 20.79%
LA County Pool Investment Fund 31,696,416 8.81
California Asset Management Program 15,105,083 4.20
Money Market Funds 28,304 0.01
Negotiable CD 3,240,000 0.90
Noncallable Agencies 56,316,770 15.65
U.S. Treasury Securities 127,588,745 35.46
Corporate Bonds 39,098,370 10.87
Supranationals 4,090,052 1.14
Asset-Backed Securities 2,475,627 0.69
TOTAL $359,789,816 100.00%
_____________________
Source: City of Santa Clarita Finance Department.

52 Outstanding Indebtedness of the City
The City has the following outstanding General Fund indebtedness, exclusive of obligations to be paid from specifically pledged revenues, such as general obligation bonds, revenue bonds payable from other than the General Fund, tax allocation bonds , community facilities district bonds and assessment district bonds. The City has never defaulted on any of its obligations.

TABLE 9

CITY OF SANTA CLARITA
General Fund Outstanding Indebtedness
(as of June 30, 2022)
Category of Indebtedness Original Issue
Amount
Outstanding
Final
Maturity

Lease Revenue Refunding Bonds (Golden Valley Road)
Series 2016A $10,320,000 $ 7,930,000 2035
Lease Revenue Refunding Bonds (Open Space and
Parkland Acquisition Program), Series 2016B1 14,020,000 12,020,000 2037 Lease Revenue Bonds (Sheriff Station Project) Series
2019 25,850,000 25,345,000 2049
Lease Revenue Bonds (Recreational Facility) Series
2020A 10,645,000 10,645,000 2050
Lease Revenue Bonds (Recreational Facility) Series
2020A-T 3,625,000 2,790,000 2030
Capital lease payable 586,227 419,042
2024 & 2025
& 2026
Compensated Absences 4,071,369 Indefinite
Claims payable 5,729,759

1. While the lease payments for these bonds are payable from the City’s General Fund, the City has paid and intends to continue to pay lease payments from assessments levied for the City’s Open Space Preservation District.

Source: City of Santa Clarita.

The City enter ed into equipment lease s for copiers effective June 2019 and April 2020 with estimated annual payments of $107,333 and $18,107, respectively, for a total of $125,430 annually, payable from General Fund revenues. On April 27, 2021, the City Council approved a lease -purchase agreement with Zamboni Company, USA Inc. for Zamboni Equipment at the Cube with estimated annual payments of $36,342. The final payment is due April 29, 2026.

Direct and Overlapping Debt
Set forth below for the City is a direct and overlapping debt report (the “Debt Report”) prepared by California Municipal Statistics, Inc. The Debt Report is included for general information purposes only.

The City has not reviewed the Debt Report for completeness or accuracy and makes no representations in connection therewith. The Debt Report generally includes long term obligations sold in the public credit markets by public agencies whose boundaries overlap the boundaries of the City in whole or in part. Such long-term obligations generally are not payable from revenues of the City (except as indicated) nor are they necessarily obligations secured by land within the City. In many cases long -term obligations issued by a public agency are payable from the general fund or other revenues of such public agency.

53 TABLE 10

CITY OF SANTA CLARITA
Direct and Overlapping Debt Statement
2022-23 Assessed Valuation: $41,356,729,027

DIRECT AND OVERLAPPING TAX AND ASSESSMENT DEBT: % Applicable Debt 9/1/22 Santa Clarita Community College District 76.356% $237,036,845 William S. Hart Union High School District 76.348 228,741,617 William S. Hart Union High School District Community Facilities District No. 90-1 100. 70,000 William S. Hart Union High School District Community Facilities District No. 2005-1 100. 13,050,000 William S. Hart Union High School District Community Facilities District No. 2015-1 100. 24,470,000 Castaic Union School District 27.696 6,426,857
Newhall School District 60.638 2,261,797
Newhall School District School Facilities Improvement District No. 2011-1 62.343 34,447,625 Saugus Union School District 93.788 1,130,618
Saugus Union School District School Facilities Improvement District No. 2014-1 94.374 116,665,139 Saugus Union School District Community Facilities District No. 2005-1 100. 13,370,000 Saugus Union School District Community Facilities District No. 2006-1, Improvement Area Nos. 1,2,3 100. 62,820,000 Saugus Union School District Community Facilities District No. 2006-2, Improvement Area Nos. 1,2,3 100. 30,595,000 Saugus Union School District Community Facilities District No. 2019-1 100. 9,155,000 Saugus-Castaic Schools Community Facilities District No. 2006-1C 100. 14,940,000 Saugus-Hart Schools Community Facilities District No. 2000-1 100. 6,630,000 Sulphur Springs Union School District 94.306 53,913,983 Sulphur Springs Union School District Community Facilities District Nos. 2002-1, 2006-1 and 2014-1 100. 62,350,879 City of Santa Clarita Open Space and Parkland Assessment District 100. 12,020,000 City of Santa Clarita Landscaping and Lighting Streetlighting Zones A and B 100. 13,345,000 City of Santa Clarita Community Facilities District No. 2002-1 100. 12,170,000 City of Santa Clarita Community Facilities District No. 2016-1 100. 17,020,000 City of Santa Clarita 1915 Act Bonds 100. 395,000 TOTAL DIRECT AND OVERLAPPING TAX AND ASSESSMENT DEBT $973,025,360

DIRECT AND OVERLAPPING GENERAL FUND DEBT:

Los Angeles County General Fund Obligations 2.183% $ 58,157,792 Los Angeles County Superintendent of Schools Certificates of Participation 2.183 74,298 Los Angeles County Sanitation District No. 32 Authority 78.563 1,180,774 Santa Clarita Community College District Certificates of Participation 76.356 4,382,834 William S. Hart Union High School District Certificates of Participation 76.348 30,923,317 Castaic Union School District Certificates of Participation 27.696 750,562 Sulphur Springs Union School District Certificates of Participation 94.306 27,235,573 City of Santa Clarita Obligations 100. 46,710,000 (1) TOTAL DIRECT AND OVERLAPPING GENERAL FUND DEBT $169,415,150

OVERLAPPING TAX INCREMENT DEBT (Successor Agency): 100. % $30,615,000

COMBINED TOTAL DEBT $1,173,055,510 (2)

(1) Excludes issue to be sold.
(2) Excludes tax and revenue anticipation notes, enterprise revenue, mortgage revenue and non-bonded capital lease obligations.

Ratios to 2022-23 Assessed Valuation:

Direct Debt ($25,365,000) 0.06%
Total Overlapping Tax and Assessment Debt 2.35%
Total Direct Debt ($72,075,000) 0.17%
Combined Total Debt 2.84%

Ratios to Redevelopment Successor Agency Incremental Valuation ($755,386,263):

Total Overlapping Tax Increment Debt ...................................................4.05%

Source: California Municipal Statistics, Inc.

54 Employee Retirement Plan
This sub -caption contains certain information relating to the California Public Employe es Retirement System (“PERS”). Neither the City nor the Authority has independently verified the information provided by PERS or makes any representations or expresses any opinion as to the accuracy of the information provided by PERS.

The annual comprehensive financial reports of PERS are available on its Internet website at www.calpers.ca.gov. The PERS website also contains PERS’ most recent actuarial valuation reports and other information concerning benefits and other matters. Such information is not incorporated by reference herein. The City cannot guarantee the accuracy of such information. Actuarial assessments are “forward- looking” statements that reflect the judgment of the fiduciaries of the pension plans, and are based upon a variety of assumptions, one or more of which may not materialize or may be changed in the future.

Actuarial assessments will change with the future experience of the pension plans.

General. The City’s defined benefit pension plan, California Public Employees’ Retirement System (CalPERS), provides pensions for all permanent full -time general and some part -time employees of the City. CalPERS is an agent multiple-employer defined benefit pension plan administered by the California Public Employees’ Retirement System. CalPERS acts as a common investment and administrative agent for its participating member employers and are included within Public Employees’ Retirement Fund A (PERF A). Benefits provisions under the Plan are established by State statute and may be amended by City resolution. The plan provides retirement and disability benefits, annual cost-of-living adjustments and death benefits to plan members and their beneficiaries based on the employee’s years of service, age and final compensation. Employees vest after five years of service and may receive statutorily reduced retirement benefits at age 50.

CalPERS issues a publicly available financial report, which includes a full description of the pension plan regarding benefit provisions, and assumptions and membership information that can be obtained at https://www.calpers.ca.gov. The most recent annual report issued by CalPERS to the City was in July 2021 (the “July 2021 CalPERS Report”). The Ju ly 2021 CalPERS Report includes information based on the June 30, 2020 actuarial valuation of assets included therein (the “2020 Actuarial Valuation”).

Additional information about the CalPERS Plans can also be found in Note 12 to the City’s Audited Financial Statements attached as Appendix B to this Official Statement.

[Remainder of page intentionally left blank.]

55 The Plan’s provisions and benefits in effect as of June 30, 2022 are summarized as follows:

Miscellaneous
Tier 1 Tier 2 Tier 3
Formula 2.7% at 55 2% at 60 2% at 62
Benefit vesting schedule 5 years of service 5 years of service 5 years of service Benefit payments monthly for life monthly for life monthly for life Retirement age 50-55 50-60 52-62
Monthly benefits, as a % of annual salary 2.7% 2.0% 2.0% Required employee contribution rates 8% 7% 6.25%
Required employer contribution rates 9.04%
$3,552,911 Required UAL contribution
Tier 1 Tier 2 Tier 3
Applies to: Employees hired
before April 9, 2011*
Employees hired
between April 9, 2011,
and December 31,
2012, or those hired
January 1, 2013, or
later, who have been a
Classic CalPERS
member with a public
agency or in a Classic
reciprocal plan within
the last 6 months)**
Employees hired
January 1, 2013, or
later**
_________________________________
* Those hired as part-time seasonal (PTS) who later convert to regular full-time will qualify for Tier 1, 2 or 3 depending on their conversion date.

Source: City of Santa Clarita 2020/21 Annual Comprehensive Financial Report.

At June 30, 2020, 1,160 employees were covered by the benefit terms: (i) 253 inactive employees or beneficiaries currently receiving benefits; (ii) 464 employees entitled to but not yet receiving benefits, and (iii) 443 active employees. This information was obtained from the PERS Annual Valuation Report as of June 30, 2021 and is the most recent information available.

Recent Actuarial Changes and Related Developments. In recent years, the CalPERS Board of Administration (the “CalPERS Board”) has taken several steps, as described below, intended to reduce the amount of the unfunded accrued actuarial liability of its managed plans. Many of the assumptions and policies implemented by the CalPERS Board have increased and are likely to continue to increase both the required contributions and the unfunded liabilities of its member employers, including the City.

On March 14, 2012, the CalPERS Board voted to lower the CalPERS’ rate of expected price inflation and its investment rate of return (net of administrative expenses) (the “CalPERS Discount Rate”) from 7.75% to 7.5%. On February 18, 2014, the CalPERS Board voted to keep the CalPERS Discount Rate unchanged at 7.5%. On November 17, 2015, the CalPERS Board approved a new funding risk mitigation policy to incrementally lower the CalPERS Discount Rate by establishing a mechanism whereby such rate is reduced by a minimum of 0.05% to a maximum of 0.25% in years when investment returns outperform the existing CalPERS Discount Rate by at least four percentage points. On December 21, 2016, the CalPERS Board voted to lower the CalPERS Discount Rate to 7.0% over a three year phase -in period in accordance with the following schedule: 7.375% in fiscal year 2017 /18, 7.25% in fiscal year 2018/19 and

7.00% in fiscal year 2019 /20. The new discount rate went into effect July 1, 2018 for the City and other member employers. Lowering the CalPERS Discount Rate means member employers like the City will see

56 increases in their normal costs and unfunded actuarial liabilities. Active members hired after January 1, 2013, under the PEPRA (defined below) will also see their contribution rates rise.

As a result of earnings for fiscal year 2020/21, the CalPERS Discount Rate was reduced to 6.8% due to the risk mitigation policy.

On January 1, 2013, the Public Employees’ Pension Reform Act of 2013 (“PEPRA”) took effect.

Among other things, PEPRA created a new benefit tier for public employees hired on or after January 1, 2013. The City believes that the provisions of PEPRA will help control its pension benefit liabilities in the future.

In April 2013, the CalPERS Board approved revised actuarial policies that aimed at returning the CalPERS system to fully -funded status within 30 years. These policies include a rate -smoothing method with a 30- year fixed amortization period for gai ns and losses (rather than the current 30- year rolling amortization method). CalPERS delayed the implementation of the new policy until fiscal year 2015 /16, and as described below further revised these policies in subsequent years.

Also, on February 20, 2014, the CalPERS Board approved new demographic assumptions reflecting (i) expected longer life spans of public agency employees and related increases in costs for the CalPERS system and (ii) trends of higher rates of retirement for certain public agency employee classes, including police officers and firefighters. The increase in liability due to the new assumptions will be amortized over 20 years with increases phased in over five years, beginning with the contribution requirement for fiscal year 2016/17.

The CalPERS Board is required to undertake an experience study every four years under its Actuarial Assumptions Policy and State law. As a result of the most recent experience study, on December 20, 2017, the CalPERS Board approved new actuarial assumptions, including (i) lowering the inflation rate to 2.625% for the June 30, 2017 actuarial valuation and to 2.50% for the June 30, 2018 actuarial valuation, (ii) lowering the payroll growth rate to 2.875% for the June 30, 2017 actuarial valuation and 2.75% for the June 30, 2018 actuarial valuation, and (iii) certain changes to demographic assumptions relating to the salary scale for most constituent groups, and modifications to the morality, retirement, and disability retirement rates.

On February 14, 2018, the CalPERS Board approved a new actuarial amortization policy with an effective date for actuarial valuations beginning on or after June 30, 2019, which includes (i) shortening the period over which actuarial gains and losses are amortized from 30 years t o 20 years, (ii) requiring that amortization payments for all unfunded accrued liability bases established after the effective date be computed to remain a level dollar amount throughout the amortization period, (iii) removing the 5 -year ramp-up and ramp-down on unfunded accrued liability bases attributable to assumptions changes and non- investment gains/losses established on or after the effective date and (iv) removing the 5 -year ramp-down on investment gains/losses established after the effective date. While CalPERS expects that reducing the amortization period for certain sources of unfunded liability will increase future average funding ratios, provide faster recovery of funded status following market downturns, decrease expected cumulative contributions, and mitigate concerns over intergenerational equity, such changes may result in increases in future employer contribution rates.

There can be no assurances that CalPERS will not make additional changes to its actuarial assumptions and policies in the future impacting upon the City’s required funding contributions and its unfunded accrued liability.

Funding Policy. Section 20814(c) of the California Public Employees’ Retirement Law (PERL) requires that the employer contribution rates for all public employers be determined on an annual basis by

57 the actuary and shall be effective on the July 1 following notice of a change in the rate. The total plan contributions are determined through PERS’ annual actuarial valuation process. The actuarially determined rate is the estimated amount necessary to finance the costs of benefits earned by employees during the year, with an additional amount to finance any unfunded accrued liability. The employer is required to contribute the difference between the actuarially determined rate and the contribution rate of employees. For the year ended June 30, 2021 , the active employee contribution rate for Tier 1 is 8%, Tier 2 is 7% and Tier 3 is

6.25% of annual pay , and the employer’s contribution rate is 9.398% of annual payroll. Employer contribution rates may change if plan contracts are amended. It is the responsibility of the employer to make necessary accounting adjustments to reflect the impact due to any Employer Paid Member Contributions or situations where members are paying a portion of the employer contribution. The employer contributions during the year ended June 30, 2022, were $8,462,978.

Annual Payments and Contribution Rates . Under GASB 27, an employer reported an annual pension cost (“APC”) equal to the annual required contribution (“ARC”) plus an adjustment for the cumulative difference between the APC and the employer’s actual plan contributions for the year. The cumulative difference was called the net pension obligation. In order to calculate the dollar value o f the ARC for inclusion in the financial statements, the applicable contribution rate was multiplied by the payroll of the covered employees that were paid during the relevant period.

Effective for financial statements beginning after July 1, 2014, GASB 68 replaces GASB 27.

Hence, the annual reports issued by CalPERS for 2015 and thereafter reflect GASB 68. GASB 68 requires additional reporting that CalPERS is intending to provide upon request by its members.

Set forth below is a history and projection of t he City’s contributions and projected payments to CalPERS, from fiscal year 20 11/12 through fiscal year 2028/29 , as determined by the annual actuarial valuation. It does not account for prepayments or benefit changes made during a fiscal year. The City contributed 100% of its APC in each completed year shown, except for 2017/18, when the City contributed a $5,000,000 excess payment , 2018/19 when the City contributed $6,862,166 excess payment , 2019/20 when the City contributed $9,652,981 excess payment , 2020/21 when the City contributed $5,029,014 excess payment, and 2021/22 when the City contributed $1,952,426. The City estimates that approximately [70]% of the payments to these plans is made from the City’s General Fund.

The schedule below illustrates the 10-year trend of City contributions. The actuarial methods and assumptions used to set the actuarially determined contributions for fiscal year 2020/21 were from June 30, 2019 public agency valuations.

Historical CalPERS Contribution Amounts by City
Measurement
Period
(ending June 30)
Actuarially
determined City
Contribution
City
Contribution
Deficiency
(excess)
Covered-
Employee
Payroll
Contributions
as a % of
Covered Payroll
2012 $3,224,628 (3,224,628) - $24,807,314 13.00
2013 3,319,326 (3,319,326) - 25,256,659 13.14
2014 3,562,246 (3,562,246) - 26,879,556 13.25
2015 3,740,138 (3,740,145) - 27,234,699 13.73
2016 3,958,892 (3,959,503) - 27,934,377 14.17
2017 4,484,140 (4,484,140) - 29,966,168 14.96
2018 4,662,191 (9,662,191) (5,000,000) 29,655,553 32.58 2019 5,637,826 (12,499,992) (6,862,166) 33,054,867 37.82 2020 6,323,890 (15,976,871) (9,652,981) 34,882,519 45.80 2021 6,190,238 (11,219,252) (5,029,014) 35,631,558 31.49 2022 6,510,552 (8,462,978) (1,952,426) 41,385,678 20.45 ___________________
Source: City of Santa Clarita 2020/21 Annual Comprehensive Financial Report.

58 The City is working toward a funded status of at least 90% within the next three years. The table below highlights the voluntary excess City contribution payments made to CalPERS over the last three fiscal years and expected to be made to CalPERS over the next three fiscal years. Also in fiscal year 2021/22, the City adopted the Public Agencies Post -Retirement Health Care Plan Docu ment and Trust Agreement, a tax -qualified irrevocable trust, organized under IRC Section 115, established to pre -fund OPEB. The Plan Trustee is U.S. Bank and Public Agencies Retirement Services (PARS) is the Trust Administrator. The Plan and its contribution requirements are established by a memorandum of understanding with the applicable employee bargaining units and may be amended by agreements between the City and the bargaining units.

CalPERS Excess Contribution Amounts by City

FISCAL YEAR
2019/20
Actual
2020/21
Actual
2021/22
Actual
2022/23
Projected
2023/24
Projected
2024/25
Projected
Ongoing Additional
UAL Payment

$1,652,981

$1,930,306

$1,846,488

0 0

0 One-Time Payment 8,000,000 3,000,000
Total Excess Payments $9,625,981 $4,930,306
Projected Funding Status 82.3% 94.2% 96.1%
115 Pension Trust Acct 2,000,000 2,000,000 2,000,000 2,000,000 ___________________
Source: Trust;City of Santa Clarita, Department of Finance.

The projected mandatory contribution rates for fiscal year 20 22/23 through 2027/28 are provided by CalPERS in its Ju ly 2021 report. The CalPERS projections assumed that all actuarial assumptions (including among other assumptions, a 7% return) will be realized and that no future changes to assumptions, contributions, benefits or funding will occur during the projection period. A complete explanation of the CalPERS assumptions can be found in the 2020 Actuarial Valuation.

59 Annual Contribution Rates
to CalPERS Retirement Plan by City
Fiscal Year
Ended
June 30
Employer
Normal Cost %

Unfunded Rate

Unfunded Liability
Payments
2015 8.160 5.578 n/a
2016 8.216 5.969 n/a
2017 8.482 6.553 n/a
2018 8.258 -- $2,300,635
2019 8.560 -- 2,921,910
2020 9.211 -- 3,466,495
2021 9.398 -- 3,591,974
2022 9.04 -- 3,552,911
2023(1) 8.85 -- 3,754,878
2024(2) 8.7 -- 4,181,000
2025(2) 8.6 -- 4,594,000
2026(2) 8.4 -- 4,500,000
2027(2) 8.3 -- 3,878,000
2028(2) 8.2 -- 3,958,000
_______________________
(1) Projected annual payment to retirement plan based on projected contribution rates on CalPERS actuarial report dated July 2021.
(2) Projected annual payment to retirement plan based on projected contribution rates on CalPERS plus Unfunded Accrued Liability (UAL) in CalPERS July 2021 Report.

Source: City of Santa Clarita, Department of Finance.

In June 2021, CalPERS reported a preliminary 4.7% net return on investments for the fiscal year ended June 30, 2020. In the two prior fiscal years ended June 30, 2019 and 2018, the reported return was

6.7% and 8.6 %, respectively. CalPERS weighted average investment returns for the past five, ten and twenty years ending June 30, 2020 are 6.3%, 8.5% and 5.5%, respectively. As discussed above, the CalPERS Board voted in December 2016 to phase in an assumed 7% rate of return by fiscal year 2019/20.

CalPERS has publicly indicated that it expects actual investment returns in the next twenty years to be less than the 7% assumed rate of return. Actual investment returns lower than the actuarially assumed level (in and of itself) will result in decreased funding status and increased required contribution by the City.

Funding Status of Plan. Based on the 2020 Actuarial Valuation (which is the most recent actuarial valuation available), CalPERS reported an unfunded liability, as of June 30, 2020, of $41.2 million for the City’s miscellaneous employees as compared to $ 45.8 million the previous year. Based upon this report, the City reported that its CalPERS obligation had a funded ratio of 82.3% based upon the market value of plan assets with respect to the City’s miscellaneous employees. As noted above, CalPERS has changed is discount rate assumptions. The funding status as of June 30, 2020 was calculated using an CalPERS Discount Rate of 7.0%. Also, as noted above CalPERS has changed its amortization and smoothing policies in 2013. Beginning with the June 30, 2015 Actuarial Valuati ons (that set fiscal year 2015 -16 CalPERS contribution rates), CalPERS no longer uses an actuarial value of assets and instead employs an amortization and rate smoothing policy that will account for all gains and losses over a fixed 30-year period with the increases and decreases in the rate phased over a 5-year period. Also as noted above, CalPERS has changed smoothing policies (shortening the period from 30 to 20- years) for valuations on and after June 30, 2019.

The table below summarizes the funded status of the City’s retirement plan as of the most recent actuarial valuation date (June 30, 2020). Additional information regarding the City’s employee retirement

60 plan, annual pension costs, the funding status thereof and significant accounting policies related thereto is set forth in Note 12 to the City’s annual comprehensive financial report, attached hereto as APPENDIX B.

CalPERS Funding History
Valuation
Date
(June 30)
Actuarial
Accrued
Liability
(AAL) –
Entry Age
Market Value
of Assets
(Overfunded)
Unfunded
AAL
Funded
Ratio
Annual
Covered
Payroll
(Overfunded)
Unfunded AAL
as a % of
Covered
Payroll
2011 $ 99,379,470 $ 74,744,441 $24,635,029 75.2% $25,381,221 97.06% 2012 108,651,771 78,013,291 30,638,480 71.8 24,198,291 126.61 2013 120,474,192 91,449,328 29,024,864 75.9 26,096,656 111.22 2014 138,805,002 111,331,265 27,473,737 80.2 27,201,293 100.00 2015 150,580,794 116,659,735 33,921,059 77.5 27,751,652 122.23 2016 164,514,560 119,981,401 44,533,159 72.9 28,113,472 158.40 2017 180,918,299 135,595,787 45,322,512 74.9 28,541,470 158.79 2018 202,221,979 153,364,091 48,857,888 75.8 30,719,107 159.05 2019 217,977,186 172,175,765 45,801,421 79.0 33,122,226 138.28 2020 232,844,010 191,691,905 41,152,105 82.3 34,777,169 118.33 _______________________________
Source: CalPERS annual valuation report dated July 2021.

For the measure period ended June 30, 2021 (the measurement date), the total pension liability was determined by rolling forward the June 30, 2019 total pension liability. The June 30, 2019 and the June 30, 2020 total pension liabilities were based on the following actuarial methods and assumptions:

Valuation Date: June 30, 2020
Measurement Date: June 30, 2021
Actuarial Cost Method: Entry Age Normal Cost Method
Amortization Method: Level Percent of Payroll
Asset Valuation Method: Market Value
Actuarial Assumptions
Discount Rate: 7.15%
Investment Rate of Return: 7.00%
Projected Salary Increases: Varies by Entry Age and Service Inflation: 2.5%
The Schedule of Changes in the City’s Net Pension Liability and Related Ratios during the measurement period is as follows:

61 Measurement Period June 30, 2020 June 30, 2021

Total Pension Liability
Service Cost $ 5,350,001 $ 5,527,979
Interest 15,203,985 16,234,316
Difference between Expected and Actual Experience 2,498,828 1,168,851 Changes of Assumptions - -
Benefit Payments, Including Refunds of Employee Contributions (7,134,971) (7,668,205) Net Change in Total Pension Liability 15,917,843 15,263,941 Total Pension Liability – Beginning 211,036,792 226,954,635 Total Pension Liability - Ending (a) $226,954,635 $242,217,576

Plan Fiduciary Net Position
Contributions – Employer $ 15,978,300 $ 11,219,959
Contributions – Employee 2,530,805 2,551,579
Net Investment Income 8,957,955 44,522,336
Administrative Expenses (242,657) (192,013)
Benefit Payments, Including Refunds of Employee Contributions (7,134,971) (7,668,205) Other Miscellaneous Income/(Expenses) - -
Plan to Plan Reserve Movement
Net Change in Fiduciary Net Position 20,089,432 50,433,656 Plan Fiduciary net Position - Beginning 172,127,426 192,216,858 Plan Fiduciary net Position - Ending (b) $192,216,858 $242,650,514

Plan Net Pension Liability/(Asset) - Ending (a)-(b) $ 34,737,777 $ (432,938)

Plan Fiduciary Net Position as a Percentage of the Total Pension Liability

84.69% 100.10%

___________________
Source: City of Santa Clarita 2020/21 Annual Comprehensive Financial Report.; City Finance Department.

Post-Retirement Medical Benefits (OPEB)
The City has elected through resolution to provide healthcare benefits as a single-employer defined benefit plan to retirees, spouses, and eligible dependents of the City. This plan provides postemployment medical insurance benefits through the PERS Health Plan (the Plan).

Funding Policy. In December 2011, the City adopted the Public Agencies Post-Retirement Health Care Plan Document and Trust Agreement, a tax-qualified irrevocable trust, organized under IRC Section 115, established to pre -fund OPEB. The Plan Trustee is U.S. Bank and Public Agencies Retirement Services (PARS) is the Trust Administrator. The annual contribution is based on the actuarially determined contribution. For the fiscal year ended June 30, 2021, the City’s cash contributions were $334,000 in payments to the trust and the estimated implied subsidy was $304,000 resulting in total contributions of $638,000. An additional $961,682 in benefits was paid directly by the Trust to recipients during the year.

Eligibility. City employees who have a service retirement from the City at age 50 with five or more years of service are eligible to receive post-employment medical benefits. Employees who have a disability retirement are also eligible. The benefit for employees hired before January 1, 2008 is up to $1,017 per month. The maximum benefit will be adjusted when the lowest cost employee rate, plus one, exceeds $1,017. No minimum years of service were required for the unrepresented employees hired before January 1, 2008 and retired before January 1, 2012 and represented employees hired before January 1, 2008 and retired after January 1, 2012 and before January 1, 2014. For other employees hired before January 1, 2008, the following vesting applies:

62 Years of Service Vested Percentage
0 to 5 years 0%
5 to 9 years 50%
10 to 14 years 75%
15 years and greater 100%

Employees hired after January 1, 2008 receive the PERS minimum and are not subject to a vesting schedule. As of the most recent valuation, June 30, 2021, the total participants in the Plan are 596, with 427 active employees, 128 retirees receiving benefits and 41 inactive entitled but not yet receiving benefits.

Net OPEB Liability. The City’s net OPEB actuarial valuations of an ongoing plan involve estimates of the value of reported amounts and assumptions about the probability of occurrence of events far into the future. Examples include assumptions about future employment, mortalit y, and the healthcare cost trend rate. Amounts determined regarding the funded status of the Plan and contributions are subject to continual revision, as actual results are compared with past expectations, and new estimates are made about the future.

The City’s net OPEB liability was measured as of June 30, 20 21 and the total OPEB liability used to calculate the net OPEB liability was determined by an actuarial valuation dated June 30, 2020 and based on the following assumptions : (a) the City contributes f ull cash benefit of the Actuarially Determined Contribution (ADC) and implied subsidy benefit is on a pay-as-you-go basis, (b) a 6.50% investment rate of return, which is based on the expected return on funds invested by PARS, (c) an annual healthcare cost trend rate of 7.25% for Non-Medicare and 6. 3% for Medicare decreasing to an ultimate rate of 4.0% in 2076, (d) inflation at 2.75% per annum, (e) aggregate payroll increase at 3.00%, (f) discount rate of 6.25% for 2021, 4.17% for 2020, (g) Municipal Bond Index of 2.16% for 2021, 2.21% for 2020, and (h) actuarial cost method is Entry Age Normal Level Percentage of Payroll. The value of assets was determined using techniques that spread the effects of short -term volatility in the market value of investments over a five - year period. The net OPEB liability is being amortized as a level percentage of projected payroll on an open basis. The remaining amortization period at June 30, 2021 was 13 years. Changes to previous assumptions include for the June 30, 2021 measurement date, the discount rate was changed from 4.17% to 6.25%; the participation rate at retirement was decreased from 100% to 95% for those hired before 1/1/08; the waived retiree reelection was decreased from 10% reelect at 65 to 5% reelect at 65; and the mortality improvement scale was updated to Scale MP-2019.

As of the most recent actuarial valuation date on June 30, 2021, the Plan was 131.7% funded. The actuarial OPEB liability for benefits was $ 39.7 million, and the Plan Fiduciary net position of assets was $52.3 million, resulting in a net OPEB asset of $12.6 million. The Plan fiduciary net position as a percentage of the total OPEB liability was 131.67%. The covered payroll (annual payroll of active employees covered by the Plan) was $ 35.6 million, and the ratio of net OPEB liability to the covered payroll was negative

35.29%. Additional information regarding the City’s net OPEB liability , the funding status thereof and significant accounting policies related thereto is set forth in Note 1 3 to the City’s annual comprehensive financial report, attached hereto as APPENDIX B.

63 The Schedule of Changes in the City’s Net OPEB Liability and Related Ratios during the June 30, 2021 measurement period as shown in the City’s annual comprehensive financial report is as follows:

Measurement Period June 30, 2021

Changes in Total OPEB Liability
Service Cost $ 2,154,981
Interest 2,517,070
Actual vs. Expected Experience (5,463,407)
Assumption Changes (17,074,375)
Benefit Payments (1,265,682)
Net Change in Total OPEB Liability (19,131,413)
Total OPEB Liability – Beginning $58,839,227
Total OPEB Liability - Ending (a) $39,707,814

Plan Fiduciary Net Position
Contributions – Employer $ 638,000
Net Investment Income 10,837,685
Benefit Payments (1,265,682)
Administrative Expenses (95,987)
Net Change in Fiduciary Net Position 10,114,016
Plan Fiduciary net Position - Beginning 42,169,576
Plan Fiduciary net Position - Ending (b) $52,283,592

Plan Net OPEB Liability/(Asset) - Ending (a)-(b) $(12,575,778)

Plan Fiduciary Net Position as a percentage of the Total OPEB Liability 131.67%

Covered employee payroll $35,631,538

Net OPEB liability as a percentage of covered-employee payroll -35.29% _________________________________________________________________ Source: City of Santa Clarita 2020/21 Annual Comprehensive Financial Report.

The City received a final results report by Bartel Associates LLC, of the City’s Retiree Healthcare Plan June 30, 2020 Actuarial Valuation Plan Funding for 2020/21 and 2021/22, dated June 18, 2021, which shows the City with a funded ratio of 118% for the measurement period ending June 30, 2020.

Deferred Compensation Plan/Defined Contribution Plan
The City has established deferred compensation/defined contribution plans for certain classifications of management under IRC Section 401(a). City participation in contributions to the plans is mandatory. The City is obligated to contribute amounts ranging from $2,000 to $19,500 per participant per year. Employee contributions to certain plans are voluntary. During the year ended June 30, 20 21, there were 1, 388 participants in the plans and the City’s contributions totaled $214,459, while employees’ contributions totaled $2,191,356.

Redevelopment Agencies
Until February 1, 2012, the California Redevelopment Law (Part 1 of Division 24 of the Health & Safety Code of the State) authorized the redevelopment agency of any city or county to receive an allocation of tax revenues resulting from increases in assessed values of properties within designated redevelopment project areas (the “incremental value”) occurring after the year the project area was formed. In effect, local

64 taxing authorities, such as the City, realized tax revenues only on the assessed value of such property at the time the redevelopment project was created for the duration of such redevelopment project.

The State Legislature approved two bills, AB X1 26 and AB X1 27, during the 2011-12 State budget process. AB X1 26 contemplated the elimination of redevelopment agencies State- wide, and AB X1 27 proposed to authorize the continued existence of redevelopment agencies that agreed to remit a percentage of their “tax increment” to the State’s taxing entities. The California Redevelopment Association and the League of California Cities filed a petition with the California Supreme Court (the “Court”), requesting the Court to review the constitutionality of AB X1 26 and AB X1 27. On December 29, 2011, the Court issued its opinion and upheld AB X1 26, but invalidated AB X1 27. As a result of the decision, all California redevelopment agencies, including the Former Redevelopment Agency, were dissolved as of February 1, 2012. Certain tax revenues allocable to the Former Redevelopment Agency will continue to be allocated to the Successor Agency to the Former Redevelopment Agency, to pay certain financial obligations approved by the Successor Agency’s Oversight Board and State Department of Finance (“DOF”), and some of those revenues may be redirected to other taxing agencies, such as the County, school districts and the City.

Prior to the dissolution of the Former Redevelopment Agency, the General Fund advanced the Former Redevelopment Agency funding for various redevelopment activities. These advances were made in the form of promissory notes and were transferred to the Successor Agency upon dissolution. In fiscal year 2014- 2015, the DOF approved final loan amounts from the General Fund to the Former Redevelopment Agency for $7,225,964 using a LAIF rate of 0.26%, which was in effect when the Oversight Board reinstated the loans on February 25, 2015. On September 22, 2015, the Committee on Budget and Fiscal Review of the California State Senate approved SB 107. A mandate of this legislation included a recalculation of the notes to the Successor Agency using a 3% simple interest from the origination of the note, instead of the LAIF rate. For fiscal year 2015 -2016 and subsequent, the loan amounts will increase by the 3% interest only. As of June 30, 2022, the loan amount reported in the General Fund was $8,708,426, of which $3,470,861 represents unpaid accrued interest.

Impact of State of California Budget
A number of the City’s revenues are collected and subvened by the State (such as sales tax and motor-vehicle license fees) or allocated in accordance with State law (most importantly, property taxes).

Therefore, State budget decisions can have an impact on City finances.

Approximately 68% of the City’s General Fund revenues are collected by the State or otherwise allocated by State law. During prior State fiscal crises, the State has reallocated a portion of such revenues to assist in its own budget balancing. Proposition 1A, adopted in 2004, amended the State Constitution to impose limits on the State’s ability to reallocate local revenue. (See “RISK FACTORS – Risks Related to Taxation in California – Proposition 1A.”)
The State’s fiscal year begins on July 1 and ends on June 30. The State Constitution requires the Governor to submit a budget for each fiscal year to the Legislature by the preceding January 10 ( the “Governor’s Budget”). The Constitution requires the Legislature to pass a budget bill by June 15, although the Legislature has frequently failed to meet this deadline. Because more than half of the State ’s General Fund income is derived generally from the April 15 personal income tax, the Governor submits a “ May Revision”' to his proposed budget. The Legislature typically waits for the May Revision before making budget decisions. Once the budget bill has been approved by a majority vote of each house of the Legislature, it is sent to the Governor for signature. Increases in taxes require approval of a two -thirds majority of each house.

On January 10, 2022, the Governor released his proposed budget for fiscal year 2022- 23. In the Governor’s proposed budget, General Fund revenues and transfers for fiscal year 2022-23 were projected

65 at $195.7 billion; a decrease of $1.0 billion, or 0.5 percent, compared with a revised estimate of $196.7 billion for fiscal year 2021-22. General Fund expenditures for fiscal year 2022-23 are projected at $213.1 billion, an increase of $3.1 billion compared with a revised estimate of $210.0 billion for fiscal year 2021-

22. The State acknowledges that risks to the State’s general fund include ongoing challenges related to the COVID-19 pandemic and significant unfunded liabilities of the two main retirement systems managed by state entities, the California Publ ic Employees’ Retirement System and the California State Teachers’ Retirement System. The State’s revenues (particularly the personal income tax) can be volatile and correlate to overall economic conditions. There can be no assurances that the State will not face fiscal stress and cash pressures again, or that other changes in the State or national economies will not materially adversely affect the financial condition of the State.

The City cannot predict the extent of any budgetary problems the State will encounter in future fiscal years, and it is not clear what measures would be taken by the State to balance its budget, as required by law.

In addition, the City cannot predict the impact that State budgets will have on the City’s finances and operations, or what actions will be taken in the future by the State Legislature and the Governor to deal with changing State revenues and expenditures. Current and future State budgets will be affected by international, national and State economic conditions and other factors over which the City has no control.

While the City is not substantially reliant on the State’s finances, a number of the City’s revenues are collected and dispersed by the State (such as sales tax and motor -vehicle license fees) or allocated in accordance with State law (most importantly, property taxes). Therefore, State budget decisions can have an impact on City finances. In the event of a material economic downturn in the State, there can be no assurance that any resulting revenue shortfalls to the State will not reduce revenues to local governments (including the City) or shift financial responsibility for programs to local governments as part of the State’s efforts to address any such related State financial difficulties.

See ““RISK FACTORS – Risks Related to Taxation in California —Proposition 1A” and “ — Proposition 22” herein.

The State budget provides certain funding for emergency response and for homelessness, from which the City expects to benefit.

Information about the State budget is regularly available at various State-maintained websites. Text of the State budget may be found at the State Department of Finance website, www.govbud.do/ca.gov. An impartial analysis of the budget is posted by the O ffice of the Legislative Analyst at www.lao.ca.gov. In addition, various State of California official statements, many of which contain a summary of the current and past State budgets, may be found at the website of th e State Treasurer, www.treasurer.ca.gov. The information referred to is prepared by the respective State agency maintaining each website and not by the City or the Authority , and neither the City nor the Authority take any responsibility for the continued accuracy of the Internet addresses or for the accuracy or timeliness of information posted there, and such information is not incorporated herein by these references.

Information Regarding Federal Budget
The Coronavirus Aid, Relief and Economic Act (the “CARES Act”) provides funding to states and local governments for expenditures incurred due to COVID -19. The CARES Act provided $9.5 billion to California, of which $2.7 million in Coronavirus Relie f Funds have been allocated to the City and $2.3 million in CARES CDBG-CV have been allocated to the City.

66 The American Rescue Plan Act of 2021 (ARPA) State and Local Fiscal Recovery Funds delivered $350 billion to state, local, and Tribal governments to s upport their response to and recovery from the COVID-19 public health emergency. The ARPA funding provided $43 billion to California, of which $35.1 million has been allocated to the City.

The Emergency Rental Assistance Program authorized $25 billion in federally-funded emergency rental assistance to support low - and moderate-income households nationwide that are unable to pay rent and utilities due to the COVID -19 pandemic. The U.S. Department of Treasury (Treasury Department) provided funds to states, l ocal governments with a population that exceeds 200,000, U.S. Territories, and Indian tribes. The City received a direct allocation from the Treasury Department in the amount of $5.2 million to provide emergency rental assistance to eligible households within the City's boundaries.

Transit also received CARES specific funding in the amount of $18.3 million and ARPA specific funding in the amount of $21.6 million. In addition, the City received $3.7 million in Coronavirus Response and Relief Supplemental Appropriations Act (CRRSA).

RISK FACTORS
Purchase of the Bonds will constitute an investment subject to certain risks, including the risk of nonpayment of principal and interest. Before purchasing any of the Bonds, prospective investors should carefully consider, among other things, the risk factors described below. However, the following is not meant to be an exhaustive listing of all the risks associated with the purchase of the Bonds. Moreover, the order of presentation of the risk factors does not necessarily reflect the order of their importance.

Substitution of Property
Pursuant to each Lease, the City will have, so long as such Lease is in effect, the option at any time and from time to time, to substitute other real property and/or improvements for any portion of such Leased Property or release any identifiable real property and/or improvements constituting the Leased Property, provided that the City shall satisfy all of the requirements set forth in such Lease. See APPENDIX C – “SUMMARY OF CERTAIN PROVISIONS OF THE PRINCIPAL LEGAL DOCUMENTS – The Lease – Substitution and Release of Property.”
Base Rental Payments Are Not Debt; Bonds are Limited Obligations The obligation of the City to make the Base Rental Payments under each Lease does not constitute an obligation of the City for which the City is obligated to levy or pledge any form of taxation or for which the City has levied or pledged any form of taxation. Neither the Bonds nor the obligation of the City to make Base Rental Payments constitu tes a debt of the City, the State or any political subdivision thereof (other than the Authority) within the meaning of any constitutional or statutory debt limitation or restriction.

The Bonds are not general obligations of the Authority, but are limited obligations payable solely from and secured by a pledge of Revenues and amounts held in the funds and accounts created under the each Indenture, consisting primarily of applicable Base Rental Payments. The Authority has no taxing power.

The Bonds are being issued by the Authority pursuant to the Act. The Supreme Court of the State in its 1998 decision of Rider v. City of San Diego, 18 Cal. 4th 1035, upheld the validity of a joint powers agency financing and found that bonds issued pursuant to the Act and payable from lease payments made pursuant to a lease with the City of San Diego were not subject to the State constitutional provisions that require two-thirds voter approval of indebtedness incurred by a city, county or school district. No voter approval of the Bonds or the Lease has been sought.

67 Although each Lease does not create a pledge, lien or encumbrance upon the funds of the City for so long that the related Leased Property is available for its use, the City covenants to take such action as may be necessary to include the related Base Rental Payments and Additional Rental Payments due under the such Lease in its annual budget and to make the necessary annual appropriations for all such Base Rental Payments and Additional Rental Payments from any source of legally available funds . The City is currently liable and may become liable on other obligations payable from general revenues, some of which may have a priority over the Base Rental Payments, or which the City, in its discretion, may determine to pay prior to the Base Rental Payments.

The City has the capacity to enter into other obligations payable from the City’s General Fund, without the consent of or prior notice to the Owners of the Bonds. To the extent that additional obligations are incurred by the City, the funds available to make Base Rental Payments may be decreased. In the event the City’s revenue sources are less than its total obligations, the City could choose to fund other activities before making Base Rental Payments and other pay ments due under either Lease. The same result could occur if state constitutional expenditure limitations were to prohibit the City from appropriating and spending all of its otherwise available revenues.

Abatement
In the event of the loss of, damage to or destruction or condemnation of either Leased Property that causes the City not to have the use and possession of all or a substantial part of such Leased Property, the City’s obligation to make the Base Rental Payments due under the Lease relating to such Leased Property will be abated and, notwithstanding the provisions of such Lease specifying the extent of such abatement and the provisions requiring rental interruption insurance covering loss of use of the Leased Property in an amount adequate to cover 24 months of Base Rental Payments due under such Lease, the resulting Base Rental Payments (and such other funds) may not be sufficient to pay all of the remaining principal of and interest on the related Bonds. See APPENDIX C – “SUMMARY OF CERTAIN PROVISIONS OF THE PRINCIPAL LEGAL DOCUMENTS – The Lease – Abatement of Rental.” Economic Condition in Local, State and National Economies The financial condition of the City can be significantly affected by generally prevailing conditions in the local, State and national economies. Such conditions and factors may impact the amounts available to the City to pay Base Rental Payments due under each Lease. A number of the City’s sources of revenues are collected and subvened by the State (such as sales taxes and motor-vehicle license fees) or allocated in accordance with State law (most importantly, property taxes). Approximately [66]% of the City’s General Fund revenues are collected by the State or allocated by State law.

Sales tax revenues account for 35 % or $ 46.2 million in the City’s 2022/23 Budget. For fiscal 2021/22, the top ten sales tax producers represented 26% o f the total sales tax received by the City, while the top twenty-five sales tax producers represented 43 % of the total sales tax. Adverse impacts on the operations of any of such businesses may affect the amount of sales tax received by the City.

The nation and the State are presently experiencing a severe economic recession resulting from the COVID-19 Pandemic. See “INTRODUCTION - COVID -19,” and “THE CITY - COVID-19 Pandemic,” herein, and “Impacts and Potential Impacts of COVID-19 on the City” below.

There can be no assurances that the current or future recession or otherwise declining conditions in the local, State or national economies will not materially adversely affect the financial condition of the City in the future. See “THE CITY - Impact of State of California Budget.”

68 Impacts and Potential Impacts of COVID-19 on the City The outbreak of COVID -19 ha s had an adverse effect on, among other things, the national economy, the global supply chain, international travel and travel -related industries. The outbreak has negatively affected the national and local economy and financial markets, and is expected to continue to negatively affect economic output worldwide and within the State and the City. Unemployment in the United States had dramatically increased as a result of the COVID -19 Pandemic. Both the State and the County have taken actions designed to mitigate the spread of COVID-19, including requiring the temporary closure of non-essential businesses. The ongoing Pandemic and the actions taken by the federal, State, and other local governments had an immediate impact on City operations and finances, incre asing City expenditures and reducing revenues. See “THE CITY - COVID-19 Pandemic.” Other potential impacts to the City associated with the Pandemic include, but are not limited to, challenges to the City’s public health and safety infrastructure. Although various measures are being implemented to address the impacts of the Pandemic on the City’s operations and finances, the City cannot predict the effectiveness and duration of these measures. The actual impact of the Pandemic on the City, its economy and its finances will depend on future events, including future events outside of the control of the City.

City Pension and OPEB Obligations
The City has significant pension and post-employment retirement benefits (“OPEB”) payable to its employees and pensioners. These obligations, and particularly the pension obligations, are in the nature of “defined benefit plans” where the City’s obligatio ns to its employees and pensioners are fixed, without regard to the earnings on the City’s or the State’s (CalPERS’) retirement system investments. If investment returns on the City’s or CalPERS plans are not realized as expected, or if pension or other OPEB benefits increase because of demographic or other factors, the City’s payments for its pension and OPEB obligations could increase, thus decreasing the revenues available to make Base Rental Payments.

Further, the City’s pension obligations are constitutionally protected under California law, meaning that the City has limited ability to alter its obligations outside of a municipal bankruptcy (Chapter 9) proceeding. Even in a bankruptcy proceeding, the City may have limited ability to avoid paying its pension obligations, and in particular, any obligation to make payments to CalPERS, potentially resulting in an adverse impact on the treatment in bankruptcy of other City creditors, including the Bond Owners. See “RISK FACTORS – Bankruptcy” below.

Risk of Uninsured Loss
The City covenants under each Lease to maintain certain insurance policies on related Leased Property. These insurance policies do not cover all types of risk. The Leased Property could be damaged or destroyed due to earthquake or other casualty for which the Leased Property is uninsured. While the City currently maintains earthquake insurance, each Lease does not require earthquake insurance on the related Leased Property. Additionally, each Leased Property could be the subject of an eminent domain proceeding. Under these circumstances an abatement of Base Rental Payments could occur and could continue indefinitely. There can be no assurances that amounts received as proceeds from insurance or from condemnation of such Leased Property will be sufficient to repair such Leased Property or to redeem the Bonds related thereto and any other obligations secured by related Base Rental Payments.

Certain of the City’s insurance policies provide for deductibles. Should the City be required to meet such deductible expenses, the availability of General Fund revenues to make Base Rental Payments may be correspondingly affected.

69 Self-Insurance
The City may self -insure for all insurance with the exception of rental interruption. Should the City self-insure, no assurance can be given that such self-insurance at the time of any casualty or loss will be adequate to cover any claims that may arise. For a discussion of (i) the insurance requirements for each Leased Property, and (ii) the conditions under which the City is permitted to self -insure, see “SOURCES OF PAYMENT OF THE BONDS – Insurance by the City.” For a general description of the City’s insurance and risk management programs, see “FINANCIAL INFORMATION RELATING TO THE CITY – Risk Management” and “APPENDIX B – AUDITED FINANCIAL STATEMENTS OF THE CITY FOR THE FISCAL YEAR ENDED JUNE 30, 2021.”
Eminent Domain
If any Leased Property is taken permanently under the power of eminent domain or sold to a government threatening to exercise the power of eminent domain, the term of the related Lease will cease as of the day possession is taken. If less than all of such Leased Property is taken permanently, or if such Leased Property or any part thereof is taken temporarily, under the power of eminent domain, (a) the related Lease will continue in full force and effect and will not be terminated by virtue of such taking, and (b) there will be a partial abatement of related Base Rental Payments as a result of the application of net proceeds of any eminent domain award to the prepayment of such Base Rental Payments, in an amount to be agreed upon by the City and the Authority such that the resulting Base Rental Payments represent fair consideration for the use and occupancy of the remaining usable portion of such Leased Property. The City covenants in each Lease to contest any eminent domain award which is insufficient to either: (i) prepay the related Base Rental Payments in whole, if all of such Leased Property is condemned; or (ii) prepay a pro rata sha re of the related Base Rental Payments, in the event that less than all of such Leased Property is condemned.

Bankruptcy
The City is a unit of State government and therefore is not subject to the involuntary procedures of the United States Bankruptcy Code (the “Bankruptcy Code”). However, pursuant to Chapter 9 of the Bankruptcy Code, the City may seek voluntary protection from its creditors for purposes of adjusting its debts. If the City were to become a debtor under the Bankruptcy Code, the City would be entitled to all of the protective provisions of the Bankruptcy Code as applicable in a Chapter 9 proceeding. the adverse effects of such a bankruptcy might be: (i) the application of the automatic stay provisions of the Bankruptcy Code, which, until rel ief is granted, would prevent collection of payments from the City or the commencement of any judicial or other action for the purpose of recovering or collecting a claim against the City; (ii) the avoidance of preferential transfers occurring during the r elevant period prior to the filing of a bankruptcy petition; (iii) the existence of unsecured or court-approved secured debt which may have a priority of payment superior to that of the Base Rental Payments under each Lease as they relate to Revenues due t o Owners of related Bonds; and (iv) the possibility of the adoption of a plan for the adjustment of the City’s debt (a “Plan”) without the consent of the Trustee or all of the Owners of Bonds, which Plan may restructure, delay, compromise or reduce the amo unt of any claim of the Owners if the Bankruptcy Court finds that the Plan is fair and equitable.

In addition, the City could either reject a Lease or assume such Lease despite any provision of such Lease which makes the bankruptcy or insolvency of the Cit y an event of default thereunder. In the event the City rejects a Lease, the Trustee, on behalf of the Owners of the related Bonds, would have a pre-petition claim that may be limited under the Bankruptcy Code and treated in a manner under a Plan over the objections of the Trustee or Owners of the related Bonds. Moreover, such rejection would terminate such Lease and the City’s obligations to make payments thereunder.

70 The Authority is a public agency and, like the City, is not subject to the involuntary procedures of the Bankruptcy Code. The Authority may also seek voluntary protection under Chapter 9 of the Bankruptcy Code. In the event the Authority were to become a debtor under the Bankruptcy Code, the Authority would be entitled to all of the protective provisions of the Bankruptcy Code as applicable in a Chapter 9 proceeding. Such a bankruptcy could adversely affect the payments under the Indenture s. Among the adverse effects might be: (i) the application of the automatic stay provisions of the Bankruptcy Code, which, until relief is granted, would prevent collection of payments from the Authority or the commencement of any judicial or other action for the purpose of recovering or collecting a claim against the Authority; (ii) the avoidance of preferential transfers occurring during the relevant period prior to the filing of a bankruptcy petition; (iii) the existence of unsecured or court-approved secured debt which may have priority of payment superior to that of the Owners of the Bonds; and (iv) the possibility of the adoption of a plan for the adjustment of the Authority’s debt without the consent of the Trustee or all of the Owners of the Bonds, which plan may restructure, delay, compromise or reduce the amount of any claim of the Owners if the Bankruptcy Court finds that the Plan is fair and equitable. However, the bankruptcy of the Authority, and not the City, should not affect the Trustee’s rights under the Lease s. The Authority could still challenge the assignment, and the Trustee and/or t he Owners of the Bonds could be required to litigate these issues to protect their interests.

No Liability of Authority to the Owners
Except as expressly provided in the Indenture s, the Authority will not have any obligation or liability to the Owners of t he related Bonds with respect to the payment when due of the applicable Base Rental Payments by the City, or with respect to the performance by the City of other agreements and covenants required to be performed by it contained in the Lease s or the Indentures, or with respect to the performance by the Trustee of any right or obligation required to be performed by it contained in the Indentures.

No Limitation on Incurring Additional Obligations
Neither the Leases nor the Indentures contain any limitations on the ability of the City to enter into other obligations (other than Additional Bonds as defined in the Indentures) that may constitute additional claims against its General Fund revenues. To the extent that the City incurs additional obligations, the funds available to make Base Rental Payments may be decreased. The City is currently liable on other obligations payable from General Fund revenues. See “THE CITY- Outstanding Indebtedness of the City” herein.

Seismic Factors
The City, like most communities in California, is an area of unpredictable seismic activity, and therefore, is subject to potentially destructive earthquakes. The City is located in a seismically dynamic region featuring two active fault systems: the San Andreas System which includes the San Andreas and the San Gabriel faults; and a system of faults associated with the transverse ranges including the Sierra Madre and San Fernando faults. As a result of the January 1994 Northridge Earthquake, damage to City facilities included the City Hall which was repaired and retrofitted for approximately $4.6 million. The City did not have use of the building for approximately 100 days during that time.

The CUBE Leased Property lies on or near the San Gabriel Fault and the San Cayetano Fault. The City has adopted a Seismic Safety Element to the City’s General Plan and implemented the Element’s recommendation by ordinance. The ordinance specifies development restrictions and requirements for engineering and geologic reports based on the type of project, intensity of use and proximity to the identified hazard zones. City development has generally avoided these areas of highest risk and General Plan policy will prevent development in high risk areas.

71 The occurrence of severe seismic activity in the City could result in substantial damage to property located in the City. In the event of damage to real property within the City, the property owner could become unwilling to pay its property tax bills or the City may be required to expend unexpected funds for repairs.

In such event, revenues to or expenditures from the General Fund of the City could be negatively affected.

Pursuant to the Lease s, the City is not required to maintain earthquake or flood insurance.

Depending on its severity, an earthquake could result in abatement of Base Rental Payments under the Leases. See “RISK FACTORS -- Abatement” above. Should an earthquake, landslide, flood or other natural hazards occur that results in substantial interference with the use of either Leased Property, under the abatement provisions of the related Lease, the City would not be obligated to make the Base Rental Payments. Either Leased Property may also be at risk from other events of force majeure, such as damaging storms, fires and explosions, strikes, sabotage, riots and spills of hazardous substances, among other events.

The City cannot predict what force majeure events may occur in the future.

Risk of Structural and Wildland Fire
The City cont racts fire protection services from the Consolidated Fire Protection District of Los Angeles County, otherwise known as the Los Angeles County Fire Department (the “Fire Department”).

The City receives urban and wildland fire protection services from the Fire Department. Mutual aid agreements are maintained with several local, State, and federal agencies. According to information contained in the Safety Element of the City’s General Plan, historical records kept by the U.S. Department of Forestry indicate that wildland fires occur regularly within the planning area, with large fires occurring approximately every 10 years. Fire danger rises based on the age and amount of vegetation; therefore, fire incidents tend to be cyclical in an area as vegetation inten sity increases with age, and dead vegetation accumulates. The Santa Clarita Valley planning area is susceptible to wildland fires because of its hilly terrain, dry weather conditions, and native vegetation. Steep slopes allow for the quick spread of flames during fires, and pose difficulty for fire suppression due to access problems for firefighting equipment. Late summer and fall months are critical times of the year when wildland fires typically occur, when the Santa Ana winds deliver hot, dry desert air into the region. Highly flammable plant communities consisting of variable mixtures of woody shrubs and herbaceous species, such as chaparral and sage vegetation, allow fires to spread easily on hillsides and in canyons. According to the Fire Department, 80 to 90 percent of the planning area is located in a Very High Fire Hazard Severity Zone, which is the highest classification for areas subject to wildfires. Areas subject to wildland fire danger include portions of Newhall and Canyon Country, Sand Canyon, Pico Canyon, Placerita Canyon, Hasley Canyon, White’s Canyon, Bouquet Canyon, and all areas along the interface between urban development and natural vegetation in hillside areas. Fire hazards increase with any drought periods, and are highest for structures at the fringe of forested or wildland areas. In addition to the damage caused directly by a foothill fire, further damage may be caused by resulting mudslides during subsequent rains. The Fire Department has adopted programs directed at wildland fire p revention, including adoption of the State Fire Code standards for new development in hazardous fire areas. Fire prevention requirements include provision of access roads, adequate road width, and clearance of brush around structures located in hillside ar eas. Additionally, proof of adequate water supply for fire flow is required within a designated distance for new construction in fire hazard areas.

Recent Thomas and Creek fires in Ventura County and Hill and Woosley fires in Los Angeles County did not have a direct impact on the City. The Rye Canyon fire in December 2017 within the City did not result in any damage to structures. The recently reported Lake Fire near Lake Hughes in the Angeles National Forest and the Bobcat fire in Los Angeles County did not have a direct impact on the City.

In the event of damage to real property within the City, the property owner could become unwilling to pay its property tax bills or the City may be required to expend unexpected funds for repairs. In such event, revenues to or expenditures from the General Fund of the City could be negatively affected.

72 Risk of Floods
According to information contained in the Safety Element of the City’s General Plan, the Santa Clarita Valley contains many natural streams and creeks that function as storm drain channels, conveying surface water runoff into the Santa Clara River. As described in the Conservation and Open Space Element of the City’s General Plan, both the City and County have acted to protect the Santa Clara River floodplain from development in order to maintain the river’s natural character and to protect future development from flood hazards. Localized flooding has been experienced intermittently in some areas of the valley due to local drainage conditions. During heavy rains some areas of Castaic, Newhall, Friendly Valley, and Bouquet Canyon have experienced mudflows or flooding. Local flooding can be exacerbated by erosion and mudslides when heavy rains occur after wildfires. Two areas of the City known to experience intermittent flooding are portions of Placerita Canyon, Sand Canyon, and Newhall Creek.

The majority of the land within the City is designated within the “moderate” and “low” risk flood zones, while select areas along creeks and waterways are designated wi thin the “high” risk flood zone.

Potential damage from flooding ranges from inconvenience to property damage and loss of life.

Dam failure can result from natural or man-made causes, including earthquakes, erosion, improper siting or design, rapidly-rising flood waters, or structural flaws. Dam failure may cause loss of life, damage to property, and displacement of persons residing in the inundation path. Damage to electric generating facilities and transmission lines could also impact life support systems in communities outside of the immediate inundation area. Within the Santa Clarita Valley, the two major reservoirs which could have a significant impact on the Santa Clarita Valley in the event of a dam failure are located in Bouquet Canyon and Castaic. Failure of these dams during a catastrophic event, such as a severe earthquake, is considered unlikely, due to their type of construction. However, local safety plans have considered the possibility of dam failure and have outlined a procedure for response and recovery from this type of hazard, including identification of inundation areas and evacuation routes.

The occurrence of flooding in the City could result in substantial damage to property located in the City. In the event of damage to real property wi thin the City, the property owner could become unwilling to pay its property tax bills or the City may be required to expend unexpected funds for repairs. In such event, revenues to or expenditures from the General Fund of the City could be negatively affected.

Drought
From 2012 through 2016, the State experienced “exceptional drought conditions” (the most severe drought classification) according to the U.S. Drought Monitor, had below average runoff, which resulted in chronic and significant shortages to municipal, industrial, agricultural, and wildlife refuge supplies, and historically low groundwater levels. As a result of those drought conditions, the Governor and the California State Water Resources Control Board (the “State Water Board”) issued Executiv e Orders, drought emergency regulations, and conservation standards to reduce potable urban water use.

Following unprecedented water conservation and record amounts of precipitation, in April 2017, the Governor lifted drought emergency Executive Orders exc ept for the Executive Order requiring permanent monthly water use reporting and banning wasteful water use practices, such as hosing of sidewalks, driveways, and other hardscapes, and strengthening local drought resilience plans.

On May 31, 2018, the Governor signed into law two bills (Assembly Bill 1668 (2018) and Senate Bill 606 (2018) (together, the “Water Conservation Legislation”) requiring the establishment of Statewide efficiency standards by 2022. The Water Efficiency Legislation is designed to assist the State better prepare for droughts and climate change by requiring urban water suppliers to, among other things, create water use objectives, establish water shortage contingency plans, and increase potable water reuse.

73 After two years of low precipitation in 2020 and 2021, the U.S. Drought Monitor reported that more than 90% of the State is experiencing moderate to exceptional drought with reservoir and groundwater levels at levels significantly below average. Continued dry conditions can threaten water supplies, impair critical habitat, reduce recreational opportunities, and create uncertainty for all water users. In March 2021, the State Water Board reported that hydrologic conditions since 2020 have been very similar to the drought years of 2014 and 2015.

In response to a second consecutive dry year in the State, on April 21, 2021, the Governor directed State agencies to take immediate action to bolster drought resilience and prepare for impacts on communities, businesses and ecosystems if dry condi tions extend to a third year and declared a regional drought emergency for the Russian River watershed in Sonoma and Mendocino counties. On May 10, 2021, the Governor expanded the drought emergency proclamation to add 39 additional counties, including the County. This proclamation directs the State Water Board to consider modifying requirements for reservoir releases and diversion limitations to conserve water upstream later in the year to maintain water supply, improve water quality, protect cold water pools for salmon and steelhead, enables flexibilities in regulatory requirements and procurement processes to mitigate drought impacts, and directs State water officials to expedite the review and processing of voluntary transfers of water from one water right holder to another, enabling available water to flow where it is needed most. On July 8, 2021, in response to intensifying drought and record- breaking temperatures across the Western United States, the Governor added nine counties to the regional drought state of emergency and called on residents to voluntarily reduce their water use by 15% compared to 2020 and limit outdoor watering to three days per week between the hours of 6:00 p.m. and 10:00 a.m. to protect water reserves if drought conditions. On Oct ober 20, 2021, the Governor expanded the drought emergency proclamation Statewide.

In an effort to conserve water, the City is conducting evening irrigation audits of its median system.

From this audit, the City has provided an encompassing punch list ide ntifying irrigation line breaks, broken/missing nozzles, excessive runtime setting, and/or areas where plant material interference is creating water run-off or sheeting. Dating back to 2015, the City has modified its operation to allow contractors to run irrigation exclusively during the evening beginning at 7 p.m. In addition to adjusting times to match Stage 2 restrictions, staff continues to reiterate these requirements to all contractors. Based on continued drought conditions, in the fall of 2021 the C ity elected to forgo its normal turf renovation program which conditions grass areas for the coming spring as these efforts require significant application of additional water. Moreover, the City is reducing water usage by 10% throughout the landscape maintenance districts’ operation through reprogramming of the City’s weather-based irrigation controller system.

Residents of the City are serviced by the Santa Clarita Valley Water Agency (“SCV Water”), formed in 2018, with three water divisions: Newhall Wate r Division, Santa Clarita Water Division and Valencia Water Division. On April 26, 2022, the SCV Water Board of Directors approved a resolution enacting Stage 2 of the Water Shortage Contingency Plan and Water Conservation and Water Shortage Ordinance. Certain water waste activities are now restricted. Landscape watering is limited to three days per week, with no watering on Saturday, and limited watering run times. While certain water activities are now restricted, the Santa Clarita Valley Water Agen cy (SCVWA) has provided the City an Alternative Performance Compliance Waiver exempting it from the three- day per week watering restrictions. The issuance of this waiver by the SCVWA acknowledges the City’s existing Weather-based Smart Irrigation Controller System and recognizes the ability of large users to implement alternative water saving strategies,, including recent actions taken by the City to voluntarily reduce landscape -related water usage by an additional ten percent.

The City can give no assurance that persistent drought conditions will not result in the imposition of water use restrictions on residents due to drought-related orders or regulations imposed by the State.

74 Hazardous Substances
The public works activities of the City may, from time to time, result in the use of hazardous substances on the facilities owned and operated by the City, including, but not limited, to either Leased Property. Accordingly, it is possible that spills, dis charges or other adverse environmental consequences of such use in the future could cause an adverse effect on the fair rental value of such Leased Property and lead, in an extreme case, to abatement, in whole or in part, of related Base Rental Payments. See “RISK FACTORS – Abatement” above.

In general, the owners and operators of a parcel may be required by law to remedy conditions relating to releases or threatened releases of hazardous substances. The federal Comprehensive Environmental Response, Compensation and Liability Act of 1980, sometimes referred to as “CERCLA” or the “Super Fund Act”, is the most well-known and widely applicable of these laws, but California laws with regard to hazardous substances are also stringent and similar in effect. Under many of these laws, the owner (or operator) is obligated to remedy a hazardous substance condition of a parcel whether or not the owner (or operator) had anything to do with creating or handling the hazardous substance.

Climate Change
Climate change caused by human activities may have adverse effects on the City. Climate change can also result in more variable weather patterns, which can lead to longer and more severe droughts as well as increased risk of flooding. Projections of the impacts of global climate change on the City are complex and depend on many factors that are outside the City’s control. The various scientific studies that forecast the amount and timing of adverse impacts of climate change are based on assumptions contained in such studies, but actual events may vary materially. Also, the scientific understanding of climate change and its effects continues to evolve. Accordingly, the City is unable to forecast with certainty when adverse impacts of climate change will occur or the extent of such impacts. The City expects to continue to consider the effects of climate change in its own planning and to participate in regional planning initiatives. While the impacts of climate change may be mitigated by the City’s past and future investment in adaptation strategies, the City can give no assurance about the net effects of those strategies and whether the City will be required to take additional adaptive mitigation measures. Particular potential impacts of climate change on the City include worsening air quality, increased flooding, and heatwaves.

Future climate change bills or measures could restrict the City’s ability to raise additional funds for its General Fund.

Green Bonds
No representation is made as to the suitability of the Bonds to fulfill environmental criteria required by prospective investors. The designation of the Bonds as “green bonds” is not based upon the receipt by the Authority or the City of any third-party certification relating to the status of the Bonds as “green bonds.” Each potential purchaser of the Bonds should determine for itself the relevance of the information contained or referred to herein or in the Indentures regarding the use of proceeds and its purchase of the Bonds should be based upon such investigation as it deems necessary. THERE CAN BE NO ASSURANCE THAT THE

USE OF PROCEEDS OF THE BONDS WILL BE SUITABLE FOR THE INVESTMENT CRITERIA OF AN INVESTOR. It is the City’s intention to apply the net proceeds received from the sale of the Bonds for the energy efficiency upgrades as described in “PLAN OF FINANCE.” Prospective investors should review the information included in this Preliminary Official Statement pertaining to the intended use of the proceeds of the Bonds and must determine for themselves the relevance of such information for the purpose of any investment in the Bonds, together with any other investigation the investor deems necessary. In particular, no assurance is given by the City or the Underwriter that the

75 use of such proceeds will satisfy, in whole or in part, any present or future investor expectations or requirements as to any investment criteria or guidelines with such investor or its investments are required to comply, whether by any present or future applicable law or regulations, or by its own by- laws or other governing rules or investment portfolio mandates, in particular with regard to any direct or indirect environmental impact of any uses of the proceeds of the Bonds.

Furthermore, it should be noted that there is currently no clearly defined definition of (legal, regulatory, or otherwise), nor market consensus as to what constitutes a “green” or an equivalently labelled project or as to what precise attributes are required for a particular project to be defined as “green” or such other equivalent label. No assurance can be given that such a clear definition will develop over time, or that, if developed, it will include the projects to be financed or refinanced with proceeds of the Bonds.

Accordingly, no assurance is or can be given to investors that any uses of the Bonds will meet investor expectations regarding such “green” or other equivalently -labelled performance objectives or that any adverse environmental and/or other impacts will not occur during the construction or operation of projects to be financed with the proceeds of the Bonds.

Risks Related to Taxation in California
Constitutional Amendments Affecting Tax Revenues. Article XIIIA of the California Constitution limits the amounts of ad valorem tax on real property to 1% of “full cash value” as determined by the county assessor. Article XIIIA defines “full cash value” to mean “the City 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 when purchased, newly constructed, or a change in ownership has occurred after the 1975 assessment period.” Furthermore, all real property valuation may be increased to reflect the inflation rate, as shown by the consumer price index, not to exceed 2% per year, or may be reduced in the event of declining property values caused by damage, destruction or other factors.

Article XIIIA exempts from the 1% tax limitation any taxes to repay indebtedness approved by the voters prior to July 1, 1978, and any bonded indebtedness for the acquisition or improvement of real property approved on or after July 1, 1978 by two-thirds of the voters voting on the proposition approving such bonds, and requires a vote of two-thirds of the qualified electorate to impose special taxes, while totally precluding the imposition of any additional ad valorem , sales or transaction tax on real property. In addition, Article XIIIA requires the approval of two-thirds of all members of the State legislature to change any State tax law resulting in increased tax revenues.

Article XIIIB of the California Constitution limits the annual appropriations from the proceeds of taxes 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 for changes in the cost of living, population and services rendered by the governmental entity. Article XIIIB includes a requirement that if an entity’s revenues in any year exceed the amount permitted to be spent, the excess would have to be returned by revising tax or fee schedules over the subsequent two years.

On November 5, 1996, California voters approved an initiative to amend the California Constitution known as the Right to Vote on Taxes Act (“Proposition 218”), which added Article XIIIC and XIIID to the California Constitution. Among other provisions, Proposition 218 requires majority voter approval for the imposition, extension or increase of general t axes and two -thirds voter approval for the imposition, extension or increase of special taxes by a local government, which is defined in Proposition 218 to include cities. Proposition 218 also provides that any general tax imposed, extended or increased without voter approval by any local government on or after January 1, 1995 and prior to November 6, 1996 will continue to be imposed only if approved by a majority vote in an election held within two years of November 6, 1996. Proposition 218 also 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. This

76 extension of the initiative power is not limited by the terms of Proposition 218 to impositions afte r November 6, 1996 and absent other legal authority, could result in retroactive reduction in any existing taxes, assessments, fees and charges. In addition, Proposition 218 limits the application of assessments, fees and charges and requires certain existing, new and increased assessments, fees and charges to be submitted to property owners for approval or rejection, after notice and public hearing. Neither the City nor the Authority expects the provisions of Proposition 218 to have any immediate materia l effect on the revenues from which Base Rental Payments are expected to be appropriated.

Implementing Legislation. Legislation enacted by the California Legislature to implement Article XIIIA (Statutes of 1978, Chapter 292, as amended) provides that, not withstanding any other law, local agencies may not levy any property tax, except to pay debt service on indebtedness approved by the voters prior to July 1, 1978, and that each county will levy the maximum tax permitted by Article XIIIA of $4.00 per $100 assessed valuation (based on the traditional practice of using 25% of full cash value as the assessed value for tax purposes). The legislation further provided that, for Fiscal Year 1978-79 only, the tax levied by each county was to be appropriated among a ll taxing agencies within the county in proportion to their average share of taxes levied in certain previous years.

Future assessed valuation growth allowed under Article XIIIA (i.e., new construction, change of ownership, and 2% annual value growth) will be allocated on the basis of “situs” among the jurisdictions that serve the tax rate area within which the growth occurs. Local agencies and schools will share the growth of “base” revenue from the tax rate area. Each year’s growth allocation becomes part of each agency’s allocation in the following year. The Authority is unable to predict the nature or magnitude of future revenue sources that may be provided by the State to replace lost property tax revenues. Article XIIIA effectively prohibits the levying of any other ad valorem property tax above those described above, even with the approval of the affected voters.

Constitutional Challenges to Property Tax System. There have been many challenges to Article XIIIA of the California Constitution. The United States Supreme Court heard the appeal in Nordlinger v.

Hahn, a challenge relating to residential property. Based upon the facts presented in Nordlinger, the United States Supreme Court held that the method of property tax assessment under Article XIIIA did not violate the federal Constitution. Neither the Authority nor the City can predict whether there will be any future challenges to California’s present system of property tax assessment and cannot evaluate the ultimate effect on the Agency’s receipt of tax increment revenues should a future decision hold unconstitutional the method of assessing property.

Statutory Revenue Limitations -- Proposition 62. Proposition 62 is a statewide statutory initiative adopted by the voters at the November 4, 1986 general election. It added Sections 53720 to 53730 to the Government Code to require that all new local taxes be approved by the voters. The statute provides that all local taxes are either general taxes or special taxes. General taxes are imposed for general governmental purposes. Special taxes are imposed for specific purposes only. General taxes may not be imposed by local government unless approved by a two-thirds vote of the entire legislative body and a majority of the voters voting on the proposed general tax. Special taxes may not be imposed by local government unless approved by a majority of the entire legislative body and by two-thirds of the voters voting on the special tax. Soon after Proposition 62 was adopted by the voters, legal challenges to taxes adopted contrary to its provisions were filed. In 1991, in the most significant case, City of Woodlake v. Logan, the California Court of Appeal held that the statutory voter approval requirement for general taxes was unconstitutional. Th e California Supreme Court refused to review Woodlake.

On September 28, 1995, the California Supreme Court, on a 5-2 vote, in a decision entitled Santa Clara County Local Transportation Authority v. Guardino (Case No. S036269), “disapproved” Woodlake and held that the voter approval requirements of Proposition 62 are valid. On December 14, 1995, the Supreme Court made minor nonsubstantive changes to its written opinion and denied the petition for

77 rehearing. The decision provides that the voter approval re quirements of Proposition 62 for both general and special taxes are valid. The Guardino case fails to say (1) whether the decision is retroactively applicable to general taxes adopted prior to the decision; (2) whether taxpayers have any remedies for refund of taxes paid under a tax ordinance that was not voter approved; (3) what statute of limitations applies to taxes adopted without voter approval prior to Guardino; (4) whether Proposition 62 applies only to new taxes or to tax increases as well.

The Court of Appeals in a December 15, 1997 decision entitled McBearty v. City of Brawley (Case No. D027877) addressed some of these issues. In Brawley, a taxpayer challenged the city’s utility tax that was passed by the city council in 1991 without a vote of the electorate. The Court of Appeals held that (i) a three year statute of limitations applies to challenges to a tax ordinance subject to Proposition 62; and (ii) the statute of limitations did not begin to run until September 1995 when the Guardino case determined that Proposition 62 was constitutional. The effect of the holding in Brawley is that any tax ordinances passed between November 1986 and December 1995 that were not approved by the electorate would be subject to a challenge until December 1998. The court ordered the city to either cease collecting the tax or seek voter approval to continue levying the tax. However, in Howard Jarvis Taxpayers Association v. City of La Habra, decided on June 4, 2001, the California Supreme Court overruled part of McBearty, finding that the three year statute of limitations applicable to such taxes does not run from the date of the Guardino decision, but rather the continued imposition and collection of such tax is an ongoing violation, upon which the limitations period begins with each new collection.

Several questions raised by the Guardino decision remain unresolved. Proposition 62 provides that if a jurisdiction imposes a tax in violation of Proposition 62, the portion of the one percent general ad valorem tax levy allocated to that jurisdiction is reduced by $1 for every $1 in revenue attributable to the improperly imposed tax for each year that such tax is collected. The practical applicability of this provision has not been fully determined. Potential futur e litigation and legislation may resolve some or all of the issues raised by the Guardino decision.

Neither the Authority nor the City can predict the outcome of any pending or future litigation concerning the validity of Proposition 62, nor can either predict the scope of the Guardino or Brawley decisions discussed above. Proposition 62 could affect the ability of the City to continue the imposition of, or to retain, certain taxes, and restrict the City’s ability to raise revenue.

Proposition 1A. Proposition 1A (“Proposition 1A”), proposed by the Legislature in connection with the 2004- 05 Budget Act and approved by the voters in November 2004, restricts State authority to reduce major local tax revenues such as the tax shifts permitted to take place in Fiscal Years 2004/05 and 2005-06. Proposition 1A provides that the State may not reduce any local sales tax rate, limit existing local government authority to levy a sales tax rate or change the allocation of local sales tax revenues, subject to certain exceptions. Proposition 1A generally prohibits the State from shifting to schools or community colleges any share of property tax revenues allocated to local governments for any fiscal year, as set forth under the laws in effect as of November 3, 2004. Any change in the allocation of property tax revenues among local governments within a county must be approved by two-thirds of both houses of the Legislature.

Proposition 1A provides, however, that beginning in Fiscal Year 2008- 09, the State may shift to schools and community colleges up to 8% of local government property tax revenues, which amount must be repaid, with interest, within three years, if the Governor proclaims that the shift is needed due to a severe state financial hardship, the shift is approved by two-thirds of both houses and certain other conditions are met.

Such a shift may not occur more than twice in any ten-year period. The State may also approve voluntary exchanges of local sales tax and property tax revenues among local governments within a county.

Proposition 1A provides that if the State reduces the vehicle license fee (“VLF”) rate below 0.65% of vehicle value, the State must provide local governments with equal replacement revenues. Further, Proposition 1A requires the State to suspend State mandates affecting cities, counties and special districts,

78 excepting mandates relating to employee rights, schools or community colleges, in any year that the State does not fully reimburse local governments for their costs to comply with such mandates.

Proposition 22. On November 2, 2010, voters in the State approved Proposition 22. Propos ition 22, known as the “Local Taxpayer, Public Safety, and Transportation Protection Act of 2010,” eliminates or reduces the State’s authority to (i) temporarily shift property taxes from cities, counties and special districts to schools, (ii) use vehicle license fee revenues to reimburse local governments for state-mandated costs (the State will have to use other revenues to reimburse local governments), (iii) redirect property tax increment from redevelopment agencies to any other local government, (iv) use State fuel tax revenues to pay debt service on State transportation bonds, or (v) borrow or change the distribution of State fuel tax revenues.

Proposition 26. On November 2, 2010, voters in the State also approved Proposition 26.

Proposition 26 amends Article XIIIC of the State Constitution to expand the definition of “tax” to include “any levy, charge, or exaction of any kind imposed by a local government” except the following: (1) a charge imposed for a specific benefit conferred or privilege granted directly to the payor that is not provided to those not charged, and which does not exceed the reasonable costs to the local government of conferring the benefit or granting the privilege; (2) a charge imposed for a specific government service or product provided directly to the payor that is not provided to those not charged, and which does not exceed the reasonable costs to the local government of providing the service or product; (3) a charge imposed for the reasonable regulatory costs to a local gover nment for issuing licenses and permits, performing investigations, inspections, and audits, enforcing agricultural marketing orders, and the administrative enforcement and adjudication thereof; (4) a charge imposed for entrance to or use of local government property, or the purchase, rental, or lease of local government property; (5) a fine, penalty, or other monetary charge imposed by the judicial branch of government or a local government, as a result of a violation of law; (6) a charge imposed as a condition of property development; and (7) assessments and property-related fees imposed in accordance with the provisions of Article XIIID. Proposition 26 provides that the local government bears the burden of proving by a preponderance of the evidence that a levy, charge, or other exaction is not a tax, that the amount is no more than necessary to cover the reasonable costs of the governmental activity, and that the manner in which those costs are allocated to a payor bear a fair or reasonable relationship to the payor’s burdens on, or benefits received from, the governmental activity.

Neither the City nor the Authority expects provisions of Proposition 26 to materially impede the City’s ability to pay Base Rental Payments when due.

Future Initiatives
From time to time, other initiative measures may be adopted, which may affect the City’s revenues and its ability to expend said revenues. The above -mentioned measures and any future measures could restrict the City’s ability to raise additional funds for its General Fund.

Limitations on Remedies
The enforceability of the rights and remedies of the owners of the Bonds and the Trustee, and the obligations incurred by the Authority and the City, respectively, may be subject to the following, among others: the limitations on legal remedies against joint powers authorities and cities in California; the federal bankruptcy code and applicable bankruptcy, insolvency, reorganization, moratorium or similar laws relating to or affecting the enforcement of creditors’ rights generally, now or hereafter in effect; principles of equity that may limit the specific enforcement under State law of certain remedies; the exercise by the United States of America of the powers delegated to it by the U.S. Constitution; and the reasonabl e and necessary exercise, in certain exceptional situations, of the police power inherent in the sovereignty of the State and its governmental bodies in the interest of serving a significant and legitimate public purpose.

Bankruptcy proceedings, or the ex ercise of powers by the federal or State government, if initiated, could

79 subject the owners of the Bonds to judicial discretion and interpretation of their rights in bankruptcy or otherwise, and consequently may entail risks of delay, limitations or modification of their rights. See also, “Bankruptcy” above.

Remedies on Default
If the City defaults in the observance or performance of any agreement, condition, covenant or term contained in either Lease required to be observed or performed by it (including w ithout limitation the payment of any related Base Rental Payments or Additional Rental Payments due under such Lease), subject to the provisions of such Lease, the Authority may at any time thereafter (with or without notice and demand and without limiting any other rights or remedies the Authority may have) recover rent and other monetary charges as they become due under such Lease all without terminating the City’s right to possession of the related Leased Property, regardless of whether or not the City has abandoned such Leased Property, and the Authority shall have the right and the City irrevocably appoints the Authority as its agent and attorney-in-fact for such purpose to attempt to sublet or re-let such Leased Property at such rent, upon such conditions and for such term and to do all other acts to maintain or preserve such Leased Property, including the removal of persons or property therefrom or taking possession thereof, as the Authority deems desirable or necessary; and the City waives any and all claims for any damages that may result to such Leased Property thereby, provided, that no such actions will be deemed to terminate such Lease and the City shall continue to remain liable for any deficiency that may arise out of such re- letting taking into account expenses incurred by the Authority due to such re-letting, payable at the same time and manner as provided for Base Rental Payments under such Lease. IN THE EVENT OF SUCH DEFAULT, THE

AUTHORITY MUST THEREAFTER MAINTAIN SUCH LEASE IN FULL FORCE AN D EFFECT

AND MAY ONLY RECOVER RENT AND OTHER MONETARY CHARGES AS THEY BECOME DUE.

Early Redemption Risk
Early prepayment of the Base Rental Payments and redemption of the related Bonds may occur in whole or in part without premium, on any date if the related Leased Property or a portion thereof is lost, destroyed or damaged beyond repair or taken by eminent domain and from the proceeds of title insurance, or on any Interest Payment Date, without a premium, if the City exercises its right to prepay Base Rent al Payments in whole or in part pursuant to the provisions of the applicable Lease and the applicable Indenture.

Investment Risks
The City administers a pooled investment program of moneys in its funds and accounts, including moneys in the City’s General Fund which will be used to make Base Rental Payments. The City has established an investment policy which it believes to be pruden tly conservative. Nevertheless, the City’s investments will be subject to market fluctuations and other risks over which the City has no control, and which could impair the City’s ability to make Base Rental Payments.

No Debt Service Reserve
The Authority has not undertaken to fund any debt service reserve to secure the payment of debt service on the Bonds.

Loss of Tax Exemption
As discussed under the caption “TAX MATTERS,” interest on the Bonds could fail to be excluded from the gross income of the owners thereof for purposes of federal income taxation, in some cases retroactive to the date of issuance of the Bonds, as a result of future acts or omissions of the Authority or

80 the City in violati on of certain covenants contained in the applicable Indenture or Lease, respectively.

Should such an event of taxability occur, the Bonds are not subject to special redemption or any increase in interest rate and will remain outstanding until maturity or until redeemed pursuant to the applicable Indenture.

In addition, Congress has considered in the past and may consider in the future, legislative proposals, including some that carry retroactive effective dates that, if enacted, would alter or eliminate the exclusion from gross income for federal income tax purposes of interest on municipal bonds, such as the Bonds. Prospective purchasers of the Bonds should consult their own tax advisors regarding any pending or proposed federal tax legislation. The City can provide no assurance that federal tax law will not change while the Bonds are outstanding or that any such changes will not adversely affect the exclusion of interest on the Bonds from gross income for federal income tax purposes. If the exclusion of interest on the Bonds from gross income for federal income tax purposes were amended or eliminated, it is likely that the market price for the Bonds would be adversely impacted.

IRS Examination of the Bonds
The Internal Revenue Service has initiated an ex panded program for examining the tax- exempt status of tax-exempt bond issues, including both random and targeted audits. It is possible that the Bonds will be selected for examination by the Internal Revenue Service. It is also possible that the market v alue of the Bonds would be affected as a result of such an examination of the Bonds (or by an examination of similar bonds).

Secondary Market Risk
There can be no assurance that there will be a secondary market for purchase or sale of the Bonds, and from time to time there may be no market for them, depending upon prevailing market conditions, the financial condition or market position of firms who may make the secondary market and the financial condition of the City.

Other Factors
The City in general has been, or in the future may be, affected by a number of other factors which could impact its financial condition. In addition to the factors discussed above, such factors include, among others, (a) effects of compliance with rapidly changing environmental, safety, licensing, regulatory and legislative requirements, (b) legislative changes, voter initiatives, referenda and statewide propositions, (c) acts of terrorism or cyber -terrorism, (d) natural disasters or other physical calamities, in addition to earthquakes discussed above, including, but not limited to, wildfires and floods and (e) changes to the climate. Any of these factors (as well as other factors) could have an adverse effect on the financial condition of the City.

The City is unable to predict what impact such factors will have on the business operations and financial condition of the City, but the impact could be significant. This Official Statement includes a brief discussion of certain of these factors. This discussion does not purport to be comprehensive or definitive, and these matters are subject to change subsequent to the date hereof.

81 RATING
S&P Global Ratings, a business unit of Standard & Poor’s Financial Services LLC (“S&P”), has assigned their long-term municipal rating of “_____” to the Bonds. This rating reflects the view of S&P as to the credit quality of the Bonds. The ratings reflect only the view of S&P, and explanation of the significance of the ratings may be obtained from S&P Global Ratings, 55 Water Street, New York, New York 10041 (212) 483- 2000. There is no assurance that the ratings will continue for any given period of time or that they will not be revised downward or withdrawn entirely by S&P, if in the judgment of S&P, circumstances so warrant.

Except as otherwise required in the Continuing Disclosure Certificate, the Authority and the City undertake no responsibility either to bring to the attention of the owners of any Bonds any downward revision or withdrawal of any rating obtained or to oppose any such revision or wi thdrawal. Any such downward revision or withdrawal of the rating obtained may have an adverse effect on the marketability or market price of the Bonds.

UNDERWRITING
The Series A Bonds are being purchased by Stifel, Nicolaus & Company, Incorporated (the “Underwriter”). The Underwriter has agreed to purchase the Series A Bonds at a price of $________________ (representing the aggregate principal amount of the Series A Bonds of $___________________ plus/less a net original issue premium/discount of $________________ and less an Underwriter’s discount of $___________________). The Bond Purchase Agreement relating to the Series A Bonds provides that the Underwriter will purchase all of the Series A Bonds if any are purchased, the obligation to make such purchase being subject to certain terms and conditions set forth in such Bond Purchase Agreement, the approval of certain legal matters by counsel and certain other conditions.

The Series B Bonds are being purchased by the Underwriter. The Underwriter has agreed to purchase the Series B Bonds at a price of $________________ (representing the aggregate principal amount of the Series B Bonds of $___________________ plus /less a net original issue premium /discount of $________________ and less an Underwriter’s discount of $___________________).

The Bond Purchase Agreement relating to the Series B Bonds provides that the Underwriter will purchase all of the Series B Bonds if any are purchased, the obligation to make such purchase being subject to certain terms and cond itions set forth in such Bond Purchase Agreement, the approval of certain legal matters by counsel and certain other conditions.

The Underwriter may offer and sell Bonds to certain dealers and others at prices lower than the offering prices stated on the cover page hereof. The offering prices may be changed from time to time by the Underwriter.

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 Bonds and the Authority will not provide any such information.

The City has agreed in a Continuing Disclosure Certificate (the “Continuing Disclosure Certificate”) entered into with Digital Assurance Corporation, as dissemination agent, for the benefit of the holders and Beneficial Owners of the Bonds to provide certa in financial information and operating data relating to the City by March 31 following the end of the City’s Fiscal Year (currently its Fiscal Year ends on June 30) (the “Annual Report”), commencing with the report for the Fiscal Year ending June 30, 2022,

82 and to provide notices of the occurrence of certain enumerated events. The specific nature of the information to be contained in the Annual Report or the notices of material events by the City is summarized in “APPENDIX D - FORM OF CONTINUING DISCLOSURE CERTIFICATE.” The form of the Continuing Disclosure Certificate is set forth in Appendix D.

The Annual Report and the notices of enumerated events will be filed by the City with the Municipal Securities Rulemaking Board’s Electronic Municipal Market Acce ss System for municipal securities disclosures, maintained on the Internet at http://emma.msrb.org/. The specific nature of the information to be contained in the Annual Report and the notices of enumerated events are set forth in Appendix D. These covenants have been made in order to assist the Underwriter in complying with Rule 15c2-12(b)(5) promulgated under the Securities Exchange Act of 1934 (“Rule 15c2-12”).

The City was during the past five years responsible for providing continuing disclosure with respect to the following five bond issues:

1. $10,645,000 Santa Clarita Public Financing Authority Lease Revenue Bonds (Recreational Facility), Series 2020A and $3,625,000 Santa Clarita Public Financing Authority Federally Taxable Lease Revenue Bonds (Recreational Facility) Series 2020A -T (collectively, the “2020 Bonds”).

2. $25,850,000 Santa Clarita Public Financing Authority Lease Revenue Bonds (Sheriff Station Project) Series 2019 (the “2019 Bonds”).

3. $11,295,000 2018 Revenue Bonds (Streetlights Acquisition and Retrofit Program) Series A (the “2018A Bonds”) and its $4,005,000 2018 Taxable Revenue Bonds (Streetlights Acquisition and Retrofit Program) Series B (the “2018B Bonds” and together with the 2018A Bonds, the “2018 Bonds”).

4. $10,320,000 Santa Clarita Public Financing Authority Lease Revenue Refunding Bonds (Golden Valley Road) Series 2016A, dated June 22, 2016 (the “2016A Bonds”).

5. $14,020,000 Santa Clarita Public Financing Authority Lease Revenue Refunding Bonds (Open Space and Parkland Acquisition) Series 2016B, dated June 22, 2016 (the “2016B Bonds”).

In conjunction with the delivery of the Bonds, Digital Assurance Certification LLC (“DAC”) conducted a continuing disclosure compliance review with respect to the abo ve-referenced bond issues.

During the course of DAC’s review, it was determined that during the past five years, there were no instances of non- compliance by the City with the requirements of its undertakings . The City ’s Fiscal Policies include a formal continuing disclosure policy that helps assure compliance with existing and future continuing disclosure undertakings (including those for related entities) through use of a disclosure practices working group including a City staff disclosure coordinator. The City believes that its procedures with the Dissemination Agent will be sufficient in the normal due course to assure substantial compliance with its continuing disclosure undertakings in the future, including the Continuing Disclosure Certificate with respect to the Bonds.

TAX MATTERS
Tax Exemption
In the opinion of Norton Rose Fulbright US LLP, Los Angeles, California, Bond Counsel to the Authority, under existing statutes, regulations, rulings and judicial decisions, and assuming compliance by

83 each of the Authority and the City with certain covenants in the Indentures, the Leases, the Tax Certificate and other documents pertaining to the Bonds and requirements of the Internal Revenue Code of 1986 (the “Code”), regarding the use, expenditure and investment of proceeds of the Bonds and the timely payment of certain investment earnings to the United States, interest on the Bonds is not included in the gross income of the owners of the Bonds for federal income tax purposes. Failure to comply with such covenants and requirements may cause interest on the Bonds to be included in gross income retroactive to the date of issuance of the Bonds.

In the further opinion of Bond Counsel, interest on the Bonds is not treated as an item of tax preference for purposes of the federal alternative minimum tax.

Ownership of, or the receipt of interest on, tax-exempt obligations may result in collateral federal income tax consequences to certain taxpayers, including, without limitation, financial institutions, property and casualty insurance companies, certain foreign corporations doing business in the United States, certain S corporations with excess passive income, individual recipients of Social Security or Railroad Retirement benefits, taxpayers that may be deemed to h ave incurred or continued indebtedness to purchase or carry tax-exempt obligations and taxpayers who may be eligible for the earned income tax credit. Bond Counsel expresses no opinion with respect to any collateral tax consequences and, accordingly, pros pective purchasers of the Bonds should consult their tax advisors as to the applicability of any collateral tax consequences.

Certain requirements and procedures contained or referred to in the Indentures, the Leases, the Tax Certificate or other documents pertaining to the Bonds may be changed, and certain actions may be taken or not taken, under the circumstances and subject to the terms and conditions set forth in such documents, upon the advice or with the approving opinion of counsel nationally recogni zed in the area of tax-exempt obligations. Bond Counsel expresses no opinion as to the effect of any change to any document pertaining to the Bonds or of any action taken or not taken where such change is made or action is taken or not taken without the approval of Norton Rose Fulbright US LLP or in reliance upon the advice of counsel other than Norton Rose Fulbright US LLP with respect to the exclusion from gross income of the interest on the Bonds for federal income tax purposes.

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

Tax Accounting Treatment of Bond Premium and Original Issue Discount Bond Premium. To the extent a purchaser acquires a Bond at a price in excess of the amount payable at its maturity, such excess will constitute “bond premium” under the Code. The Code and applicable Treasury Regulations provide generally that bond premium on a tax- exempt obligation is amortized over the remai ning term of the obligation (or a shorter period in the case of certain callable obligations) based on the obligation's yield to maturity (or shorter period in the case of certain callable obligations). The amount of premium so amortized reduces the owner’s basis in such obligation for federal

84 income tax purposes, though such amortized premium is not deductible for federal income tax purposes.

This 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 the obligation. Bond Counsel is not opining on the accounting for bond premium or the consequence to a Bond purchaser of purchasing a Bond with bond premium. Persons considering the purchase of Bond s with bond premium should consult with their own tax advisors with respect to the determination of bond premium on such Bonds for federal income tax purposes and with respect to the state and local tax consequences of owning and disposing of such Bonds.

Original Issue Discount. The excess, if any, of the stated redemption price at maturity of Bonds of a particular maturity over the initial offering price to the public of the Bond s of that maturity at which a substantial amount of the Bonds of that maturity is sold to the public is “original issue discount.” Original issue discount accruing on a Bond is treated as interest excluded from the gross income of the owner thereof for federal income tax purposes under the same conditions and limitations as are applicable to interest payable on such Bond. Original issue discount on a Bond purchased pursuant to the initial public offering at the initial public offering price at which a substantial amount of the Bonds of that maturity is sold to the public accrues on a semiannual basis over the term of the Bond on the basis of a constant yield; and within each semiannual period accrues on a ratable daily basis. The amount of original issue discount on a Bond accruing during each period is added to the adjusted basis of such Bond, which will affect the amount of taxable gain upon disposition (including sale, redemption or payment on maturity) of such Bond. The Code includes certain provisions relating to the accrual of original issue discount in the case of purchasers that purchase Bonds other than at the initial offering price.

Bond Counsel is not opining on the accounting for or consequence to a Bond purchaser of bond premium or original issue discount. Acc ordingly, persons considering the purchase of Bond s with bond premium or original issue discount should consult with their own tax advisors with respect to the determination of bond premium or original issue discount on such Bond s for federal income tax purposes and with respect to the state and local tax consequences of owning and disposing of such Bonds.

Information Reporting and Backup Withholding
Interest paid on the Bonds will be subject to information reporting in a manner similar to interest paid on taxable obligations. Although such reporting requirement does not, in and of itself, affect the excludability of such interest from gross income for federal income tax purposes, such reporting requirement causes the payment of interest on the Bonds to be subject to backup withholding if such interest is paid to beneficial owners who (a) are not “exempt recipients,” and (b) either fail to provide certain identifying information (such as the beneficial owner’s taxpayer identification number) in the required manner or have been identified by the IRS as having failed to report all interest and dividends required to be shown on their income tax returns. Generally, individuals are not exempt recipients, whereas corporations and certain other entities are exempt recipients. Amounts withheld under the backup withholding rules from a payment to a beneficial owner are allowed as a refund or credit against such beneficial owner’s federal income tax liability so long as the required information is furnished to the IRS.

State Tax Exemption
In the further opinion of Bond Counsel, interest on the Bonds is exempt from personal income taxes imposed by the State.

Future Developments
Existing law may change to reduce or eliminate the benefit to owners of the Bonds of the exclusion of the interest on the Bond s from gross income for federal income tax purposes or of the exemption of

85 interest on the Bonds from State personal income taxation. Any proposed legislation or administrative action, whether or not taken, could also affe ct the value and marketability of the Bonds. Prospective purchasers of the Bonds should consult with their own tax advisors with respect to any proposed or future change in tax law.

A copy of the forms of opinion of Bond Counsel relating to the Bonds are included in APPENDIX E-1 and APPENDIX E-2 hereto.

LITIGATION
There is no controversy of any nature now pending against and notice of which has been received by the City or the Authority or, to the best knowledge of their respective officers, threatened, se eking to restrain or enjoin the issuance, sale, execution or delivery of the Bonds or in any way contesting or affecting the validity of the Bonds or any proceedings of the City or the Authority taken with respect to the issuance or sale thereof or the pledge or application of any moneys or security provided for the payment of the Bonds or the use of the Bond proceeds. T here are no pending lawsuits that challenge the validity of the Bonds, the corporate existence of the City or the Authority, or the title of the officers thereof to their respective offices.

LEGAL OPINION
The proceedings in connection with the issuance of the Bonds are subject to the approval as to their legality by Norton Rose Fulbright US LLP, Los Angeles, California, Bond Counsel for the Authority.

Bond Counsel undertakes no responsibility for the accuracy, completeness or fairness of the information contained in this Official Statement. The legal opinion relates only to the legality of the Bonds and is not intended to be, nor is it to be interpreted or relied upon, as a disclosure document or an express or implied recommendation as to the investment quality of the Bonds. A copy of the proposed form of Bond Counsel’s final approving opinion with respect to the Series A Bonds is attached hereto as Appendix E-1 and a copy of the proposed form of Bond Counsel’s final approving opinion with respect to the Series B Bonds is attached hereto as Appendix E-2 .

Certain legal matters will be passed on for the Authority and for the City by Burke Williams & Sorensen LLP, Los Angeles, California, City Attorney and Authority Counsel, and by Norton Rose Fulbright US LLP, Los Angeles, California, Disclosure Counsel.

MUNICIPAL ADVISOR
The City has retained Columbia Capital Management, LLC, Carlsbad, California (the “Municipal Advisor”), as municipal advisor in connection with the authorization, issuance, sale and delivery of the Bonds. The Municipal Advisor is a regist ered Municipal Advisor (as defined in Section 15B of the Securities Exchange Act of 1934, as amended) and has acted as municipal advisor to the City and the Authority concerning the 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 the Official Statement or any of the other legal documents.

FINANCIAL STATEMENTS
The City’s financial statements for the Fiscal Year ended June 30, 2021 , included in APPENDIX B hereto, have been audited by Eide Bailly LLP (EB). EB was not requested to consent to the inclusion of its report in APPENDIX B and it has not undertaken to update its report or to take any action intended or likely to elicit information concerning the accuracy, completeness or fairness of the statements made in the

86 Official Statement, and no opinion is expressed by EB with respect to any event subsequent to the date of its report.

MISCELLANEOUS
All quotations from, and summaries and explanations of the Indentures, the Site Leases, the Leases and the Assignment Agreements, the Bond Law, or other statutes and documents contained herein do not purport to be complete, and reference is made to said documents and statutes for full and complete statements of their provisions.

This Official Statement is submitted only in connection with the sale of the Bonds by the Authority. All estimates, assumptions, statistical information and other statements contained herein, while taken from sources considered reliable, are not guaranteed by the Authority, the City or the Underwriter.

The information contained herein should not be construed as representing all conditions affecting the Authority, the City or the Bonds.

All information contained in this Official Statement pertaining to the Authority and the City has been furnished by the Authority and the City, and the execution and delivery of this Official Statement has been duly authorized by the Authority and the City.

EXECUTION AND DELIVERY
The execution and delivery of this Official Statement has been authorized by the Authority and the City.

SANTA CLARITA PUBLIC FINANCING

AUTHORITY

Executive Director

CITY OF SANTA CLARITA

City Manager

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APPENDIX A

GENERAL INFORMATION ABOUT THE CITY OF SANTA

CLARITA AND THE COUNTY OF LOS ANGELES

The following information concerning the City of Santa Clarita and the County of Los Angeles is presented as general background data. The Bonds are payable solely from the sources described herein (see “SECURITY FOR THE BONDS”). The taxing power of the City of Santa Clarita, the County of Los Angeles, the State of California or any political subdivision thereof is not pledged to the payment of the Bonds. See the information under the caption “THE BONDS.” The economic and demographic information below is provided as general background. Although it has been collected from sources that the City considers to be reliable, the City has made no independent verification of the information provided by non -City sources and the City takes no responsibility for the completeness or accuracy thereof . The current state of the economy of the City, the County, the State of California and the United States of America may not be reflected in the data discussed below, because more up-to-date information is not publicly available. In particular, the impact of the COVID-19 pandemic on the local economy and workforce is not reflected in all of the historical information within.

General Background
The City is located between the Santa Susana and San Gabriel mountain ranges approximately 35 miles northwest from the City of Los Angeles. The City encompasses 70.8 square miles and is comprised of the communities of Canyon Country, Newhall, Saugus, and Valencia, all located in Los Angeles County (the “County”). The following information specifically relates to the City and generally to the Santa Clarita Valley (the “Valley”).

The first discovery of gold in 1842 was the beginning of a transformation of the area of the City, where the once-ancient Alliklik Indians, wild horses, Spanish explorers and European colonists lived. After purchasing Rancho San Francisco (later known as Newhall Ranch) in 1875, Henry Mayo sold a ri ght-of- way to the Southern Pacific Railroad for $1 and a town site known as Newhall for another $1. Not only did it become a rail center, but the first commercially producing oil well began operation in Pico Canyon in 1875, followed by the state’s first oil refinery in Railroad Canyon.

The City was officially incorporated on December 15, 1987, after a ballot measure was passed by the City’s residents. The City is a general law city and operates under a Council -Manager form of government and provides, either directly or under contract with the County, a full range of municipal services including public safety, public works (including the sewer system), parks and recreation, community development, public libraries and cultural events.

Geography and Climate
Santa Clarita Valley is located 35 miles northwest of Los Angeles and 40 miles east of the Pacific Ocean. It covers 150 square miles and forms an inverted triangle with the San Gabriel and Santa Susana mountain ranges, separating it from the San Fernando Valley and the Los Angeles Basin on the south, and the San Joaquin Valley, Mojave Desert and Angeles National Forest to the north. The Santa Clara River and its tributaries drain over 490,000 acres of mountains and canyons forming Santa Clarita Valley.

The City of Santa Clarita covers approximately 70.8 square miles and is located 40 miles from Los Angeles International Airport, 25 miles from the Burbank Airport; and 50 to 60 miles from the ports of Los Angeles and Long Beach, respectively. The City is accessible via Highway 126, the Golden State and the Antelope Valley Freeways. Three Metrolink stations serve rail passengers from the San Fernando Valley and Downtown Los Angeles.

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In general, the climate in the City is sunny, warm and dry in the summer and semi-moist and mild in the winters. The annual rainfall of 15 to 18 inches occurs primarily between November and March.

Municipal Government
The City provides general government services either with its own employees or through contracts.

The City has a Council Manager form of municipal government. The City Council appoints the City Manager who is responsible for the day-to-day administration of City business and the coordination of all departments. The City Council is composed of five members elected b iannually at large to four -year staggered terms. The Mayor is selected by the City Council from among its members. Beginning in 2016, the City’s General Municipal Election was consolidated with Los Angeles County General Election held on November 8, 2016. As of July 1, 2022, the City had a staff of [ 450.35] funded equivalent full time positions. The current members of the City Council, term expiration and their principal occupations are as follows:

City Council Term Expires Occupation

Laurene F. Weste, Mayor November 2022 Community Advocate Jason Gibbs, Mayor Pro Tem November 2024 Deputy Director - Engineering Cameron Smyth, Councilmember November 2024 Vice President – State Affairs Marsha A. McLean, Councilmember November 2022 Business Owner William Miranda, Councilmember November 2022 Business Consultant

Current City Management Staff includes the following:

Mr. Ken Striplin has been the City Manager for the City since January 1, 2013. He has worked for the City since 1995, serving in a leadership capacity in every City department during his tenure. Previously Mr. Striplin has served the City as Assistant City Manager, Assistant to the City Manager, Technology Services Manager, Management Analyst and Administrative Analyst. In addition, Mr. Striplin has served as Interim Director of two departments: Field Services and Planning and Economic Development. He holds Bachelor of Arts and Master of Public Administration degrees from California State University, Northridge, and a Doctor of Education in Organizational Leadership from Pepperdine University.

Mr. Frank Oviedo has been the Assistant City Manager since January 7, 2013. Mr. Oviedo brings over 15 years of experience in city government. Prior to joining the City, he was the Deputy City Manager for the City of Elk Grove from 2002-2009 and was the City Manager of Wildomar from 2009-2012. During Frank’s career, he has worked in every city department in three cities, with a steady progression of management responsibilities in local government. Frank Oviedo earned a Bachelor’s degree from California State University Fresno and a Master’s degree in Public Administration from Arizona State University.

Ms. Carmen Magaña is the appointed Treasurer and Director of Administrative Services for the City. In this position she provides leadership to the Department of Administrative Services and serves as the Chief Financial Officer of the City and the Successor Agency. Ms. Magaña began her career with the City in 1998 and prior to this position, she served as the Administrative Services Manager overseeing Finance and Technology Services. She is a member of the City’s Leadership Team and serves as a member of the City’s Budget Team. Ms. Magaña received a Bachelor’s degree from California State University, Northridge in Business Administration and Finance and a Master’s degree in Public Administration, Public Sector Management and Leadership.

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Municipal Services
The City provides park and recreation services, transit services, trash collection, street maintenance, building inspection and planning services. As a “contract city,” the City purchases certain public services through contracts with other agencies and private companies. Contracting for services enables the City to accomplish the essential administrative and operational functions of a municipality with a relatively small workforce and payroll, and a minimum of facilities and equipment. The primary example of this is t he contract for public safety services, whose sworn and civilian personnel are provided by the Los Angeles County Sheriff Department. Fire protection is provided by the Los Angeles County Fire Protection District.

Other regularly contracted services include refuse and recycling collection, landscaping and public transit services.

Population
The following table shows the City’s and County’s population as of January 1, 2012 through January 1, 2022.

CITY OF SANTA CLARITA AND LOS ANGELES COUNTY
Population
Year Los Angeles County City of Santa Clarita
2012 9,956,882 178,982
2013 10,025,712 207,170
2014 10,078,930 208,440
2015 10,126,423 209,391
2016 10,158,196 210,031
2017 10,193,753 215,891
2018 10,209,676 216,387
2019 10,184,378 221,703
2020 10,172,951 221,932
2021 9,931,338 228,084
2022 9,861,224 228,835
Source: State of California, Department of Finance, E-4 Population Estimates for Cities, Counties, and the State, 2012-2020, with 2010 Census Benchmark, and 2021-2022, with 2010 Census Benchmark. Sacramento, California, May 2022, as of January 1.

Income
The U.S. Census Bureau ’s American Community Survey reports that the median income of households in the City for 2021 is $109,336 compared to $84,907 for the State and $69,717 for the nation.

Education
The City is served by 48 elementary schools, 6 middle schools, 10 high schools and numerous private and parochial schools. Three colleges are located in the Santa Clarita Valley, California Institute of the Arts, The Master’s University, and College of the Canyons. California State University – Northridge in the northern part of the San Fernando Valley is nearby and serves as an additional resource for higher - level education.

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Assessed Valuation
In Fiscal Year 2019/20, the City was the fifth largest city in assessed valuation within the County.

The following table represents the most recent ten-year history of assessed valuation in the City, including State-reimbursed exemptions.

CITY OF SANTA CLARITA
Assessed Valuation
(000s)
Fiscal Year Local Secured Utility Unsecured Total
2011/12 $20,317,662 $3,696 $847,579 $21,168,938
2012/13 20,111,075 3,696 870,669 20,985,441
2013/14 23,410,799 3,696 854,976 24,269,472
2014/15 25,220,113 3,696 888,132 26,111,942
2015/16 26,473,499 3,696 853,667 27,330,863
2016/17 27,622,848 3,696 797,363 28,423,909
2017/18 29,903,220 4,576 819,549 30,727,345
2018/19 31,627,924 4,576 848,468 32,480,968
2019/20 34,319,756 4,284 850,777 35,174,818
2020/21 36,094,271 4,284 884,857 36,983,412
2021/22 37,521,627 4,429 864,657 38,390,714
2022/23 40,422,359 4,429 929,940 41,356,729
Source: Los Angeles County Assessor.

Housing
As of January 1, 2022, the California Department of Finance reported that there were 48,830 single family detached units in the City, 9,460 single family attached units, 19,319 multifamily housing units and 2,628 mobile home units. The vacancy rate is approximately 3.0%. Based on the CoreLogic, Inc.’s [2019 Home Sales Report, 1,237 units were sold in 2019 within the City with a median sales price of $619,250, a 5% increase from the 2018 median sales price of $585,000].

Construction Activity
The following table shows the valuation of building permits issued in the City for the last five calendar years in which the data is available.

CITY OF SANTA CLARITA
Building Permits and Valuations
Year Residential Permits Residential Value Non-Residential Value Total 2017 2,088 $193,928,950 $117,854,007 $311,782,957
2018 1,993 170,234,197 98,154,780 268,388,977
2019 1,865 219,555,761 139,270,994 358,826,755
2020 2,456 385,159,704 68,143,008 453,302,712
2021 2,094 134,206,852 114,343,078 248,549,930
Source: City of Santa Clarita Permit System

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Development Activity within the City
The following projects are currently under construction within the City. These projects have received planning entitlements, and have pulled the requisite grading, building, and other applicable permits.

Housing. The Skyline Ranch development was approved by the County and annexed to the City in 2018. Development continues with half of the 1,220 single -family homes completed and the remaining units anticipated for completion through 2024.

Trenton Heights is beginning construction on 94 single family detached homes with a recreational facility. Models are nearing completion with the first phases under construction as well.

Plum Canyon apartments are under construction including a total of 228 units with 34 deed- restricted low-income units.

Tesoro del Valle is an existing residential community that is on track to annex to the City in November 2022. The development is currently grading for the construction of the next phase of 820 homes in the Tesoro Highlands development. Construction of homes is expected to begin in early 2023.

Family Promise is approved to build two single-story residential buildings with 5 residential units, office space, common area, and recreational space.

Bridge to Home is approved to build a new 20,000 square -foot homeless shelter with up to 60 individual beds and up to 40 family beds.

Metrowalk is approved for construction of up to 498 residential units including market -rate apartments, senior market -rate apartments, deed -restricted affordable senior apartments, and for -sale townhomes. The development would also include a mixture of private recreational amenities and a nearly 1-acre public park site.

Golden Triangle Apartments, located adjacent to Home Depot, is approved for construction of 164 multifamily residential units with associated private recreational facilities.

Commercial. The Center at Needham Ranch is over half built with the first 7 buildings completed totaling nearly 1 million square feet of commercial industrial space and nearly 900,000 square feet under construction. Existing tenants range from distribution, film studio and support services, as well as beverage production.

The Santa Clarita Commerce Center has been graded and the building pads prepared for the future construction of over 300,000 square feet of commercial industrial space.

Self-storage projects are under construction in Centre Pointe and on Valley Center Drive bringing 286,000 square feet of new commercial storage space.

Mixed-Use. Vista Canyon is a development approved for 1,100 residential units and up to 950,000 square feet of commercial and office space. Construction of Vista Canyon commenced in 2016, with 725 residential units, a 60,000 square -foot office/commercial building, a parking structure, and a public park completed to date.

Sand Canyon Plaza is beginning construction of a mixed- use project with 580 residential units, recreational amenities, a 140 -bed assisted living facility and a nearly 50,000 square foot retail center.

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Grading of the project site and development of the retail center is expected to cont inue through 2023 with the assisted living and residential units to follow.

Riverwalk was approved for 136 residential units and a 5,000 square-foot retail center.

Civic Uses. The Vista Canyon Multi -Modal Center will provide a transit hub for the community including: a bus transfer station with seven bus bays, a new train station with a grade separated center platform, restrooms, parking, a new rail bridge, sound and retaining walls and additional 3,500 feet of track.

This project is under construction and is scheduled to be completed in 2023.

The Central Park Buildout project includes the addition of four full -sized multipurpose fields, the installation of sport field lighting, landscaping and irrigation, various site furnishings, a restroom building, upgrades to the adjacent dog park, including a lighted accessible walkway from the new parking lot to the dog park, and 268 additional parking spaces. The project is under construction and is scheduled to be completed in 2023.

The West Creek Inclusive project will constructed approximately 15,800 square feet of play area.

The play area will be comprise of all -inclusive play elements, shaded play areas, an outdoor community fitness area, and a BankShot play area with basketball hoops at varying heights and non-conventional angle boards. This project is under construction and is scheduled to be completed in December 2022.

Employment
The California Employment Development Department has reported preliminary unemployment figures for August 2022 of 3.7% for the U.S., 4.1% statewide, 5.2% for the County, and 4.3% for the City (seasonally adjusted for all except the City).

The following table summarizes the City’s employment and unemployment rates for 2017 through 2021 calendar years.

CITY OF SANTA CLARITA
Civilian Labor Force, Employment and Unemployment
Annual Averages
2017 2018 2019 2020 2021
Civilian Labor Force
Employment 112,300 113,600 113,500 98,400 102,700
Unemployment 4,600 4,900 4,700 12,600 8,800 Total 107,700 108,600 108,800 111,000 111,500

Unemployment Rate(a) 4.1% 4.3% 4.1% 11.4% 7.9%
(a) The unemployment rate is calculated using unrounded data.

Source: California Employment Development Department, March 25, 2022 with March 2021 Benchmark.

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Largest Employers
Major non-governmental employers within the Santa Clarita Valley are as follows:

SANTA CLARITA VALLEY
Major Non-Governmental Employers
Company Product/Service Employees
Six Flags Magic Mountain Amusement Park 2,200
Henry Mayo Newhall Memorial Hospital Hospital 1,778
Princess Cruises Travel 1,116
Boston Scientific Medical Device 893
The Master’s College Education 863
Advanced Bionics Medical Device 693
Logix Financial Services 674
Woodward HRT (formerly H.R. Textron) Aerospace 610
Amazon Retail 580
Kaiser Permanente Hospital 528
Stay Green Inc. Landscape Services 500
Contractors Wardrobe Home Improvement 473
AMS Fulfillment Warehouse Fulfillment 470
Quest Diagnostics (formerly Specialty Labs) Medical R&D 466 California Institute of the Arts Education 455
Walmart Retail 450
Q2 Solutions Laboratory Services 389
Subtotal 13,138
Other 7,417
Private Subtotal within Top 50 20,555
Gov. Subtotal within Top 50 8,632
Total within Top 50 29,187
Source: 2022 Economic Outlook for the Santa Clarita Valley, updated September 2022.

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Commercial Activity and Sales Tax
The following tables show total taxable transactions and sales tax revenues within the City over the last ten calendar years in which annual data is available.

CITY OF SANTA CLARITA
Taxable Transactions
(Thousands of Dollars)
Year Permits Taxable Transactions
2012 6,021 $2,764,693
2013 6,012 2,896,147
2014 6,232 3,004,553
2015 7,008 3,096,583
2016 7,009 3,151,492
2017 7,093 3,238,131
2018 7,484 3,250,142
2019 7,829 3,279,703
2020 8,449 2,944,704
2021 7,714 3,769,927
2022(1) 7,814 984,284
(1) First Quarter 2022.

Source: California Board of Equalization and California Department of Tax and Fee Administration.

The following table shows a breakdown of the taxable sales within the City for 2021 calendar year (the latest calendar year in which annual information is available).

CITY OF SANTA CLARITA
Taxable Sales – 2021
Type of Business Permits Taxable Transactions
Retail and Food Services
Motor Vehicle and Parts Dealers 165 $ 829,220,052
Home Furnishings and Appliance Stores 221 116,433,437
Bldg. Material and Garden Equip. & Supplies 89 268,577,425 Food and Beverage Stores 150 161,484,223
Gasoline Stations 48 390,281,363
Clothing and Clothing Accessories Stores 859 149,605,906 General Merchandise Stores 268 500,903,909
Food Services and Drinking Places 601 515,777,106
Other Retail Stores 2,338 218,125,303
Retail and Food Total 4,739 $3,150,408,724
All Other Outlets 2,975 619,518,681
Totals All Outlets 7,714 $3,769,927,405
Source: California Department of Tax and Fee Administration.

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Industry
The City is part of the Los Angeles-Long Beach-Glendale Metropolitan Statistical Area (“MSA”), which is comprised of parts of Los Angeles County.

LOS ANGELES-LONG BEACH-GLENDALE MSA
Historical Civilian Labor Force
Calendar Years 2017 through 2021
Annual Averages
Wage and Salary Employment:(2) 2017 2018 2019 2020 2021

Agriculture 5,800 4,600 4,500 4,400 4,600
Mining and Logging 2,200 1,900 1,900 1,700 1,600
Construction 137,700 146,300 149,300 145,500 149,800
Manufacturing 350,100 341,200 339,200 313,800 311,700
Wholesale Trade 224,500 223,200 220,500 200,100 202,000 Retail Trade 422,500 424,800 417,300 378,600 401,400
Transportation, Warehousing, Utilities 191,800 203,600 213,800 208,600 214,200 Information 214,500 216,400 217,300 185,800 213,200
Finance and Insurance 137,400 136,500 135,500 131,500 127,600 Real Estate and Rental and Leasing 83,700 86,700 88,400 80,100 83,200 Professional and Business Services 613,400 630,400 642,800 593,300 629,500 Educational and Health Services 794,300 821,300 843,600 820,900 839,600 Leisure and Hospitality 523,900 536,500 544,700 394,400 429,300 Other Services 154,100 158,800 158,400 127,000 134,100 Federal Government 48,000 47,300 47,400 50,200 47,600
State Government 92,500 91,700 92,500 85,200 89,200
Local Government 438,600 451,600 454,300 430,300 421,400 Total all Industries (1) 4,441,400 4,522,700 4,571,400 4,151,000 4,300,000 (1) Totals may not add due to rounding.

Source: State of California Employment Development Department.

Recreational Activities
There are a number of recreational and historical facilities located in the Santa Clarita Valley.

Among them are Six Flags Magic Mountain Amusement Park and Gene Autry’s Melody Ranch. For water enthusiasts there are Castaic Lake, Lake Hughes, Lake Elizab eth, Lake Piru and Lake Pyramid. The Angeles National Forest, Placerita Canyon Nature Center, Saugus Train Station, Vasquez Rocks County Park and the City’s community parks are also available for hiking and picnicking. William S. Hart Park features a Spanish colonial mansion museum. Within the City, there are 35 park facilities, nearly 11,000 acres of City-owned open space and 150 miles trails and paseos designed for commuting and recreational use, including walking, hiking, biking and skating. Frazier Park and Mountain High are within a 40 mile drive for ski enthusiasts. Also located in the City are the Canyon Theatre Guild and The Main, multi -use arts center, as well as the Friendly Valley, Valencia Country Club, Sand Canyon Country Club and Vista Valencia golf courses. Santa Clarita residents enjoy the City’s distinctive trail system. There are three libraries located in the valley.

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APPENDIX B

AUDITED FINANCIAL STATEMENTS OF THE CITY OF SANTA CLARITA FOR THE FISCAL YEAR ENDED JUNE 30, 2021

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APPENDIX C

SUMMARY OF CERTAIN PROVISIONS OF THE PRINCIPAL LEGAL DOCUMENTS

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APPENDIX D

FORM OF CONTINUING DISCLOSURE CERTIFICATE

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APPENDIX E-1

FORM OF OPINION OF BOND COUNSEL
On the delivery date of the Series A Bonds, Norton Rose Fulbright US LLP , Los Angeles, California, Bond Counsel, proposes to render its final approving opinion substantially in the following form:

[Closing Date]

Santa Clarita Public Financing Authority
23920 Valencia Boulevard
Santa Clarita, California 91355

City of Santa Clarita
23920 Valencia Boulevard
Santa Clarita, California 91355

$[Series A principal amount]*
Santa Clarita Public Financing Authority
Lease Revenue Bonds (Energy Efficiency Program)
Series 2022A
(Green Bonds)
Ladies and Gentlemen:

We have acted as Bond Counsel to the Santa Clarita Public Financing Authority (the “Authority”) in connection with the issuance by the Authority of its $ [Series A principal amount]* Lease Revenue Bonds (Energy Efficiency Program), Series 2022A (Green Bonds) (the “Series A Bonds”). The Series A 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 (the “Bond Law”) . The Series A Bonds shall be issued and secured pursuant to an Indenture, dated as of October 1, 20 20 (the “Original Indenture”), as supplemented by the First Supplemental Indenture, dated as of October 1, 2022 (the “First Supplemental Indenture,” and together with the Original Indenture, as supplemented, the “Indenture” ), each by and between the Authority and U.S.

Bank Trust Company, National Association (formerly known as U.S. Bank National Association), as trustee (the “Trustee”). The Authority has previously issued its $10,645,000 Lease Revenue Bonds (Recreational Facility), Series 2020A and its $3,625,000 Federally Taxable Lease Revenue Bonds (Recreational Facility) Series 2020A-T (collectively, the “2020 Bonds,” and together with the Series A Bonds, the “Bonds”), with which the Series A Bonds are on parity.

The Series A Bonds are limited obligations of the Authority secured under the Indenture by a pledge of applicable Revenues and certain other moneys held under the Indenture. The Revenues consist of (i) Base Rental Payments made by the City of Santa Clarita, California (the “City”) pursuant to a Lease Agreement, dated as of October 1, 2020, as amended and restated by the First Amendment to Lease Agreement, dated as of October 1, 2022 (as so amended and supplemented, the “Lease”), each by and between the Authority,

* Preliminary, subject to change.

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as lessor, and the City, as lessee, (ii) any proceeds of Bonds originally deposited with the Trustee and all moneys on deposit in the funds and accounts (other than the Rebate Fund) established under the Indenture, (iii) investment income with respect to such moneys held by the Trustee and (iv) any insurance proceeds or condemnation awards received by or payable to the Trustee relating to the applicable Base Rental Payments.

The City has leased certain real property and improvements (the “CUBE Leased Property”) to the Authority pursuant to the Site and Facility Lease, dated as of October 1, 2020 (the “Site Lease”), by and between the City and the Authority. Pursuant to the Assignment Agreement, dated as of October 1, 2020 (the “Assignment Agreement”), by and between the Authority and the Trustee, the Authority has assigned to the Trustee, for the benefit of the Owners of the Bonds , certain of the Authority’s rights under the Site Lease and the Lease, including the right to receive Base Rental Payments under the Lease.

As Bond Counsel, we have reviewed the Indenture, the Site Lease, the Lease, the Assignment Agreement and certifications of the Authority, the City, the Trustee and others, opinions of counsel to the Authority, the City and the Trustee, and such othe r 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, under existing law:

1. The Series A 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 authoriz ed, 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 Series A 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.

3. The Lease and Site Lease have been duly and validly authorized, executed and delivered by the Authority and the City and constitute the legally valid and binding obligations of the Authority and the City, enforceable against the Authority and the City in accordance with their terms.

4. The Assignment Agreement 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.

5. Assuming compliance by the Authority and the City with certain covenants in the Indenture, the Lease, the Tax Certificate and other documents pertaining to the Series A Bonds and requirements of the Internal Revenue Code of 1986, as amended, regarding the use, expenditure and investment of proceeds of the Series A Bonds and the timely payment of certain investment earnings to the United States, interest on the Series A Bonds is not includable in the gross income of the owners of the Series A Bonds for federal income tax purposes. Failure to comply with such covenants and requirements may cause interest on the Series A Bonds to be included in gross income retroactive to the date of issuance of the Series A Bonds.

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6. Interest on the Series A Bonds is not treated as an item of tax preference for purposes of the federal alternative minimum tax.

7. Interest on the Series A Bonds is exempt from personal income taxes of the State of California under present state law.

The Code imposes certain requirements that must be met subsequent to the issuance and delivery of th e Series A Bonds for interest thereon to be and remain excluded from the gross income of the owners thereof for federal income tax purposes. Noncompliance with such requirements could cause the interest on the Series A Bonds to fail to be excluded from the gross income of the owners thereof retroactive to the date of issuance of the Series A Bonds. Pursuant to the Indenture, the Lease and the Tax Certificate being delivered by the Authority and the City in connection with the issuance of the Series A Bonds, each of the Authority and the City is making representations relevant to the determination of, and is undertaking certain covenants regarding or affecting, the exclusion of interest on the Series A Bonds from the gross income of the owners thereof for fe deral income tax purposes. In reaching the conclusions supporting our opinions described in the immediately preceding paragraph, we have assumed the accuracy of such representations and the present and future compliance by each of the Authority and the City with such covenants. Further, except as stated in the preceding paragraph, we express no opinion as to any federal or state tax consequence of the receipt or accrual of interest on, or the ownership or disposition of, the Series A Bonds.

Further, certain requirements and procedures contained or referred to in the Indenture, the Lease or other documents pertaining to the Series A Bonds may be changed, and certain actions may be taken, under the circumstances and subject to the terms and conditions set for th in such documents, upon the advice or with the approving opinion of counsel nationally recognized in the area of tax -exempt obligations. We express no opinion as to the effect of any change to any document pertaining to the Series A Bonds or of any action taken or not taken where such change is made or action is taken or not taken without our approval or in reliance upon the advice of counsel other than ourselves with respect to the exclusion from gross income of the interest on the Series A Bonds for federal income tax purposes.

The opinions expressed in paragraphs 1 through 4 above are qualified to the extent the enforceability of the Series A Bonds, the Indenture, the Lease, the Site Lease and the Assignment Agreement may be limited by applicable bank ruptcy, 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 Series A Bonds, the Indenture, the Lease, the Site Lease and the Assignment Agreement 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 sufficiency of the Official Statement or other offering material relating to the Series A 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 fact or circumstance that may hereaft er come to our attention or to reflect any change in any law that may hereafter occur or become effective. Moreover, our opinions are not a guarantee of results and are not binding on the Internal Revenue Service; rather, such opinions represent our legal judgment

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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 E-2

FORM OF OPINION OF BOND COUNSEL
On the delivery date of the Series B Bonds, Norton Rose Fulbright US LLP , Los Angeles, California, Bond Counsel, proposes to render its final approving opinion substantially in the following form:

[Closing Date]

Santa Clarita Public Financing Authority
23920 Valencia Boulevard
Santa Clarita, California 91355

City of Santa Clarita
23920 Valencia Boulevard
Santa Clarita, California 91355

$[Series B principal amount]*
Santa Clarita Public Financing Authority
Lease Revenue Bonds (Energy Efficiency Program)
Series 2022B (Green Bonds)
Ladies and Gentlemen:

We have acted as Bond Counsel to the Santa Clarita Public Financing Authority (the “Authority”) in connection with the issuance by the Authority of its $ [Series B principal amount]* Lease Revenue Bonds (Energy Efficiency Program), Series 2022B (Green Bonds) (the “Series B Bonds”). The Series B 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 (the “Bond Law”) . The Series B Bonds shall be issued and secured pursuant to an Indenture, dated as of June 1, 2016 (the “Original Indenture”), as supplemented by the First Supplemental Indenture, dated as of October 1, 2022 (the “First Supplemental Indenture” and together with the Original Indenture, as supplemented, the “Indenture” ), each by and b etween the Authority and U.S. Bank Trust Company, National Association (formerly known as U.S. Bank National Association) , as trustee (the “Trustee”). The Authority has previously issued its $10,320,000 Lease Revenue Refunding Bonds (Golden Valley Road), Series 2016A (the “2016 Bonds,” and together with the Series B Bonds, the “Bonds”), with which the Series B Bonds are on parity.

The Series B Bonds are limited obligations of the Authority secured under the Indenture by a pledge of applicable Revenues and certain other moneys held under the Indenture. The Revenues consist of (i) Base Rental Payments made by the City of Santa Clarita, California (the “City”) pursuant to a Lease Agreement, dated as of June 1, 2016, as amended and restated by the First Amendment to Lease Agreement, dated as of October 1, 2022 (as so amended and supplemented, the “Lease”), each by and between the Authority, as lessor, and the City, as lessee, (ii) any proceeds of Bonds originally deposited with the Trustee and all moneys on deposit in the funds and accounts (other than the Rebate Fund) established under the Indenture,

* Preliminary, subject to change.

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(iii) investment income with respect to such moneys held by the Trustee and (iv) any insurance proceeds or condemnation awards received by or payable to the Trustee relating to the applicable Base Rental Payments.

The City has leased certain real property and improvements (the “ City Hall Leased Property”) to the Authority pursuant to the Site and Facility Lease, dated as of June 1, 2016 (the “Site Lease”), by and between the City and the Authority. Pursuant to the Assignment Agreement, dated as of June 1, 2016 (the “Assignment Agreement”), by and between the Authority and the Trustee, the Authority has assigned to the Trustee, for the benefit of the Ow ners of the Bonds , certain of the Authority’s rights under the Site Lease and the Lease, including the right to receive Base Rental Payments under the Lease.

As Bond Counsel, we have reviewed the Indenture, the Site Lease, the Lease, the Assignment Agreement and certifications of the Authority, the City, the Trustee and others, opinions of counsel to the Authority, the City 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, under existing law:

1. The Series B 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 Series B 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.

5. Assuming compliance by the Authority and the City with certain covenants in the Indenture, the Lease, the Tax Certificate and other documents pertaining to the Series B Bonds and requirements of the Internal Revenue Code of 1986, as amended, regarding the use, expenditure and investment of proceeds of the Series B Bonds and the timely payment of certain investment earnings to the United States, interest on the S eries B Bonds is not includable in the gross income of the owners of the Series B Bonds for federal income tax purposes. Failure to comply with such covenants and requirements may cause interest on the Series B Bonds to be included in gross income retroactive to the date of issuance of the Series B Bonds.

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6. Interest on the Series B Bonds is not treated as an item of tax preference for purposes of the federal alternative minimum tax.

7. Interest on the Series B Bonds is exempt from personal income taxes of the State of California under present state law.

The Code imposes certain requirements that must be met subsequent to the issuance and delivery of the Series B Bonds for interest thereon to be and remain excluded from the gross income of the owners thereof for federal income tax purposes. Noncompliance with such requirements could cause the interest on the Series B Bonds to fail to be excluded from the gross income of the owners thereof retroactive to the date of issuance of the Series B Bonds. Pursuant to the Indenture, the Lease and the Tax Certificate being delivered by the Authority and the City in connection with the issuance of the Series B Bonds, each of the Authority and the City is making representations relevant to the determination of, and is undertaking certain covenants regarding or affecting, the exclusion of interest on the Series B Bonds from the gross income of the owners thereof for federal incom e tax purposes. In reaching the conclusions supporting our opinions described in the immediately preceding paragraph, we have assumed the accuracy of such representations and the present and future compliance by each of the Authority and the City with such covenants. Further, except as stated in the preceding paragraph, we express no opinion as to any federal or state tax consequence of the receipt or accrual of interest on, or the ownership or disposition of, the Series B Bonds.

Further, certain requirements and procedures contained or referred to in the Indenture, the Lease or other documents pertaining to the Series B Bonds may be changed, and certain actions may be taken, under the circumstances and subject to the terms and conditions set forth in such documents, upon the advice or with the approving opinion of counsel nationally recognized in the area of tax -exempt obligations. We express no opinion as to the effect of any change to any document pertaining to the Series B Bonds or of any action taken or not taken where such change is made or action is taken or not taken without our approval or in reliance upon the advice of counsel other than ourselves with respect to the exclusion from gross income of the interest on the Series B Bonds for federal income tax purposes.

The opinions expressed in paragraphs 1 through 4 above are qualified to the extent the enforceability of the Series B Bonds, the Indenture, the Lease, the Site Lease and the Assignment Agreement may be limited by applicable bankruptcy, ins olvency, 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 Series B Bonds, the Indenture, the Lease, the Site Lease and the Assignment Agreement 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 sufficiency of the Official Statement or other offering material relating to the Series B Bonds.

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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

BOOK-ENTRY SYSTEM
The information in this section concerning DTC and DTC’s book -entry only system has been obtained from sources that the Authority believes to be reliable, but the Authority takes no responsibility for the completeness or accuracy thereof. The following description of the procedures and record keeping with respect to beneficial ownership interests in the Bonds, payment of principal, premium, if any, and interest with respect to the Bonds to DTC Participants or Beneficial Owners, confirmation and transfers of beneficial ownership interests in the Bonds and other related transactions by and between DTC, the DTC Participants and the Beneficial Owners is based solely on information provided by DTC to the Authority which the Authority believes to be reliable, but the Authority and the Underwriter do not and cannot make any independent representations concerning these matters and do not take responsibility for the accuracy or completeness thereof. Neither the DTC, Direct Participants, Indirect Participants nor the Beneficial Owners should rely on the foregoing information with respect to such matters, but should instead confirm the same with DTC or the DTC Participants, as the case may be.

The Depository Trust Company (“DTC”), New York, New York, will act as securities depository for the Bonds. The 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 Bond will be issued for each annual maturity of the Bonds, each in the aggregate principal amount of such maturity, and will be deposited through the facilities of 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. 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 ele ctronic 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 for 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 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 it s Participants are on file with the Securities and Exchange Commission. More information about DTC can be found at www.dtcc.com.

Purchases of Bonds under the DTC system must be made by or through Direct Participants, which will receive a credit for the Bonds on DTC’s records. The ownership interest of each actual purchaser of each Bond (“Beneficial Owner”) is in turn to be recorded on the Direct and Indirect Participants’ records.

Beneficial Owners will not receive wr itten 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 Bonds are to be accomplished

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by entries made on the books of Direct and Indirect Participants acting on behalf of Beneficial Owners.

Beneficial Owners will no t receive Bonds representing their ownership interests in Bonds, except in the event that use of the book-entry system for the Bonds is discontinued.

To facilitate subsequent transfers, all 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 representative of DTC. The deposit of 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 Bonds; DTC’s records reflect only the identity of the Direct Participants to whose accounts such 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, an d 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 Bonds may wish to take certain steps to augment the transmission to them of notices of significant events with respect to the Bonds, such as prepayments, tenders, defaults, and proposed amendments to the Bond documents. For example, Beneficial Owners of Bonds may wish to ascertain that the nominee holding the 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 registrar and request that copies of notices be provided directly to them.

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

Neither DTC nor Cede & Co. (nor any other DTC nominee) will consent or vote with respect to Bonds unless authorized by a Direct Participant in accordance with DTC’s MMI 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 Bonds are credited on the record date (identified in a listing attached to the Omnibus Proxy).

Prepayment proceeds, distributions, and dividend payments with respect to the 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 payable 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 Participant and not of DTC, the Trustee, or the Authority, subject to any statutory or regulatory requirements as may be in effect from time to time. Payment of redemption proceeds, distributions, and dividend payments 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.

A Bond Owner shall give notice to elect to have its Bonds purchased or tendered, through its Participant, to the Trustee, and shall effect delivery of such Bonds by causing the Direct Participant to transfer the Participant’s interest in the Bonds, on DTC’s records, to the Trustee. The requirement for physical delivery of Bonds in connection with an optional tender or a mandatory purchase will be deemed

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satisfied when the ownership rights in the Bonds are transferred by Direct Participants on DTC’s reco rds and followed by a book-entry credit of tendered Bonds to the Trustee’s DTC account.

DTC may discontinue providing its services as depository with respect to the Bonds at any time by giving reasonable notice to the Authority or the Trustee. Under such c ircumstances, in the event that a successor depository is not obtained, physical 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, Bonds will be printed and delivered to DTC.

Santa Clarita City CouncilSeptember 27, 2022

Santa Clarita City Council
September 27, 2022