Agenda packet — City Council and Concurrent Authorities, June 14, 2022 (part 8 of 9)

C. The information in the Preliminary Official Statement (other than statements pertaining to the book-entry system and under the headings “OWNERSHIP AND DEVELOPMENT OF PROPERTY WITHIN IMPROVEMENT AREA 2,” as to which no view is expressed) as of its date was and as of the date hereof is, and in the Official Statement (other than statements pertaining to the book-entry system and under the headings “OWNERSHIP AND DEVELOPMENT OF 1358
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5 PROPERTY WITHIN IMPROVEMENT AREA 2,” as to which no view is expressed) as of its date is, true and correct in all material respects and does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements therein, in light of the circumstances under which they were made, not misleading; and, upon delivery and up to and including 25 days after the End of the Underwriting Period (as defined in paragraph (D) below), the Official Statement will be amended and supplemented so as to contain no misstatement of any material fact or material omission of any statement necessary to make the statements contained therein, in the light of the circumstances in which such statements were made, not misleading.

D. Up to and including 25 days after the End of the Underwriting Period (as defined below), the City will advise the Underwriter promptly of any proposal to amend or supplement the Official Statement and will not effect or consent to any such amendment or supplement without the consent of the Underwriter, which consent will not be unreasonably withheld. The City will advise the Underwriter promptly of the institution of any proceedings known to it by any governmental agency prohibiting or otherwise materially affecting the use of the Official Statement in connection with the offering, sale or distribution of the Bonds. As used herein, the term “End of the Underwriting Period” means the later of such time as: (i) the Bonds are delivered to the Underwriter; or (ii) the Underwriter does not retain, directly or as a member of an underwriting syndicate, an unsold balance of the Bonds for sale to the public. Unless the Underwriter gives notice to the contrary, the End of the Underwriting Period shall be deemed to be the Closing Date. Any notice delivered pursuant to this provision shall be written notice delivered to the City at or prior to the Closing Date and shall specify a date (other than the Closing Date) to be deemed the “End of the Underwriting Period.” If in the opinion of the Underwriter any such event or proceedings requires the preparation and distribution of a supplement or amendment to the Official Statement, the City shall prepare and furnish to the Underwriter, at the City’s expense, such number of copies of the supplement or amendment to the Official Statement, in (i) a “designated electronic format” consistent with the requirements of the MSRB’s Rule G-32 and (ii) a printed format form in substance mutually agreed upon by the City and the Underwriter as the Underwriter may reasonably request. If such amendment or supplement to the Official Statement shall be made subsequent to the Closing Date, the City also shall furnish, or cause to be furnished, such additional legal opinions, certificates, instruments and other documents as the Underwriter may reasonably deem necessary to evidence the truth and accuracy of any such supplement or amendment to the Official Statement.

E. As of the time of acceptance hereof and as of the Closing Date, the City and the Community Facilities District, as applicable, have each complied, and will at the Closing Date be in compliance in all material respects, with the Formation Documents and the City Documents, and any immaterial noncompliance by the City or the Community Facilities District, if any, will not impair the ability of the City or the Community Facilities District, as applicable, to carry out, give effect to or consummate the transactions contemplated by the foregoing. From and after the date of issuance of its Bonds, the City will continue to comply with the covenants of the City contained in the City Documents and it shall cause the Community Facilities District to continue to comply with the covenants of the Community Facilities District contained in the City Documents.

F. Except as described in the Preliminary Official Statement, neither the City nor the Community Facilities District is, and as of the Closing Date, neither will be, in any respect material to the transactions referred to herein or contemplated hereby, in breach of or in default under, any law or administrative rule or regulation of the State, the United States of America, or of any department, division, agency or instrumentality of either thereof, or under any applicable court or administrative decree or order, or under any loan agreement, note, resolution, indenture, contract, agreement or other instrument to which the City or the Community Facilities District, as the case 1359
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6 may be, is a party or is otherwise subject or bound; and, to the City’s knowledge, no event has occurred and is continuing which, with the passage of time or the giving of notice, or both, would constitute a default or event of default under any such instrument which breach, default or event could have an adverse effect on the City’s ability or the Community Facilities District’s ability to perform their respective obligations under the City Documents; and as of such times, except as disclosed in the Official Statement, the authorization, execution and delivery of the City Documents and compliance with the provisions of each thereof, or the performance of the conditions precedent to be performed by the City pursuant to this Purchase Agreement, will not conflict with or constitute a breach of or default under any applicable law or administrative rule or regulation of the State, the United States of America, or of any department, division, agency or instrumentality of either thereof, or under any applicable court or administrative decree or order, or under any loan agreement, note, resolution, indenture, contract, agreement or other instrument to which the City is a party or is otherwise subject or bound, in any manner which would materially and adversely affect the performance by the City or the Community Facilities District of their respective obligations under the City Documents or the performance of the conditions precedent to be performed by the City pursuant to this Purchase Agreement. The City has received all licenses, permits or other regulatory approvals required, if any, for the pledge, collection and/or application by the Community Facilities District of the Special Taxes (as defined in the Fiscal Agent Agreement) and other moneys pledged to the payment of the principal of and interest on the Bonds under the Fiscal Agent Agreement.

G. Except as may be required under the “blue sky” or other securities laws of any jurisdiction, all approvals, consents, authorizations, elections and orders of, or filings or registrations with, any governmental authority, board, agency or commission having jurisdiction which would constitute a condition precedent to, or the absence of which would materially adversely affect, the performance by the City or the Community Facilities District of their respective obligations under the City Documents, and the performance of the conditions precedent to be performed by the City pursuant to this Purchase Agreement, have been or will be obtained at the Closing Date and are or will be in full force and effect at the Closing Date.

H. At the time of acceptance hereof there is and as of the Closing there will be no action, suit, proceeding, inquiry or investigation, at law or in equity, before or by any court, government agency, public board or body (collectively and individually, an “Action”) pending (notice of which has been served on the City or the Community Facilities District) or to the best knowledge of the City or the Community Facilities District threatened, in which any such Action: (i) in any way questions the powers of the City Council or the existence of the Community Facilities District or the titles of the officers of the City and/or the Community Facilities District to their respective offices; (ii) affects, contests or seeks to prohibit, restrain or enjoin the issuance or delivery of the Bonds or the payment or collection of the Special Taxes or any amounts pledged or to be pledged to pay the principal of and interest on the Bonds, or in any way contests or affects the validity of the City Documents or the consummation of the transactions on the part of the City or the Community Facilities District contemplated thereby; (iii) contests the exclusion of interest on the Bonds from federal or State income taxation or contests the powers of the City or the Community Facilities District which may result in any material adverse change relating to the financial condition of the City or the Community Facilities District; (iv) except as disclosed in the Official Statement, wherein an unfavorable decision, ruling or finding would materially adversely affect the financial position or condition of the City or the Community Facilities District or would result in any material adverse change in the ability of the City to pledge or apply the Special Taxes or to pay debt service on the Bonds; or (v) contests the completeness or accuracy of the Preliminary Official Statement or the Official Statement or any supplement or amendment thereto or asserts that the Preliminary Official Statement or the Official Statement contained any untrue statement of a material fact or 1360
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7 omitted to state any material fact required to be stated therein or necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading; and as of the time of acceptance hereof there is and, as of the Closing Date, there will be no known basis for any Action of the nature described in clauses (i) through (v) of this sentence.

I. The City will furnish such information, execute such instruments and take such other action in cooperation with the Underwriter and at the expense of the Underwriter as the Underwriter may reasonably request in order: (i) to qualify the Bonds for offer and sale under the “blue sky” or other securities laws and regulations of such states and other jurisdictions of the United States of America as the Underwriter may designate; and (ii) to determine the eligibility of the Bonds for investment under the laws of such states and other jurisdictions and will use its best efforts to continue such qualifications in effect so long as required for the distribution of the Bonds, provided; however, that the City will not be required to execute a special or general consent to service of process or qualify as a foreign corporation in connection with any such qualification in any jurisdiction.

J. The City Documents conform as to form and tenor to the descriptions thereof contained in the Preliminary Official Statement. The City represents that the Bonds, when issued, executed and delivered in accordance with the Fiscal Agent Agreement and sold to the Underwriter as provided herein, will be validly issued and outstanding special tax obligations of the City payable solely from the proceeds of the Net Taxes and amounts in certain funds and accounts established in the Fiscal Agent Agreement, and entitled to the benefits of the Fiscal Agent Agreement. The City will comply with the covenant in the Fiscal Agent Agreement to cause the Special Taxes to be levied and collected at the same time and in the same manner as ordinary ad valorem property taxes. The Fiscal Agent Agreement creates a valid pledge of, first lien upon and security interest in, the Special Taxes, and in the moneys in the Special Tax Fund established pursuant to the Fiscal Agent Agreement, on the terms and conditions set forth in the Fiscal Agent Agreement. The Fiscal Agent Agreement creates a valid pledge of the moneys in certain funds and accounts established pursuant to the Fiscal Agent Agreement, subject in all cases to the provisions of the Fiscal Agent Agreement permitting the application thereof for the purposes and on the terms and conditions set forth therein.

K. Except as disclosed in the Preliminary Official Statement, there are, to the best of the City’s knowledge, no entities with outstanding assessment liens against any of the properties within Improvement Area 2 of the Community Facilities District which are senior to or on a parity with the Special Taxes.

L. The issuance and sale of the Bonds is not subject to any transfer or other documentary stamp taxes of the State or any political subdivision thereof.

M. The City shall not knowingly take or omit to take any action that, under existing law, may adversely affect the exclusion from gross income for federal income tax purposes, or the exemption from State of California personal income tax, of the interest on the Bonds. The City has not been notified of any listing or proposed listing by the Internal Revenue Service to the effect that the City is a bond issuer whose arbitrage certifications may not be relied upon.

N. Any certificate signed on behalf of the Community Facilities District by any officer or employee of the City authorized to do so and delivered to the Underwriter in connection with the issuance and sale of the Bonds shall be deemed to be a representation and covenant by the Community Facilities District to the Underwriter as to the statements made therein. 1361
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8 O. The City will apply the proceeds of the Bonds in accordance with the Fiscal Agent Agreement and as will be described in the Official Statement.

P. At or prior to the Closing, the City will have duly authorized, executed and delivered the City Continuing Disclosure Certificate. Except as otherwise disclosed in the Preliminary Official Statement and based on a review of its previous undertakings, the City has not failed to comply, in any material respects, with any of its continuing disclosure undertakings previously entered into pursuant to the provisions of the Rule within the last five years.

Q. Between the date of this Purchase Agreement and the date of Closing, the City will not offer or issue any bonds, notes or other obligations for borrowed money not previously disclosed to the Underwriter and the City shall not create, assume or guarantee any indebtedness payable from, or pledge or otherwise encumber, the Special Taxes or other assets, properties, funds or interests that will be pledged as security for the Bonds pursuant to the City Documents.

R. Until such time as moneys have been set aside in an amount sufficient to pay all then outstanding Bonds at maturity or to the date of redemption if redeemed prior to maturity, plus unpaid interest thereon and premium, if any, to maturity or to the date of redemption if redeemed prior to maturity, the City will faithfully perform and abide by all of the covenants, undertakings and provisions contained in the Fiscal Agent Agreement.

S. The Preliminary Official Statement was deemed final by a duly authorized officer of the City prior to its delivery to the Underwriter, except for the omission of such information as is permitted to be omitted in accordance with paragraph (b)(1) of the Rule. The City hereby covenants and agrees that, within seven (7) business days from the date hereof, or upon reasonable written notice from the Underwriter within sufficient time to accompany any confirmation requesting payment from any customers of the Underwriter, the City shall cause a final electronic and/or printed form of the Official Statement as set forth in Section 1 above to be delivered to the Underwriter in sufficient quantity to comply with paragraph (b)(4) of the Rule and Rules G-12, G-15, G-32 and G-36 of the Municipal Securities Rulemaking Board.

T. The City hereby approves the preparation and distribution of the Official Statement, consisting of the Preliminary Official Statement with such changes as are noted thereon and as may be made thereto, with the approval of Bond Counsel and the Underwriter from time to time prior to the Closing Date.

U. The City hereby ratifies any prior use of and authorizes the future use by the Underwriter, in connection with the offering and sale of the Bonds, of the Preliminary Official Statement, the Official Statement, this Purchase Agreement and all information contained herein, and all other documents, certificates and written statements furnished by the City to the Underwriter in connection with the transactions contemplated by this Purchase Agreement.

The execution and delivery of this Purchase Agreement by the City shall constitute a representation by the City to the Underwriter that the representations and warranties contained in this Section 2 with respect to the City and the Community Facilities District are true as of the date hereof.

3. Conditions to the Obligations of the Underwriter. The obligation of the Underwriter to accept delivery of and pay for the Bonds on the Closing Date shall be subject, at the option of the Underwriter, to the accuracy in all material respects of the representations and warranties on the part of the City, on its own behalf and on behalf of the Community Facilities District, contained herein, to 1362
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9 the accuracy in all material respects of the statements of the officers and other officials of the City and the Community Facilities District made in any certificates or other documents furnished pursuant to the provisions hereof, to the performance by the City and the Community Facilities District of their obligations to be performed hereunder at or prior to the Closing Date and, to the following additional conditions:

A. At the Closing Date, the Community Facilities District Resolutions, the Formation Documents, and the City Documents shall be in full force and effect, and shall not have been amended, modified or supplemented, except as may have been agreed to in writing by the Underwriter, and there shall have been taken in connection therewith, with the issuance of the Bonds, and with the transactions contemplated thereby, and by this Purchase Agreement, all such actions as, in the opinion of Bond Counsel, shall be necessary and appropriate.

B. At the Closing Date, except as was described in the Preliminary Official Statement, neither the City nor the Community Facilities District shall be, in any respect material to the Bonds, the City Documents or the transactions referred to herein or contemplated hereby, in breach of or in default under, any law or administrative rule or regulation of the State, the United States of America, or of any department, division, agency or instrumentality of either thereof, or under any applicable court or administrative decree or order, or under any loan agreement, note, resolution, indenture, contract, agreement or other instrument to which the City or the Community Facilities District, respectively, is a party or is otherwise subject or bound, and the performance by the City or the Community Facilities District, respectively, of its obligations under the Bonds, the City Documents, the Community Facilities District Resolutions, this Purchase Agreement and any other instruments contemplated by any of such documents, and compliance with the provisions of each thereof, will not conflict with or constitute a breach of or default under any applicable law or administrative rule or regulation of the State, the United States of America or of any department, division, agency or instrumentality of either thereof or under any applicable court or administrative decree or order or under any loan agreement, note, resolution, indenture, contract, agreement or other instrument to which the City or the Community Facilities District, respectively, is a party or is otherwise subject or bound, in any manner which would materially and adversely affect the performance by the City or the Community Facilities District, respectively, of its obligations under the City Documents, the Bonds or the Community Facilities District Resolutions.

C. The information contained in the Official Statement is, as of the Closing Date and as of the date of any supplement or amendment thereto pursuant hereto, true and correct in all material respects and does not, as of the Closing Date or as of the date of any supplement or amendment thereto, contain any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading.

D. The Underwriter shall have the right to cancel its obligation to purchase the Bonds and to terminate this Purchase Agreement by written notice to the City if, between the date of this Purchase Agreement and the Closing Date, in the Underwriter’s sole and reasonable judgment any of the following events shall occur (each a “Termination Event”):

1. Between the date hereof and the Closing Date, the market price or marketability, at the initial offering prices set forth on the cover page of the Official Statement, of the Bonds, or the ability of the Underwriter to enforce contracts for the sale of the Bonds, shall have been materially adversely affected, in the judgment of the Underwriter (evidenced by a written notice 1363
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10 to the City terminating the obligation of the Underwriter to accept delivery of and pay for the Bonds), by reason of any of the following:
a. Legislation introduced in or enacted (or resolution passed) by the Congress of the United States of America or the legislature of the State or recommended to the Congress by the President of the United States of America or a member of the President’s Cabinet, the Department of the Treasury, the Internal Revenue Service or any member of Congress or favorably reported for passage to either House of Congress by any committee of such House to which such legislation had been referred for consideration, or a decision rendered by a court established under Article III of the Constitution of the United States of America or by the Tax Court of the United States of America, or an order, ruling, regulation (final, temporary or proposed), press release or other form of notice issued or made by or on behalf of the Treasury Department of the United States of America, the Internal Revenue Service or other federal or State authority with appropriate jurisdiction, with the purpose or effect, directly or indirectly, of imposing federal or State income taxation upon such interest as would be received by any owners of the Bonds beyond the extent to which such interest is subject to taxation as of the date hereof; b. Legislation introduced in or enacted (or resolution passed) by the Congress, or shall have been favorably reported out of committee or be pending in committee, or shall have been recommended to the Congress for passage by the President of the United States of America or a member of the President’s Cabinet, or an order, decree, injunction or decision issued by any court of competent jurisdiction, or an order, ruling, regulation (final, temporary or proposed), press release, statement or other form of notice issued or made by or on behalf of the Securities and Exchange Commission, or any other governmental agency having jurisdiction of the subject matter, to the effect that obligations of the general character of the Bonds, the Resolution or the City Documents, are not exempt from registration under or other requirements of the Securities Act of 1933, as amended, or that the Fiscal Agent Agreement is not exempt from qualification under or other requirements of the Trust Indenture Act of 1939, as amended, or that the issuance, offering or sale of obligations of the general character of the Bonds, as contemplated hereby or by the Official Statement or otherwise, is or would be in violation of the federal securities laws as amended and then in effect;
c. A general suspension of trading on the New York Stock Exchange or other major exchange shall be in force, or minimum or maximum prices for trading shall have been fixed and be in force, or maximum ranges for prices for securities shall have been required and be in force on any such exchange, whether by virtue of determination by that exchange or by order of the SEC or any other governmental authority having jurisdiction; d. There shall have occurred (1) an outbreak or escalation of hostilities or the declaration by the United States of a national emergency or war or (2) any other calamity or crisis in the financial markets of the United States or elsewhere or the escalation of such calamity or crisis;
e. Except as disclosed in or contemplated by the Official Statement, any material adverse change in the affairs of the City or the Community Facilities District shall have occurred;

2. The introduction, proposal or enactment of any amendment to the federal or California Constitution or any action by any federal or State court, legislative body, regulatory body or other authority materially adversely affecting the tax status of the City or the 1364
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11 Community Facilities District, their property, income, securities (or interest thereon), the validity or enforceability of the Special Tax;

3. Any event occurring or information becoming known which, in the judgment of the Underwriter, makes untrue or incorrect in any material respect any statement or information contained in the Preliminary Official Statement or in the Official Statement or has the effect that the Preliminary Official Statement or the Official Statement contains any untrue statement of a material fact or omits to state a material fact required to be stated therein or necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading;

4. A general banking moratorium shall have been declared by federal, State of New York or State of California officials authorized to do so or a material disruption in securities settlement, payment or clearance services affecting the Bonds shall have occurred;

5. The imposition by the New York Stock Exchange or other national Securities exchange, or any governmental authority, of any material restrictions not now in force with respect to the Bonds or obligations of the general character of the Bonds or Securities generally, or the material increase of any such restrictions now in force, including those relating to the extension of credit by, or the charge to the net capital requirements of, the Underwriter;

6. A decision by a court of the United States of America shall be rendered, or a stop order, release, regulation or no-action letter by or on behalf of the Securities and Exchange Commission or any other governmental agency having jurisdiction of the subject matter shall have been issued or made, to the effect that the issuance, offering or sale of the Bonds as contemplated by this Purchase Agreement or by the Official Statement, or any document relating to the issuance, offering or sale of the Bonds is or would be in violation of any provision of the federal securities laws at the Closing Date, including the Securities Act of 1933, the Securities Exchange Act of 1934 and the Trust Indenture Act of 1939;

7. Any amendment is made to the Official Statement that in the Underwriter’s reasonable judgment will materially adversely affect the marketability of the Bonds or the ability of the Underwriter to enforce contracts for the sale of the Bonds;

8. Any proceeding shall have been commenced or be threatened in writing by the Securities and Exchange Commission against the City or the Community Facilities District.

9. The commencement of an Action described in Section 2(H).

Upon the occurrence of a Termination Event and the termination of this Purchase Agreement by the Underwriter, all obligations of the City, the Community Facilities District, and the Underwriter under this Agreement shall terminate, without further liability, except that the City and the Underwriter shall pay their respective expenses as set forth in Section 6 below.

E. At or prior to the Closing Date, the Underwriter shall have received a counterpart original or certified copy of the following documents, in each case satisfactory in form and substance to the Underwriter:

1. Official Statement. The Official Statement and each supplement or amendment, if any thereto, executed by an authorized officer of the City; 1365
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12 2. Fiscal Agent Agreement. The Fiscal Agent Agreement, duly executed and delivered by the City and the Fiscal Agent;

3. Resolutions. Certifications by the City Clerk with respect to each resolution and ordinance of the City Council, for the City or as the legislative body of the Community Facilities District, relating to the City Documents, the transactions contemplated thereby, formation of the Community Facilities District and issuance of the Bonds;

4. City Continuing Disclosure Certificate. The City Continuing Disclosure Certificate executed and delivered by the City;

5. Bond Counsel Opinion. An unqualified approving opinion for the Bonds, dated the Closing Date and addressed to the City, of Bond Counsel, to the effect that the Bonds are the valid, legal and binding obligations of the City and that the interest thereon is excluded from gross income for federal income tax purposes and exempt from personal income taxes of the State, in substantially the form included as Appendix E to the Official Statement, together with a letter of Bond Counsel, dated the Closing Date and addressed to the Underwriter, to the effect that such opinion addressed to the City may be relied upon by the Underwriter to the same extent as if such opinion was addressed to it;

6. Supplemental Opinion. A supplemental opinion or opinions, dated the Closing Date and addressed to the Underwriter, of Bond Counsel, to the effect that:
(i) this Purchase Agreement has been duly authorized, executed and delivered by the City and, assuming due authorization, execution and delivery by the other parties thereto, constitutes the legal, valid and binding agreement of the City and is enforceable in accordance with its terms, except to the extent that enforceability may be limited by moratorium, bankruptcy, reorganization, insolvency or other similar laws affecting creditors’ rights generally or by the exercise of judicial discretion in accordance with general principles of equity or otherwise in appropriate cases and by limitations on legal remedies against public agencies in the State; (ii) the Bonds are not subject to the registration requirements of the Securities Act of 1933, as amended, and the Fiscal Agent Agreement is exempt from qualification under the Trust Indenture Act of 1939, as amended; and
(iii) the information contained in the Official Statement on the cover and under the captions “THE BONDS,” “SECURITY FOR THE BONDS,” “TAX MATTERS” and in Appendices E and H to the Official Statement (excluding any financial, statistical and economic data, forecasts, numbers, charts, graphs, estimates, projections, and assumptions and any information regarding The Depository Trust Company and the book-entry system as to which Bond Counsel need express no opinion or view, and further, excluding any material that may be treated as included under such captions by cross-reference), are accurate insofar as such statements purport to summarize certain provisions of the Bonds, the Fiscal Agent Agreement, Bond Counsel’s final approving opinion and the Act; and

7. City Attorney Opinion. An opinion, dated the Closing Date and addressed to the Underwriter, of the City Attorney to the City and counsel to the Community Facilities District, substantially in the form of Appendix B hereto; 1366
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13 8. Closing Certificate of the City. A certificate, dated the Closing Date, and signed by an authorized officer of the City substantially in the form of Appendix C hereto, together with such additional certifications as Bond Counsel may require;

9. Bank Incumbency Certificate. Certified copies of the general resolution of the Fiscal Agent authorizing the execution and delivery of certain documents by certain officers of the Fiscal Agent, which resolution authorizes the execution of the Fiscal Agent Agreement and the authentication of the Bonds;

10. Fiscal Agent’s Certificate. A certificate of the Fiscal Agent, dated the Closing Date, in form and substance acceptable to the Underwriter and its counsel, substantially in the form of Appendix D hereto;

11. Fiscal Agent’s Counsel Opinion. An opinion of counsel to the Fiscal Agent, dated the Closing Date, addressed to the Underwriter and the City, substantially in the form of Appendix E hereto;

12. Disclosure Counsel Opinion. A letter of Jones Hall, A Professional Law Corporation, as disclosure counsel to the City (“Disclosure Counsel”), dated the Closing Date and addressed to the Underwriter and the City, to the effect that without passing upon or assuming any responsibility for the accuracy, completeness or fairness of the statements contained in the Preliminary Official Statement and the Final Official Statement and making no representation that they have independently verified the accuracy, completeness or fairness of any such statements, based upon the information made available to them in the course of their participation in the preparation of the Final Official Statement, nothing has come to such counsel's attention which would lead them to believe that the Preliminary Official Statement, as of its date and the date of the Purchase Agreement, and the Final Official Statement, as of its date and as of the Closing Date (but excluding therefrom the appendices thereto, financial statements and statistical data, and information regarding The Depository Trust Company and its book entry system, as to which no opinion need be expressed), contained an untrue statement of a material fact or omits to state a material fact required to be stated therein or necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading;

13. Opinion of Underwriter’s Counsel. An opinion of Kutak Rock LLP, counsel to the Underwriter (“Underwriter’s Counsel”), dated the date of the Closing, addressed to the Underwriter, in form and substance acceptable to the Underwriter;

14. Special Tax Consultant Certificate. A certificate, dated the Closing Date from DTA substantially in the form attached as Appendix F hereto;

15. Transcript. A transcript of all proceedings relating to the authorization, issuance, sale and delivery of the Bonds, including certified copies of the Fiscal Agent Agreement and all resolutions of the City and the Community Facilities District relating thereto;

16. Nonarbitrage Certificate. A certificate of the City, dated the Closing Date, in a form acceptable to Bond Counsel and the Underwriter, that the Bonds are not arbitrage bonds within the meaning of Section 148 of the Internal Revenue Code of 1986, as amended;

17. Specimen Bonds. Copies of the Specimen Bonds;
1367
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14 18. Form 8038-G. An Information Return for Tax-Exempt Bond Issues (Internal Revenue Service Form 8038-G), in a form satisfactory to Bond Counsel for filing, executed by a duly authorized officer of the City, together with evidence that such Form 8038-G has been mailed;

19. CDIAC Statements. Copies of filings with the California Debt and Investment Advisory Commission (“CDIAC”) relating to the issuance of the Bonds;

20. Letter of Representations. A copy of the Blanket Letter of Representations to DTC relating to the Bonds signed by the City;

21. Certificates Regarding Preliminary Official Statement. Prior to and in connection with printing and distribution of the Preliminary Official Statement, (i) an executed certificate of the City deeming the Preliminary Official Statement final within the meaning of the Rule, and (ii) an executed certificate of Eight Mile Development, Inc. (the “Master Developer”), substantially in the form under Appendix G hereto, an executed certificate of Richmond American Homes of Maryland, Inc. (“Richmond American”), substantially in the form under Appendix G hereto and an executed certificate of Meritage Homes of California, Inc. (“Meritage Homes”), substantially in the form under Appendix G hereto.

22. Richmond American and Meritage Homes Continuing Disclosure Certificates. An executed copy of the Richmond American Continuing Disclosure Certificate and Meritage Homes Continuing Disclosure Certificate in the form included as an appendix to the Official Statement.

23. Master Developer, Richmond American and Meritage Homes BringDown Certificates. An executed bring-down certificate from each of the Master Developer Richmond American and Meritage Homes, each dated as of the Closing Date, in the form set forth in Appendix H hereto.

24. Master Developer Opinion. The opinions of counsel to the Master Developer substantially in the form set forth in Appendix I hereto, addressed to the City and the Underwriter.

25. Richmond American and Meritage Homes’ Counsel Opinions. The opinions of counsel to Richmond American and Meritage Homes, each dated the Closing Date and addressed to the City and the Underwriter, in form and substance acceptable to the City and Underwriter.

26. Appraiser Closing Certificate. A certificate in form and substance as set forth in Appendix J hereto of Integra Realty Resources - Sacramento, the appraiser of the property within Improvement Area 2 of the Community Facilities District, dated as of the Closing Date.

27. Additional Documents. Such additional legal opinions, certificates, instruments and other documents as the Underwriter may reasonably request to evidence the truth and accuracy, as of the date hereof and as of the Closing Date, of the material representations and warranties of the City, on its own behalf and on behalf of the Community Facilities District, contained herein, and of the statements and information contained in the Official Statement and the due performance or satisfaction by the City at or prior to the Closing of all agreements then to be performed and all conditions then to be satisfied by the City and the Community Facilities District in 1368
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15 connection with the transactions contemplated hereby and by the Fiscal Agent Agreement and the Official Statement.

If the City shall be unable to satisfy the conditions to the obligations of the Underwriter to purchase, accept delivery of and pay for the Bonds contained in this Purchase Agreement, or if the obligations of the Underwriter to purchase, accept delivery of and pay for the Bonds shall be terminated for any reason permitted by this Purchase Agreement, this Purchase Agreement shall terminate and neither the City nor the Underwriter shall be under any further obligation hereunder, except that the respective obligations of the Underwriter and the City set forth in Section 6 hereof shall continue in full force and effect.

4. Representations and Agreements of the Underwriter. The Underwriter represents to and agrees with the City that, as of the date hereof and as of the date of the Closing:

A. The Underwriter is duly authorized to execute and deliver this Purchase Agreement and to take any action under the Purchase Agreement required to be taken by it.

B. The Underwriter is in compliance with MSRB Rule G-37 with respect to the City and the Community Facilities District, and is not prohibited thereby from acting as underwriter with respect to securities of the City and the Community Facilities District. The Underwriter is in compliance with MSRB Rule G-17 with respect to the City and the Community Facilities District.

C. The Underwriter has, and has had, no financial advisory relationship with the City or the Community Facilities District with respect to the Bonds, and no investment firm controlling, controlled by or under common control with the Underwriter has or has had any such financial advisory relationship, within the meaning of California Government Code Section 53590, or otherwise.

D. The Underwriter has not paid or agreed to pay, nor will it pay or agree to pay, any entity, company, firm or person (including, but not limited to, the City’s financial consultants, or any officer, agent or employee thereof), other than a bona fide officer, agent or employee working for the Underwriter, any compensation, fee, gift or other consideration contingent upon or resulting from the award of or entering into this Purchase Agreement.

E. The Underwriter has reasonably determined that the City’s undertaking in the City Continuing Disclosure Certificate to provide continuing disclosure with respect to the Bonds is sufficient to effect compliance with the Rule.

5. Establishment of Issue Price.

A. The Underwriter agrees to assist the City in establishing the issue price of the Bonds and shall execute and deliver to the City at Closing an “issue price” or similar certificate, together with the supporting pricing wires or equivalent communications, substantially in the form attached hereto as Appendix K, with such modifications as may be appropriate or necessary, in the reasonable judgment of the Underwriter, the City and Bond Counsel (as defined herein), to accurately reflect, as applicable, the sales price or prices or the initial offering price or prices to the public of the Bonds.

B. Except as otherwise set forth in Appendix A attached hereto, the City will treat the first price at which 10% of each maturity of the Bonds (the “10% test”) is sold to the public 1369
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16 as the issue price of that maturity. At or promptly after the execution of this Purchase Agreement, the Underwriter shall report to the City the price or prices at which it has sold to the public each maturity of Bonds. If at that time the 10% test has not been satisfied as to any maturity of the Bonds, the Underwriter agrees to promptly report to the City the prices at which it sells the unsold Bonds of that maturity to the public. That reporting obligation shall continue, whether or not the Closing Date has occurred, until either (i) the Underwriter has sold all Bonds of that maturity or (ii) the 10% test has been satisfied as to the Bonds of that maturity, provided that, the Underwriter’s reporting obligation after the Closing Date may be at reasonable periodic intervals or otherwise upon request of the City or Bond Counsel. For purposes of this Section, if Bonds mature on the same date but have different interest rates, each separate CUSIP number within that maturity will be treated as a separate maturity of the Bonds.

C. The Underwriter confirms that it has offered the Bonds to the public on or before the date of this Purchase Agreement at the offering price or prices (the “initial offering price”), or at the corresponding yield or yields, set forth in Appendix A attached hereto, except as otherwise set forth therein. Appendix A also sets forth, as of the date of this Purchase Agreement, the maturities, if any, of the Bonds for which the Underwriter represents that (i) the 10% test has been satisfied (assuming orders are confirmed by the close of the business day immediately following the date of this Purchase Agreement) and (ii) the 10% test has not been satisfied and for which the City and the Underwriter agree that the restrictions set forth in the next sentence shall apply, which will allow the City to treat the initial offering price to the public of each such maturity as of the sale date as the issue price of that maturity (the “hold-the-offering-price rule”). So long as the hold-the-offering-price rule remains applicable to any maturity of the Bonds, the Underwriter will neither offer nor sell unsold Bonds of that maturity to any person at a price that is higher than the initial offering price to the public during the period starting on the sale date and ending on the earlier of the following:
a. the close of the fifth (5th) business day after the sale date; or b. the date on which the Underwriter has sold at least 10% of that maturity of the Bonds to the public at a price that is no higher than the initial offering price to the public.

The Underwriter will advise the City promptly after the close of the fifth (5th) business day after the sale date whether it has sold 10% of that maturity of the Bonds to the public at a price that is no higher than the initial offering price to the public.

D. The Underwriter confirms that:
(i) any selling group agreement and any third-party distribution agreement relating to the initial sale of the Bonds to the public, together with the related pricing wires, contains or will contain language obligating each dealer who is a member of the selling group and each broker-dealer that is a party to such third-party distribution agreement, as applicable:
(A)(i) to report the prices at which it sells to the public the unsold Bonds of each maturity allocated to it, whether or not the Closing Date has occurred, until either all Bonds of that maturity allocated to it have been sold or it is notified by the Underwriter that the 10% test has been satisfied as to the Bonds of that maturity, provided that, the reporting obligation after the Closing Date may be reasonable periodic intervals or otherwise upon request of the Underwriter and (ii) to 1370
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17 comply with the hold-the-offering-price rule, if applicable, if and for so long as directed by the Underwriter,
(B) to promptly notify the Underwriter of any sales of Bonds that, to its knowledge, are made to a purchaser who is a related party to an underwriter participating in the initial sale of the Bonds to the public (each such term being used as defined below), and (C) to acknowledge that, unless otherwise advised by the dealer or broker-dealer, the Underwriter shall assume that each order submitted by the dealer or broker-dealer is a sale to the public.
(ii) any selling group agreement relating to the initial sale of the Bonds to the public, together with the related pricing wires, contains or will contain language obligating each dealer that is a party to a third-party distribution agreement to be employed in connection with the initial sale of the Bonds to the public to require each broker-dealer that is a party to such third-party distribution agreement to (A) report the prices at which it sells to the public the unsold Bonds of each maturity allocated to it, whether or not the Closing Date has occurred, until either all Bonds of that maturity allocated to it have been sold or it is notified by the Underwriter or the dealer that the 10% test has been satisfied as to the Bonds of that maturity, provided that, the reporting obligation after the Closing Date may be at reasonable periodic intervals or otherwise upon request of the Underwriter or the dealer, and (B) comply with the hold-the-offering-price rule, if applicable, if and for so long as directed by the Underwriter or the dealer and as set forth in the related pricing wires.

E. The City acknowledges that, in making the representation set forth in this section, the Underwriter will rely on (i) in the event a selling group has been created in connection with the initial sale of the Bonds to the public, the agreement of each dealer who is a member of the selling group to comply with the requirements for establishing issue price of the Bonds, including, but not limited to, its agreement to comply with the hold-the-offering-price rule, if applicable to the Bonds, as set forth in a selling group agreement and the related pricing wires, and (ii) in the event that a third-party distribution agreement was employed in connection with the initial sale of the Bonds to the public, the agreement of each broker-dealer that is a party to such agreement to comply with the requirements for establishing issue price of the Bonds, including, but not limited to, its agreement to comply with the hold-the-offering-price rule, if applicable to the Bonds, as set forth in the third-party distribution agreement and the related pricing wires. The City further acknowledges that the Underwriter shall not be liable for the failure of any dealer who is a member of a selling group, or of any broker-dealer that is a party to a third-party distribution agreement, to comply with its corresponding agreement to comply with the requirements for establishing issue price of the Bonds, including, but not limited to, its agreement to comply with the hold-the-offering-price rule, if applicable to the Bonds.

F. The Underwriter acknowledges that sales of any Bonds to any person that is a related party to an underwriter participating in the initial sale of the Bonds to the public (each such term being used as defined below) shall not constitute sales to the public for purposes of this section.

Further, for purposes of this section:
a. “public” means any person other than an underwriter or a related party;
b. “underwriter” means (A) any person that agrees pursuant to a written contract with the City (or with the lead underwriter to form an underwriting syndicate) to 1371
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18 participate in the initial sale of the Bonds to the public and (B) any person that agrees pursuant to a written contract directly or indirectly with a person described in clause (A) to participate in the initial sale of the Bonds to the public (including a member of a selling group or a party to a third-party distribution agreement participating in the initial sale of the Bonds to the public);
c. a purchaser of any of the Bonds is a “related party” to an underwriter if the underwriter and the purchaser are subject, directly or indirectly, to (A) more than 50% common ownership of the voting power or the total value of their stock, if both entities are corporations (including direct ownership by one corporation of another), (B) more than 50% common ownership of their capital interests or profits interests, if both entities are partnerships (including direct ownership by one partnership of another), or (C) more than 50% common ownership of the value of the outstanding stock of the corporation or the capital interests or profit interests of the partnership, as applicable, if one entity is a corporation and the other entity is a partnership (including direct ownership of the applicable stock or interests by one entity of the other); and
d. “sale date” means the date of execution of this Purchase Agreement by all parties.

6. Expenses.

A. Whether or not the Underwriter accepts delivery of and pays for the Bonds as set forth herein, it shall be under no obligation to pay, and the City shall pay out of the proceeds of the Bonds or any other legally available funds of the City, all expenses incidental to the performance of the City’s obligations hereunder, including but not limited to the cost of printing and delivering the Bonds to the Underwriter; the costs of printing and shipping the Preliminary Official Statement and the Official Statement; the fees and disbursements of the City, the Community Facilities District, the Fiscal Agent, Bond Counsel, Disclosure Counsel, accountants and any other experts or consultants retained by the City or the Community Facilities District in connection with the issuance and sale of the Bonds; and any other expenses not specifically enumerated in paragraph (B) of this Section incurred in connection with the issuance and sale of the Bonds.

B. Whether or not the Bonds are delivered to the Underwriter as set forth herein, the City shall be under no obligation to pay, and the Underwriter shall be responsible for and pay, CUSIP®and CDIAC fees and expenses to qualify the Bonds for sale under any “blue sky” laws; the fees and disbursements of Underwriter’s Counsel; and all other expenses incurred by the Underwriter in connection with its public offering and distribution of the Bonds not specifically enumerated in paragraph (A) of this Section.

7. Notices. Any notice of other communication to be given to the City under this Purchase Agreement may be given by delivering the same in writing to the City of Stockton, 425 North El Dorado Street, Stockton, California 95202, Attention: Chief Financial Officer; any notice or other communication to be given to the Underwriter under this Purchase Agreement may be given by delivering the same in writing to Oppenheimer & Co. Inc., 580 California Street, Suite 2300, San Francisco, California 94104, Attention: Municipal Capital Markets Group. All such notices, requests or other communications may be made by telephone, personal or courier delivery, registered or certified mail, facsimile transmission or electronic communication, provided that delivery by facsimile transmission or electronic communication must be confirmed by the sender. The City and 1372
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19 the Underwriter may, by notice given as aforesaid, specify a different address for any such notices, requests or other communications.

8. Parties In Interest. This Purchase Agreement is made solely for the benefit of the City and the Underwriter (including any successors or assignees of the Underwriter) and no other person shall acquire or have any right hereunder or by virtue hereof. The City and the Underwriter may not assign this Purchase Agreement. The term “successor” shall not include any holder of any Bonds merely by virtue of such holding.

9. Survival of Representations and Warranties. The representations and warranties of the City under this Purchase Agreement shall not be deemed to have been discharged, satisfied or otherwise rendered void by reason of the Closing and regardless of any investigations made by or on behalf of the Underwriter (or statements as to the results of such investigations) concerning such representations and statements of the City or the Community Facilities District and regardless of delivery of and payment for the Bonds.

10. Severability. If any provision of this Purchase Agreement is, or is held or deemed to be, invalid, inoperative or unenforceable as applied in any particular case in any jurisdiction or jurisdictions, because it conflicts with any provisions of any constitution, statute, rule of public policy or for any other reason, such circumstances shall not make the provision in question invalid, inoperative or unenforceable in any other case or circumstance, or make any other provision or provisions of this Agreement invalid, inoperative or unenforceable to any extent whatsoever.

11. Execution in Counterparts. This Purchase Agreement may be executed by the parties hereto in separate counterparts, each of which when so executed and delivered shall be an original, but all such counterparts shall together constitute but one and the same instrument.

12. Effective. This Purchase Agreement shall become effective and binding upon the respective parties hereto upon the execution of the acceptance hereof by the City and shall be valid and enforceable as of the time of such acceptance.

13. No Prior Agreements. This Purchase Agreement supersedes and replaces all prior negotiations, agreements and understanding between the parties hereto in relation to the sale of the Bonds by the City.

14. Governing Law. This Purchase Agreement shall be governed by the laws of the State.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
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15. Effective Date. This Purchase Agreement shall become effective and binding upon the respective parties hereto upon the execution of the acceptance hereof by the City and shall be valid and enforceable as of the time of such acceptance.

Very truly yours,
OPPENHEIMER & CO. INC.

By:

Its: Authorized Officer
The foregoing is hereby agreed to and
accepted as of the date first above written:

CITY OF STOCKTON
By:

Authorized Representative
Time of Execution: _____________ p.m. California time
[EXECUTION PAGE OF BOND PURCHASE AGREEMENT – IMPROVEMENT AREA 2 OF THE CITY OF STOCKTON COMMUNITY FACILITIES DISTRICT NO. 2018-2 (WESTLAKE VILLAGES II), SPECIAL TAX BONDS, SERIES 2022)] 1374
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APPENDIX A
$_______
IMPROVEMENT AREA 2 OF THE CITY OF STOCKTON
COMMUNITY FACILITIES DISTRICT NO. 2018-2
(WESTLAKE VILLAGES II)
SPECIAL TAX BONDS, SERIES 2022

MATURITY SCHEDULE
Maturity
(September 1)
Principal
Amount
Interest
Rate Yield Price
10% Test
Satisfied*
10% Test
Not
Satisfied
Subject to
Hold-TheOfferingPrice Rule
(Marked if
Used)
2023
2024
2025
2026
2027
2028
2029
2030
2031
2032
2033
2034
2035
2036
2037
2038
2039
20__
(T)
20__
(T)
_________________________________
(T) Term Bond.
(C) Priced to optional call at [par] on September 1, 20___. * At the time of execution of this Purchase Agreement and assuming orders are confirmed by the close of the business day immediately following the date of this Purchase Agreement. 1375
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B-1

APPENDIX B

OPINION OF CITY ATTORNEY
[Closing Date]
City of Stockton
425 North El Dorado Street
Stockton, California 9520
Oppenheimer & Co. Inc.
22 Battery Street, Suite 500
San Francisco, California 94111
Re: $10,625,000 Improvement Area 2 of the City of Stockton Community Facilities District No. 2018-2 (Westlake Villages II), Special Tax Bonds, Series 2022 Ladies and Gentlemen:

We have acted as City Attorney for the City of Stockton (the “City”) and counsel for Improvement Area 2 of the City of Stockton Community Facilities District No. 2018-2 (Westlake Villages II) (the “Community Facilities District”), in connection with the purchase and sale of the Improvement Area 2 of the City of Stockton Community Facilities District No. 2018-2 (Westlake Villages II), Special Tax Bonds, Series 2022 (the “Bonds”). As such Counsel, we have reviewed the Bond Purchase Agreement, dated [BPA Date] (the “Purchase Agreement”), by and between Oppenheimer & Co. Inc. (the “Underwriter”) and the City, the Fiscal Agent Agreement, dated as of July 1, 2022 (the “Fiscal Agent Agreement”), by and between the City and U.S. Bank Trust Company, National Association, as fiscal agent (the “Fiscal Agent”), the City Continuing Disclosure Certificate, dated [Closing Date] executed by the City (the “City Continuing Disclosure Certificate”), the Preliminary Official Statement, dated [POS Date], relating to the Bonds (the “Preliminary Official Statement”), the Official Statement, dated [OS Date], relating to the Bonds (the “Official Statement”), Resolution No. ________ adopted by the City Council of the City on ______, 2022 (“Bond Resolution”), and such other documents, certificates, records and papers as we have deemed necessary to render the below opinions.

The Bonds, Fiscal Agent Agreement, Purchase Agreement, and the City Continuing Disclosure Certificate, are collectively referred to herein as the “Bond Documents.” Capitalized terms used herein and not otherwise defined shall have the meanings assigned to them in the Purchase Agreement.

With your permission we have assumed, without undertaking to verify the same by independent investigation, the following: (a) the authenticity of original documents and the genuineness of all signatures (other than those of the City and the Community Facilities District); (b) the conformity to the originals of all documents submitted to us as copies; (c) the truth, accuracy, and completeness of the information, representations, and warranties contained in these documents, certificates, records and papers we have reviewed; and (d) compliance with all covenants and agreements contained in such documents.

Based on the foregoing, and in reliance thereon, as of the date hereof, we are of the following opinions:
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1. The City is a municipal corporation and charter city duly organized and validly existing pursuant to the Constitution and laws of the State of California;

2. The Community Facilities District is duly organized and validly existing as a community facilities district under the Constitution and laws of the State;

3. The Bond Resolution was duly adopted at a meeting of the City Council, which meeting was duly called and held pursuant to law and with all public notice required by law and at which a quorum was present and acting throughout;

4. The preparation and distribution of the Preliminary Official Statement and the Official Statement have been duly approved by the City Council, acting for itself or as the Legislative Body of the Community Facilities District;

5. The execution and delivery by the City of the Bond Documents, and the Bonds and the performance of its obligations thereunder have been duly authorized by all requisite action of the City Council, acting for itself or as the Legislative Body of the Community Facilities District, and the Bonds and the Bond Documents have been duly executed and delivered by the City, and constitute legal, valid and binding obligations of the City enforceable against the City, in accordance with their respective terms, subject to bankruptcy, insolvency, reorganization, moratorium and other laws affecting the enforcement of creditors’ rights in general and to the application of equitable principles if equitable remedies are sought;

6. To the best of our knowledge, no action, suit, proceeding, inquiry or investigation, at law or in equity, before or by any court, regulatory agency, public board or body is pending or to the best of such counsel’s knowledge, threatened in any way affecting the existence of the City or the Community Facilities District or the titles of the officers of each to their respective offices, or seeking to restrain or to enjoin the execution and delivery of the Bond Documents, or the issuance, sale or delivery of the Bonds or the application of the proceeds thereof or the collection or application of the Special Tax, or the exclusion from gross income for State personal income taxes of interest on the Bonds, or in any way contesting or affecting the validity or enforceability of the Bonds, the Bond Documents or any action of the City or the Community Facilities District contemplated by any of said documents or in any way contesting the completeness or accuracy of the Preliminary Official Statement or the Official Statement or the powers of the City or its authority with respect to the Purchase Agreement or any other applicable agreement, or any action on the part of the City or the Community Facilities District contemplated by any of said documents;

7. To the best of our knowledge, the City and the Community Facilities District are not in breach of or in default under any court or administrative decree or order, or under any loan agreement, note, resolution, indenture, contract, agreement or other instrument to which the City or the Community Facilities District is a party or is otherwise subject or bound, including the Bond Documents, a consequence of which could be to materially and adversely affect the ability of the City or the Community Facilities District to perform their obligations under the Bonds, the Bond Documents or which, with the passage of time or the giving of notice or both, would constitute an event of default thereunder; and;

8. To the best of our knowledge, the adoption of the Bond Resolution and the execution and delivery of the Bonds and the Bond Documents, did not and will not conflict with or constitute a breach of or default under any applicable court or administrative decree or order, or under any loan 1377
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agreement, note, ordinance, resolution, indenture, contract, agreement or other instrument to which the City or the Community Facilities District, as the case may be, is a party or is otherwise subject or bound, a consequence of which could be to materially and adversely affect the ability of City or the Community Facilities District to perform their obligations under the Bonds or any Bond Documents.

The opinions set forth above are subject to the following additional qualifications:

General principles of equity, regardless of whether such enforceability is considered in a proceeding in equity or at law; and limitations imposed by bankruptcy, insolvency, fraudulent conveyance, receivership, conservatorship, reorganization, arrangement, liquidation, moratorium or other similar laws affecting the enforcement of creditors’ rights in general heretofore or hereafter enacted, as such laws may be applied in the event of bankruptcy, insolvency, reorganization, arrangement, receivership, conservatorship, liquidation, readjustment of debt or other similar proceedings of, or moratorium or similar occurrence affecting municipal corporations in the State.

We express no opinion as to matters governing by laws other than the laws of the State and the federal laws of the United States of America, or the enforceability of any choice of law provision in the documents described herein.

This opinion is solely for your benefit in connection with the transactions covered by the first paragraph of this letter and may not be relied upon or used by, circulated, quoted or referred to, nor may copies hereof be delivered to, any other person or for any other purpose without our prior written approval; provided, however, copies of this opinion may be included in the closing transcripts for the transactions connected with the issuance of the Bonds. We disclaim any obligation to update this opinion letter for events occurring or coming to our attention after the date hereof.

Respectfully submitted,
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APPENDIX C
IMPROVEMENT AREA 2 OF THE CITY OF STOCKTON
COMMUNITY FACILITIES DISTRICT NO. 2018-2
(WESTLAKE VILLAGES II)
SPECIAL TAX BONDS, SERIES 2022

CLOSING CERTIFICATE OF THE CITY
I, the undersigned, hereby certify that I am the Controller/Treasurer and Chief Financial Officer of the City of Stockton (the “City”), the City Council (the “City Council”) of which is the Legislative Body for Improvement Area 2 of the City of Stockton Community Facilities District No. 2018-2 (Westlake Villages II) (the “Community Facilities District”), a community facilities district duly organized and existing under the laws of the State of California (the “State”) and I am authorized to execute this Certificate on behalf of the City in connection with the issuance of the above-captioned bonds (the “Bonds”). All capitalized terms herein not otherwise defined shall have the meanings given such terms in the Bond Purchase Agreement (the “Bond Purchase Agreement”), dated [BPA Date], by and between the City and Oppenheimer & Co. Inc..

I further certify on behalf of the City that:
(i) The representations, warranties and covenants of the City contained in the Bond Purchase Agreement, made on behalf of the City and the Community Facilities District, are true and correct in all material respects on and as of the date hereof as if made on the date hereof; (ii) The Community Facilities District Resolutions, Formation Documents and the City Documents are in full force and effect and have not been amended, modified or supplemented; (iii) Except as described in the Official Statement, there is no action, suit, proceeding, inquiry or investigation at law or in equity, or by any court or regulatory agency, public board or body pending, with respect to which the City or the Community Facilities District has been served with process, or to the best knowledge of the City or the Community Facilities District, threatened wherein an unfavorable decision, ruling or finding would: (a) affect the creation, organization, existence or powers of the City or the Community Facilities District, or the titles of their officers to their respective offices, (b) enjoin or restrain the issuance, sale and delivery of the Bonds, the levy or collection of the Special Tax or any other moneys or property pledged or to be pledged under the Fiscal Agent Agreement, or the pledge thereof, (c) in any way question or affect any of the rights, powers, duties or obligations of the City or the Community Facilities District with respect to the Special Taxes or moneys and assets pledged or to be pledged to pay the principal of, premium, if any, or interest on the Bonds, (d) in any way question or affect any authority for the issuance of the Bonds, or the validity or enforceability of the Bonds or the proceedings relating to the issuance of the Bonds, or (e) in any way question or affect the Bond Purchase Agreement or the transactions contemplated thereby, the Official Statement or the City Documents; (iv) The information in the Preliminary Official Statement (other than statements pertaining to DTC and it book-entry system and under the headings “OWNERSHIP AND DEVELOPMENT OF PROPERTY WITHIN IMPROVEMENT AREA 2” and contained in APPENDIX G–DTC AND THE BOOK-ENTRY ONLY SYSTEM,” as to which no view is expressed) as of its date was and as of the date hereof is, and in the Official Statement (other than 1379
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C-2
statements pertaining to DTC and its book-entry system and under the headings “OWNERSHIP AND DEVELOPMENT OF PROPERTY WITHIN IMPROVEMENT AREA 2” and contained in APPENDIX G–DTC AND THE BOOK-ENTRY ONLY SYSTEM,”” as to which no view is expressed) as of its date was and as of the date hereof is, true and correct in all material respects and does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements therein, in light of the circumstances under which they were made, not misleading;
(v) The City has complied with all agreements and covenants, and satisfied all conditions, on its part to be complied with or satisfied under the Bond Purchase Agreement and under the Community Facilities District Resolutions, the Formation Documents, the City Documents and the Official Statement at or prior to the date hereof; (vi) No event has occurred since the date of the Official Statement which either makes untrue or incorrect in any material respect as of the date hereof any statement or information contained in the Preliminary Official Statement or the Official Statement (other than statements pertaining to DTC and its book-entry system and under the headings “OWNERSHIP AND DEVELOPMENT OF PROPERTY WITHIN IMPROVEMENT AREA 2” and contained in Appendix G–DTC and the Book-Entry Only System,” as to which no view is expressed) or is not reflected in the Official Statement but should be reflected therein in order to make the statements and information therein not misleading in any material respect; (vii) The use of and distribution by the Underwriter of the Preliminary Official Statement and the Official Statement in connection with the offer and sale of the Bonds is hereby ratified; and (viii) The City and the Community Facilities District are each in compliance with all covenants set forth in the Fiscal Agent Agreement.

IN WITNESS WHEREOF, the undersigned has executed this certificate as of the date set forth below.

Dated: [Closing Date] CITY OF STOCKTON
By:

Controller/Treasurer and Chief Financial
Officer
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APPENDIX D
IMPROVEMENT AREA 2 OF THE CITY OF STOCKTON
COMMUNITY FACILITIES DISTRICT NO. 2018-2
(WESTLAKE VILLAGES II)
SPECIAL TAX BONDS, SERIES 2022
FISCAL AGENT’S CERTIFICATE
The undersigned is an authorized officer of U.S. Bank Trust Company, National Association (the “Bank”), and as such, is familiar with the facts herein certified and is authorized and qualified to state and certify the following:
(i) The Bank is duly organized and existing as a national banking association under the laws of the United States of America, having the full power and authority to accept and perform its duties under a Fiscal Agent Agreement, dated as of July 1, 2022 (the “Fiscal Agent Agreement”), by and between the City and U.S. Bank Trust Company, National Association, as fiscal agent. Capitalized terms used herein and not otherwise defined have the meanings given to such terms in the Bond Purchase Agreement, dated [BPA Date], by and between the City and Oppenheimer & Co. Inc.;
(ii) Pursuant to the Fiscal Agent Agreement, the Bank will apply the proceeds from the Bonds to the purposes specified in the Fiscal Agent Agreement; (iii) The Bank is duly authorized to accept the obligations created by the Fiscal Agent Agreement and to authenticate the Bonds pursuant to the terms of the Fiscal Agent Agreement;
(iv) The Fiscal Agent Agreement has been duly authorized, executed and delivered by the Bank and, assuming due authorization, execution and delivery thereof by the other parties thereto, constitutes a valid and binding agreement of the Bank enforceable against the Bank in accordance with its terms;
(v) The Bonds have been validly authenticated and delivered by the Bank pursuant to the Fiscal Agent Agreement;
(vi) No consent, approval, authorization or other action by any governmental or regulatory authority having jurisdiction over the Bank that has not been obtained is or will be required for the authentication of the Bonds or the consummation by the Bank of the other transactions contemplated to be performed by the Bank in connection with the authentication of the Bonds and the acceptance and performance of the obligations created by the Fiscal Agent Agreement;
(vii) There is no action, suit, proceeding, inquiry or investigation, at law or in equity, before or by any court, regulatory agency, public board or body that has been served on the Bank or, to the best of its knowledge, threatened in any way affecting the existence of the Bank, or seeking to restrain or to enjoin the execution and delivery of the Fiscal Agent Agreement or the authentication of the Bonds, by the Bank, or in any way contesting or affecting the validity or enforceability, as against the Bank, of the Fiscal Agent Agreement or any action of the Bank 1381
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D-2
contemplated by any of said documents, or in which an adverse outcome would materially and adversely affect the ability of the Bank to perform its obligations under the Fiscal Agent Agreement; (viii) The Bank is not in breach of or in default under any applicable law or administrative rule or regulation of the State of California (the “State”) or the United States of America, or of any department, division, agency or instrumentality of either thereof, or under any applicable court or administrative decree or order, or under any loan agreement, note, resolution, indenture, contract, agreement or other instrument to which the Bank is a party or is otherwise subject or bound, a consequence of which could be to materially and adversely affect the ability of the Bank to perform its obligations under the Fiscal Agent Agreement (provided, however, that the Bank does not certify as to compliance with State or federal securities laws); and (ix) The authentication of the Bonds, and the execution and delivery of the Fiscal Agent Agreement by the Bank, and compliance with the provisions of each, will not conflict with or constitute a breach of or default under any applicable law or administrative rule or regulation of the State or the United States of America, or of any department, division, agency or instrumentality of either thereof, or under any applicable court or administrative decree or order, or under any loan agreement, note, ordinance, resolution, indenture, contract, agreement or other instrument to which the Bank is a party or is otherwise subject or bound, a consequence of which could be to materially and adversely affect the ability of the Bank to perform its obligations under the Fiscal Agent Agreement.

Dated: [Closing Date] U.S. BANK TRUST COMPANY, NATIONAL

ASSOCIATION
as Fiscal Agent
By:

Authorized Officer
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APPENDIX E
FISCAL AGENT’S COUNSEL OPINION
[Closing Date]
Oppenheimer & Co. Inc.
580 California Street, Suite 2300
San Francisco, California 94104
City of Stockton
425 North El Dorado Street
Stockton, California 95202
Re: Improvement Area 1 of the City of Stockton Community Facilities District No. 2018-2 (Westlake Villages II), Special Tax Bonds, Series 2022 Ladies and Gentlemen:

We have acted as counsel for U.S. Bank Trust Company, National Association, a national banking association (the “Bank”) in connection with the execution by the Bank of a Fiscal Agent Agreement, dated as of July 1, 2022 (the “Fiscal Agent Agreement”), by and between the City and U.S. Bank Trust Company, National Association, as fiscal agent (the “Fiscal Agent”). We are generally familiar with the Articles of Association and the Bylaws of the Bank and are also familiar with the corporate proceedings of the Bank with regard to its authorization, execution and delivery of the Fiscal Agent Agreement. Capitalized terms used herein shall have the respective meanings ascribed to them in the Fiscal Agent Agreement, except as otherwise defined herein.

We have examined such documents and have reviewed such questions of law as we have considered necessary and appropriate for the purposes of this opinion. In such review, we have assumed the genuineness of all signatures, the authenticity of all documents submitted to us as originals, and the conformity with originals of all documents submitted to us as copies. Where questions of fact material to our opinions expressed below were not established independently, we have relied upon statements of officers of the Bank as contained in their certificates.

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

1. The Bank is a national banking association duly organized, validly existing and in good standing under the laws of the United States of America.

2. The Bank has all requisite corporate power, authority and legal right to execute and deliver the Fiscal Agent Agreement and to perform its duties and obligations under the Fiscal Agent Agreement, and has taken all necessary corporate action to authorize the execution and delivery thereof and the performance of its obligations thereunder, including the authentication and delivery of the Bonds in its capacity as fiscal agent under the Fiscal Agent Agreement.
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3. The Bank has duly authorized, executed and delivered the Fiscal Agent Agreement. Assuming the due authorization, execution and delivery thereof by the other parties thereto, the Fiscal Agent Agreement is a legal, valid and binding agreement of the Bank, enforceable in accordance with its terms against the Bank.

4. To our knowledge, no authorization, approval, consent, or order of any governmental agency or regulatory authority having jurisdiction over the Bank that has not been obtained by the Bank is required for the authorization, execution and delivery by the Bank of the Fiscal Agent Agreement or the authentication and delivery of the Bonds by the Bank under the Fiscal Agent Agreement.

The opinions set forth above are subject to the following qualifications and exceptions:
(a) the opinions are subject to the effect of any applicable bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium or other similar laws of general application affecting creditors' rights; and
(b) the opinions are subject to the effect of general principles of equity, including (without limitation) concepts of materiality, reasonableness, good faith and fair dealing, and other similar doctrines affecting the enforceability of agreements generally (regardless of whether considered in a proceeding in equity or at law).

Our opinions expressed above are limited to the laws of the State of California and the federal laws of the United States of America.

The foregoing opinions are being furnished to you solely for your benefit and may not be relied upon by, nor may copies be delivered to, any other person without our prior written consent.

Very truly yours,
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APPENDIX F
IMPROVEMENT AREA 2 OF THE CITY OF STOCKTON
COMMUNITY FACILITIES DISTRICT NO. 2018-2
(WESTLAKE VILLAGES II)
SPECIAL TAX BONDS, SERIES 2022

CERTIFICATE OF SPECIAL TAX CONSULTANT
The undersigned hereby states and certifies:

1. That he is an authorized officer of DTA (the “Special Tax Consultant”) and as such is familiar with the facts herein certified and is authorized and qualified to certify the same.

2. That the Special Tax Consultant has prepared the Rate and Method of Apportionment of Special Tax (the “Rate and Method”) for Improvement Area 2 of the City of Stockton Community Facilities District No. 2018-2 (Westlake Villages II) (the “Community Facilities District”) as set forth in Appendix A to the Official Statement for the above-captioned bonds (the “Bonds”) dated [BPA Date]. Capitalized terms not otherwise defined herein shall be defined as provided in the Rate and Method or the Fiscal Agent Agreement, dated as of July 1, 2022 (the “Fiscal Agent Agreement”), by and between the City and U.S. Bank Trust Company, National Association, as fiscal agent (the “Fiscal Agent”).

3. That the Special Tax, if levied in accordance with the Rate and Method and collected will annually yield sufficient revenue to make timely payments of the annual debt service on the Bonds, and annual Administrative Expenses related to the levy and collection of the Special Tax and the expenses of the Fiscal Agent for the Bonds (no representation is made as to the actual amounts that will be collected in future years).

4. That the Maximum Annual Special Tax, if collected in the maximum amounts permitted pursuant to the Rate and Method on the Closing Date, would generate at least 110% of the Annual Debt Service payable with respect to the Bonds payable from such Special Tax plus estimated Administrative Expenses equal to a maximum of $______ for Fiscal Year 2022-23, assuming the debt service schedule shown in the Official Statement is true and correct.

5. That all information supplied by the Special Tax Consultant for use in the Official Statement is true and correct, as of the date of the Official Statement and as of the date hereof.

6. That, as of the dates of the Preliminary Official Statement and the Official Statement and as of the date hereof, the information contained in the portion of the Official Statement entitled “SECURITY FOR THE BONDS,” and “APPENDIX A,” including all tables and maps sourced to the Special Tax Consultant, and the other data provided by the Special Tax Consultant and included in the Official Statement, do not, to our knowledge, contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made therein, in light of the circumstances under which they were made, not misleading. 1385
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7. The Community Facilities District, the City, the Underwriter, Oppenheimer & Co.

Inc., and all the professionals involved in the financing are entitled to rely on this Certificate.

Dated: [Closing Date] DTA
By:

Title:
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APPENDIX G
IMPROVEMENT AREA 2 OF THE CITY OF STOCKTON
COMMUNITY FACILITIES DISTRICT NO. 2018-2
(WESSTLAKE VILLAGES II)
SPECIAL TAX BONDS, SERIES 2022

FORM OF CERTIFICATE OF PROPERTY OWNER
[POS Date]
The undersigned party certifies and represents that he or she is duly authorized on behalf of [Eight Mile Development, Inc.] [Richmond American Homes of Maryland, Inc.] [Meritage Homes of California, Inc.] (the “Property Owner”), to execute and deliver this certificate (this “Certificate”) in connection with the issuance, sale and delivery of the Bonds captioned above (the “Bonds”).

Capitalized terms used but not defined in this Certificate have the same meaning as is set forth in the Bond Purchase Agreement with respect to the Bonds between Oppenheimer & Co. Inc., as underwriter (the “Underwriter”), and the City.

As used in this Certificate, the term “Actual Knowledge of the Undersigned” means the knowledge that the undersigned currently has as of the date of this Certificate or has obtained through (i) interviews with such current officers and responsible employees of the Property Owner as the undersigned has reasonably determined are likely, in the ordinary course of their respective duties, to have knowledge of the matters set forth in this Certificate, and/or (ii) review of documents reasonably available to the undersigned and which the undersigned reasonably deemed necessary for the undersigned to obtain knowledge of the matters set forth in this Certificate. The undersigned has not conducted any extraordinary inspection or inquiry other than such inspections or inquiries as are prudent and customary in connection with the ordinary course of the Property Owner’s current business and operations.

As used in this Certificate, the term “Relevant Entity” of the Property Owner means any person presently directly or indirectly through one or more intermediaries controlling, controlled by or under common control with the Property Owner, and about whom information could be material to potential investors in their investment decision regarding the Bonds (including without limitation information relevant to the Property Owner’s proposed development of the Property (defined herein), or to the Property Owner’s ability to pay the Special Taxes due with respect to the Property prior to delinquency).

As used in this Certificate, the term “Property” means the real property currently owned by the Property Owner within Improvement Area 2 of the City of Stockton Community Facilities District No. 2018-2 (Westlake Villages II) (the “Community Facilities District”), as further described in the Preliminary Official Statement.

The undersigned certifies that he or she is familiar with the facts set forth in this Certificate, and further hereby certifies to the Actual Knowledge of the Undersigned as follows, as an authorized officer or representative of the Property Owner:
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(1) The Property Owner has been duly organized and validly exists in good standing under the laws of the State of California and has or will have prior to the Closing, as required, all requisite limited partnership right, power and authority:
(i) to execute and deliver this Certificate;
(ii) to own and develop the Property, as described in the Preliminary Official Statement;
(iii) to execute and deliver the Property Owner Continuing Disclosure Certificate at Closing;
(iv) to perform its obligations under the Property Owner Continuing Disclosure Certificate; and
(v) to carry on its business as described in the Preliminary Official Statement. (2) The Property Owner agrees to execute at Closing the Property Owner Continuing Disclosure Certificate substantially in the form attached as an appendix to the Preliminary Official Statement, with such additional changes as may be agreed upon by the Underwriter, Bond Counsel and the Property Owner.
(3) Except as disclosed in the Preliminary Official Statement, to the Actual Knowledge of the Undersigned, neither Property Owner is aware of any material failures by it or any entity under managerial control of such Property Owner to comply in all material respects with previous continuing disclosure undertakings in a written certificate or agreement executed by it or its Relevant Entities to provide periodic continuing disclosure reports or notices of material events respecting securities offerings in California within the past five years.
(4) To the Actual Knowledge of the Undersigned, execution and delivery of the Property Owner Continuing Disclosure Certificate, and the performance by the Property Owner of its obligations under the Property Owner Continuing Disclosure Certificate, will not conflict with or constitute a breach of or default under any loans, lines of credit, agreements, or other contractual or financial obligations of the Property Owner or any applicable law, regulation, judgment or decree.
(5) To the Actual Knowledge of the Undersigned, neither the Property Owner nor any of its Relevant Entities is currently in material default on any loans, lines of credit, credit agreements, or other material contractual or financial obligations, or in breach of any applicable law, regulation, judgment or decree, and no event has occurred and is continuing that would constitute such a default or breach, the result of which could reasonably be expected to materially and adversely affect the ability of the Property Owner:
(i) to own and develop the Property, as described in the Preliminary Official Statement;
(ii) to pay Special Taxes on the Property (to the extent the responsibility of the Property Owner) prior to delinquency;
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(iii) to carry on its business as described in the Preliminary Official Statement; and
(iv) to perform its obligations under the Property Owner Continuing Disclosure Certificate.
(6) Except as disclosed in the Preliminary Official Statement, to the Actual Knowledge of the Property Owner, the Property Owner has not assumed any obligations under any loans, lines of credit, credit agreements, or other material contractual or financial obligations, or any applicable judgment or decree, which could reasonably be expected to materially and adversely affect the ability of the Property Owner:
(i) to own and develop the Property, as described in the Preliminary Official Statement,
(ii) to pay Special Taxes on the Property (to the extent the responsibility of the Property Owner) prior to delinquency, or
(iii) to carry on its business as described in the Preliminary Official Statement.
(7) Except as described in the Preliminary Official Statement, the Property Owner has no loans outstanding and unpaid and no lines of credit that are secured by the Property.
(8) Except as disclosed in the Preliminary Official Statement, to the Actual Knowledge of the Undersigned, neither the Property Owner nor any of its Relevant Entities is currently in default in, or, in the last five years, has ever defaulted to any material extent in, the payment of special taxes or assessments in connection with the Community Facilities District or any other community facilities districts or assessment districts in California that was not cured prior to the institution of any enforcement action with a court of law. (9) Except as disclosed in the Preliminary Official Statement, to the Actual Knowledge of the Undersigned, there is no litigation, inquiry, investigation or administrative proceeding of any nature pending against the Property Owner (with service of process to the Property Owner having been accomplished), or to the Actual Knowledge of the Undersigned, overtly threatened in writing against the Property Owner, or to the Actual Knowledge of the Undersigned, pending or overtly threatened in writing against any Relevant Entity of the Property Owner, in each case which, if successful, could reasonably be expected to:
(i) materially and adversely affect the ability of the Property Owner to own, and develop the Property, as described in the Preliminary Official Statement; (ii) materially and adversely affect the ability of the Property Owner to pay Special Taxes on the Property (to the extent the responsibility of the Property Owner) prior to delinquency;
(iii) materially and adversely affect the ability of the Property Owner to carry on its business as described in the Preliminary Official Statement; 1389
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(iv) materially adversely affect the ability of the Property Owner to perform its obligations under the Property Owner Continuing Disclosure Certificate; (v) challenge, question the validity or enforceability of, or restrain or enjoin the performance of, the Special Taxes, the Bonds, the Resolution, the Fiscal Agent Agreement, the Property Owner Continuing Disclosure Certificate or the Bond Purchase Agreement; or
(vi) restrain or enjoin collection of Special Taxes or other sums to be pledged to pay the principal of and interest on the Bonds.
(10) Except as disclosed in the Preliminary Official Statement or in this Certificate:
(i) the Property Owner and, to the Actual Knowledge of the Undersigned, its Relevant Entities, are solvent;
(ii) to the Actual Knowledge of the Undersigned, there are no proceedings pending (with service of process to the Property Owner having been accomplished) or overtly threatened in writing in which the Property Owner or any of its Relevant Entities may be adjudicated as bankrupt, become the debtor in a bankruptcy proceeding, be discharged from any or all of its respective debts or obligations, be granted an extension of time to pay its respective debts or obligations, or be granted a reorganization or readjustment of its respective debts or obligations; and (iii) Neither the Property Owner nor, to the Actual Knowledge of the Undersigned, any of its Relevant Entities, has filed for bankruptcy or been declared bankrupt in the last 10 years.
(11) As of the date hereof, the information in the sections of the Preliminary Official Statement entitled “OWNERSHIP AND DEVELOPMENT OF PROPERTY WITHIN IMPROVEMENT AREA 2,” “CONTINUING DISCLOSURE – [Richmond American”][Meritage Homes”] and “SPECIAL RISK FACTORS” concerning the Property Owner and its Relevant Entities, the Property, the Property Owner’s development and financing plans, and the Property Owner’s contractual arrangements (but excluding any information cited as coming from a source other than the Property Owner) is true and correct in all material respects, and contains no untrue statement of a material fact and does not omit any material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading. (12) Except as disclosed in the Preliminary Official Statement, the Property Owner has not submitted an application for, nor received actual notice of, (i) the formation or authorization of any other assessment district or community facilities district that would include any portion of the Property, or (ii) the authorization or issuance of any debt secured by an assessment or another special tax to be levied on any portion of the Property, other than the Special Tax.
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(13) Except as set forth in the Preliminary Official Statement, to the Actual Knowledge of the Undersigned, there are no claims, disputes, lawsuits, actions or contingent liabilities of or against the Property Owner or its Relevant Entities, or among, by or between the Property Owner and any contractors working on the development of the Property, which could reasonably be expected to materially and adversely affect:
(i) the ability of the Property Owner to own and develop the Property, as described in the Preliminary Official Statement;
(ii) the ability of the Property Owner to pay Special Taxes on the Property (to the extent the responsibility of the Property Owner) prior to delinquency; (iii) the ability of the Property Owner to carry on its business as described in the Preliminary Official Statement; or
(iv) the ability of the Property Owner to perform its obligations under the Property Owner Continuing Disclosure Certificate.
(14) To the Actual Knowledge of the Undersigned, all information submitted by, or on behalf of, the Property Owner to (i) the Appraiser, as such information is set forth in the Appraisal, was, at the time of submission, and, except as modified by later information submitted by such Property Owner, is, as of the date of this Certificate, true and correct in all material respects, and (ii) the City, the Community Facilities District, Bond Counsel, Disclosure Counsel, or the Underwriter in connection with the issuance of the Bonds was, at the time of submission and, except as modified by later information submitted by such Property Owner, is as of the date of this Certificate, true and correct in all material respects. (15) The Property Owner covenants that, while the Bonds or any refunding obligations related thereto are outstanding, the Property Owner will not bring any action, suit, proceeding, inquiry or investigation at law or in equity, before any court, regulatory agency, public board or body, that in any way:
(i) seeks to challenge or overturn the formation of the Community Facilities District;
(ii) seeks to challenge the adoption of the ordinance levying Special Taxes within Improvement Area 2 of the Community Facilities District; (iii) seeks to invalidate the Community Facilities District or any of the Bonds or any refunding obligations; or
(iv) seeks to invalidate the special tax liens imposed under Section 3115.5 of the Streets and Highways Code based on recordation of the notices of special tax lien relating thereto.

The foregoing covenant shall not prevent the Property Owner in any way from bringing any other action, suit, proceeding, inquiry or investigation at law or in equity relating to the following:
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(a) a claim that the Special Tax has not been levied in accordance with the Rate and Method;
(b) the application or use of the Special Taxes levied and collected; or (c) the enforcement of the obligations of the City or the Community Facilities District under the Fiscal Agent Agreement or any agreements between the Property Owner and the City or the Community Facilities District or under which the Property Owner is a beneficiary.
(16) The Property Owner has received a copy of the Rate and Method containing the prepayment formula. The Property Owner acknowledges that any prepayment of the Special Taxes may only be made in accordance with the Rate and Method. (17) The Property Owner shall comply with the provision of the Mello-Roos Community Facilities Act of 1982, as amended, relating to the Notice of Special Tax described in California Government Code Section 53341.5 in connection with the sale of the Property.
(18) Based upon its current development plans, including, without limitation, its current budget and subject to economic conditions and risks generally inherent in the development of real property, the Property Owner anticipates that it will have sufficient funds to (i) carry on its business as described in the Preliminary Official Statement, (ii) own and develop the Property as described in the Preliminary Official Statement, and (iii) pay Special Taxes on the Property (to the extent the responsibility of the Property Owner) prior to delinquency.
(19) The Property Owner consents to the issuance of the Bonds. The Property Owner acknowledges and agrees that the proceeds of such Bonds will be used for the acquisition and construction of the improvements described in the Preliminary Official Statement. The Property Owner acknowledges that the costs to acquire and construct such improvements are estimates, and that any increase in costs in excess of the estimated costs relating to improvements will reduce the improvements which may be financed by the City, and neither the City, nor the Community Facilities District has any obligation to provide moneys to pay for any such costs.
(20) As a condition to the issuance of the Bonds, the Property Owner agrees to deliver a bring-down certificate, dated the Closing Date, in substantially the form attached as Appendix H to the Bond Purchase Agreement, to affirm and restate the Property Owner’s certifications, representations and covenants made in this Certificate. If any event related to or affecting the Property Owner, its Relevant Entities or the ownership, development or sale of the Property occurs, as a result of which it is necessary to modify the bring-down certificate, the Property Owner agrees to deliver a new bring-down certificate revised to reflect such event.
(21) The Property Owner acknowledges and agrees that:
(i) in connection with the purchase and sale of the Bonds under the Bond Purchase Agreement, and with the discussions, undertakings and procedures leading 1392
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up to the consummation of the purchase and sale of the Bonds under the Bond Purchase Agreement, the Underwriter is and has been acting solely as principal and is not acting as the agent or fiduciary of the Property Owner; (ii) the Underwriter has not assumed a fiduciary responsibility in favor of the Property Owner with respect to (a) the offering of the Bonds contemplated hereby or the process leading thereto (whether or not the Underwriter, or any affiliate of the Underwriter, has advised or is currently advising the Property Owner on other matters), or (b) any other obligation to the Property Owner with respect to the offering contemplated by the Bond Purchase Agreement; and (iii) the Property Owner has consulted its own legal, financial and other advisors to the extent it has deemed appropriate in connection with the offering contemplated by the Bond Purchase Agreement.
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On behalf of the Property Owner, I have reviewed the contents of this Certificate and the Property Owner has consulted with counsel regarding the meaning of its contents. The Property Owner acknowledges and understands that a variety of state and federal laws, including but not limited to the Securities Act of 1933, as amended, and Rule 10b-5 promulgated under the Securities Exchange Act of 1934, as amended, may apply to the Property Owner, and that under some circumstances certification as to the matters set forth in this Certificate, without additional disclosures or other action, may not fully discharge all duties and obligations of the Property Owner under such laws.
[EIGHT MILE DEVELOPMENT, INC.] [RICHMOND
AMERICAN HOMES OF MARYLAND, INC.]
[MERITAGE HOMES OF CALIFORNIA, INC.]
By:___________________________________________
Authorized Officer
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APPENDIX H
$________
IMPROVEMENT AREA 2 OF THE CITY OF STOCKTON
COMMUNITY FACILITIES DISTRICT NO. 2018-2
(WESTLAKE VILLAGES II)
SPECIAL TAX BONDS, SERIES 2022

BRING-DOWN CERTIFICATE OF PROPERTY OWNER
[Closing Date]
The undersigned party certifies and represents that he or she is duly authorized on behalf of [Eight Mile Development, Inc.] [Richmond American Homes of Maryland, Inc.] [Meritage Homes of California, Inc.] (the “Property Owner”), to execute and deliver this certificate (this “Certificate”) in connection with the issuance, sale and delivery of the Bonds captioned above (the “Bonds”) This Bring-Down Certificate is delivered pursuant to the Bond Purchase Agreement with respect to the Bonds dated [BPA Date], between Oppenheimer & Co. Inc., as underwriter, and the City (the “Purchase Agreement”).

In connection with the distribution of the Preliminary Official Statement relating to the Bonds, the Property Owner executed a Certificate of Property Owner dated [POS Date] (the “Certificate”).

Capitalized terms used but not defined in this Bring-Down Certificate have the same meanings as set forth in the Purchase Agreement and the Certificate.

The undersigned, on behalf of the Property Owner, further certifies as follows:
(1) The undersigned is familiar with the facts certified in the Certificate and this BringDown Certificate and is authorized and qualified to certify the same as an authorized officer or representative of the Property Owner.
(2) The undersigned has received the final Official Statement relating to the Bonds dated [OS Date] (the “Final Official Statement”).
(3) Each statement made in the Certificate is affirmed and restated as if made on the date hereof; provided that each statement made in the Certificate referring to the Preliminary Official Statement is affirmed as it relates to the Final Official Statement. (4) During the period between the date of this Certificate and the Closing Date, if the Property Owner has actual knowledge of any event relating to or affecting the Property Owner, its Relevant Entities, or the ownership, development or sale of the Property which could cause the information under the captions of the Official Statement indicated in Paragraph 11 of the Certificate (and subject to the limitations and exclusions contained in Paragraph 11 of the Certificate) to contain an untrue statement of a material fact or to omit to state a material fact necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading, the Property Owner shall notify the City and the Underwriter and if, in the opinion of counsel to the City 1395
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or the Underwriter, such event requires the preparation and publication of a supplement or amendment to the Official Statement, the Property Owner shall reasonably cooperate with the City in the preparation of an amendment or supplement to the Official Statement in form and substance satisfactory to counsel to the City and to the Underwriter. (5) To the Actual Knowledge of the Undersigned (as defined in the Certificate), no event has occurred since the date of the Preliminary Official Statement that has, in any material way, adversely affected the statements and information described in Paragraph 11 of the Certificate (and subject to the limitations and exclusions contained in Paragraph 11 of the Certificate) relating to the Property Owner and its Relevant Entities, the Property, the Property Owner’s development and financing plans, and the Property Owner’s contractual arrangements (but excluding any information cited as coming from a source other than the Property Owner), which should be disclosed in the Final Official Statement for the purposes for which it is to be used in order to make such statements and information contained in the Final Official Statement not misleading in any material respect. (6) For a period of 90 days after the Closing Date, if the Property Owner has actual knowledge of any event relating to or affecting the Property Owner, its Relevant Entities, or the ownership development or sale of the Property which could cause the information under the captions of the Final Official Statement indicated in Paragraph 11 of the Certificate (and subject to the limitations and exclusions contained in Paragraph 11 of the Certificate) to contain an untrue statement of a material fact or to omit to state a material fact necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading, the Property Owner shall notify the City and the Underwriter and if, in the opinion of counsel to the City or the Underwriter, such event requires the preparation and publication of a supplement or amendment to the Final Official Statement, the Property Owner shall reasonably cooperate with the City in the preparation of an amendment or supplement to the Final Official Statement in form and substance satisfactory to counsel to the City and to the Underwriter. (7) The Property Owner has duly executed and delivered the Property Owner Continuing Disclosure Certificate, and the Property Owner Continuing Disclosure Certificate constitutes the legal, valid and binding obligation of the Property Owner, enforceable against the Property Owner in accordance with its terms, except as such enforcement is limited by bankruptcy, insolvency, reorganization, arrangement, moratorium, fraudulent conveyance, and other similar laws relating to or affecting the rights of creditors and certain equitable, legal, or statutory principles affecting the enforcement of contractual rights generally, regardless of whether such enforcement is considered in a proceeding in equity or at law.
[EIGHT MILE DEVELOPMENT, INC.] [RICHMOND
AMERICAN HOMES OF MARYLAND, INC.]
[MERITAGE HOMES OF CALIFORNIA, INC.]
By:___________________________________________
Authorized Officer
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APPENDIX I
IMPROVEMENT AREA 2 OF THE CITY OF STOCKTON
COMMUNITY FACILITIES DISTRICT NO. 2018-2
(WESTLAKE VILLAGES II)
SPECIAL TAX BONDS, SERIES 2022
FORM OF PROPERTY OWNER’S COUNSEL OPINION
One or more letters of counsel to Eight Mile Development, Inc., a California corporation, (the "Property Owner"), which may be in-house counsel or an outside law firm engaged by the Property Owner in connection with the issuance of the Bonds, or both, collectively to the effect that:

No information came to the attention of the lawyers in such counsel’s firm or office rendering legal services in connection with its representation of the Property Owner that caused such counsel to believe that, as of the date of the Official Statement and as of the date of such letter, the information in the sections of the Preliminary Official Statement entitled “OWNERSHIP AND DEVELOPMENT OF PROPERTY WITHIN IMPROVEMENT AREA 2,” and “SPECIAL RISK FACTORS” concerning the Property Owner and its Relevant Entities, the Property, the Property Owner ’s development and financing plans, and the Property Owner’s contractual arrangements (but excluding any information cited as coming from a source other than the Property Owner ) (except that no belief is expressed as to (a) any financial statements and other financial, statistical, economic, or engineering data or forecasts, estimates, projections, assumptions, or expressions of opinion, or (b) any information about valuation, appraisals, market absorption, archaeological, or environmental matters), contained or contain any untrue statement of a material fact or omitted or omit to state a material fact necessary to make the statements therein, in light of the circumstances under which they were made, not misleading.
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APPENDIX J
IMPROVEMENT AREA 2 OF THE CITY OF STOCKTON
COMMUNITY FACILITIES DISTRICT NO. 2018-2
(WESTLAKE VILLAGES II)
SPECIAL TAX BONDS, SERIES 2022

CERTIFICATE OF APPRAISER
Integra Realty Resources - Sacramento (the “Appraiser”), Rocklin, California prepared an appraisal of the properties within Improvement Area 2 of the City of Stockton Community Facilities District No. 2018-2 (Westlake Villages II) (the “Community Facilities District”) with an effective date of ______, 2022 (the “Appraisal”). The Appraisal is described and summarized in the Preliminary Official Statement dated [POS Date] (the “Preliminary Official Statement”) and the Official Statement dated [OS Date] (the “Official Statement”), including as Appendix B thereto, relating to the bonds captioned above.

The Appraiser hereby certifies that, to the best of his knowledge and belief, all information with respect to the Appraisal in the Preliminary Official Statement and in the Official Statement was true and correct as of the date of the Appraisal and that the Appraiser is aware that acts and events may have occurred since the date of the Appraisal which could result in both positive and negative effects on market value; however, an updated Appraisal has not been completed as of this date.

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

Dated: [Closing Date]

INTEGRA REALTY RESOURCES -

SACRAMENTO
By:
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APPENDIX K
$________
IMPROVEMENT AREA 2 OF THE CITY OF STOCKTON
COMMUNITY FACILITIES DISTRICT NO. 2018-2
(WESTLAKE VILLAGES II)
SPECIAL TAX BONDS, SERIES 2022

FORM OF ISSUE PRICE CERTIFICATE
The undersigned, on behalf of Oppenheimer & Co. Inc. (the “Underwriter”) hereby certifies as set forth below with respect to the sale and issuance of the above-captioned obligations (together the “Bonds”).

1. Sale of the Bonds. As of the date of this certificate, for each Maturity of the Bonds, the first price at which at least 10% of such Maturity of the Bonds was sold to the Public is the respective price listed in Schedule A.

2. Defined Terms.
(a) Issuer means City of Stockton.
(b) Maturity means Bonds with the same credit and payment terms. Bonds with different maturity dates, or Bonds with the same maturity date but different stated interest rates, are treated as separate Maturities.
(c) Public means any person (including an individual, trust, estate, partnership, association, company, or corporation) other than an Underwriter or a related party to an Underwriter.

The term “related party” for purposes of this certificate generally means any two or more persons who have greater than 50 percent common ownership, directly or indirectly. (d) Underwriter means (i) any person that agrees pursuant to a written contract with the Issuer (or with the lead underwriter to form an underwriting syndicate) to participate in the initial sale of the Bonds to the Public, and (ii) any person that agrees pursuant to a written contract directly or indirectly with a person described in clause (i) of this paragraph to participate in the initial sale of the Bonds to the Public (including a member of a selling group or a party to a retail distribution agreement participating in the initial sale of the Bonds to the Public).

The representations set forth in this certificate are limited to factual matters only. Nothing in this certificate represents Oppenheimer’s interpretation of any laws, including specifically Sections 103 and 148 of the Internal Revenue Code of 1986, as amended, and the Treasury Regulations thereunder. The undersigned understands that the foregoing information will be relied upon by the Issuer with respect to certain of the representations set forth in the Tax Certificate and with respect to compliance with the federal income tax rules affecting the Bonds, and by Jones Hall, A Professional Law Corporation, in connection with rendering its opinion that the interest on the Bonds is excluded from gross income for federal income tax purposes, the preparation of the Internal Revenue Service 1399
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Form 8038-G, and other federal income tax advice that it may give to the Issuer from time to time relating to the Bonds.

OPPENHEIMER & CO. INC.

By:_______________________________________
Name:_____________________________________
Dated: [Closing Date]
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SCHEDULE

SCHEDULE A

SALE PRICES
(Attached)

1401
Jones Hall Draft of May 24, 2022
PRELIMINARY OFFICIAL STATEMENT DATED ________________, 2022 NEW ISSUE–FULL BOOK-ENTRY NOT RATED
In the opinion of Jones Hall, A Professional Law Corporation, San Francisco, California, Bond Counsel, subject, however to certain qualifications described herein, under existing law, the interest on the Bonds is excluded from gross income for federal income tax purposes and such interest is not an item of tax preference for purposes of the federal alternative minimum tax. In the further opinion of Bond Counsel, such interest is exempt from California personal income taxes. See “TAX MATTERS. $____________*
IMPROVEMENT AREA 2 OF THE CITY OF STOCKTON
COMMUNITY FACILITIES DISTRICT NO. 2018-2
(WESTLAKE VILLAGES II)
SPECIAL TAX BONDS, SERIES 2022
Dated: Date of Delivery Due: September 1, as shown on inside cover The City of Stockton (the “City”) is issuing the above-captioned bonds (the “Bonds”) for Improvement Area 2 of the City of Stockton Community Facilities District No. 2018-2 (Westlake Villages II) (“Improvement Area 2”) under the Mello-Roos Community Facilities Act of 1982 (the “Act”), the Resolution of Issuance (as defined herein), and a Fiscal Agent Agreement, dated as of July 1, 2022 (the “Fiscal Agent Agreement”), by and between the City and U.S. Bank Trust Company, National Association, as fiscal agent (the “Fiscal Agent”). See “THE BONDS – Authority for Issuance.” The Bonds are being issued to (i) construct and/or acquire certain public facilities authorized for the District (defined herein), (ii) pay capitalized interest on a portion of the Bonds through September 1, 2023, (iii) establish a debt service reserve fund for the Bonds, and (iv) pay initial administration costs and the costs of issuing the Bonds. See “SOURCES AND USES OF FUNDS.” The Bonds are payable from the Net Taxes (as defined herein) received by the City from special taxes levied on property within Improvement Area 2 according to the rate and method of apportionment of special tax for Improvement Area 2. The Bonds are secured by a first pledge of the Net Taxes levied and collected in Improvement Area 2 and the moneys on deposit in certain funds held by the Fiscal Agent under the Fiscal Agent Agreement.

See “SECURITY FOR THE BONDS.”
Improvement Area 2 constitutes a portion of a large, ongoing development in the City known as the Westlake Villages Development. Land within CFD 2018-2 (Westlake Village II) (the “District”) consists of 580 acres planned for 2,163 homes ranging in size from 1,400 to 3,500 square feet, and when fully developed is anticipated to include a master-planned portion dedicated to 55+ living, multiple neighborhood parks, a school site, and a series of artificial lakes to aid in flood control. Taxable land in Improvement Area 2, which is the only portion of the District that constitutes security for the Bonds, is developing into 292 single-family residential units in three villages (Villages L, M, and N). The Master Developer, which is owned by members of the Spanos family, has obtained final maps for all 292 residential lots, and sold the lots, in finished condition, to two merchant builders: Richmond American Homes (208 lots) and Meritage Homes (84 lots). All of the required backbone and in-tract improvements are in place, including paved access and public utilities to the lots. As of April 15, 2022, 56 homes were under construction. See “OWNERSHIP AND DEVELOPMENT OF PROPERTY WITHIN IMPROVEMENT AREA 2.”
Interest on the Bonds is payable semiannually on each March 1 and September 1, commencing March 1, 2023. The Bonds will be issued in denominations of $5,000 or integral multiples of $5,000. The Bonds, when delivered, will be initially registered in the name of Cede & Co., as nominee of The Depository Trust Company (“DTC”). DTC will act as securities depository for the Bonds. See “THE BONDS – Description of the Bonds” and “APPENDIX G – DTC and the Book-Entry Only System.”
The Bonds are subject to optional redemption, mandatory sinking fund redemption and special mandatory redemption from prepaid special taxes.

See “THE BONDS – Redemption.”
The Bonds, the interest thereon, and any premiums payable on the redemption of any Bonds, are not an indebtedness of the City (except to the limited extent described in this Official Statement), the State of California (the “State”) or any of their respective political subdivisions. None of the City (except to the limited extent described in this Official Statement), the State or any of its political subdivisions is liable for the Bonds. Neither the faith and credit nor the taxing power of the City (except to the limited extent described in this Official Statement) or the State or any of their respective political subdivisions is pledged to the payment of the Bonds. Other than the Net Taxes, no taxes are pledged to the payment of the Bonds. The Bonds do not constitute a general obligation of the City, but are limited obligations of the City payable solely from the Net Taxes as more fully described in this Official Statement.

MATURITY SCHEDULE
(see inside cover)
This cover page contains certain information for quick reference only. It is not a summary of essential information about the Bonds.

Potential investors should read this entire Official Statement to obtain information essential for making an informed investment decision.

Investment in the Bonds involves risks that may not be appropriate for some investors. See “SPECIAL RISK FACTORS” for a discussion of special risk factors that should be considered in evaluating the investment quality of the Bonds.

The Bonds are offered when, as and if issued by the City and accepted by the Underwriter, subject to approval as to their legality by Jones Hall, A Professional Law Corporation, San Francisco, California, Bond Counsel, and subject to certain other conditions. Jones Hall, A Professional Law Corporation, is also serving as Disclosure Counsel to the City. Certain matters will be passed upon for the City by the City Attorney, and for the Underwriter by Kutak Rock LLP, San Francisco, California. It is anticipated that the Bonds, in book-entry form, will be available for delivery through the facilities of DTC on or about September __, 2022.
[Oppenheimer Logo]
The date of this Official Statement is: ________________, 2022. ________________
*Preliminary; subject to change.

This Preliminary Official Statement and the information contained herein are subject to completion or amendment. Under no circumstances 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 prior to registration or qualification under the securities laws of such jurisdiction.

EXHIBIT 3
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MATURITY SCHEDULE
$ _______________ Serial Bonds
(Base CUSIP†: __________)
Maturity Principal Interest
(September 1) Amount Rate Yield Price CUSIP†
$ ___ __% Term Bond due September 1, 20___, Yield: __%, Price: __%, CUSIP† No. _______ $ ___ __% Term Bond due September 1, 20___, Yield: __%, Price: __%, CUSIP† No. _______ † CUSIP Copyright 2022, American Bankers Association. CUSIP data herein are provided by CUSIP Global Services, managed by Standard & Poor’s Capital IQ, and are provided for convenience of reference only. Neither the City nor the Underwriter assumes any responsibility for the accuracy of these CUSIP data. Neither the City nor the Underwriter takes any responsibility for the accuracy of the CUSIP data.

EXHIBIT 3
1403

CITY OF STOCKTON, CALIFORNIA
City Council
Kevin J. Lincoln II, Mayor
Christina Fugazi, Vice Mayor and Councilmember, District 5 Sol Jobrack, Councilmember, District 1
Dan Wright, Vice Mayor and Councilmember, District 2
Paul Canepa, Councilmember, District 3
Susan Lenz, Councilmember, District 4
Kimberly Warmsley, Councilmember, District 6
City Staff
Harry E. Black, City Manager
Kimberly Trammel, Chief Financial Officer
Kevin Beltz, Program Manager III Debt and Treasury
Eliza Garza, City Clerk
Lori M. Asuncion, Acting City Attorney
____________________________

SPECIAL SERVICES
Independent Registered
Municipal Advisor to the City
Del Rio Advisors, LLC
Modesto, California
Municipal Advisor to the City
With Respect to the Bonds
KNN Public Finance
Berkeley, California
Bond Counsel and Disclosure Counsel
Jones Hall, A Professional Law Corporation
San Francisco, California
Special Tax Consultant
DTA
San José, California
Appraiser
Integra Realty Resources – Sacramento
Sacramento, California
Absorption Consultant
The Gregory Group
Folsom, California
Fiscal Agent
U.S. Bank Trust Company, National Association
San Francisco, California
EXHIBIT 3
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i

TABLE OF CONTENTS
Page Page
INTRODUCTION ...............................................1 SOURCES AND USES OF FUNDS ..................6
THE BONDS......................................................7 Authority for Issuance ....................................7 Description of the Bonds................................7 Redemption*..................................................8 Transfer or Exchange of Bonds ...................10
SECURITY FOR THE BONDS........................11
Pledge of Special Taxes ..............................11 Special Taxes ..............................................11 Special Tax Methodology.............................12
Annual Special Tax; Maximum Special
Tax...........................................................15 Levy and Collection of Special Taxes ..........16
Special Tax Fund.........................................16 Reserve Fund ..............................................17 Delinquent Payments; Teeter Plan;
Covenant for Superior Court
Foreclosure..............................................19 Additional Bonds for Refunding
Purposes Only .........................................22 DEBT SERVICE SCHEDULE..........................23
THE DISTRICT AND IMPROVEMENT AREA 225
Formation of the District and
Improvement Area 2 ................................25
Location and Description of the District
and the Immediate Area ..........................25
Environmental Matters .................................29 The Improvements .......................................29 Market Absorption Report ............................29

OWNERSHIP AND DEVELOPMENT OF

PROPERTY WITHIN IMPROVEMENT AREA

2...................................................................30 Current Ownership.......................................31 Development Plan and Current Status ........31
Development Agreement and
Subdivision Agreement............................33
The Master Developer .................................34 Master Developer’s Financing Plan .............34
Richmond American Homes ........................36
Meritage Homes...........................................37

VALUE OF PROPERTY WITHIN
IMPROVEMENT AREA 2 AND SPECIAL TAX
BURDEN ......................................................39 The Appraisal ...............................................39 Value to Special Tax Burden Ratios ............41
Overlapping Liens and Priority of Lien .........44
Sample Tax Bill ............................................46 Special Tax Collection and Delinquency
Rate..........................................................45 SPECIAL RISK FACTORS ..............................49
Limited Obligation of the City to Pay
Debt Service.............................................49 Levy and Collection of the Special Tax ........49
Concentration of Ownership.........................50
Appraised Values .........................................50 Property Values and Property
Development............................................51 Other Possible Claims Upon the Value
of Taxable Property..................................54 Bankruptcy and Foreclosure Delays ............54
FDIC/Federal Government Interests in
Properties.................................................55 No Acceleration Provisions ..........................56 Loss of Tax Exemption.................................56 IRS Audit of Tax-Exempt Bond Issues.........56
Voter Initiatives.............................................57 Case Law Related to the Mello-Roos
Act............................................................58 COVID-19.....................................................58 TAX MATTERS................................................59 LEGAL MATTERS ...........................................60 Legal Opinion ...............................................60 No Litigation .................................................60 CONTINUING DISCLOSURE..........................61
The City........................................................61 Richmond American Homes.........................61
Meritage Homes...........................................61 NO RATINGS...................................................62 UNDERWRITING.............................................62 MUNICIPAL ADVISORS..................................62
EXECUTION ....................................................63 APPENDIX A – Rate and Method of Apportionment of Special Tax APPENDIX B – The Appraisal
APPENDIX C – The Absorption Report
APPENDIX D – San Joaquin County and City of Stockton Demographic Information APPENDIX E – Form of Opinion of Bond Counsel
APPENDIX F – Forms of Continuing Disclosure Undertakings APPENDIX G – DTC and the Book-Entry Only System
APPENDIX H – Summary of Certain Provisions of the Fiscal Agent Agreement EXHIBIT 3
1405

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 in part, for any other purpose. This Official Statement is not to be construed as a contract with the purchasers of the Bonds. Statements contained in this Official Statement which involve estimates, forecasts or matters of opinion, whether or not expressly so described herein, are intended solely as such and are not to be construed as a representation of facts.

Estimates and Forecasts. When used in this Official Statement and in any continuing disclosure by the City, in any press release and in any oral statement made with the approval of an authorized officer of the City, the words or phrases “will likely result,” “are expected to,” “will continue,” “is anticipated,” “estimate,” “project,” “forecast,” “expect,” “intend” and similar expressions may identify “forward looking statements.” 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 to 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 City since the date hereof.

Limit of Offering. No dealer, broker, salesperson or other person has been authorized by the City 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.

Involvement of Underwriter. The Underwriter has reviewed the information in this Official Statement in accordance with, and as a part of, its responsibilities to investors under the federal securities laws as applied to the facts and circumstances of this transaction, but the Underwriter does not guarantee the accuracy or completeness of such information. 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 any implication that there has been no change in the affairs of the City, the District or Improvement Area 2 since the date hereof. All summaries of the Fiscal Agent Agreement 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.

IN CONNECTION WITH THIS OFFERING, THE UNDERWRITER MAY OVERALLOT OR EFFECT

TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE BONDS OFFERED HEREBY AT A LEVEL ABOVE THAT WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN MARKET.

SUCH STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME. THE UNDERWRITER

MAY OFFER AND SELL THE BONDS TO CERTAIN DEALERS, INSTITUTIONAL INVESTORS AND

OTHERS AT PRICES LOWER THAN THE PUBLIC OFFERING PRICE STATED ON THE COVER PAGE

HEREOF AND SAID PUBLIC OFFERING PRICE MAY BE CHANGED FROM TIME TO TIME BY THE UNDERWRITER.

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.

The City maintains an Internet website, but the information on that website is not incorporated in this Official Statement.

EXHIBIT 3
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1 _________________________

OFFICIAL STATEMENT
_________________________
$____________*
IMPROVEMENT AREA 2 OF THE CITY OF STOCKTON
COMMUNITY FACILITIES DISTRICT NO. 2018-2
(WESTLAKE VILLAGES II)
SPECIAL TAX BONDS, SERIES 2022
This Official Statement, including the cover page, inside cover and attached appendices, is provided to furnish information regarding the bonds captioned above (the “Bonds”) to be issued by the City of Stockton (the “City”) on behalf of Improvement Area 2 (“Improvement Area 2”) of the City of Stockton Community Facilities District No. 2018-2 (Westlake Villages II) (the “District”).

Any statements made in this Official Statement involving matters of opinion or of estimates, whether or not so expressly stated, are set forth as such and not as representations of fact, and no representation is made that any of the estimates will be realized. Definitions of certain terms used herein and not defined herein have the meaning set forth in the Fiscal Agent Agreement. See “APPENDIX H – Summary of Certain Provisions of the Fiscal Agent Agreement.”

INTRODUCTION
This introduction is not a summary of the entire Official Statement. It is only a brief description of and guide to, and is qualified by, more complete and detailed information contained throughout the Official Statement, including the cover page, inside cover and attached appendices, and documents summarized or described in this Official Statement. A full review should be made of the entire Official Statement. The offering of the Bonds to potential investors is made only by means of the entire Official Statement.

Authority for Issuance. The Bonds are issued pursuant to the provisions of the MelloRoos Community Facilities Act of 1982, as amended (Sections 53311, et seq., of the Government Code of the State of California) (the “Act”) and pursuant to a Fiscal Agent Agreement dated as of July 1, 2022 (the “Fiscal Agent Agreement”) between the City and U.S.

Bank Trust Company, National Association, as fiscal agent (the “Fiscal Agent”), and a resolution (the “Resolution of Issuance”) adopted on [June 14], 2022 by the City Council of the City (the “City Council”), as legislative body of the District. See “THE BONDS – Authority for Issuance.”
The City and the County. The City boundaries encompass approximately 64.8 square miles in the center of San Joaquin County (the “County”) in California’s San Joaquin Valley, 78 miles east of the San Francisco Bay area, 345 miles north of San Francisco and 45 miles south of Sacramento. The City is a municipal corporation and a charter city, duly organized and existing under the constitution and laws of the State. For economic and demographic * Preliminary; subject to change.

EXHIBIT 3
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2 information regarding the City and the County, see “APPENDIX D – San Joaquin County and City of Stockton Demographic Information.”
Description of the Bonds. The Bonds will be issued in denominations of $5,000 or any integral multiple of $5,000. Interest is payable semiannually on each March 1 and September 1, commencing March 1, 2023. The Bonds will be initially issued only in book-entry form and registered to Cede & Co. as nominee of The Depository Trust Company (“DTC”), which will act as securities depository of the Bonds. Principal and interest (and premium, if any) on the Bonds is payable by the Fiscal Agent to DTC, which remits such payments to its Participants for subsequent distribution to the registered owners as shown on the Fiscal Agent’s books. See “THE BONDS.”
Use of Proceeds. Proceeds of the Bonds will primarily be used to finance a portion of the costs of acquiring and constructing certain public infrastructure improvements authorized to be financed by the District (the “Improvements,” as described herein). The Improvements consist generally of roadway, water, drainage, wastewater, and other infrastructure improvements necessary for completion of development of property within Improvement Area 1 of the City of Stockton Community Facilities District No. 2018-2 (Westlake Villages II) (“Improvement Area 1”) and Improvement Area 2. The cost of a portion of the Improvements will be reimbursed by the proceeds of the Bonds and may also be reimbursed using pay-as-you go financing from the Special Tax. See “THE IMPROVEMENTS.” Proceeds of the Bonds will also be used to establish a reserve fund (described below) available for payment on the Bonds, to pay capitalized interest on a portion of the Bonds through September 1, 2023, and to provide initial administration costs and to pay the costs of the issuance of the Bonds.

The District and the Improvement Areas. The District, together with Improvement Area 1 and Improvement Area 2 therein, were formed in June 2018 with a maximum bond authorization of $75,000,000, allocated $15,000,000 to Improvement Area 1 and $60,000,000 to Improvement Area 2. In January 2022, certain parcels that were formerly within Improvement Area 2 were moved into newly established Improvement Area 3 of the City of Stockton Community Facilities District No. 2018-2 (Westlake Villages II) (“Improvement Area 3”) and Improvement Area 4 of the City of Stockton Community Facilities District No. 2018-2 (Westlake Villages II) (“Improvement Area 4”). Improvement Area 1, Improvement Area 2, Improvement Area 3, and Improvement Area 4 are collectively referred to as the “Improvement Areas.” The Bonds will be the first and only “new money” series to be issued for Improvement Area 2; the Bonds are only payable from net Special Taxes levied in Improvement Area 2, as described herein.

Land within the District (consisting of the four Improvement Areas) is known as the “Westlake Villages Development,” and is planned to develop into 2,163 homes ranging in size from 1,400 to 3,500 square feet. When fully developed, it is planned to include a masterplanned portion dedicated to 55+ living, multiple neighborhood parks, a school site and a series of man-made lakes to aid in flood control. It is bounded on the west by Bishop Cut, on the north by Eight Mile Road, on the east by Regatta Lane and on the south by Disappointment Slough.

Land in the District is part of a larger development being undertaken in the area. See “THE DISTRICT AND IMPROVEMENT AREA 2” for additional information.

Ownership and Development of Property. Stockton Westlake Investment, LLC, a California limited liability company (“Stockton Westlake Investment, LLC”), previously owned all the land in Improvement Area 2. Eight Mile Development, Inc., a California corporation (the “Master Developer”), which is affiliated with Stockton Westlake Investment, LLC, has EXHIBIT 3
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3 constructed and is continuing to construct the backbone infrastructure necessary for all 292 lots within Improvement Area 2.

The Master Developer has obtained final maps for all 292 residential lots, and sold the lots, in finished condition, to two merchant builders (together, the “Merchant Builders”): 208 lots to Richmond American Homes of Maryland, Inc. (“Richmond American Homes”) and 84 lots to Meritage Homes California, Inc. (“Meritage Homes”). All of the required backbone and in-tract improvements are in place, including paved access and public utilities to the lots. As of April 15, 2022, 56 homes were under construction. See “OWNERSHIP AND DEVELOPMENT OF PROPERTY WITHIN IMPROVEMENT AREA 2.”
As of April 15, 2022, ownership of land in Improvement Area 2 and the appraised value of such land was as follows:

Owner Appraised Value
Richmond American Homes (208 lots*) $40,652,544
Meritage Homes (84 lots*) 17,358,912
Total $58,011,456
_____________
* For each Merchant Builder, ownership includes improved lots and homes under construction.

Source: The Appraisal.

See “OWNERSHIP AND DEVELOPMENT OF PROPERTY WITHIN IMPROVEMENT AREA 2” for additional details on the Master Developer, the Merchant Builders, and the ongoing development in Improvement Area 2.

Security and Sources of Payment for the Bonds. The City Council annually levies special taxes on the property in Improvement Area 2 (the “Special Taxes”) in accordance with the Rate and Method of Apportionment for Improvement Area 2 of City of Stockton Community Facilities District No. 2018-2 (Westlake Villages II) (the “Special Tax Formula”), which is attached as APPENDIX A to this Official Statement. The Bonds are secured by and payable from a first pledge of the “Net Taxes,” which are comprised of Gross Taxes less Administrative Expenses. “Gross Taxes” is defined in the Fiscal Agent Agreement as the proceeds of the Special Taxes received by the City, including any scheduled payments and any prepayments thereof and interest thereon, and proceeds of the redemption or sale of property sold as a result of foreclosure of the lien of the Special Taxes to the amount of said lien and interest thereon. “Gross Taxes” does not include any penalties collected in connection with delinquent Special Taxes or any interest in excess of the interest due on the Bonds. The Bonds are also secured by certain funds and accounts established and held under the Fiscal Agent Agreement. In particular, a debt service reserve fund (the “Reserve Fund”), and within the Reserve Fund, the “2022 Reserve Account,” established in connection with the issuance of the Bonds in an amount equal to the Reserve Requirement (as defined herein) for the Bonds as of their date of delivery. See “SECURITY FOR THE BONDS.”
Pursuant to the Act, the Resolution of Issuance, and the Fiscal Agent Agreement, so long as any Bonds are outstanding, the City will annually levy the Special Tax against all land within Improvement Area 2 taxable under the Act in accordance with the Special Tax Formula and to make provision for the collection of the Special Tax in amounts which will be sufficient to pay interest on, principal of and redemption premium (if any) on the Bonds as such becomes due and payable and to replenish the Reserve Fund as necessary. See “SECURITY FOR THE BONDS – Special Tax Methodology” and “APPENDIX A – Rate and Method of Apportionment of Special Tax.”
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4 Unpaid Special Taxes do not constitute a personal indebtedness of the owners of any of the parcels within Improvement Area 2. In the event of delinquency, proceedings may be conducted only against the real property on which the Special Tax is delinquent.

The unpaid Special Taxes are not required to be paid upon sale of property within Improvement Area 2.

Covenant to Foreclose. The City has covenanted in the Fiscal Agent Agreement to cause foreclosure proceedings to be commenced and prosecuted against certain parcels with delinquent installments of the Special Taxes. For a more detailed description of the foreclosure covenant, see “SECURITY FOR THE BONDS – Delinquent Payments; Teeter Plan; Covenant for Superior Court Foreclosure.”
Additional Bonds for Refunding Purposes Only. The Fiscal Agent Agreement provides that additional bonds secured by the Net Taxes may be issued by the City only for the purpose of refunding then-Outstanding Bonds. See “SECURITY FOR THE BONDS – Additional Bonds for Refunding Purposes Only.”
Value Estimate of Property in Improvement Area 2. Taxable real property within Improvement Area 2 is security for the Special Tax securing the Bonds and is comprised of both developed and undeveloped property. To obtain an estimate of the value of taxable property in Improvement Area 2, the City ordered an appraisal (the “Appraisal”), prepared by Integra Realty Resources, Sacramento, California (the “Appraiser”), with an April 15, 2022 date of value. The Appraisal is described herein under the caption “VALUE OF PROPERTY WITHIN IMPROVEMENT AREA 2 AND SPECIAL TAX BURDEN – The Appraisal” and attached hereto in its entirety as APPENDIX B. The Appraisal estimates the value of the properties which are subject to the Special Tax as of the date of value of approximately $58,010,000. See the Appraisal in APPENDIX B.

Based upon the $58,010,000 appraised value of taxable property in Improvement Area 2 and an estimated principal amount of Bonds of $10,625,000*, as well as overlapping landsecured debt attributable to those parcels, for a total direct and overlapping land-secured debt amount of $10,625,000*, the value-to-lien ratio for such property is approximately 5.46* to 1; provided, however, that the value-to-lien ratio of individual parcels may vary significantly. See “VALUE OF PROPERTY WITHIN IMPROVEMENT AREA 2 AND SPECIAL TAX BURDEN – Value to Special Tax Burden Ratios.”
Market Absorption Report. In connection with the issuance of the Bonds, the City hired The Gregory Group, Folsom, California (the “Absorption Consultant”) to perform market absorption study services related to the development of the land in Improvement Area 2. The Absorption Consultant’s report (the “Absorption Report”) describes the planned development based on information available as of May 2022, and is attached hereto as APPENDIX C. The Absorption Consultant estimates that the 292 single-family residential homes planned for Improvement Area 2 will be absorbed in less than 2 years, with final sales to homeowners in calendar year 2024, in accordance with the absorption schedule set forth in the Absorption Report and summarized herein. See “THE DISTRICT AND IMPROVEMENT AREA 2 – Market Absorption Report” and APPENDIX C.
* Preliminary; subject to change.

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5 Redemption of Bonds Before Maturity. The Bonds are subject to optional redemption, mandatory sinking fund redemption and special mandatory redemption from prepaid Special Taxes. See “THE BONDS – Redemption.”
Risk Factors Associated with Purchasing the Bonds. Investment in the Bonds involves risks that may not be appropriate for some investors. See “SPECIAL RISK FACTORS” for a discussion of certain risk factors which should be considered, in addition to the other matters set forth in this Official Statement, in considering the investment quality of the Bonds.

In particular, no assurance can be given that the timing of construction of homes and/or sale of homes projected by the Merchant Builders in this Official Statement will be accomplished. Neither the City nor the Underwriter can predict the impact of COVID-19 on home production and home sales activities or the willingness of owners of land in Improvement Area 2, including the Merchant Builders or any subsequent owner, to pay the Special Taxes securing the Bonds. See “SPECIAL RISK FACTORS – COVID-19.” Limited Obligation of the City. The Bonds, the interest thereon, and any premiums payable on the redemption of any Bonds, are not an indebtedness of the City (except to the limited extent described in this Official Statement), the State of California (the “State”) or any of their respective political subdivisions. None of the City (except to the limited extent described in this Official Statement), the State or any of its political subdivisions is liable for the Bonds.

Neither the faith and credit nor the taxing power of the City (except to the limited extent described in this Official Statement) or the State or any of their respective political subdivisions is pledged to the payment of the Bonds. Other than the Net Taxes, no taxes are pledged to the payment of the Bonds. The Bonds do not constitute a general obligation of the City, but are limited obligations of the City payable solely from the Net Taxes as more fully described in this Official Statement.

Summary of Information. Brief descriptions of certain provisions of the Fiscal Agent Agreement and certain other documents are included herein. The descriptions and summaries of documents herein do not purport to be comprehensive or definitive, and reference is made to each such document for the complete details of all its respective terms and conditions, copies of which are available for inspection at the office of the City. All statements herein with respect to certain rights and remedies are qualified by reference to laws and principles of equity relating to or affecting creditors’ rights generally. Capitalized terms used in this Official Statement and not otherwise defined herein have the meanings ascribed to such terms in the Fiscal Agent Agreement. See “APPENDIX H – Summary of Certain Provisions of the Fiscal Agent Agreement.” The information and expressions of opinion herein speak only as of the date of this Official Statement and are subject to change without notice. Neither delivery of this Official Statement, any sale made hereunder, nor any future use of this Official Statement shall, under any circumstances, create any implication that there has been no change in the affairs of the City, the District or Improvement Area 2 since the date hereof.

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6 SOURCES AND USES OF FUNDS
A summary of the estimated sources and uses of funds associated with the sale of the Bonds follows.

Sources
Principal Amount of Bonds $
Plus/Less: [Net] Original Issue Premium/Discount
Total Sources $
Uses
Improvement Fund $
Deposit to Interest Account [1]
Deposit to 2022 Reserve Account of Reserve Fund [2]
Costs of Issuance [3]
Total Uses $
[1] Capitalized interest will be used to pay a portion of debt service on the Bonds through Sept. 1, 2023. [2] Equal to the Reserve Requirement with respect to the Bonds as of their date of delivery. [3] Includes, among other things, the fees and expenses of Bond Counsel and Disclosure Counsel, the Fiscal Agent, the Appraiser, the Absorption Consultant, the Special Tax Administrator, and the Municipal Advisors, Underwriter’s discount, as well as the cost of printing the preliminary and final Official Statements.

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7 THE BONDS
This section generally describes certain of the terms of the Bonds contained in the Fiscal Agent Agreement. See “APPENDIX H – Summary of Certain Provisions of the Fiscal Agent Agreement.”
Authority for Issuance
The Bonds are issued pursuant to the Fiscal Agent Agreement, the Resolution of Issuance, and the Act. On June 19, 2018, the City Council adopted Resolution No. 2018-06-19- 1502-01 (the “Resolution of Formation”), which formed the District and Improvement Area 2 therein. The District was established and authorized to incur bonded indebtedness in an aggregate principal amount not to exceed $60,000,000 for Improvement Area 2 at a special election in the District held on the same day. The Bonds will be the first and only “new money” series to be issued for Improvement Area 2. Additional Bonds secured by the Net Taxes may be issued by the City only for the purpose of refunding then-Outstanding Bonds.

Description of the Bonds
The Bonds are being issued as fully registered bonds, registered in the name of Cede & Co. as nominee of The Depository Trust Company (“DTC”), and will be available to ultimate purchasers in the denomination of $5,000 or any integral multiple thereof, under the book-entry system maintained by DTC. Ultimate purchasers of Bonds will not receive physical certificates representing their interest in the Bonds. So long as the Bonds are registered in the name of Cede & Co., as nominee of DTC, references herein to the Owners will mean Cede & Co., and will not mean the ultimate purchasers of the Bonds.

Payments of the principal, premium, if any, and interest on the Bonds will be made directly to DTC, or its nominee, Cede & Co., so long as DTC or Cede & Co. is the registered owner of the Bonds. Disbursements of such payments to DTC’s participants is the responsibility of DTC, and disbursements of such payments to the Beneficial Owners is the responsibility of DTC’s participants and indirect participants, as more fully described in “APPENDIX G – DTC and the Book-Entry Only System.”
The Bonds will be dated as of, and bear interest from, the date of their delivery at the rates contained, and mature in the amounts and years shown on the inside cover page of this Official Statement.

The principal of, and any redemption premium due with respect to, the Bonds will be payable in lawful money of the United States of America at the principal corporate trust office of the Fiscal Agent in San Francisco, California, or such other place as designated by the Fiscal Agent, upon presentation and surrender of the Bonds. Interest on the Bonds, computed on the basis of a 360-day year consisting of twelve 30-day months, will be paid in lawful money of the United States of America semiannually on March 1 and September 1 of each year (each an “Interest Payment Date”), commencing March 1, 2023.

Interest on the Bonds (including the final interest payment upon maturity or earlier redemption) is payable by check of the Fiscal Agent mailed on each Interest Payment Date by first class mail to the registered Owner thereof at such registered Owner’s address as it appears on the registration books maintained by the Fiscal Agent at the close of business on the 15th day of the calendar month preceding the Interest Payment Date (the “Record Date”), or by wire EXHIBIT 3
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8 transfer made on such Interest Payment Date upon written instructions received by the Fiscal Agent on or before the Record Date preceding the Interest Payment Date, of any Owner of $1,000,000 or more in aggregate principal amount of Bonds; provided that so long as any Bonds are in book-entry form, payments with respect to such Bonds will be made by wire transfer, or such other method acceptable by the Fiscal Agent, to DTC. See “APPENDIX G – DTC and the Book-Entry Only System.”
Each Bond will bear interest from the Interest Payment Date next preceding the date of authentication thereof unless (i) it is authenticated on an Interest Payment Date, in which event it will bear interest from such date of authentication, or (ii) it is authenticated prior to an Interest Payment Date and after the close of business on the Record Date preceding such Interest Payment Date, in which event it will bear interest from such Interest Payment Date, or (iii) it is authenticated prior to the Record Date preceding the first Interest Payment Date, in which event it will bear interest from the dated date; provided, however, that if at the time of authentication of a Bond, interest is in default thereon, such Bond will bear interest from the Interest Payment Date to which interest has previously been paid or made available for payment thereon.

So long as the Bonds are registered in the name of Cede & Co., as nominee of DTC, payments of the principal, premium, if any, and interest on the Bonds will be made directly to DTC, or its nominee, Cede & Co. Disbursements of such payments to DTC’s participants is the responsibility of DTC and disbursements of such payments to the Beneficial Owners is the responsibility of DTC’s direct participants and indirect participants, as more fully described herein. See “APPENDIX G – DTC and the Book-Entry Only System.” Redemption*
Optional Redemption. The Bonds are subject to optional redemption from any source of available funds prior to maturity, in whole, or in part among maturities as specified by the City and by lot within a maturity, on any date on or after September 1, ______, at the following respective redemption prices (expressed as percentages of the principal amount of the Bonds to be redeemed), plus accrued interest thereon to the date of redemption:

Redemption Dates Redemption Price
September 1, _____ through August 30, ____
September 1, _____ through August 30, ____
September 1, _____ through August 30, ____
September 1, _____ and any date thereafter
Mandatory Redemption from Prepayments. The Bonds are subject to mandatory redemption from Prepayments of the Special Tax by property owners, in whole or in part among maturities as specified by the City and by lot within a maturity, on any Interest Payment Date at the following respective redemption prices (expressed as percentages of the principal amount of the Bonds to be redeemed), plus accrued interest thereon to the date of redemption:
* Preliminary; subject to change.

EXHIBIT 3
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9 Redemption Dates Redemption Price
Interest Payment Dates through March 1, _____
September 1, _____ and March 1, _____
September 1, _____ and March 1, _____
September 1, _____ and Interest Payment Dates thereafter Mandatory Sinking Fund Redemption. The Bonds maturing September 1, ____ and September 1, ____ (the “Term Bonds”) are subject to mandatory sinking payment redemption in part on September 1, ____ and September 1, ____, respectively, and on each September 1 thereafter to maturity, by lot, at a redemption price equal to 100% of the principal amount thereof to be redeemed, without premium, in the aggregate respective principal amounts as set forth in the following tables:

Term Bonds Due September 1, ____
Mandatory
Redemption Date
(September 1)
Sinking Fund
Payment
Term Bonds Due September 1, ____
Mandatory
Redemption Date
(September 1)
Sinking Fund
Payment
The amounts in the foregoing tables will be reduced pro rata, in order to maintain substantially uniform debt service, as a result of any prior partial optional redemption or mandatory redemption of the Term Bonds.

Purchase In Lieu of Redemption. In lieu of redemption, moneys in the Redemption Account may be used and withdrawn by the Fiscal Agent for purchase of outstanding Bonds, upon the filing with the Fiscal Agent of an Officer’s Certificate requesting such purchase, at public or private sale as and when, and at such prices (including brokerage and other charges) as such Officer’s Certificate may provide, but in no event may Bonds be purchased at a price in excess of the principal amount thereof, plus interest accrued to the date of purchase.

Redemption Procedure by Fiscal Agent. The Fiscal Agent will cause notice of any redemption to be mailed by first class mail, postage prepaid, at least 20 days but not more than 60 days prior to the date fixed for redemption, to the Securities Depositories and to one or more Information Services, and to the respective registered Owners of any Bonds designated for redemption, at their addresses appearing on the Bond registration books in the principal office of the Fiscal Agent; but such mailing is not a condition precedent to such redemption and failure to mail or to receive any such notice, or any defect therein, will not affect the validity of the proceedings for the redemption of such Bonds.

EXHIBIT 3
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10 Such notice will state the redemption date and the redemption price and, if less than all of the then outstanding Bonds are to be called for redemption, will designate the CUSIP numbers and Bond numbers of the Bonds to be redeemed by giving the individual CUSIP number and Bond number of each Bond to be redeemed or will state that all Bonds between two stated Bond numbers, both inclusive, are to be redeemed or that all of the Bonds of one or more maturities have been called for redemption, will state as to any Bond called in part the principal amount thereof to be redeemed, and will require that such Bonds be then surrendered at the principal office of the Fiscal Agent for redemption at the said redemption price, and will state that further interest on such Bonds will not accrue from and after the redemption date.

Whenever provision is made in the Fiscal Agent Agreement for the redemption of less than all of the Bonds of any maturity, the Fiscal Agent will select the Bonds to be redeemed, from all Bonds or such given portion thereof of such maturity by lot in any manner which the Fiscal Agent in its sole discretion deems appropriate. Upon surrender of Bonds redeemed in part only, the City will execute and the Fiscal Agent will authenticate and deliver to the registered Owner, at the expense of the City, a new Bond or Bonds, of the same series and maturity, of authorized denominations in aggregate principal amount equal to the unredeemed portion of the Bond or Bonds.

City’s Right to Rescind. The City has the right to rescind any notice of the optional redemption of Bonds and such notice may be cancelled and annulled if for any reason funds will not be or are not available on the date fixed for redemption for the payment in full of the Bonds then called for redemption. Neither the City nor the Fiscal Agent will have any liability to the Owners of the Bonds or any other party related to any such rescission of redemption.

Effect of Redemption. From and after the date fixed for redemption, if funds available for the payment of the principal of, and interest and any premium on, the Bonds so called for redemption are deposited in the Redemption Account, such Bonds so called will cease to be entitled to any benefit under the Fiscal Agent Agreement other than the right to receive payment of the redemption price, and no interest will accrue thereon on or after the redemption date specified in such notice.

Transfer or Exchange of Bonds
So long as the Bonds are registered in the name of Cede & Co., as nominee of DTC, transfers and exchanges of Bonds will be made in accordance with DTC procedures. See APPENDIX G. Any Bond may, in accordance with its terms, be transferred or exchanged by the person in whose name it is registered, in person or by his duly authorized attorney, upon surrender of such Bond for cancellation, accompanied by delivery of a duly written instrument of transfer in a form approved by the Fiscal Agent. Whenever any Bond(s) will be surrendered for transfer or exchange, the City will execute and the Fiscal Agent will authenticate and deliver a new Bond(s), for a like aggregate principal amount of Bond(s) of authorized denominations and of the same maturity. The City will pay the cost for any services rendered or any expenses incurred by the Fiscal Agent in connection with any such transfer or exchange. The Fiscal Agent will collect from the Owner requesting such transfer any tax or other governmental charge required to be paid with respect to such transfer or exchange.

No transfers or exchanges of Bonds will be required to be made (i) within 15 days prior to the date established by the Fiscal Agent for selection of Bonds for redemption or (ii) with respect to a Bond after that Bond has been selected for redemption.

EXHIBIT 3
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11 SECURITY FOR THE BONDS
Pledge of Special Taxes
The Bonds are secured by and payable from a first pledge of the Net Taxes. The Bonds are secured by and payable from a first pledge of the “Net Taxes,” which are comprised of Gross Taxes less Administrative Expenses. “Gross Taxes” is defined in the Fiscal Agent Agreement as the proceeds of the Special Taxes received by the City, including any scheduled payments and any prepayments thereof and interest thereon, and proceeds of the redemption or sale of property sold as a result of foreclosure of the lien of the Special Taxes to the amount of said lien and interest thereon. “Gross Taxes” does not include any penalties collected in connection with delinquent Special Taxes or any interest in excess of the interest due on the Bonds.

The Bonds are also secured by the Reserve Fund held under the Fiscal Agent Agreement and, subject to prior disbursement to pay costs of the Improvements, moneys in the Improvement Fund. Until disbursed as provided in the Fiscal Agent Agreement, moneys in the Special Tax Fund, are pledged to the payment of the principal of, and interest and any premium on, the Bonds, as provided in the Fiscal Agent Agreement and in the Act, until all the Bonds have been paid and retired, or until moneys or Federal Securities have been set aside irrevocably for that purpose.

The Improvements are not pledged to pay the debt service on the Bonds. Any proceeds of condemnation, destruction or other disposition of any Improvements are not pledged to pay the debt service on the Bonds and are free and clear of any lien or obligation imposed under the Fiscal Agent Agreement.

Special Taxes
A Special Tax applicable to each taxable parcel in Improvement Area 2 will be levied and collected according to the tax liability determined by the City Council through the application of the Special Tax Formula, the complete copy of which is set forth in APPENDIX A hereto, for all taxable properties in Improvement Area 2. Interest and principal on the Bonds are payable from the annual Special Taxes to be levied and collected on taxable property within Improvement Area 2, from amounts held in the funds and accounts established under the Fiscal Agent Agreement (other than the Rebate Fund) and from the proceeds, if any, from the sale of such property for delinquency of such Special Taxes. For purposes of this Official Statement, DTA has served as special tax consultant to the City (the “Special Tax Consultant”) and prepared certain information regarding the Special Taxes applicable to Improvement Area 2.

Under the Special Tax Formula, taxable parcels in Improvement Area 2 are subject to both (i) “Special Tax A,” which is levied for public facilities, and (ii) “Special Tax B” which is levied for public services. Only Special Tax A is pledged to the Bonds and all references in this Official Statement to the Special Tax securing the Bonds means “Special Tax A” as defined in the Special Tax Formula.

The Special Taxes are exempt from the property tax limitation of Article XIIIA of the California Constitution, pursuant to Section 4 thereof as a “special tax” authorized by a twothirds vote of the qualified electors. The levy of the Special Taxes was authorized by the City pursuant to the Act in an amount determined according to the Special Tax Formula approved by EXHIBIT 3
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12 the City. See “–Special Tax Methodology” below and “APPENDIX A – Rate and Method of Apportionment of Special Tax.”
The amount of Special Taxes that Improvement Area 2 may levy in any year, and from which principal and interest on the Bonds is to be paid, is strictly limited by the maximum rates approved by the qualified electors within Improvement Area 2 which are set forth as the “Maximum Special Tax A” for facilities in the Special Tax Formula (the “Maximum Annual Special Tax”). Under the Special Tax Formula, Special Taxes for the purpose of making payments on the Bonds will be levied annually in an amount, not in excess of the annual Maximum Annual Special Tax. The Special Taxes and any interest earned on the Special Taxes constitute a trust fund for the principal of and interest on the Bonds pursuant to the Fiscal Agent Agreement and, so long as the principal of and interest on these obligations remains unpaid, the Special Taxes and investment earnings thereon will not be used for any other purpose, except as permitted by the Fiscal Agent Agreement, and will be held in trust for the benefit of the owners thereof and will be applied pursuant to the Fiscal Agent Agreement. The Special Tax Formula apportions the Annual Costs (as defined in the Special Tax Formula and described below) among the taxable parcels of real property within Improvement Area 2 according to the rate and methodology set forth in the Special Tax Formula. See “–Special Tax Methodology” below. See also “APPENDIX A – Rate and Method of Apportionment of Special Tax.”
The City may levy the Special Tax at the Maximum Annual Special Tax rate, which has been authorized by the qualified electors within Improvement Area 2, as set forth in the Special Tax Formula, if conditions so require. Because each year’s Special Tax levy is limited to the Maximum Annual Special Tax rates authorized as set forth in the Special Tax Formula, no assurance can be given that, in the event of Special Tax delinquencies, the amount of the Annual Costs will in fact be collected in any given year. See “SPECIAL RISK FACTORS – Levy and Collection of the Special Tax” herein. The Special Taxes are collected for the City by the County in the same manner and at the same time as ad valorem property taxes.

Special Tax Methodology
The Special Tax authorized under the Act applicable to land within Improvement Area 2 will be levied and collected according to the tax liability determined by the City through the application of the appropriate amount or rate as described in the Special Tax Formula set forth in “APPENDIX A – Rate and Method of Apportionment of Special Tax” and in accordance with the Act. See “SPECIAL RISK FACTORS – Levy and Collection of Special Tax.” Capitalized terms set forth in this section and not otherwise defined have the meanings set forth in the Special Tax Formula.

Determination of Special Tax Requirement for Facilities. Each year, the City will determine the “Special Tax Requirement for Facilities,” which includes the following items (less any applicable credits for available revenues):
(i) Debt Service on bonds issued for Improvement Area 2; (ii) any amounts needed to replenish bond reserve funds; (iii) pay Administrative Expenses;
(iv) an amount equal to Special Tax delinquencies reasonably anticipated for such year and for previous year’s delinquencies in excess of the amount estimated for such year; and
(v) pay-as-you-go construction expenditures for authorized improvements.

EXHIBIT 3
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13 The calculation of the Special Tax Requirement for Facilities is the basis for the amount of Special Tax to be levied within Improvement Area 2. In no event may the City levy a Special Tax in any year above the Maximum Annual Special Tax identified for each parcel in the Special Tax Formula.

Parcels Subject to the Special Tax. Each Fiscal Year, all Taxable Property within Improvement Area 2 shall be classified as Developed Property, Final Mapped Property, Undeveloped Property, Taxable Property Owner Association Property, or Taxable Public Property and shall be subject to Special Taxes in accordance with the Special Tax Formula determined pursuant to the provisions thereof. Residential Property shall be assigned to Land Use Classes 1 through 5 as listed in Table 1 in the Special Tax Formula based on the description and the Residential Floor Area for each Dwelling Unit. Non-Residential Property shall be assigned to Land Use Class 6.

Transition Year. A portion of the Maximum Special Tax A will transition from being used for public facilities to public services as described in the Special Tax Formula as of the Transition Year. “Transition Year” means the first year in which the CFD Administrator determines that the Transition Event has occurred in the prior Fiscal Year, and “Transition Event” means the earlier of (i) July 1, 2068 or (ii) the Fiscal Year when the CFD Administrator determines that the following events have occurred: (i) all Bonds secured by the levy and collection of Special Tax A in the CFD have been fully repaid, (ii) all Administrative Expenses from prior Fiscal Years have been paid or reimbursed to the City, and (iii) there are no other Authorized Facilities that the City intends to fund with Bonds and Facilities Taxes.

Assigned Special Tax A and Backup Special Tax A. The Maximum Special Tax A for each Assessor’s Parcel classified as Developed Property shall be the greater of (i) the amount derived by application of the Assigned Special Tax A and (ii) the amount derived by application of the Backup Special Tax A. In the Transition Year and each Fiscal Year thereafter, no Special Tax A shall be levied on Undeveloped Property, unless there are delinquent Special Tax A amounts on a Parcel of Undeveloped Property, in which case such delinquent Special Tax A amounts can continue to be levied against a parcel until they are collected.

Developed Property. Residential Property shall be assigned to Land Use Classes 1 through 5 as listed in Table 1 to the Special Tax Formula based on the Residential Floor Area for each Dwelling Unit. Non-Residential Property shall be assigned to Land Use Class 6. The Assigned Special Tax that shall be levied in Fiscal Year 2019-2020 for each Assessor’s Parcel classified as Developed Property is shown on Table 1 to the Special Tax Formula. The Backup Special Tax A for an Assessor’s Parcel of Developed Property shall equal $18,060 per Acre for Fiscal Year 2019-2020.

On each July 1, the Assigned Special Tax A and the Backup Special Tax A shall be increased by an amount equal to two percent (2.00%) of the amount in effect for the previous Fiscal Year.

Furthermore, all Assessor’s Parcels shall be relieved simultaneously and permanently from the obligation to pay and disclose the Backup Special Tax A if the CFD Administrator calculates that (i) the annual debt service required for the Outstanding Bonds, when compared to the Assigned Special Tax A that could be levied against all Assessor’s Parcels of Developed Property, results in 110% debt service coverage (i.e., the Assigned Special Tax A that could be levied against all Developed Property in each remaining Fiscal Year based on the then existing development is at EXHIBIT 3
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14 least equal to the sum of (a) 1.10 times the debt service necessary to support the remaining Outstanding Bonds in each corresponding Fiscal Year, and (b) the Administrative Expenses as defined in Section A of the Special Tax Formula), and (ii) all authorized Bonds have already been issued or the City has covenanted that it shall not issue any additional Bonds (except refunding bonds) to be supported by the Assigned Special Taxes.

In some instances, an Assessor’s Parcel of Developed Property may contain more than one (1) Land Use Class. The Special Taxes levied on an Assessor’s Parcel shall be the sum of the Special Taxes for all Land Use Classes located on that Assessor’s Parcel. If an Assessor’s Parcel of Developed Property includes both Residential Property and Non-Residential Property, the Acreage to be assigned to the Non-Residential Property for purposes of establishing the annual Special Tax A shall equal the Non-Residential Floor Area on the Assessor’s Parcel divided by Total Floor Area on the Assessor’s Parcel multiplied by the Acreage of the Assessor’s Parcel.

Furthermore, for a condominium plan, if only a portion of its building permits have been issued, the remaining portion of the condominium plan shall be considered Final Mapped Property. The CFD Administrator’s allocation to each type of property shall be final.

Final Mapped Property, Undeveloped Property, and Other Categories. The Fiscal Year 2019-2020 Maximum Special Tax for each Assessor’s Parcel of Final Mapped Property, Undeveloped Property, Taxable Property Owner Association Property, and Taxable Public Property shall be $18,060 per Acre. On each July 1, the Maximum Special Tax for Final Mapped Property, Undeveloped Property, Taxable Property Owner Association Property, and Taxable Public Property shall be increased by an amount equal to two percent (2.00%) of the amount in effect for the previous Fiscal Year.

Annual Levy of Special Tax A. Commencing with Fiscal Year 2018-2019 and for each following Fiscal Year, the CFD Administrator shall determine the Special Tax A Levy as follows:

First: The Assigned Special Tax A shall be levied on each Assessor’s Parcel of Developed Property in an amount equal to 100% of the applicable Assigned Special Tax A for Developed Property.

Second: If additional monies are needed to satisfy the Special Tax A Requirement after the first step has been completed, the Special Tax A shall be levied Proportionately on each Assessor’s Parcel of Final Mapped Property until (i) the total Special Taxes levied under the first two steps listed in this Section D equal the Special Tax A Requirement, or (ii) the Special Taxes levied on Final Mapped Property equal 100% of the Maximum Special Tax, whichever comes first.

Third: If additional monies are needed to satisfy the Special Tax A Requirement after the first two steps have been completed, the Special Tax A shall be levied Proportionately on each Assessor’s Parcel of Undeveloped Property until (i) the total Special Taxes levied under the first three steps listed in this Section D equal the Special Tax A Requirement, or (ii) the Special Tax A levied on Undeveloped Property equals 100% of the Maximum Special Tax A, whichever occurs first.

Fourth: If additional monies are needed to satisfy the Special Tax A Requirement after the first three steps have been completed, then the levy of the Special Tax A on each EXHIBIT 3
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15 Assessor’s Parcel of Developed Property for which the Maximum Special Tax A is determined through the application of the Backup Special Tax A shall be increased in equal percentages from the Assigned Special Tax A up to 100% of the Maximum Special Tax A for each such Assessor’s Parcel of Developed Property until (i) the total Special Taxes levied under the first four steps listed in this Section D equal the Special Tax A Requirement, or (ii) the Special Taxes levied on all Developed Property equal 100% of the Maximum Special Tax A for Developed Property, whichever occurs first.

Fifth: If additional monies are needed to satisfy the Special Tax A Requirement after the first four steps have been completed, the Special Tax A shall be levied Proportionately on each Assessor’s Parcel of Taxable Property Owner Association Property until (i) the total Special Taxes levied under the first five steps listed in this Section D equal the Special Tax A Requirement, or (ii) the Special Taxes levied on all Taxable Property Owner Association Property equal 100% of the Maximum Special Tax A for Property Owner Association Property, whichever occurs first.

Sixth: If additional monies are needed to satisfy the Special Tax A Requirement after the first five steps have been completed, the Special Tax A shall be levied Proportionately on each Assessor’s Parcel of Taxable Public Property until (i) the total Special Taxes levied under the first six steps listed in this Section D equal the Special Tax A Requirement, or (ii) the Special Taxes levied on all Taxable Public Property equal 100% of the Maximum Special Tax A for Taxable Public Property, whichever occurs first.

Notwithstanding the above, the CFD Administrator or its designee may, in any Fiscal Year, levy Proportionately less than 100% of the Assigned Special Tax A in the first step (above), when (i) the City is no longer required to levy the Special Tax A beyond the first step (above) in order to meet the Special Tax A Requirement; and (ii) all authorized Bonds have already been issued or the City has covenanted that it will not issue any additional Bonds (except refunding bonds), to be supported by the Special Tax A.

Termination of the Special Tax. The Special Tax will be levied and collected (up to maximum allowable amount) for as long as needed to pay the principal and interest on the Bonds and other costs incurred in order to construct and acquire the authorized public facilities; provided, however, the Special Tax may not be levied after fiscal Year 2068-69.

Prepayment of the Special Tax. The Special Tax Formula provides that landowners may permanently satisfy all or a portion of the Special Tax by a cash settlement with the City.

The amount of the prepayment required is to be calculated according to a formula set forth in the Special Tax Formula, which is generally based on the Parcel’s share of the outstanding Bonds, remaining facilities costs which have not been bonded, the Reserve Fund, fees, call premiums, negative arbitrage and any expenses incurred by the City in connection with the prepayment and expected future facilities costs.

Annual Special Tax; Maximum Special Tax
The annual Special Tax will be calculated by the City and levied each year to meet the Special Tax Requirement for Facilities. However, in no event may the City levy a Special Tax in any year above the Maximum Annual Special Tax identified for each parcel in the Special Tax Formula. See “APPENDIX A – Rate and Method of Apportionment of Special Tax.” EXHIBIT 3
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16 In addition to the maximum annual Special Tax rate limitation in the Special Tax Formula, Section 53321(d) of the Act provides that the special tax levied against any parcel for which an occupancy permit for private residential use has been issued may not be increased as a consequence of delinquency or default by the owner of any other parcel within a community facilities district by more than 10% above the amount that would have been levied in such Fiscal Year had there never been any such delinquencies or defaults. The debt service on the Bonds has been structured so that an annual Special Tax levy only on residential properties will be sufficient for annual payments on the Bonds, however in cases of significant delinquencies, default in the payment of principal of and interest on the Bonds may occur.

The Special Tax levy may include a pay-as-you-go component. The Special Tax Formula provides a mechanism whereby the City may utilize the pay-as-you-go component to pay for and/or reimburse developers of property in Improvement Area 2 for a portion of the cost of Improvements not funded by proceeds of the bonds issued for Improvement Area 2. In the event it is utilized, proceeds of the annual Special Tax levy will first be used to pay the Annual Costs other than pay-as-you-go expenditures and second, if the levy included a pay-as-you-go component, for authorized facilities costs not funded from Bond proceeds.

Levy and Collection of Special Taxes
The City shall cause Special Taxes in an amount corresponding to the Special Tax Requirement for Facilities to be levied each Fiscal Year in accordance with the Ordinance such that the computation of the levy is complete before the final date on which the County Treasurer-Tax Collector will accept the transmission of the Special Tax amounts for the parcels within Improvement Area 2 for inclusion on the next secured real property tax roll. Upon the completion of the computation of the amounts of the levy, the City shall prepare or cause to be prepared, and shall transmit to the County Treasurer-Tax Collector such data as the County Treasurer-Tax Collector requires to include the levy of the Special Taxes on the next secured real property tax roll.

The City shall fix and levy the amount of Special Taxes within Improvement Area 2 required for the payment of principal of and interest on any outstanding Bonds of Improvement Area 2 becoming due and payable during the ensuing Bond Year, including any necessary replenishment or expenditure of the Reserve Fund for the Bonds and an amount estimated to be sufficient to pay the Administrative Expenses during such year, all in accordance with the rate and method of apportionment of the Special Taxes for Improvement Area 2 and the Ordinance. In any event, the Special Taxes so levied shall not exceed the authorized amounts as provided in the proceedings pursuant to the Resolution of Formation.

The Special Taxes shall be payable and be collected in the same manner and at the same time and in the same installment as the general taxes on real property are payable, and have the same priority, become delinquent at the same times and in the same proportionate amounts and bear the same proportionate penalties and interest after delinquency as do the general taxes on real property.

Special Tax Fund
The City covenants that it will receive Net Taxes in trust for the Owners and will instruct the Chief Financial Officer to deposit all Net Taxes with the Fiscal Agent at least three Business Days prior to each Interest Payment Date, and the City shall have no beneficial right or interest in the amounts so deposited, except as provided by this Agreement. All such Net Taxes shall EXHIBIT 3
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17 be disbursed, allocated and applied solely to the uses and purposes set forth in this Agreement, and shall be accounted for separately and apart from all other money, funds, accounts or other resources of the City.

Pursuant to the Fiscal Agent Agreement, the Fiscal Agent establishes as a separate fund to be held by the Fiscal Agent for the benefit of the owners of the Bonds, the Special Tax Fund. The Fiscal Agent is required to deposit the Special Taxes in the Special Tax Fund and thereafter transfer the Net Taxes on the dates and in the amounts in the following order of priority:
(1) To the Interest Account of the Special Tax Fund, at least one Business Day prior to each Interest Payment Date, the amount required to pay interest the Bonds on the immediately succeeding Interest Payment Date; provided, that to the extent that deposits have been made in the Interest Account from the proceeds of the sale of an issue of the Bonds, or otherwise, the transfer from the Special Tax Fund need not be made;
(2) To the Principal Account of the Special Tax Fund, at least one Business Day prior to each Interest Payment Date, the amount required to pay principal of the Bonds (including mandatory sinking fund payments) on the immediately succeeding Interest Payment Date; provided, that to the extent that deposits have been made in the Interest Account from the proceeds of the sale of an issue of the Bonds, or otherwise, the transfer from the Special Tax Fund need not be made; (3) To the Redemption Account of the Special Tax Fund, moneys needed for the purpose of redeeming Bonds called for optional redemption prior to maturity, to be applied on or after the redemption date to the payment of principal, interest and premiums, if any, on the Bonds to be redeemed;
(4) To the Reserve Fund, after taking into account amounts then on deposit in the Reserve Fund, the amounts needed so that the amount in the Reserve Fund equals the Reserve Requirement; and
(5) To the Surplus Fund, as soon as practicable after each September 2, all remaining amounts in the Special Tax Fund. The amounts in the Surplus Fund are not pledged to the repayment of the Bonds and may be used by the City for any lawful purpose. Moneys deposited in the Surplus Fund shall be transferred by the Fiscal Agent upon the direction of the City.

Reserve Fund
The Fiscal Agent Agreement establishes the Reserve Fund, and within the Reserve Fund, the 2022 Reserve Account, to be held by the Fiscal Agent, to the credit of which a deposit shall be made upon issuance of the Bonds in the amount of the Reserve Requirement with respect to the Bonds as of the date of their delivery.

Moneys in the 2022 Reserve Account of the Reserve Fund shall be held in trust by the Fiscal Agent for the benefit of the Owners of the Bonds as a reserve for the payment of principal of, and interest on, the Bonds and will be subject to a lien in favor of the Owners of the Bonds.

Unless otherwise set forth in a Supplemental Agreement, for each Series of Additional Bonds covered by the Reserve Fund, the Fiscal Agent shall establish a separate account within the EXHIBIT 3
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18 Reserve Fund for each such Series, which account shall be maintained purely for accounting purposes, and amounts in all accounts within the Reserve Fund shall be pledged to all Bonds equally and ratably.

Upon delivery of the Bonds, the amount on deposit in the 2022 Reserve Account of the Reserve Fund will be established by depositing certain proceeds of the Bonds in the amount of the “Reserve Requirement” for the Bonds, which means , as of the date of any calculation, an amount equal to the lesser of (a) Maximum Annual Debt Service on the respective Outstanding Bonds covered by the Reserve Fund, (b) 125% of the average Annual Debt Service on the respective Outstanding Bonds covered by the Reserve Fund, or (c) 10% of the original principal amount of the respective Bonds covered by the Reserve Fund (or the issue price of the respective Bonds excluding accrued interest, if the net original issue discount or premium is less than 98% or more than 102% of the principal amount of the respective Bonds), as calculated by the City. However, in no event will the City, in connection with the issuance of Additional Bonds covered by the Reserve Fund be obligated to deposit an amount in the Reserve Fund which is in excess of the amount permitted by the applicable provisions of the Tax Code to be so deposited from the proceeds of tax-exempt bonds without having to restrict the yield of any investment purchased with any portion of such deposit and, in the event the amount of any such deposit into the Reserve Fund is so limited, the Reserve Requirement will, in connection with the issuance of such Additional Bonds, be increased only by the amount of such deposit as permitted by the Code, and Improvement Area 2 may meet all or a portion of the Reserve Requirement by depositing a Qualified Reserve Fund Credit Instrument in the Reserve Fund as described above.

The City is required to maintain an amount of money or other security equal to the Reserve Requirement in the Reserve Fund at all times that the Bonds are outstanding. Except as otherwise provided in the Fiscal Agent Agreement, all amounts deposited in the Reserve Fund will be used and withdrawn by the Fiscal Agent solely for the purpose of making transfers to the Special Tax Fund in the event of any deficiency of the amount required for payment of the principal of, and interest on, the Bonds on such Interest Payment Date.

Whenever the amount in the Reserve Fund exceeds the then applicable Reserve Requirement, the Fiscal Agent will transfer an amount equal to the excess from the Reserve Fund to the Improvement Fund, if the Project has not been completed as of the date of such transfer, or if the Project has been completed, to the Special Tax Fund to be used for the payment of the principal of and interest on the Outstanding Bonds, except that investment earnings on amounts in the Reserve Fund may be withdrawn from the Reserve Fund for purposes of making payment to the Federal government to comply with rebate requirements.

The City has the right at any time to cause the Fiscal Agent to release funds from the Reserve Fund, in whole or in part, by tendering to the Fiscal Agent: (1) a Qualified Reserve Fund Credit Instrument, and (2) an opinion of Bond Counsel stating that such release will not, of itself, cause the portion of the interest on the Bonds to become includable in gross income for purposes of federal income taxation. Upon tender of such items to the Fiscal Agent, the Fiscal Agent will transfer such funds from the Reserve Fund to the City. Prior to the expiration of any Qualified Reserve Fund Credit Instrument, the City is obligated either to replace such Qualified Reserve Fund Credit Instrument with a new Qualified Reserve Fund Credit Instrument, or to deposit or cause to be deposited with the Fiscal Agent an amount of funds such that the funds on deposit in the Reserve Fund together with all Qualified Reserve Fund Credit Instruments held by the Fiscal Agent is at least equal to the Reserve Requirement (which funds may come from a draw by the Fiscal Agent on the Qualified Reserve Fund Credit Instrument prior to its EXHIBIT 3
1424
19 expiration). Any Qualified Reserve Fund Credit Instrument deposited with the Fiscal Agent shall contain instructions to the Fiscal Agent with respect to the purpose and use thereof.

Under the Fiscal Agent Agreement, a “Qualified Reserve Fund Credit Instrument” is defined as an irrevocable standby or direct-pay letter of credit or surety bond issued by a commercial bank or insurance company, provided that all of the following requirements are met:
(a) the long-term credit rating of such bank or insurance company is rated at the time of issuance in the “AA” category or higher by S&P or Moody’s (without regard to qualifier); (b) such letter of credit or surety bond has a term of at least 12 months; (c) such letter of credit or surety bond has a stated amount at least equal to the portion of the Reserve Requirement; and (d) the Fiscal Agent is authorized pursuant to the terms of such letter of credit or surety bond to draw thereunder an amount equal to any deficiencies which may exist from time to time in the Special Tax Fund for the purpose of making payments required pursuant to the Fiscal Agent Agreement or the amount to be restored to the Reserve Fund if not timely renewed or extended.

If a Qualified Reserve Fund Credit Instrument were obtained in the future, and the longterm credit rating of the provider thereof was downgraded after the date of issuance of such Qualified Reserve Fund Credit Instrument, the City would not be obligated to replace the Qualified Reserve Fund Credit Instrument or otherwise fund the Reserve Fund.

Delinquent Payments; Teeter Plan; Covenant for Superior Court Foreclosure General. The Special Tax will be collected in the same manner and the same time as ad valorem property taxes, except at the City’s option, the Special Taxes may be billed directly to property owners or collected at a different time to meet the City’s financial obligations. In the event of a delinquency in the payment of any installment of Special Taxes, the City is authorized by the Act to order institution of an action in superior court to foreclose the lien therefor.

Teeter Plan. In 1949, the California Legislature enacted an alternative method for the distribution of property taxes to local agencies. This method, commonly known as the Teeter Plan, is set forth in Sections 4701-4717 of Revenue and Taxation Code of the State of California. The San Joaquin County Board of Supervisors (the “Board of Supervisors”) approved implementation of the Teeter Plan in November 1993, both as to general and special taxes entered and collected on the secured tax roll.

Generally, the Teeter Plan provides for a tax distribution procedure by which secured roll taxes, special taxes and assessments are distributed to taxing agencies within a county included in the Teeter Plan on the basis of the tax levy, rather than on the basis of actual tax collections. A county then receives all future delinquent tax payments, penalties and interest, and a complex tax redemption distribution system for all taxing agencies is avoided. In connection with the Teeter Plan, a county can advance to the participating taxing agencies an amount equal to 95% of the total then-prior years’ delinquent secured property taxes, 100% of the total then-prior years’ delinquent secured special taxes, including the associated penalties and interest, and 100% of the then-current year’s secured roll levy.

The Teeter Plan remains in effect unless the Board of Supervisors orders discontinuance. The County policy provides that it may order discontinuance of the Teeter Plan as to special taxes for the next year if the rate of delinquency for a taxing district exceeds 3% in any Fiscal Year. Unless and until the Board of Supervisors orders discontinuance of the Teeter Plan with respect to the District, the City is credited with 100% of the scheduled Special Tax EXHIBIT 3
1425
20 payments without regard to actual amounts collected. The City can give no assurance, however, that the Teeter Plan will be continued in future years.

If any tax or assessment which was distributed to a Teeter Plan participant is subsequently changed by correction, cancellation or refund, a pro rata adjustment for the amount of the change is made on the records of the treasurer of the County and the County Auditor. Such an adjustment would be an offset to future distributions of tax revenues to the District.

So long as the County maintains its policy of collecting taxes pursuant to said procedures and the City meets the Teeter Plan requirements, the City will receive 100% of the annual installments levied on taxable parcels in the District without regard to actual collections.

No assurance can be given that the County will continue to include special taxes levied within community facilities districts in the Teeter Plan, and the County could decide to discontinue the inclusion of such special taxes in the Teeter Plan at any time, or to discontinue the Teeter Plan in its entirety.

Foreclosure Covenant. The City has covenanted in the Fiscal Agent Agreement with and for the benefit of the Owners of the Bonds that it will annually on or before October 1 of each year review the public records of the County of San Joaquin relating to the collection of the Special Tax in order to determine the amount of the Special Tax collected in the prior Fiscal Year, and if the City determines on the basis of such review that:
• Aggregate Delinquencies. The amount so collected is deficient by more than 5% of the total amount of the Special Tax levied in such Fiscal Year, it will within 30 days thereafter institute foreclosure proceedings as authorized by the Act in order to enforce the lien of the delinquent installment of the Special Tax against each separate lot or parcel of land in Improvement Area 2 for which such installment of the Special Tax is delinquent, and will diligently prosecute and pursue such foreclosure proceedings to judgment and sale; or
• Individual Delinquencies. The amount so collected is deficient by less than 5% of the total amount of the Special Tax levied in Improvement Area 2 in such Fiscal Year, but that property owned by any single property owner in Improvement Area 2 is delinquent by more than $3,000 with respect to the Special Tax due and payable by such property owner in such Fiscal Year and prior Fiscal Year(s), it will within 30 days thereafter institute foreclosure proceedings as authorized by the Act in order to enforce the lien of the delinquent installment of the Special Tax against each such property, and will diligently prosecute and pursue such foreclosure proceedings to judgment and sale.

The Chief Financial Officer shall notify legal counsel of any such delinquency of which it is aware, and such legal counsel shall commence, or cause to be commenced, such actions to collect such delinquencies and subsequent foreclosure proceedings in such a manner as such counsel deems appropriate.

Notwithstanding the foregoing, the City’s obligation to pursue foreclosure shall be at the option of the City so long as (i) the Teeter Plan is in effect with respect to any delinquent parcel meeting the conditions above, and (ii) there is no then-outstanding draw on any amounts in the Reserve Fund.

EXHIBIT 3
1426
21 Foreclosure Proceedings. Under the Act, foreclosure proceedings are instituted by the bringing of an action in the superior court of the county in which the parcel lies, naming the owner and other interested persons as defendants. The action is prosecuted in the same manner as other civil actions. In such action, the real property subject to the special taxes may be sold at a judicial foreclosure sale for a minimum price that will be sufficient to pay or reimburse the delinquent special taxes.

The Owners of the Bonds benefit from the Reserve Fund established pursuant to the Fiscal Agent Agreement; however, if delinquencies in the payment of the Special Taxes with respect to the Bonds are significant enough to completely deplete the Reserve Fund, there could be a default or a delay in payments of principal and interest to the owners of the Bonds pending prosecution of foreclosure proceedings and receipt by the City of the proceeds of foreclosure sales. Provided that it is not levying the Special Tax at the Maximum Annual Special Tax rates set forth in the Special Tax Formula, the City may adjust (but not to exceed the Maximum Annual Special Tax and subject to the limitation described under the caption “– Special Tax Methodology – Limitation on Increases of Special Tax Levy” above) the Special Taxes levied on all property within Improvement Area 2 subject to the Special Tax to provide an amount required to pay debt service on the Bonds and to replenish the Reserve Fund.

Under current law, a judgment debtor (property owner) has at least 120 days from the date of service of the notice of levy in which to redeem the property to be sold. If a judgment debtor fails to redeem and the property is sold, his or her only remedy is an action to set aside the sale, which must be brought within 90 days of the date of sale. If, as a result of such an action a foreclosure sale is set aside, the judgment is revived and the judgment creditor is entitled to interest on the revived judgment as if the sale had not been made (California Code of Civil Procedure Section 701.680).

Foreclosure by court action is subject to normal litigation delays, the nature and extent of which are largely dependent upon the nature of the defense, if any, put forth by the debtor and the condition of the calendar of the superior court of the county. Such foreclosure actions can be stayed by the superior court on generally accepted equitable grounds or as the result of the debtor’s filing for relief under the Federal bankruptcy laws. The Act provides that, upon foreclosure, the Special Tax lien will have the same lien priority as is provided for ad valorem taxes and special assessments. See “VALUE OF PROPERTY WITHIN IMPROVEMENT AREA 2 AND SPECIAL TAX BURDEN – Overlapping Liens and Priority of Lien.” No assurances can be given that the real property subject to a judicial foreclosure sale will be sold or, if sold, that the proceeds of sale will be sufficient to pay any delinquent Special Tax installment. The Act does not require the City to purchase or otherwise acquire any lot or parcel of property foreclosed upon if there is no other purchaser at such sale.

Section 53356.6 of the Act requires that property sold pursuant to foreclosure under the Act be sold for not less than the amount of judgment in the foreclosure action, plus postjudgment interest and authorized costs, unless the consent of the owners of 75% of the outstanding Bonds is obtained. However, under Section 53356.6 of the Act, the City, as judgment creditor, is entitled to purchase any property sold at foreclosure using a “credit bid,” where the City could submit a bid crediting all or part of the amount required to satisfy the judgment for the delinquent amount of the Special Tax. If the City becomes the purchaser under a credit bid, the City must pay the amount of its credit bid into the redemption fund established for the Bonds, but this payment may be made up to 24 months after the date of the foreclosure sale.

EXHIBIT 3
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22 Additional Bonds For Refunding Purposes Only
In addition to the Bonds, the City may, by a Supplemental Agreement, authorize the issuance additional series of special tax bonds, payable from Net Taxes and secured, unless otherwise provided in the Supplemental Agreement, by the Net Taxes equally and ratably with Bonds previously issued, and the City may issue, and the Fiscal Agent may authenticate and deliver to the purchaser thereof, Bonds of any series so established, in such principal amount as shall be determined by the City, but only if (a) the Bonds are issued to refund some or all of the then-Outstanding Bonds and (b) debt service on the refunding Bonds in each Bond Year is less than debt service on the Bonds refunded.

Nothing in the Fiscal Agent Agreement shall be interpreted to prohibit issuance of bonds, notes or other obligations secured on a subordinate basis to the Bonds, or prevent or be construed to prevent a Supplemental Agreement providing for the issuance of Additional Bonds from pledging or otherwise providing, in addition to the security given or intended to be given by this Agreement, additional security for the benefit of such Additional Bonds or any portion thereof.

EXHIBIT 3
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23 DEBT SERVICE SCHEDULE
The annual debt service on the Bonds, based on the interest rates and maturity schedule set forth on the inside cover of this Official Statement (assuming no early redemptions), is set forth below.

Improvement Area 2 of the City of Stockton
Community Facilities District No. 2018-2 (Westlake Villages II) Special Tax Bonds Series 2022
Debt Service Schedule*
Period Ending
(Sept. 1)
Bonds
Principal
Bonds
Interest
Bonds
Total
* Preliminary; subject to change.

Source: Underwriter.

EXHIBIT 3
1429
24 The projected annual debt service coverage on the Bonds (based on the Assigned Special Tax and the projected debt service on the Bonds) is shown below.

Improvement Area 2 of the City of Stockton
Community Facilities District No. 2018-2 (Westlake Villages II) Debt Service Coverage Based on Assigned Special Tax*
Period
Ending
(Sept. 1)
Assigned
Special Taxes[1]
Administrative
Expenses[2]
Special Taxes
Available For
Debt Service
Total Debt
Service*
Debt Service
Coverage*
2023 $646,205 ($25,500) $150,000 $622,701.74 NA [3]
2024 659,129 (26,010) 633,119 571,762.50 1.1073x
2025 672,312 (26,530) 645,781 585,762.50 1.1025x
2026 685,758 (27,061) 658,697 594,162.50 1.1086x
2027 699,473 (27,602) 671,871 607,162.50 1.1066x
2028 713,462 (28,154) 685,308 619,562.50 1.1061x
2029 727,732 (28,717) 699,014 630,562.50 1.1086x
2030 742,286 (29,291) 712,995 645,812.50 1.1040x
2031 757,132 (29,877) 727,255 660,062.50 1.1018x
2032 772,275 (30,475) 741,800 673,312.50 1.1017x
2033 787,720 (31,084) 756,636 685,562.50 1.1037x
2034 803,474 (31,706) 771,768 696,812.50 1.1076x
2035 819,544 (32,340) 787,204 712,062.50 1.1055x
2036 835,935 (32,987) 802,948 726,062.50 1.1059x
2037 852,654 (33,647) 819,007 743,812.50 1.1011x
2038 869,707 (34,320) 835,387 755,062.50 1.1064x
2039 887,101 (35,006) 852,095 770,062.50 1.1065x
2040 904,843 (35,706) 869,137 788,562.50 1.1022x
2041 922,940 (36,420) 886,519 805,312.50 1.1008x
2042 941,398 (37,149) 904,250 820,312.50 1.1023x
2043 960,226 (37,892) 922,335 833,562.50 1.1065x
2044 979,431 (38,649) 940,781 853,887.50 1.1018x
2045 999,020 (39,422) 959,597 871,850.00 1.1006x
2046 1,019,000 (40,211) 978,789 887,450.00 1.1029x
2047 1,039,380 (41,015) 998,365 905,687.50 1.1023x
2048 1,060,168 (41,835) 1,018,332 921,300.00 1.1053x
2049 1,081,371 (42,672) 1,038,699 939,287.50 1.1058x
2050 1,102,998 (43,526) 1,059,473 959,387.50 1.1043x
2051 1,125,058 (44,396) 1,080,662 981,337.50 1.1012x
2052 1,147,559 (45,284) 1,102,275 999,875.00 1.1024x
Total $26,215,289 ($1,034,486) $24,710,098 $22,868,114.24 * Preliminary; subject to change.
[1] Assigned Special Tax for Fiscal Year 2022-23 (assuming full buildout) escalating by 2% per year, per the Rate and Method of Apportionment.
[2] Based on an estimated Administration Expense budget of $25,000 in FY 2021-22. [3] Net special taxes required of $150,000 based on the Capitalized interest included to cover interest payments through September 1, 2023.

Source: Underwriter and DTA.

EXHIBIT 3
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25 THE DISTRICT AND IMPROVEMENT AREA 2
Formation of the District and Improvement Area 2
On June 19, 2018, the City Council adopted the Resolution of Formation, which formed the District and Improvement Area 2 therein. The District was established and authorized to incur bonded indebtedness in an aggregate principal amount not to exceed $60,000,000 for Improvement Area 2 at a special election in the District held on the same day. Change proceedings were undertaken in February 2020 to amend the rate and method of apportionment of special tax for Improvement Area 2 and modify the boundaries of Improvement Area 2. In January 2022, certain parcels that were formerly within Improvement Area 2 were moved into newly established Improvement Area 3 and Improvement Area 4. The Bonds will be the first series to be issued for Improvement Area 2; the Bonds are only payable from net Special Taxes levied in Improvement Area 2, as described herein.

Location and Description of the District and the Immediate Area The District. The District is bounded on the west by Bishop Cut, on the north by Eight Mile Road, on the east by Regatta Lane and on the south by Disappointment Slough in the City.

It is part of a larger development project, as described further herein. See “OWNERSHIP AND DEVELOPMENT OF IMPROVEMENT AREA 2.”
Maps. The maps on the following pages show the area of the District and Improvement Area 2 therein.

EXHIBIT 3
1431
26 [Reserved for Map #1 – Aerial Overview]
EXHIBIT 3
1432
27 [Reserved for Map #2 – DTA Map Overview]
EXHIBIT 3
1433
28 [Reserved for Map #3 – Detailed Improvement Area 2 Plan] EXHIBIT 3
1434
29 Environmental Matters
Flood Zone. According to the Federal Emergency Management Agency (FEMA) National Flood Insurance Program, Flood Insurance Rate Map (FIRM), the subject is located within Zone X (areas outside of the 0.2% annual chance flood plain), as reflected by FEMA map panel 06077C0295F (dated October 16, 2009).

Seismic Conditions. According to the Seismic Safety Commission, the subject properties are located within Zone 3, which is considered to be the lowest risk zone in California. There are only two zones in California: Zone 4, which is assigned to areas near major faults; and Zone 3, which is assigned to all other areas of more moderate seismic activity. In addition, the subject is not located in a Fault-Rupture Hazard Zone (formerly referred to as an Alquist-Priolo Special Study Zone), as defined by Special Publication 42 (revised January 1994) of the California Department of Conservation, Division of Mines and Geology.

Fire Hazard. Land in the District is not located within a High Fire Hazard Severity Zone or Very High Fire Hazard Severity Zone as defined by CalFIRE.

The Improvements
The City expects to utilize proceeds of the Bonds to reimburse costs expended for infrastructure facilities constructed and necessary to facilitate development in Improvement Area 2 and, more broadly, the District. Authorized District facilities consist generally of roadway improvements, water and wastewater system improvements, drainage system improvements, sound walls, landscaping and certain incidental expenses. The Special Tax Formula provides that the funding of Improvement costs can also be made from collections of the Special Tax available as the “pay-as-you-go” component of Special Taxes. The pay-as-you-go funding component could provide for funding of the cost of the Improvements in excess of the amount provided from Bond proceeds through annual Special Tax collections in excess of the amount needed to pay the debt service on the Bonds. See “SECURITY AND SOURCES OF PAYMENT FOR THE BONDS – Special Tax Methodology.”
Market Absorption Report
In connection with the issuance of the Bonds, the City hired The Gregory Group, Folsom, California (the “Absorption Consultant”) to perform market absorption study services related to the development of the 292 planned single-family homes in Improvement Area 2. The Absorption Consultant’s report (the “Absorption Report”) describes the planned development based on information available as of May 2022, and is attached hereto as APPENDIX C.

The Absorption Report included market pricing and absorption analysis for the 292 single-family homes planned for Improvement Area 2. The absorption analysis is based on information provided by the Master Developer and the Merchant Builders to the Absorption Consultant (as well as estimates by the Absorption Consultant) which includes an estimate as to when the villages opened for sales, infrastructure development, grading schedules, marketing considerations and anticipated market conditions. Furthermore, there are expected to be (and the market can sustain) several different projects selling simultaneously within each product type but built by different builders. Additional factors considered in predicting absorption rates are:
• The desirability of Westlake Villages as a new-home destination EXHIBIT 3
1435
30 • Increasing new-home sales within the subject market area • Limited future inventory in the subject market area
• Current absorption rates for similar product types within the subject market area • Overall improving economic conditions and excellent housing conditions within the North Central Valley Region.

The Absorption Consultant concludes that Improvement Area 2 can absorb an average of 1 unit per week per product offering for all of the product offerings (within the two phases and five product types) over the marketing life of the development given the pricing (with home sizes ranging from 1,590 to 3,153 square feet and base prices range from $539,000 to $687,950).

Based on the foregoing and as set forth in more detail in the Absorption Report, the Absorption Consultant’s conclusions on absorption of the 292 single-family homes planned for Improvement Area 2 are set forth in the following tablet:

Project/Village Merchant Builder
Total
Units
Sold as of
3/31/22
Remainder
2022 2023 2024
Summers Bend (Village L) Richmond Am. Homes 96 8 39 49 -- Westlake (Village M) Meritage Homes 84 4 39 41 --
Autumn Trails (Village N) Richmond Am. Homes 112 12 39 52 9 Totals/Averages 292 24 117 142 9
___________
Note: The number of units that are being absorbed in the above table are based on home sales (i.e., entering into a contract) and are not based on actual closings to individual homeowners.

Source: Absorption Consultant.

Neither the City nor the Underwriter is obligated to make, and neither has undertaken to make, an independent verification of the information contained in the Absorption Report and neither the City nor the Underwriter assumes responsibility for the accuracy or completeness of the Absorption Report. The Absorption Report should be read in its entirety, and a complete copy thereof is set forth as APPENDIX C – THE ABSORPTION REPORT.

OWNERSHIP AND DEVELOPMENT OF PROPERTY WITHIN IMPROVEMENT AREA 2 Unpaid Special Taxes do not constitute a personal indebtedness of the owners of the parcels within Improvement Area 2. There is no assurance that the present property owners or any subsequent owners will have the ability to pay the Special Taxes or that, even if they have the ability, they will choose to pay the Special Taxes. An owner may elect to not pay the Special Taxes when due and cannot be legally compelled to do so. Neither the City nor any Bondowner will have the ability at any time to seek payment directly from the owners of property within Improvement Area 2 of the Special Tax or the principal or interest on the Bonds, or the ability to control who becomes a subsequent owner of any property within Improvement Area 2.

The Master Developer and the Merchant Builders have provided certain information set forth in this section entitled “OWNERSHIP AND DEVELOPMENT OF PROPERTY WITHIN IMPROVEMENT AREA 2.” In addition, any Internet addresses included below are for reference only, and the information on those Internet sites is not a part of this Official Statement or EXHIBIT 3
1436
31 incorporated by reference into this Official Statement. Certain other information contained below has been obtained from the Appraisal. See APPENDIX B.

No assurance can be given that development of the property will be completed, or that it will be completed in a timely manner. The Special Taxes are not personal obligations of the developers or of any subsequent landowners; the Bonds are secured only by the Special Taxes and moneys available under the Fiscal Agent Agreement. See “SECURITY FOR THE BONDS” and “SPECIAL RISK FACTORS” herein.

Current Ownership
The following table shows the Assigned Special Taxes and Share of Assigned Special Taxes among the owners of property in Improvement Area 2 as of the July 1, 2022 date of value of the Appraisal. The Special Tax for Fiscal Year 2022-23 will only be levied on Developed Property as defined in the Special Tax Formula. Additional information on the Master Developer and each of the Merchant Builders and their planned development in Improvement Area 2 is provided below.

Table 1
Improvement Area 2 of the City of Stockton
Community Facilities District No. 2018-2 (Westlake Villages II) Ownership Based on Assigned Fiscal Year 2022-23 Special Tax Owners of Record
Number of
Lots [1] Taxable Acre
Est. FY 2022-23
Assigned
Special Taxes [2]
Share of
Special Tax
Meritage Homes [2] 84 12.54 $240,334 29.48%
Richmond American Homes [3] 108 30.00 $574,962 70.52%
Totals 292 42.54 $815,297 100.00%
[1] Source: Appraisal prepared by Integra Realty Resources, dated April 29, 2022. [2] Based on the area/acreage identified for residential lots, on the recorded Subdivision Map of Village M (Tract No. 3591), of 12.54 acres. [3] Based on the area/acreage identified for residential lots, on the recorded Subdivision Maps of Village L (Tract No. 3590) and Village N (Tract No. 3592), of 16.8 acres and 13.2 acres, respectively.
[4] Based on the application of the backup special tax pursuant to Section C.3 of the Rate and Method of Apportionment, in an amount of $19,165 per acre for FY 2022-23.

Source: DTA.

Development Plan and Current Status
General. Land in the District is planned to be developed into 2,163 homes ranging in size from 1,400 to 3,500 square feet. It is bounded on the west by Bishop Cut, on the north by Eight Mile Road, on the east by Regatta Lane and on the south by Disappointment Slough in the City. The land in the District is part of a larger residential community referred to as the “Westlake Villages Development,” being developed by the Master Developer in the City (herein, the “Westlake Villages Development”).

The Westlake Villages Development includes approximately 580 acres that is planned for approximately 2,163 homes including 767 active adult (55+ age-restricted) homes (not including the 322 single-family homes built in the initial phase of the Westlake Village Development that are located outside the District, referred to by the Master Developer as Villages O, P & Q) and approximately 68 acres of lakes, an 11-acre community park and a recreation center to be located on 5 acres. There is no commercial component to the Westlake EXHIBIT 3
1437
32 Villages Development. The Westlake Villages Development covers the land in Improvement Area 2 of the District as well as in the three other improvement areas established for the District and land outside the District. Only the land in Improvement Area 2 is security for the Bonds.

The Master Developer maintains an internet website (www.westlakeliving.com) for the Westlake Villages Development. The website address is given for reference and convenience only, and the information on the website may be incomplete or inaccurate and has not been reviewed by the City or the Underwriter. Nothing on the website is a part of this Official Statement or incorporated into this Official Statement by reference.

Backbone Infrastructure and Other Development Conditions. The Development Agreement and Subdivision Agreement require satisfaction of various items as conditions of development of the Westlake Villages Development. All of the backbone infrastructure improvements necessary for the build-out of the 292 single-family homes in Improvement Area 2 (Villages L, M, and N), including backbone roads and related improvements are in place. A listing of the key capital improvements – both backbone infrastructure and in-tracts – follows.

Table 2
List of Key Capital Improvements and In-Tracts
As of May 1, 2022
List of Capital Improvements/
Discrete Components
Planning
Area
Total Costs
Estimated [1]
Percent of
Total Cost
Estimate
Completion
Percentage
/ Expended
to Date
Allocated to
Villages L, M, N [2]

WATER IMPROVEMENTS
VILLAGE L IN-TRACT 2 $565,743 2.15% 100.00% $565,743
VILLAGE M IN-TRACT 2 $390,634 1.49% 100.00% $390,634
VILLAGE N IN-TRACT 2 $503,809 1.92% 100.00% $503,809
SUBTOTAL $1,460,186 5.55% $1,460,186

SANITARY SEWER IMPROVEMENTS
VILLAGE L IN-TRACT 2 $678,312 2.58% 100.00% $678,312
VILLAGE M IN-TRACT 2 $563,094 2.14% 100.00% $563,094
VILLAGE N IN-TRACT 2 $598,498 2.28% 100.00% $598,498
SUBTOTAL $1,839,905 7.00% $1,839,905

STREET/ROADWAY IMPROVEMENTS
VILLAGE L SPINE 2 $0 0.00% 100.00% $0
VILLAGE L IN-TRACT 2 $2,594,202 9.86% 100.00% $2,594,202 VILLAGE M SPINE 2 $1,105,348 4.20% 100.00% $1,105,348
VILLAGE M IN-TRACT 2 $1,540,089 5.86% 100.00% $1,540,089 VILLAGE N SPINE 2 $1,870,000 7.11% 100.00% $1,870,000
VILLAGE N IN-TRACT 2 $2,020,670 7.68% 100.00% $2,020,670 WESTLAKE VILLAGES DRIVE 2 $9,067,896 34.48% 100.00% $9,067,896 SUBTOTAL $18,198,206 69.20% $18,198,206

STORM DRAIN IMPROVEMENTS
VILLAGE L IN-TRACT 2 $708,503 2.69% 100.00% $708,503
VILLAGE M IN-TRACT 2 $581,938 2.21% 100.00% $581,938
VILLAGE N IN-TRACT 2 $979,386 3.72% 100.00% $979,386
SUBTOTAL $2,269,827 8.63% $2,269,827
PARKS AND REC. IMPROVEMENTS
LAKE 4 2 $2,529,080 9.62% 100.00% $2,529,080
SUBTOTAL $2,529,080 9.62% $2,529,080
TOTAL ESTIMATE $26,297,204 100.00% $26,297,204
[1] Estimates, subject to change.
[2] To be financed from various bond issuances.

Source: Master Developer.

EXHIBIT 3
1438
33 Utilities. It is expected that utility service for the taxable property in Improvement Area 2 will be provided by the following entities:

Utility Provider
Water/Sewer City of Stockton
Electricity/Natural Gas Pacific Gas & Electric (PG&E)
Data/Phone Comcast/AT&T
Final Map Status. All 292 single-family residential units have received final map approval.

Ownership of Lots by Merchant Builders. Village L and Village N, owned by Richmond American Homes, are planned for 96 homes and 112 homes, respectively. Village M, owned by Meritage Homes, is planned for 84 homes.

Homes Under Construction. Richmond American Homes and Meritage Homes are current building both model homes and production homes in Improvement Area 2. As of April 15, 2022 (the date of value of the Appraisal), Richmond American Homes had 26 homes under construction, while Meritage Homes had 30 homes under construction.

Development Agreement and Subdivision Agreement
Development Agreement. The City entered into a Development Agreement in September 2004 (as amended to date, the “Development Agreement”) with Spanos Family Partnership, a California general partnership and certain individuals to which Stockton Westlake Investment, LLC, and the Merchant Builders are successors in interest with respect to the land owned by each party in the District. The Development Agreement’s purpose is to preserve existing policies, rules and regulations with respect to the Westlake Villages Development. All of the property in the District is subject to the requirements of the Development Agreement. The Development Agreement was entered into in accordance with Sections 65864 through 65869.5 of the California Government Code, as implemented through the Stockton City Code. The Development Agreement runs with the property and is set to expire on January 10, 2040.

Subdivision Agreement. The City entered into a Subdivision Agreement on January 31, 2006 (as amended to date, the “Subdivision Agreement”) with Spanos Family Partnership, a California general partnership, which subsequently assigned the Subdivision Agreement to Stockton Westlake Investment, LLC. The Subdivision Agreement is the primary implementation tool for the development of the Westlake Villages project and creates a binding contract between the City and the parties thereto, and their assigned successors in interest, which sets forth the needed infrastructure improvements, park dedication requirements, timing and method for financing improvements and other specific performance obligations of the City and the Master Developer and its successors, including obligations related to development of the property in the District, with the terms, conditions, rules, regulations, entitlements, vested rights and other provisions relating to the development of the property in the District. Included are provisions relating to infrastructure improvements, public dedication requirements, landscaping amenities and other obligations of the parties.

The Subdivision Agreement runs with the property, and may be modified only by mutual consent of the parties. With the Agreement in place, subject to compliance with the terms of the Agreement, construction of homes within the District may occur upon City approval of EXHIBIT 3
1439
34 subdivision maps, satisfaction of certain design requirements and conditions of such maps and issuance of building permits.

The Master Developer
Ownership Structure of Master Developer. The Master Developer has been installing the public improvements necessary for development of the District, exercising options to purchase land within the District from Stockton Westlake Investments, LLC, and selling lots to the Merchant Builders. Both the Master Developer and Stockton Westlake Investments, LLC are owned by members of the Spanos family. The Master Developer has been involved in the entitlement and development of the Westlake Villages Development since 2014. The Spanos family, through various entities, has owned the land for more than 25 years.

Relevant Experience of Spanos Family and Related Entities. Starting in 1960 by Alex G. Spanos, the Spanos family has formed a variety of privately held real estate companies focused on the development of multi-family housing and master planned communities (collectively, the “Spanos Family Companies”). Over the past 60 years, Spanos Family Companies have developed more than 125 apartment projects across the country consisting of over 50,000 apartment units. Spanos Family Companies currently have offices in 7 states, with the primary office located in Stockton, California. Additionally, the Spanos family has owned a majority stake in the Los Angeles Chargers football team (previously the San Diego Chargers) for over 35 years.

Spanos Family Companies have worked on master planned communities in Stockton for more than 25 years. Spanos Family Companies have entitled and sold Spanos Park West, a largely residential subdivision in the City, including more than 1,700 homes built to the immediate east of Westlake Villages Development, along with the Parkwest Place shopping center and apartments and Walmart in the late 1990’s and early 2000’s. Preceding that project, Spanos Family Companies entitled and sold Spanos Park East, a residential subdivision in the City, including approximately 1,000 homes located on the east side of Highway 5 in the City that were built in the early 1990s.

Master Developer’s Financing Plan
Cost Incurred for the Improvements. The Master Developer has expended over $33 million dollars on the construction and installation of Improvements for Improvement Area 1 and Improvement Area 2, which commenced in late 2018.

The Improvements include spine road infrastructure on Regatta Lane, Scott Creek Drive, traffic signals located at Eight Mile Road & Regatta Lane and Scott Creek Drive & Regatta Lane, perimeter precast masonry walls, common area landscaping, an artificial lake, sanitary lift station, wet utility trunk lines (storm drain, sanitary sewer, water, and non-potable water lines) and partial improvements to Eight Mile Road. Further, the Improvements include the in-tract construction and installation of paved streets, wet utility trunk lines (storm drain, sanitary sewer, water and non-potable water lines), joint trenches for dry utilities, curbs, gutters, and sidewalks.

All required fees and engineering and consulting required entitlements, permits and soft costs have been paid for the Improvements.

See Table 2 above, for a detailed break-down of the status and costs of the backbone and in-tract improvements constructed by the Master Developer for Improvement Area 2.

EXHIBIT 3
1440
35 Funding Sources. The Master Developer has used, and intends to use, the following sources of funds to finance the Improvements for the Westlake Villages Development:
• Equity from the partner-entities comprising the Master Developer (see “–The Master Developer,” above, for more information about these entities). • Sales of lots in the District (including Improvement Area 2) to merchant builders and other developers (see “– The Merchant Builders” herein). • Proceeds of special tax bonds secured by land within the District (including Improvement Area 2).
• Pay-as-you-go Special Taxes available to the Master Developer under the Acquisition Agreement (see “–Acquisition Agreement” below).

Notwithstanding the belief of the Master Developer that it will have sufficient funds to complete its planned development, no assurance can be given that sources of financing available to the Master Developer will be sufficient to complete such development as currently anticipated. While the Master Developer has made internal financing available in the past for similar activities, there can be no assurance whatsoever of its willingness or ability to do so in the future. Neither the Master Developer nor the Spanos Family Companies or any of their affiliates has any legal obligation of any kind to make any such funds available or to obtain loans or lines of credit. If and to the extent that internal financing, loan proceeds, lines of credit, or bond proceeds are inadequate to pay the costs to complete the Master Developer’s planned development, there could be a shortfall in the funds required to complete such proposed development and portions of such development might not be completed.

Acquisition Agreement. In connection with the formation of the District, the City and the Master Developer entered into a Funding, Construction and Acquisition Agreement (the “Acquisition Agreement”) which provides that the Master Developer will construct (or cause to be constructed or funded) the Improvements, and the City, upon completion of construction and acceptance (or through progress payments prior to completion of the entire Improvement), will purchase the Improvements or reimburse the Master Developer for expended amounts from the proceeds of the Bonds and/or Special Taxes on a pay-as-you-go basis. The Master Developer will be responsible for the portion of the cost of construction of the Improvements not paid with Bond proceeds.

The Rate and Method provides that the funding of Improvement costs can also be made from collections of the Special Tax available as the “pay-as-you-go” component of Special Taxes. The pay-as-you-go funding component is expected to provide for funding of the cost of a portion of the Improvements in excess of the amount provided from bond proceeds (if such proceeds are not sufficient) through annual Special Tax collections in excess of the amount needed to pay the debt service. The City contemplates utilizing this funding mechanism during the time the Bonds are outstanding. Additionally, after the final maturity date of the Bonds and any additional bonds issued to reimburse developers for costs of the Improvements, the City expects to continue to levy Special Taxes for payment of the “Development Impact Fee Deferral” (as defined in the Rate and Method) which levy may secure future bonds issued after payment in full of the Bonds and any additional bonds issued under the Fiscal Agent Agreement. See “SECURITY AND SOURCES OF PAYMENT FOR THE BONDS – Special Tax Methodology” and “ – Special Tax Fund.”
EXHIBIT 3
1441
36 Richmond American Homes
Richmond American Homes’ Development Plan. Richmond American Homes purchased 208 lots from the Master Developer in finished lot condition, which lots are located in Village L (96 lots) and Village N (112 lots). Richmond American Homes plans to build out these units within “Summers Bend at Westlake” and “Autumn Trails at Westlake” neighborhoods. The first homes in the neighborhood are expected to be sold and closed to individual homeowners in late 2022, and the final homes in the neighborhood by 2024. Richmond American Homes plans to fund the purchase of the lots from the Master Developer and its home construction costs through internally generated funds and sales of homes to individual homeowners.

Richmond American Homes’ plans are summarized as follows:

Community No. of
Lots
Floor
Plans
Square
Footage
Base Pricing
Summers Bend (Village L) 96 4 1,820 - 3,040 $625,950 - $687,950 Autumn Trails (Village N) 112 4 1,590 - 2,380 $584,950 - $634,950 Richmond American and its Parent Corporation. Richmond American Homes is a subsidiary of M.D.C. Holdings, Inc., a Delaware corporation (“Richmond American”).

Richmond American’s common stock is publicly traded on the NYSE under the symbol “MDC.” Richmond American’s business consists of two primary operations, homebuilding and financial services. Its homebuilding subsidiaries build and sell primarily single-family detached homes, with each homebuilding subsidiaries serving as the general contract for its project and retaining subcontractors for land development home construction. Its financial services operations include subsidiaries that provide mortgage financing, place title insurance and homeowners insurance for homebuyers, as well as providing general liability insurance for Richmond American’s subsidiaries and most of its subcontractors. The company’s homebuilding subsidiaries have been operating under the Richmond American Homes name for many years, and it currently has homebuilding operations in 9 states across the country.

Richmond American’s website address is http://www.richmondamerican.com. The website address is given for reference and convenience only, and the information on the website may be incomplete or inaccurate and has not been reviewed by the City or the Underwriter. Nothing on the website is a part of this Official Statement or incorporated into this Official Statement by reference.

Additional Information about Richmond American Homes is subject to the informational requirements of the Securities Exchange Act of 1934 (the “Exchange Act”) and in accordance therewith files reports, proxy statements, and other information, including financial statements, with the SEC. The SEC maintains an Internet web site that contains reports, proxy and information statements and other information regarding registrants that file electronically with the SEC, including Richmond American Homes. The address of such Internet web site is www.sec.gov. All documents subsequently filed by Richmond American Homes’ pursuant to the requirements of the Exchange Act after the date of this Official Statement will be available for inspection in such manner as the SEC prescribes. Copies of Richmond American Homes’ Annual Report and each of its other quarterly and current reports, including any amendments, are available from Richmond American Homes’ website at www.richmondamerican.com. The website address is given for reference and convenience only. The information on the website may be incomplete or inaccurate and has not been reviewed by the City or the Underwriter.

EXHIBIT 3
1442
37 Nothing on the website is a part of this Official Statement or incorporated into this Official Statement by reference.

Although Richmond American Homes expects to have sufficient funds available to undertake and complete its development activities in Improvement Area 2, there can be no assurance, however, that amounts necessary to finance the remaining development and home construction costs will be available to Richmond American Homes when needed. Any contributions Richmond American Homes or its affiliates to fund the costs of such development and home construction are entirely voluntary. If and to the extent that internal funding, including but not limited to home sales revenues, are inadequate to pay the costs to complete the planned development by Richmond American Homes and other financing by Richmond American Homes is not put into place, there could be a shortfall in the funds required to complete the proposed development by Richmond American Homes in Improvement Area 2 and the remaining portions of the development may not be developed.

Meritage Homes
Meritage Homes’ Development Plan. Meritage Homes purchased 84 lots from the Master Developer in finished lot condition, which lots are located in Village M. Meritage Homes plans to build out these units within “Westlake” neighborhood. The first homes in the neighborhood are expected to be sold and closed to individual homeowners in late 2022, and the final homes in the neighborhood by the end of 2023. Meritage Homes plans to fund the purchase of the lots from the Master Developer and its home construction costs through internally generated funds and sales of homes to individual homeowners.

Meritage Homes’ plans are summarized as follows:

Community
No. of
Lots
Floor
Plans
Square
Footage
Base
Pricing
Westlake (Village M) 84 6 1,743 - 3,153 $541,990 and up Meritage Homes and its Parent Corporation. Meritage Homes California, Inc. (“Meritage Homes”) is a subsidiary of Meritage Homes Corporation, a Maryland corporation (“Meritage”). Meritage’s common stock is publicly traded on the NYSE under the symbol “MTH.” Meritage designs and builds single-family homes, historically focused on high-growth regions of the United States and offering a variety of entry-level and first move-up homes. It has homebuilding operations in three regions: West, Central and East, which are comprised of nine states: Arizona, California, Colorado, Texas, Florida, Georgia, North Carolina, South Carolina and Tennessee. Meritage also offers title and escrow, mortgage, and insurance services.

Carefree Title Agency, Inc., its wholly-owned title company, provides title insurance and closing/settlement services to its homebuyers. Meritage Homes Insurance Agency, Inc., its wholly-owned insurance broker, works in collaboration with insurance companies nationwide to offer homeowners insurance and other insurance products to its homebuyers. Its financial services operations also provide mortgage services to its homebuyers through an unconsolidated joint venture.

Meritage’s website address is http://www.meritagehomes.com. The website address is given for reference and convenience only, and the information on the website may be incomplete or inaccurate and has not been reviewed by the City or the Underwriter. Nothing on the website is a part of this Official Statement or incorporated into this Official Statement by reference.

EXHIBIT 3
1443
38 Meritage is subject to the informational requirements of the Securities Exchange Act of 1934 (the “Exchange Act”) and in accordance therewith files reports, proxy statements, and other information, including financial statements, with the SEC. The SEC maintains an Internet web site that contains reports, proxy and information statements and other information regarding registrants that file electronically with the SEC, including Meritage. The address of such Internet web site is www.sec.gov. All documents subsequently filed by Meritage pursuant to the requirements of the Exchange Act after the date of this Official Statement will be available for inspection in such manner as the SEC prescribes. Copies of Meritage’s Annual Report and each of its other quarterly and current reports, including any amendments, are available from Meritage’s website at www.meritagehomes.com. The website address is given for reference and convenience only. The information on the website may be incomplete or inaccurate and has not been reviewed by the City or the Underwriter. Nothing on the website is a part of this Official Statement or incorporated into this Official Statement by reference.

Although Meritage Homes expects to have sufficient funds available to undertake and complete its development activities in Improvement Area 2, there can be no assurance, however, that amounts necessary to finance the remaining development and home construction costs will be available to Meritage Homes when needed. Any contributions Meritage Homes or its affiliates to fund the costs of such development and home construction are entirely voluntary.

If and to the extent that internal funding, including but not limited to home sales revenues, are inadequate to pay the costs to complete the planned development by Meritage Homes and other financing by Meritage Homes is not put into place, there could be a shortfall in the funds required to complete the proposed development by Meritage Homes in Improvement Area 2 and the remaining portions of the development may not be developed.

EXHIBIT 3
1444
39 VALUE OF PROPERTY WITHIN IMPROVEMENT AREA 2 AND SPECIAL TAX BURDEN The value of the land within Improvement Area 2 is a critical factor in determining the investment quality of the Bonds. If a property owner defaults in the payment of the Special Tax, the City’s only remedy is to foreclose on the delinquent property in an attempt to obtain funds with which to pay the delinquent Special Tax. Although a portion of Improvement Area 2 is developed, a variety of economic, political, and natural occurrences incapable of being accurately predicted can affect land values and eventual completion of development. See “SPECIAL RISK FACTORS – Property Values and Property Development.” Unpaid Special Taxes do not constitute a personal indebtedness of the owners of the parcels within Improvement Area 2, and the owners have made no commitment to pay the principal of or interest on the Bonds or to support payment of the Bonds in any manner. There is no assurance that the owners have the ability to pay the Special Taxes or that, even if they have the ability, they will choose to pay such taxes. An owner may elect to not pay the Special Taxes when due and cannot be legally compelled to do so. Neither the City nor any Bondholder will have the ability at any time to seek payment from the owners of property within Improvement Area 2 of any Special Tax or any principal or interest due on the Bonds, or the ability to control who becomes a subsequent owner of any property within Improvement Area 2.

The Appraisal
General. At the request of the City, Integra Realty Resources, Sacramento, California (the “Appraiser”) prepared an Appraisal Report with a date of value of April 15, 2022 (the “Appraisal”). The Appraisal estimates a value for all taxable property in Improvement Area 2.

The Appraisal is set forth in its entirety in APPENDIX B hereto. The description herein of the Appraisal is intended for limited purposes only; the Appraisal should be read in its entirety. The conclusions reached in the Appraisal are subject to certain assumptions and qualifications which are set forth in the Appraisal.

Property Appraised. The appraised properties consist of all 292 improved residential lots, with new homes under construction, located within Improvement Area 2.

Value Estimates. The Appraiser was requested to provide a market value of the appraised properties by Assessor’s parcel, as welI as a cumulative, or aggregate, value of the property, as of the date of inspection (value). The Appraiser has concluded a market value estimate of $58,010,000 (rounded) for taxable property in Improvement Area 2, representing the cumulative, or aggregate, values, in accordance with the assumptions and conditions set forth in the Appraisal. Values by ownership are shown in the following table.

Table 4
Improvement Area 2 of the City of Stockton
Community Facilities District No. 2018-2 (Westlake Villages II) Appraised Value of Taxable Property in Improvement Area 2 Owner Appraised Value
Richmond American Homes (208 lots*) $40,652,544
Meritage Homes (84 lots*) 17,358,912
Total $58,011,456
_____________
* For each Merchant Builder, ownership includes improved lots and homes under construction.

Source: The Appraisal.

EXHIBIT 3
1445
40 The valuation accounts for the impact of the lien of the Special Tax and excludes property in Improvement Area 2 designated for public and quasi-public purposes and not subject to the Special Tax of Improvement Area 2.

Appraisal Methodology. In the Appraisal, the Appraiser provides estimates of market value of the appraised properties by ownership and Assessor’s parcel, as well as an aggregate, or cumulative value of the properties. The Appraiser used the sales comparison approach to value to determine the market value of each component comprising the appraised properties (being improved residential lots, with some new homes under construction). The cumulative, or aggregate, value of the appraised properties represents the sum of the value estimates concluded for each ownership interest, which is not equivalent to the market value of Improvement Area 2 as a whole. For additional details, see APPENDIX B.

Hypothetical Condition. The market value estimated by the Appraiser is based on a hypothetical condition. A hypothetical condition is defined by USPAP as “a condition, directly related to a specific assignment, which is contrary to what is known by the appraiser to exist on the effective date of the assignment results, but is used for the purpose of the analysis.” The estimate of market value is subject to the hypothetical condition that certain of the proceeds from the Bonds are available to reimburse for infrastructure improvements completed. The estimate of market value accounts for the impact of the Lien of the Special Taxes securing the Bonds.

Extraordinary Assumptions and Limiting Conditions. In considering the estimate of value evidenced by the Appraisal, the Appraisal is based upon a number of standard and special assumptions that affect the estimates as to value, some of which include that there were no adverse soil conditions, toxic substances or other environmental hazards that may interfere or inhibit development of the appraised properties. If, at some future date, items are discovered that are determined to have a detrimental impact on value, the Appraiser reserves the right to amend the opinion of value stated in the Appraisal. For more information and a complete description of certain other assumptions made by the Appraiser, see “APPENDIX B – The Appraisal.”
Because the Appraiser arrived at an estimate of current market value based upon certain assumptions which may or may not be fulfilled, no assurance can be given that, should the parcels become delinquent due to unpaid Special Taxes, and be foreclosed upon and offered for sale for the amount of the delinquency, any bid would be received for such property or, if a bid is received, that such bid would be sufficient to pay such delinquent Special Taxes.

No assurance can be given that the estimated absorption will be achieved or attained over an extended period of time; real estate is cyclical in nature, and it is impossible to accurately forecast and project specific demand over a projected absorption period. See “SPECIAL RISK FACTORS – Property Values and Property Development.” Limitations of Appraised or Assessed Valuation. Property values may not be evenly distributed throughout Improvement Area 2; thus, certain parcels may have a greater value than others. This disparity is significant because in the event of nonpayment of the Special Tax, the only remedy is to foreclose against the delinquent parcel.

No assurance can be given that the foregoing valuation can or will be maintained during the period of time that the Bonds are outstanding in that the City has no control over the market EXHIBIT 3
1446
41 value of the property within Improvement Area 2 or the amount of additional indebtedness that may be issued in the future by other public agencies, the payment of which, through the levy of a tax or an assessment, may be on a parity with the Special Taxes. See “– Overlapping Liens and Priority of Lien” below.

For a description of certain risks that might affect the assumptions made in the Appraisal, see “SPECIAL RISK FACTORS” herein.

Value to Special Tax Burden Ratios
The value of the land within Improvement Area 2 is a critical factor in determining the investment quality of the Bonds. If a property owner defaults in the payment of a Special Tax, the County’s only remedy is to foreclose on the delinquent property in an attempt to obtain funds with which to pay the delinquent Special Taxes. See “SECURITY FOR THE BONDS - Delinquent Payments; Teeter Plan; Covenant for Superior Court Foreclosure” and “SPECIAL RISK FACTORS – Bankruptcy and Foreclosure Delays.” Reductions in District property values due to a downturn in the economy, natural disasters such as earthquakes or floods, stricter land use regulations or other events could have an adverse impact on the security for payment of the Special Taxes.

The Special Tax is levied on each parcel within Improvement Area 2 and only the respective individual parcel is responsible for its allocated Special Tax.

In comparing the value of the real property within Improvement Area 2 and the principal amount of the Bonds, it should be noted that only the real property upon which there is a delinquent Special Tax can be foreclosed upon, and the real property within Improvement Area 2 cannot be foreclosed upon as a whole to pay delinquent Special Taxes of the owners of such parcels within Improvement Area 2 unless all of the property is subject to a delinquent Special Tax. In any event, individual parcels may be foreclosed upon separately to pay delinquent Special Taxes levied against such parcels.
* Preliminary; subject to change.

EXHIBIT 3
1447
42 Share of Assigned Special Tax – At Build-Out. The following table summarizes the estimated total Assigned Special Tax and share of Assigned Special Tax for parcels in Improvement Area 2, upon build-out.

Table 5
Improvement Area 2 of the City of Stockton
Community Facilities District No. 2018-2 (Westlake Villages II) Assigned Special Tax Calculation – At Build-Out
Land
Use
Class Property Description
Assigned
Special Tax
No. of
Planned Units*
Estimated Total
Assigned
Special Tax
Share of
Assigned Special
Tax
1 Single Family Detached (>3,001 SF) $3,091 73 $225,665 34.92% 2 Single Family Detached (2,501 - 3,000 SF) 2,396 73 174,923 27.07 3 Single Family Detached (2,001 - 2,500 SF) 1,769 73 129,139 19.99 4 Single Family Detached (1,501 - 2,000 SF) 1,595 73 116,435 18.02 5 Single Family Detached (< 1,501 SF) 1,459 0 0 0.00
Total 292 $646,162 100.00%
Source: DTA.

Share of Assigned Special Tax – Current Development. The following table summarizes the estimated total Assigned Special Tax and share of Assigned Special Tax for parcels in Improvement Area 2, based on the status of current development.

Table 6
Improvement Area 2 of the City of Stockton
Community Facilities District No. 2018-2 (Westlake Villages II) Assigned Special Tax Calculation – Current Development Status (Building Permits Pulled as of May 1, 2022)
Land
Use Class Property Description
FY 2022-2023
Assigned
Special Tax
Building Permits
Issued (1)
Total Assigned
Special Tax
Share of
Special Taxes
1 Single Family Detached (>3,001 SF) $3,091 0 $0 0.00%
2 Single Family Detached (2,501 - 3,000 SF) 2,396 0 0 0.00 3 Single Family Detached (2,001 - 2,500 SF) 1,769 0 0 0.00 4 Single Family Detached (1,501 - 2,000 SF) 1,595 0 0 0.00 5 Single Family Detached (< 1,501 SF) 1,459 0 0 0.00
Developed Property Subtotal: 0 $0 0.00%
(1) [Pending confirmation of building permit data.]
Source: DTA.

EXHIBIT 3
1448
43 Table 6a
Improvement Area 2 of the City of Stockton
Community Facilities District No. 2018-2 (Westlake Villages II) Assigned Special Tax Calculation – Final Mapped Property (Building Permits Pulled as of May 1, 2022)
Land Use Class Property Description
Maximum Special
Tax (per Acre)
Actual Special Tax
(per Acre) [2]
Total Final Mapped
Special Tax
Share of Special
Taxes
Final Mapped FINAL MAPPED PROPERTY ([T.B.D] Remaining Acres) [1] $19,165 $19,165 0 0.00% Final Mapped Property Subtotal: $0 0.00%
Developed Property and Final Mapped Property Grand Total: $0 0.00% * Preliminary; subject to change.
[1] [Pending confirmation of building permit data.]
[2] Based on the anticipated Special Tax Requirement, and the application of the Rate and Method of Apportionment.

Source: DTA.

Value-to-Lien Ratios by Major Property Owners. The following table summarizes the value-to-lien ratios of property in Improvement Area 2 against the Bonds and overlapping debt in Improvement Area 2, by major property owners for purposes of application of the Special Tax Formula.

Table 7
Improvement Area 2 of the City of Stockton
Community Facilities District No. 2018-2 (Westlake Villages II) Value-to-Lien Ratio by Major Property Owners as May 7, 2022* Property Owner
No. of
Lots Taxable Acre
Appraised
Value[1]
Est. FY 2022-
23 Assigned
Special Tax
Levy
% of
FY 2022-23
Assigned
Special Tax
Levy
Reclamation
District No. 2042
CFD No. 2001-1 [5]
Series 2022
Bonds[2]
Total
LandSecured
Debt
Value to
Lien
Ratio*
Meritage Homes [2] 84 12.54 $17,358,912 $240,334 29.48% $0 $3,132,052 $3,132,052 5.54 Richmond American Homes [3] 208 30.00 $40,652,544 $574,962 70.52% $0 $7,492,948 $7,492,948 5.43 Totals 292 42.54 $58,011,456 $815,297 100.00% $0 $10,625,000 $10,625,000 5.46 * Preliminary; subject to change.
[1] Source: Appraisal prepared by Integra Realty Resources, dated April 29, 2022. [2] Based on the area/acreage identified for residential lots, on the recorded Subdivision Map of Village M (Tract No. 3591), of 12.54 acres. [3] Based on the area/acreage identified for residential lots, on the recorded Subdivision Maps of Village L (Tract No. 3590) and Village N (Tract No. 3592), of 16.8 acres and 13.2 acres, respectively.
[4] Based on the application of the backup special tax pursuant to Section C.3 of the Rate and Method of Apportionment, in an amount of $19,165 per acre for FY 2022-23. [5] To come.

Source: DTA.

EXHIBIT 3
1449
44 Overlapping Liens and Priority of Lien
The principal of and interest on the Bonds are payable from the Special Tax authorized to be collected within Improvement Area 2, and payment of the Special Tax is secured by a lien on certain real property within Improvement Area 2. Such lien is co-equal to and independent of the lien for general taxes and any other liens imposed under the Act, regardless of when they are imposed on the property in Improvement Area 2. The imposition of additional special taxes, assessments and general property taxes will increase the amount of independent and co-equal liens which must be satisfied in foreclosure. The City, the County and certain other public agencies are authorized by the Act to form other community facilities districts and improvement areas and, under other provisions of State law, to form special assessment districts, either or both of which could include all or a portion of the land within Improvement Area 2.

Other public agencies whose boundaries overlap those of Improvement Area 2 could, without the consent of the City and in certain cases without the consent of the owners of the land within Improvement Area 2, impose additional taxes or assessment liens on the land within Improvement Area 2. The lien created on the land within Improvement Area 2 through the levy of such additional taxes or assessments may be secured on parity with the lien of the Special Tax. In addition, construction loans may be obtained by the homebuilder owners and home loans are likely to be obtained by ultimate homeowners. The deeds of trust securing such debt on property within Improvement Area 2, however, will be subordinate to the lien of the Special Tax.

For example, additional CFD obligations on land in Improvement Area 2 include City of Stockton Community Facilities District No. 2018-3 (Citywide Services and Maintenance). This CFD levies special taxes that pay for authorized public services, which special taxes are on a parity to the lien securing the Special Taxes securing the Bonds.

There can be no assurance that the current owners, or any subsequent owner, will not petition for the formation of other community facilities districts and improvement areas or for a special assessment district or districts and that parity special taxes or special assessments will not be levied by the County or some other public agency to finance additional public facilities, however no other special districts are currently contemplated or foreseen by the City.

Set forth on the following page is an overlapping debt table showing the existing authorized indebtedness payable with respect to property within Improvement Area 2. This table has been prepared by California Municipal Statistics Inc. as of the date indicated, and is included for general information purposes only. Neither the City nor the Underwriter has reviewed the data for completeness or accuracy and make no representations in connection therewith.

EXHIBIT 3
1450
45 Table 8
City of Stockton
Improvement Area 2 of the City of Stockton
Community Facilities District No. 2018-2 (Westlake Villages II) Summary of Overlapping Bonded Debt
As of May 1, 2021
2020-21 Local Secured Assessed Valuation: $9,166,942
DIRECT AND OVERLAPPING TAX AND ASSESSMENT DEBT: % Applicable Debt San Joaquin Delta Community College District General Obligation Bonds 0.009% $ 16,966 Lodi Unified School District General Obligation Bonds 0.044 100,060 Lodi Unified School District SFID No. 1 General Obligation Bonds 0.112 51,339 Reclamation District No. 2042 Community Facilities District No. 2001-1 2.411 107,108 City of Stockton Community Facilities District No. 2018-2, IA 1 100.000 8,970,000 (1) TOTAL DIRECT AND OVERLAPPING TAX AND ASSESSMENT DEBT $9,245,473 OVERLAPPING GENERAL FUND DEBT:

San Joaquin County Certificates of Participation 0.010% $ 6,410 Lodi Unified School District Certificates of Participation 0.044 5,059 City of Stockton Pension Obligation Bonds 0.034 17,937
TOTAL OVERLAPPING GENERAL FUND DEBT $29,406
COMBINED TOTAL DEBT $9,274,879 (2)
Ratios to 2020-21 Assessed Valuation:

Direct Debt ($8,970,000)..................................................... 97.85% Total Direct and Overlapping Tax and Assessment Debt .. 100.86% Combined Total Debt ......................................................... 101.18% ______________
[1] Excludes 2021 Bonds and 2022 Bonds to be sold.
[2] Excludes tax and revenue anticipation notes, enterprise revenue, mortgage revenue and non-bonded capital lease obligations.

Source: California Municipal Statistics, Inc.

Special Tax Collection and Delinquency Rate
The first year for levy and collection of the Special Taxes will be for Fiscal Year 2022-23; accordingly, there is no delinquency history. Future delinquencies in the payment of property taxes (including the Special Taxes) with respect to property in Improvement Area 2, to the extent not covered by the Teeter Plan, could result in draws on the Reserve Fund established, and perhaps, ultimately, a default in the payment on the Bonds. See “SECURITY FOR THE BONDS – Delinquent Payments; Teeter Plan; Covenant for Superior Court Foreclosure” and “SPECIAL RISK FACTORS.”
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46 Sample Tax Bill
The following tables summarize the representative property tax bill for Fiscal Year 2021-22 for certain land use classes of residential property in Improvement Area 2, based on product being developer by Richmond American Homes and Meritage Homes, respectively.

Table 9A
Improvement Area 2 of the City of Stockton
Community Facilities District No. 2018-2 (Westlake Villages II) Effective Tax Rate Analysis Fiscal Year 2022-23
Richmond American Homes – Summer Bend Neighborhood

VILLAGE/NAME/BUILDER VILLAGE L - SUMMER BEND (RICHMOND) ESTIMATED HOME SIZE [1] 3,040 2,630 2,070 1,852
LAND USE CLASS [2] 1 2 3 4
LAND USE CLASS DESCRIPTION (>3,000 SF) (2,501 - 3,000 SF) (2,001 - 2,500 SF) (1,501 - 2,000 SF) CURRENT AVERAGE BASE SALES PRICE [1] $687,950 $652,950 $610,950 $610,951 AD-VALOREM TAXES [3] RATE AMOUNT AMOUNT AMOUNT AMOUNT
BASE PROPERTY TAX RATE 1.0000% $6,879.50 $6,529.50 $6,109.50 $6,109.51 LODI USD BOND 2011R 0.0070% $48.16 $45.71 $42.77 $42.77 LODI USD BOND 2012R 0.0125% $85.99 $81.62 $76.37 $76.37 LONDI USD BOND 2015R 0.0026% $17.89 $16.98 $15.88 $15.88 LODI SFID 1 BOND 2016R 0.0217% $149.29 $141.69 $132.58 $132.58 LODI USD BOND 2017 0.0107% $73.61 $69.87 $65.37 $65.37
LODI USD BOND 2017R 0.0044% $30.27 $28.73 $26.88 $26.88 LODI SFID 1 BOND 2018 0.0311% $213.95 $203.07 $190.01 $190.01 LODIA USD BOND 2020 0.0457% $314.39 $298.40 $279.20 $279.20 SJ DELTA COLLEGE BOND 2015R 0.0126% $86.68 $82.27 $76.98 $76.98 SJ DELTA COLLEGE BOND 2018D 0.0034% $23.39 $22.20 $20.77 $20.77 SJ DELTA COLLEGE BOND 2020R 0.0023% $15.82 $15.02 $14.05 $14.05 TOTAL GENERAL PROPERTY TAXES 1.1540% $7,938.94 $7,535.04 $7,050.36 $7,050.37 OVERLAPPING ASSESSMENTS [4]
WESTLAKE VILL ZONE C-6 $92.00 $92.00 $92.00 $92.00
WESTLAKE VILLAGE MUD ZONE 11 $3.64 $3.64 $3.64 $3.64
CENTRAL DELTA WATER $2.00 $2.00 $2.00 $2.00
WATER ZONE 2 $2.00 $2.00 $2.00 $2.00
SJC MOSQUITO ABATE $1.28 $1.28 $1.28 $1.28
SJC MOSQ & VCTR CONTROL BEN ASMT $9.28 $9.28 $9.28 $9.28 RECL DISTRICT NO. 2042(MR) $44.24 $44.24 $44.24 $44.24
RECL DISTRICT NO. 2042 $41.86 $41.86 $41.86 $41.86
CSA NO.53 - HAZ WASTE $4.00 $4.00 $4.00 $4.00
TOTAL SPECIAL ASSESSMENTS & CHARGES $200.30 $200.30 $200.30 $200.30 TOTAL EFFECTIVE TAX RATE EXCLUDING CFD 1.18% 1.18% 1.19% 1.19% IMPROVEMENT AREA NO. 2 OF CFD 2018-2 (FACILITIES) [5] $3,091.30 $2,396.21 $1,769.03 $1,595.00 CFD 2018-2 (SERVICES) [6] $551.83 $551.83 $551.83 $551.83 PROJECTED TOTAL PROPERTY TAXES $11,782.37 $10,683.38 $9,571.52 $9,397.50 PROJECTED TOTAL EFFECTIVE TAX RATE 1.71% 1.64% 1.57% 1.54% _________________
[1] Source: Market Absorption Study dated May 2022, prepared by the Gregory Group. For each merchant builder, the above table evaluates smallest unit size each RMA Land Use Class.
[2] Rate and Method of Apportionment for Improvement Area No. 2 of CFD No. 2018-2 (Westlake Villages II). [3] Source: County of San Joaquin Tax Collector. Based on tax rates for FY 2021-22. [4] Based on review of taxes/assessments on subject property and neighboring properties. [5] Source: Rate and Method of Apportionment. Assigned Special Tax A applicable for FY 2022-23. [6] Source: Rate and Method of Apportionment. Special Tax B applicable for FY 2022-23.

Source: DTA.

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47 Table 9B
Improvement Area 2 of the City of Stockton
Community Facilities District No. 2018-2 (Westlake Villages II) Effective Tax Rate Analysis Fiscal Year 2022-23
Meritage Homes

VILLAGE/NAME/BUILDER VILLAGE M - WESTLAKE (MERITAGE)
ESTIMATED HOME SIZE [1] 3,153 2,833 2,054 1,743
LAND USE CLASS [2] 1 2 3 4
LAND USE CLASS DESCRIPTION (>3,000 SF) (2,501 - 3,000 SF) (2,001 - 2,500 SF) (1,501 - 2,000 SF) CURRENT AVERAGE BASE SALES PRICE [1] $644,990 $614,990 $559,990 $539,990 AD-VALOREM TAXES [3] RATE AMOUNT AMOUNT AMOUNT AMOUNT
BASE PROPERTY TAX RATE 1.0000% $6,449.90 $6,149.90 $5,599.90 $5,399.90 LODI USD BOND 2011R 0.0070% $45.15 $43.05 $39.20 $37.80 LODI USD BOND 2012R 0.0125% $80.62 $76.87 $70.00 $67.50 LONDI USD BOND 2015R 0.0026% $16.77 $15.99 $14.56 $14.04 LODI SFID 1 BOND 2016R 0.0217% $139.96 $133.45 $121.52 $117.18 LODI USD BOND 2017 0.0107% $69.01 $65.80 $59.92 $57.78
LODI USD BOND 2017R 0.0044% $28.38 $27.06 $24.64 $23.76 LODI SFID 1 BOND 2018 0.0311% $200.59 $191.26 $174.16 $167.94 LODIA USD BOND 2020 0.0457% $294.76 $281.05 $255.92 $246.78 SJ DELTA COLLEGE BOND 2015R 0.0126% $81.27 $77.49 $70.56 $68.04 SJ DELTA COLLEGE BOND 2018D 0.0034% $21.93 $20.91 $19.04 $18.36 SJ DELTA COLLEGE BOND 2020R 0.0023% $14.83 $14.14 $12.88 $12.42 TOTAL GENERAL PROPERTY TAXES 1.1540% $7,443.18 $7,096.98 $6,462.28 $6,231.48 OVERLAPPING ASSESSMENTS [4]
WESTLAKE VILL ZONE C-6 $92.00 $92.00 $92.00 $92.00
WESTLAKE VILLAGE MUD ZONE 11 $3.64 $3.64 $3.64 $3.64
CENTRAL DELTA WATER $2.00 $2.00 $2.00 $2.00
WATER ZONE 2 $2.00 $2.00 $2.00 $2.00
SJC MOSQUITO ABATE $1.28 $1.28 $1.28 $1.28
SJC MOSQ & VCTR CONTROL BEN ASMT $9.28 $9.28 $9.28 $9.28 RECL DISTRICT NO. 2042(MR) $44.24 $44.24 $44.24 $44.24
RECL DISTRICT NO. 2042 $41.86 $41.86 $41.86 $41.86
CSA NO.53 - HAZ WASTE $4.00 $4.00 $4.00 $4.00
TOTAL SPECIAL ASSESSMENTS & CHARGES $200.30 $200.30 $200.30 $200.30 TOTAL EFFECTIVE TAX RATE EXCLUDING CFD 1.19% 1.19% 1.19% 1.19% IMPROVEMENT AREA NO. 2 OF CFD 2018-2 (FACILITIES) [5] $3,091.30 $2,396.21 $1,769.03 $1,595.00 CFD 2018-2 (SERVICES) [6] $551.83 $551.83 $551.83 $551.83 PROJECTED TOTAL PROPERTY TAXES $11,286.61 $10,245.32 $8,983.45 $8,578.61 PROJECTED TOTAL EFFECTIVE TAX RATE 1.75% 1.67% 1.60% 1.59% _________________
[1] Source: Market Absorption Study dated May 2022, prepared by the Gregory Group. For each merchant builder, the above table evaluates smallest unit size each RMA Land Use Class.
[2] Rate and Method of Apportionment for Improvement Area No. 2 of CFD No. 2018-2 (Westlake Villages II). [3] Source: County of San Joaquin Tax Collector. Based on tax rates for FY 2021-22. [4] Based on review of taxes/assessments on subject property and neighboring properties. [5] Source: Rate and Method of Apportionment. Assigned Special Tax A applicable for FY 2022-23. [6] Source: Rate and Method of Apportionment. Special Tax B applicable for FY 2022-23.

Source: DTA.

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48 Table 9C
Improvement Area 2 of the City of Stockton
Community Facilities District No. 2018-2 (Westlake Villages II) Effective Tax Rate Analysis Fiscal Year 2022-23
Richmond American Homes – Autumn Trails Neighborhood

VILLAGE/NAME/BUILDER VILLAGE N - AUTUMN TRAIL (RICHMOND) ESTIMATED HOME SIZE [1] 2,170 1,590
LAND USE CLASS [2] 3 4
LAND USE CLASS DESCRIPTION (2,001 - 2,500 SF) (1,501 - 2,000 SF) CURRENT AVERAGE BASE SALES PRICE [1] $614,950 $584,950
AD-VALOREM TAXES [3] RATE AMOUNT AMOUNT
BASE PROPERTY TAX RATE 1.0000% $6,149.50 $5,849.50
LODI USD BOND 2011R 0.0070% $43.05 $40.95
LODI USD BOND 2012R 0.0125% $76.87 $73.12
LONDI USD BOND 2015R 0.0026% $15.99 $15.21
LODI SFID 1 BOND 2016R 0.0217% $133.44 $126.93
LODI USD BOND 2017 0.0107% $65.80 $62.59
LODI USD BOND 2017R 0.0044% $27.06 $25.74
LODI SFID 1 BOND 2018 0.0311% $191.25 $181.92
LODIA USD BOND 2020 0.0457% $281.03 $267.32
SJ DELTA COLLEGE BOND 2015R 0.0126% $77.48 $73.70
SJ DELTA COLLEGE BOND 2018D 0.0034% $20.91 $19.89
SJ DELTA COLLEGE BOND 2020R 0.0023% $14.14 $13.45
TOTAL GENERAL PROPERTY TAXES 1.1540% $7,096.52 $6,750.32 OVERLAPPING ASSESSMENTS [4]
WESTLAKE VILL ZONE C-6 $92.00 $92.00
WESTLAKE VILLAGE MUD ZONE 11 $3.64 $3.64
CENTRAL DELTA WATER $2.00 $2.00
WATER ZONE 2 $2.00 $2.00
SJC MOSQUITO ABATE $1.28 $1.28
SJC MOSQ & VCTR CONTROL BEN ASMT $9.28 $9.28
RECL DISTRICT NO. 2042(MR) $44.24 $44.24
RECL DISTRICT NO. 2042 $41.86 $41.86
CSA NO.53 - HAZ WASTE $4.00 $4.00
TOTAL SPECIAL ASSESSMENTS & CHARGES $200.30 $200.30
TOTAL EFFECTIVE TAX RATE EXCLUDING CFD 1.19% 1.19%
IMPROVEMENT AREA NO. 2 OF CFD 2018-2 (FACILITIES) [5] $1,769.03 $1,595.00 CFD 2018-2 (SERVICES) [6] $551.83 $551.83
PROJECTED TOTAL PROPERTY TAXES $9,617.68 $9.097.45
PROJECTED TOTAL EFFECTIVE TAX RATE 1.56% 1.56%
_________________
[1] Source: Market Absorption Study dated May 2022, prepared by the Gregory Group. For each merchant builder, the above table evaluates smallest unit size each RMA Land Use Class.
[2] Rate and Method of Apportionment for Improvement Area No. 2 of CFD No. 2018-2 (Westlake Villages II). [3] Source: County of San Joaquin Tax Collector. Based on tax rates for FY 2021-22. [4] Based on review of taxes/assessments on subject property and neighboring properties. [5] Source: Rate and Method of Apportionment. Assigned Special Tax A applicable for FY 2022-23. [6] Source: Rate and Method of Apportionment. Special Tax B applicable for FY 2022-23.

Source: DTA.

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49 SPECIAL RISK FACTORS
The purchase of the Bonds described in this Official Statement involves a degree of risk that may not be appropriate for some investors. The following includes a discussion of some of the risks which should be considered before making an investment decision. This discussion does not purport to be comprehensive or definitive or a complete statement of all factors that may be considered as risks in evaluating the credit quality of the Bonds.

Limited Obligation of the City to Pay Debt Service
The City has no obligation to pay principal of and interest on the Bonds in the event Special Tax collections are delinquent, other than from amounts, if any, on deposit in the Reserve Fund or funds derived from the tax sale or foreclosure and sale of parcels on which levies of the Special Tax are delinquent, nor is the City obligated to advance funds to pay such debt service on the Bonds. The Bonds are not general obligations of the City but are limited obligations of the City and Improvement Area 2 payable solely from the proceeds of the Special Tax and certain funds held under the Fiscal Agent Agreement, including amounts deposited in the Reserve Fund and investment income thereon, and the proceeds, if any, from the sale of property subject to the Special Tax in the event of a foreclosure. See “SECURITY FOR THE BONDS.” Tax revenues available for the payment of the Bonds will be limited to the Net Taxes levied and collected on taxable property within Improvement Area 2.

Levy and Collection of the Special Tax
General. The principal source of payment of principal of and interest on the Bonds is the proceeds of the annual levy and collection of the Special Tax against property within Improvement Area 2.

Limitation on Maximum Annual Special Tax Rate. The annual levy of the Special Tax is subject to the maximum annual Special Tax rate authorized in the Special Tax Formula. The levy cannot be made at a higher rate even if the failure to do so means that the estimated proceeds of the levy and collection of the Special Tax, together with other available funds, will not be sufficient to pay debt service on the Bonds.

In addition to the maximum annual Special Tax rate limitation in the Special Tax Formula, Section 53321(d) of the Act provides that the special tax levied against any parcel for which an occupancy permit for private residential use has been issued may not be increased as a consequence of delinquency or default by the owner of any other parcel within a community facilities district by more than 10% above the amount that would have been levied in such Fiscal Year had there never been any such delinquencies or defaults. In cases of significant delinquency, these factors may result in defaults in the payment of principal of and interest on the Bonds.

No Relationship Between Property Value and Special Tax Levy. Because the Special Tax Formula is not based on property value, the levy of the Special Tax will rarely, if ever, result in a uniform relationship between the value of particular Taxable Parcels and the amount of the levy of the Special Tax against those parcels. Thus, there will rarely, if ever, be a uniform relationship between the value of the Taxable Parcels and their proportionate share of debt service on the Bonds, and certainly not a direct relationship.

EXHIBIT 3
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50 Factors that Could Lead to Special Tax Deficiencies. The following are some of the factors that might cause the levy of the Special Tax on any particular Taxable Parcels to vary from the Special Tax that might otherwise be expected:

Transfers to Governmental Entities. The number of Taxable Parcels could be reduced through the acquisition of Taxable Parcels by a governmental entity and failure of the government to pay the Special Tax based upon a claim of exemption or, in the case of the federal government or an agency thereof, immunity from taxation, thereby resulting in an increased tax burden on the remaining taxed parcels.

Property Tax Delinquencies. Failure of the owners of Taxable Parcels to pay property taxes (and, consequently, the Special Tax), or delays in the collection of or inability to collect the Special Tax by tax sale or foreclosure and sale of the delinquent parcels, could result in a deficiency in the collection of Net Taxes. For a summary of recent Special Tax collection and delinquency rates in Improvement Area 2, see “VALUE OF PROPERTY WITHIN IMPROVEMENT AREA 2 AND SPECIAL TAX BURDEN” herein.

Concentration of Ownership
All of the land within Improvement Area 2 is currently owned by the Merchant Builders.

An owner of property in Improvement Area 2 is not personally obligated to pay the Special Tax attributable to the owner’s property. Rather, the Special Tax is an obligation only against the parcel of property, secured by the amount which could be realized in a foreclosure proceeding against the property, and not by any promise of the owner to pay. If the value of the property is not sufficient, taking into account other obligations also constituting a lien against the property, the City, Fiscal Agent and owners of the Bonds have no recourse against the owner, such as filing a lawsuit to collect money.

Failure of the Merchant Builders or any future owner of significant property subject to the Special Taxes in Improvement Area 2 to pay installments of Special Taxes when due could cause the depletion of the Reserve Fund prior to reimbursement from the resale of foreclosed property or payment of the delinquent Special Tax and, consequently, result in the delinquency rate reaching a level that would cause an insufficiency in collection of the Special Tax to meet the City’s obligations on the Bonds. In that event, there could be a delay or failure in payments on the Bonds. See “SPECIAL RISK FACTORS – Bankruptcy and Foreclosure Delays” below and “SECURITY FOR THE BONDS – Delinquent Payments; Teeter Plan; Covenant for Superior Court Foreclosure.”
Development of undeveloped property within Improvement Area 2 may be subject to unexpected delays, disruptions and changes which may affect the willingness and ability of landowners to pay the Special Taxes when due. Certain infrastructure improvements remain to be completed in order to complete construction within Improvement Area 2. No assurance can be given that the remaining proposed residential development will be partially or fully completed, and for purposes of evaluating the investment quality of the Bonds, prospective purchasers should consider the possibility that such parcels will remain vacant and only partially improved.

Appraised Values
The Appraisal estimates the market value of certain taxable property within Improvement Area 2. This market value is merely the present opinion of the Appraiser, and is subject to the EXHIBIT 3
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51 assumptions and limiting conditions stated in the Appraisal. The City has not sought the present opinion of any other appraiser of the value of the taxed parcels. A different present opinion of value might be rendered by a different appraiser.

The opinion of value relates to sale by a willing seller to a willing buyer as of the date of valuation, each having similar information and neither being forced by other circumstances to sell or to buy. Consequently, the opinion is of limited use in predicting the selling price at a foreclosure sale, because the sale is forced and the buyer may not have the benefit of full information.

In considering the estimates of value evidenced by the Appraisal, it should be noted that the Appraisal is based upon a number of standard and special assumptions which affect the estimates as to value, as well as the hypothetical condition of the Improvements having been completed, as set forth in the Appraisal (see APPENDIX B hereto). The improvements to be financed by the Bonds were not in place as of the date of inspection; thus, the value estimate is subject to a hypothetical condition (of such improvements being in place).

In addition, the opinion is a present opinion. It is based upon present facts and circumstances. Differing facts and circumstances may lead to differing opinions of value. The appraised market value is not evidence of future value because future facts and circumstances may differ significantly from the present.

No assurance can be given that any of the appraised property in Improvement Area 2 could be sold in a foreclosure for the estimated market value contained in the Appraisal. Such sale is the primary remedy available to Bondowners if that property should become delinquent in the payment of Special Taxes.

Property Values and Property Development
The value of taxable property within Improvement Area 2 is a critical factor in determining the investment quality of the Bonds. If a property owner defaults in the payment of the Special Tax, the City’s only remedy is to foreclose on the delinquent property in an attempt to obtain funds with which to pay the delinquent Special Tax.

Land values could be adversely affected by economic and other factors beyond the City’s control, such as a general economic downturn, relocation of employers out of the area, shortages of water, electricity, natural gas or other utilities, destruction of property caused by earthquake, flood, wildfires, or other natural disasters, environmental pollution or contamination, or unfavorable economic conditions. Land in Improvement Area 2 is adjacent to cropland areas utilized for hay and corn production, which could increase the chances of a fire in the area, and in an area protected from flooding by levees which could be breached.

Neither the Underwriter nor the City has evaluated development risks related to the development of land in Improvement Area 2. Since these are largely business risks of the type that property owners customarily evaluate individually, and inasmuch as changes in land ownership may well mean changes in the evaluation with respect to any particular parcel, the City is issuing the Bonds without regard to any such evaluation. Thus, the creation of the District (and Improvement Area 2 therein) and the issuance of the Bonds in no way implies that the Underwriter or the City has evaluated these risks or the reasonableness of these risks.

The following is a discussion of specific risk factors that could affect the timing or scope of property development in Improvement Area 2 or the value of property in Improvement Area 2.

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52 Land Development. Land values are influenced by the level of development in the area in many respects.

First, undeveloped or partially developed land is generally less valuable than developed land and provides less security to the Owners of the Bonds should it be necessary for Improvement Area 2 to foreclose on undeveloped or partially developed property due to the nonpayment of Special Taxes.

Second, failure to complete development on a timely basis could adversely affect the land values of those parcels that have been completed. Lower land values would result in less security for the payment of principal of and interest on the Bonds and lower proceeds from any foreclosure sale necessitated by delinquencies in the payment of the Special Tax. See “VALUE OF PROPERTY WITHIN IMPROVEMENT AREA 2 AND SPECIAL TAX BURDEN – Value to Special Tax Burden Ratios.” No assurance can be given that the proposed development within Improvement Area 2 will be completed, and in assessing the investment quality of the Bonds, prospective purchasers should evaluate the risks of non-completion.

Neither the Master Developer nor the Merchant Builders nor any other person provides any assurances that the project currently envisioned for the land in Improvement Area 2 will be completed, or that available sources of financing that will actually be available and sufficient to complete such projected development. The Master Developer and the Merchant Builders have no obligation to the City or to owners of the Bonds to complete the project or the construction of homes within Improvement Area 2.

Risks of Real Estate Investment Generally. Continuing development of land within Improvement Area 2 may be adversely affected by changes in general or local economic conditions, fluctuations in the real estate market, increased construction costs, development, financing and marketing capabilities of individual property owners, water or electricity shortages, and other similar factors. Development in Improvement Area 2 may also be affected by development in surrounding areas, which may compete with Improvement Area 2. In addition, land development operations are subject to comprehensive federal, state and local regulations, including environmental, land use, zoning and building requirements. There can be no assurance that proposed land development operations within Improvement Area 2 will not be adversely affected by future government policies, including, but not limited to, governmental policies to restrict or control development, or future growth control initiatives. There can be no assurance that land development operations within Improvement Area 2 will not be adversely affected by these risks.

Natural Disasters. The value of the parcels in Improvement Area 2 in the future can be adversely affected by a variety of natural occurrences, particularly those that may affect infrastructure and other public improvements and private improvements on the parcels in Improvement Area 2 and the continued habitability and enjoyment of such private improvements. For example, the areas in and surrounding Improvement Area 2, like those in much of the State, may be subject to earthquakes or other unpredictable seismic activity. See “THE DISTRICT AND IMPROVEMENT AREA 2 – Environmental Matters.” Other natural disasters could include, without limitation, landslides, floods, droughts or tornadoes. One or more natural disasters could occur and could result in damage to improvements of varying seriousness. The damage may entail significant repair or replacement costs and that repair or replacement may never occur either because of the cost, or because EXHIBIT 3
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53 repair or replacement will not facilitate habitability or other use, or because other considerations preclude such repair or replacement. Under any of these circumstances there could be significant delinquencies in the payment of Special Taxes, and the value of the parcels may well depreciate.

Drought. California is currently in a drought, and has in the past experienced various periods of drought. No assurance can be given that the current drought or any future drought will not adversely impact the development of land within Improvement Area 2.

Legal Requirements. Other events that may affect the value of a parcel include changes in the law or application of the law. Such changes may include, without limitation, local growth control initiatives, local utility connection moratoriums and local application of statewide tax and governmental spending limitation measures. Development in Improvement Area 2 may also be adversely affected by the application of laws protecting endangered or threatened species.

Hazardous Substances. Any discovery of a hazardous substance detected on property within Improvement Area 2 would affect the marketability and the value of some or all of the property in Improvement Area 2. In that event, the owners and operators of a parcel within Improvement Area 2 may be required by law to remedy conditions of the parcel relating to releases or threatened releases of hazardous substances. The federal Comprehensive Environmental Response, Compensation and Liability Act of 1980, sometimes referred to as “CERCLA” or the “Superfund Act,” is the most well-known and widely applicable of these laws.

State law with regard to hazardous substances are also applicable to property within Improvement Area 2 and are as stringent as the federal laws. Under many of these laws, the owner (or operator) is obligated to remedy a hazardous substance condition of property whether or not the owner (or operator) has anything to do with creating or handling the hazardous substance. The effect, therefore, should any of the parcels be contaminated by a hazardous substance is to reduce the marketability and value of the parcel by the costs of remedying the condition, because the purchaser, upon becoming owner, will become obligated to remedy the condition just as is the seller.

The values set forth in the Appraisal do not take into account the possible reduction in marketability and value of any of the parcels within Improvement Area 2 by reason of the possible liability of the owner (or operator) for the remedy of a hazardous substance condition on a parcel. Although the City is not aware that the owner (or operator) of any of the property within Improvement Area 2 has a current liability for a hazardous substance with respect to any of the parcels, it is possible that such liabilities do currently exist and that the City is not aware of them.

Further, it is possible that liabilities may arise in the future with respect to any of the parcels within Improvement Area 2 resulting from the existence, currently, on the parcel of a substance presently classified as hazardous but which has not been released or the release of which is not presently threatened, or may arise in the future resulting from the existence, currently, on the parcel of a substance not presently classified as hazardous but which may in the future be so classified. Further, such liabilities may arise not simply from the existence of a hazardous substance but from the method of handling it. All of these possibilities could significantly affect the value of a parcel within Improvement Area 2 that is realizable upon a foreclosure sale.

EXHIBIT 3
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54 Endangered and Threatened Species. It is illegal to harm or disturb any plants or animals in their habitat that have been listed as endangered species by the United States Fish & Wildlife Service under the Federal Endangered Species Act or by the California Fish & Game Commission under the California Endangered Species Act without a permit. The discovery of an endangered plant or animal could delay development of undeveloped property in Improvement Area 2 or reduce the value of such property.

Other Possible Claims Upon the Value of Taxable Property While the Special Taxes are secured by the Taxable Parcels in Improvement Area 2, the security only extends to the value of such property that is not subject to priority and parity liens and similar claims. The table in the section entitled “VALUE OF PROPERTY WITHIN IMPROVEMENT AREA 2 AND SPECIAL TAX BURDEN – Overlapping Liens and Priority of Lien” shows the presently outstanding amount of governmental obligations (with stated exclusions), the tax or assessment for which is or may become an obligation of one or more of the Taxable Parcels. The table also states the additional amount of general obligation bonds the tax for which, if and when issued, may become an obligation of one or more of the Taxable Parcels. The table does not specifically identify which of the governmental obligations are secured by liens on one or more of the Taxable Parcels.

The City, the County and certain other public agencies are authorized by the Act to form other community facilities districts and improvement areas and, under other provisions of State law, to form special assessment districts, either or both of which could include all or a portion of the land within Improvement Area 2. Other governmental obligations may be authorized and undertaken or issued in the future, the tax, assessment or charge for which may become an obligation of one or more of the parcels of taxable property and may be secured by a lien on a parity with the lien of the Special Tax securing the Bonds.

In general, as long as the Special Tax is collected on the County tax roll, the Special Tax and all other taxes, assessments and charges also collected on the tax roll are on a parity, that is, are of equal priority. Questions of priority become significant when collection of one or more of the taxes, assessments or charges is sought by some other procedure, such as foreclosure and sale. In the event of proceedings to foreclose for delinquency of Special Taxes securing the Bonds, the Special Tax will be subordinate only to existing prior governmental liens, if any.

Otherwise, in the event of such foreclosure proceedings, the Special Taxes will generally be on a parity with the other taxes, assessments and charges, and will share the proceeds of such foreclosure proceedings on a pro rata basis. Although the Special Taxes will generally have priority over non-governmental liens on a Taxable Parcel, regardless of whether the nongovernmental liens were in existence at the time of the levy of the Special Tax or not, this result may not apply in the case of bankruptcy. See “– Bankruptcy and Foreclosure Delays” below.

Bankruptcy and Foreclosure Delays
The Fiscal Agent Agreement generally provides that the Special Tax is to be collected in the same manner as ordinary ad valorem property taxes are collected and, except as provided in the special covenant for foreclosure described in “SECURITY FOR THE BONDS – Delinquent Payments of Special Tax; Teeter Plan; Covenant for Superior Court Foreclosure” and in the Act, is subject to the same penalties and the same procedure, sale and lien priority in case of delinquency as is provided for ordinary ad valorem property taxes. Under these procedures, 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.

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55 If sales or foreclosures of property are necessary, there could be a delay in payments to owners of the Bonds pending such sales or the prosecution of foreclosure proceedings and receipt by the City of the proceeds of sale if the Reserve Fund is depleted. See “SECURITY FOR THE BONDS – Delinquent Payments; Teeter Plan; Covenant for Superior Court Foreclosure.”
The ability of the City to collect interest and penalties specified by State law and to foreclose against properties having delinquent Special Tax installments may be limited in certain respects with regard to properties in which the Federal Deposit Insurance Corporation (the “FDIC”) has or obtains an interest. The FDIC would obtain such an interest by taking over a financial institution that has made a loan that is secured by property within Improvement Area 2.

The payment of the Special Tax and the ability of the City to foreclose the lien of a delinquent unpaid Special Tax may also be limited by bankruptcy, insolvency or other laws generally affecting creditors’ rights or by the laws of the State of California relating to judicial foreclosure. The various legal opinions to be delivered concurrently with the delivery of the Bonds (including Bond Counsel’s approving legal opinion) will be qualified as to the enforceability of the various legal instruments by bankruptcy, insolvency, reorganization, moratorium and other similar laws affecting creditors’ rights, by the application of equitable principles and by the exercise of judicial discretion in appropriate cases.

Other laws generally affecting creditors’ rights or relating to judicial foreclosure may affect the ability to enforce payment of Special Taxes or the timing of enforcement of Special Taxes. For example, the Soldiers and Sailors Civil Relief Act of 1940 affords protections such as a stay in enforcement of the foreclosure covenant, a six-month period after termination of military service to redeem property sold to enforce the collection of a tax or assessment and a limitation on the interest rate on the delinquent tax or assessment to persons in military service if the court concludes the ability to pay such taxes or assessments is materially affected by reason of such service.

To the extent that property in Improvement Area 2 continues to be owned by a limited number of property owners, the chances are increased that the Reserve Fund could be fully depleted during any such delay in obtaining payment of delinquent Special Taxes. As a result, sufficient moneys would not be available in the Reserve Fund to make up shortfalls resulting from delinquent payments of the Special Tax and thereby to pay principal of and interest on the Bonds on a timely basis.

FDIC/Federal Government Interests in Properties
General. The ability of the City to foreclose the lien of delinquent unpaid Special Tax installments may be limited with regard to properties in which the Federal Deposit Insurance Corporation (the “FDIC”), the Drug Enforcement Agency, the Internal Revenue Service, or other federal agency has or obtains an interest.

Federal courts have held that, based on the supremacy clause of the United States Constitution, in the absence of Congressional intent to the contrary, a state or local agency cannot foreclose to collect delinquent taxes or assessments if foreclosure would impair the federal government interest.

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56 The supremacy clause of the United States Constitution reads as follows: “This Constitution, and the Laws of the United States which shall be made in Pursuance thereof; and all Treaties made, or which shall be made, under the Authority of the United States, shall be the supreme Law of the Land; and the Judges in every State shall be bound thereby, any Thing in the Constitution or Laws of any State to the contrary notwithstanding.” This means that, unless Congress has otherwise provided, if a federal governmental entity owns a parcel that is subject to Special Taxes within Improvement Area 2 but does not pay taxes and assessments levied on the parcel (including Special Taxes), the applicable state and local governments cannot foreclose on the parcel to collect the delinquent taxes and assessments.

Moreover, unless Congress has otherwise provided, if the federal government has a mortgage interest in the parcel and Improvement Area 2 wishes to foreclose on the parcel as a result of delinquent Special Taxes, the property cannot be sold at a foreclosure sale unless it can be sold for an amount sufficient to pay delinquent taxes and assessments on parity with the Special Taxes and preserve the federal government’s mortgage interest. In Rust v. Johnson (9th Circuit; 1979) 597 F.2d 174, the United States Court of Appeal, Ninth Circuit held that the Federal National Mortgage Association (“FNMA”) is a federal instrumentality for purposes of this doctrine, and not a private entity, and that, as a result, an exercise of state power over a mortgage interest held by FNMA constitutes an exercise of state power over property of the United States.

No Acceleration Provisions
The Bonds do not contain a provision allowing for their acceleration in the event of a payment default or other default under the terms of the Bonds or the Fiscal Agent Agreement.

Under the Fiscal Agent Agreement, a Bondowner is given the right for the equal benefit and protection of all Bondowners similarly situated to pursue certain remedies. So long as the Bonds are in book-entry form, DTC will be the sole Bondowner and will be entitled to exercise all rights and remedies of Bond holders, in accordance with its procedures and rules.

Loss of Tax Exemption
As discussed under the caption “TAX MATTERS,” interest on the Bonds might become includable in gross income for purposes of federal income taxation retroactive to the date the Bonds were issued as a result of future acts or omissions of the City in violation of its covenants in the Fiscal Agent Agreement. The Fiscal Agent Agreement does not contain a special redemption feature triggered by the occurrence of an event of taxability. As a result, if interest on the Bonds were to become includable in gross income for purposes of federal income taxation, the Bonds would continue to remain outstanding until maturity unless earlier redeemed pursuant to optional redemption, mandatory sinking fund redemption or special mandatory redemption upon prepayment of the Special Taxes.

IRS Audit of Tax-Exempt Bond Issues
The Internal Revenue Service (the “IRS”) has initiated an expanded program for the auditing of tax-exempt bond issues, including both random and targeted audits. It is possible that the Bonds will be selected for audit by the IRS. It is also possible that the market value of such Bonds might be affected as a result of such an audit of such Bonds (or by an audit of similar bonds or securities).

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57 Voter Initiatives
From time to time, initiative measures qualify for the State ballot pursuant to the State’s constitutional initiative process and those measures could be adopted by State voters. The adoption of any such initiative might place limitations on the ability of the State, the City, the County or other local districts to increase revenues or to increase appropriations or on the ability of the landowners to complete the development of Improvement Area 2. See “– Property Values and Property Development” above.

Under the State Constitution, the power of initiative is reserved to the voters for the purpose of enacting statutes and constitutional amendments. Since 1978, the voters have exercised this power through the adoption of Proposition 13 and similar measures, including Proposition 218, which was approved in the general election held on November 5, 1996, and Proposition 26, which was approved on November 2, 2010.

Any such initiative may affect the collection of fees, taxes and other types of revenue by local agencies such as the City. Subject to overriding federal constitutional principles, such collection may be materially and adversely affected by voter-approved initiatives, possibly to the extent of creating cash-flow problems in the payment of outstanding obligations such as the Special Tax Bonds.

Proposition 218—Voter Approval for Local Government Taxes—Limitation on Fees, Assessments, and Charges—Initiative Constitutional Amendment, added Articles XIIIC and XIIID to the State Constitution, imposing certain vote requirements and other limitations on the imposition of new or increased taxes, assessments and property-related fees and charges.

On November 2, 2010, State voters approved Proposition 26, entitled the “Supermajority Vote to Pass New Taxes and Fees Act”. Section 1 of Proposition 26 declares that Proposition 26 is intended to limit the ability of the State Legislature and local government to circumvent existing restrictions on increasing taxes by defining the new or expanded taxes as “fees.” Proposition 26 amended Articles XIIIA and XIIIC of the State Constitution. The amendments to Article XIIIA limit the ability of the State Legislature to impose higher taxes (as defined in Proposition 26) without a two-thirds vote of the Legislature. Article XIIIC requires that all new local taxes be submitted to the electorate before they become effective. Taxes for general governmental purposes require a majority vote and taxes for specific purposes (“special taxes”) require a two-thirds vote.

The Special Taxes and the Bonds were each authorized by not less than a two-thirds vote of the landowners within Improvement Area 2 who constituted the qualified electors at the time of such voted authorization. The District believes, therefore, that issuance of the Bonds does not require the conduct of further proceedings under the Act, Proposition 218 or Proposition 26.

Like their antecedents, Proposition 218 and Proposition 26 are likely to undergo both judicial and legislative scrutiny before the impact on Improvement Area 2 can be determined.

Certain provisions of Proposition 218 and Proposition 26 may be examined by the courts for their constitutionality under both State and federal constitutional law, the outcome of which cannot be predicted.

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58 Case Law Related to the Mello-Roos Act
On August 1, 2014, the California Court of Appeal, Fourth Appellate District, issued its opinion in City of San Diego v. Melvin Shapiro, et al. (D063997). The case involved a Convention Center Facilities District (the “CCFD”) established by the City of San Diego. The CCFD is a financing district established under San Diego’s city charter (the “Charter”) and was intended to function much like a community facilities district established under the Act. The CCFD was comprised of all of the real property in the entire city. However, the CCFD special tax was to be levied only on properties in the CCFD that were improved with a hotel.

At the election to authorize the CCFD special tax, the CCFD proceedings limited the electorate to owners of hotel properties and lessees of real property owned by a governmental entity on which a hotel was located. Registered voters in the City of San Diego were not permitted to vote. This definition of the qualified electors of the CCFD was based on Section 53326(c) of the Act, which generally provides that, if a special tax will not be apportioned in any tax year on residential property, the legislative body may provide that the vote shall be by the landowners of the proposed community facilities district whose property would be subject to the special tax. The San Diego Court held that the CCFD special tax election did not comply with its Charter and with applicable provisions of the State Constitution -- specifically Article XIIIA, section 4 (“Cities, Counties and special districts, by a two-thirds vote of the qualified electors of such district, may impose special taxes on such district . . ..”) and Article XIIIC, section 2(d) (“No local government may impose, extend, or increase any special tax unless and until that tax is submitted to the electorate and approved by a two-thirds vote.”) -- because the electors in the CCFD election should have been the registered voters residing within the CCFD (the boundaries of which were coterminous with the boundaries of the City of San Diego).

As to Improvement Area 2, there were no registered voters within Improvement Area 2 at the time of the election to authorize the Special Taxes. Significantly, the San Diego Court expressly stated that it was not addressing the validity of a landowner election to impose special taxes on property pursuant to the Act in situations where there are fewer than 12 registered voters. Therefore, by its terms, the San Diego Court’s holding does not apply to the special tax election in Improvement Area 2. Moreover, Sections 53341 and 53359 of the Act establish a limited period of time in which special taxes levied under the Act may be challenged by a third party, which time period has now passed.

COVID-19
The spread of the COVID-19 coronavirus pandemic, and responses intended to slow its spread, are likely to result in negative impacts to the homebuilding operations and sales of homes within Improvement Area 2. There can be no assurances that the spread of the virus and the related shelter in place order and social distancing requirements currently imposed by the State of California, or other State or local mandates and/or other responses intended to slow its spread will not materially adversely impact the pace of sales of lots or homes or the willingness of owners of land in Improvement Area 2, including the Master Developer, the Merchant Builders or individual homeowners, to pay the Special Taxes securing the Bonds. In addition, no assurance can be given that the property tax payment dates will not be deferred in the future, which may cause a delay in the receipt of Net Taxes by the City for the payment of the Bonds.

Finally, stock and municipal bond markets in the U.S. and globally have seen significant volatility attributed to coronavirus concerns; there can be no assurances that these or other concerns that emerge later will not materially adversely impact the secondary market for the Bonds.

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59 TAX MATTERS
Federal Tax Status. In the opinion of Jones Hall, A Professional Law Corporation, San Francisco, California, Bond Counsel, subject, however to the qualifications set forth below, under existing law, the interest on the Bonds is excluded from gross income for federal income tax purposes and such interest is not an item of tax preference for purposes of the federal alternative minimum tax.

The opinions set forth in the preceding paragraph are subject to the condition that the City comply with all requirements of the Internal Revenue Code of 1986, as amended (the “Tax Code”) that must be satisfied subsequent to the issuance of the Bonds in order that the interest thereon be, and continue to be, excludable from gross income for federal income tax purposes.

The City has made certain representations and covenants in order to comply with each such requirement. Inaccuracy of those representations, or failure to comply with certain of those covenants, may cause the inclusion of such interest in gross income for federal income tax purposes, which may be retroactive to the date of issuance of the Bonds.

Tax Treatment of Original Issue Discount and Premium. If the initial offering price to the public at which a Bond is sold is less than the amount payable at maturity thereof, then such difference constitutes “original issue discount” for purposes of federal income taxes and State of California personal income taxes. If the initial offering price to the public at which a Bond is sold is greater than the amount payable at maturity thereof, then such difference constitutes “original issue premium” for purposes of federal income taxes and State of California personal income taxes. De minimis original issue discount and original issue premium are disregarded.

Under the Tax Code, original issue discount is treated as interest excluded from federal gross income and exempt from State of California personal income taxes to the extent properly allocable to each owner thereof subject to the limitations described in the first paragraph of this section. The original issue discount accrues over the term to maturity of the Bond on the basis of a constant interest rate compounded on each interest or principal payment date (with straightline interpolations between compounding dates). The amount of original issue discount accruing during each period is added to the adjusted basis of such Bonds to determine taxable gain upon disposition (including sale, redemption, or payment on maturity) of such Bond. The Tax Code contains certain provisions relating to the accrual of original issue discount in the case of purchasers of the Bonds who purchase the Bonds after the initial offering of a substantial amount of such maturity. Owners of such Bonds should consult their own tax advisors with respect to the tax consequences of ownership of Bonds with original issue discount, including the treatment of purchasers who do not purchase in the original offering to the public at the first price at which a substantial amount of such Bonds is sold to the public.

Under the Tax Code, original issue premium is amortized on an annual basis over the term of the Bond (said term being the shorter of the Bond’s maturity date or its call date). The amount of original issue premium amortized each year reduces the adjusted basis of the owner of the Bond for purposes of determining taxable gain or loss upon disposition. The amount of original issue premium on a Bond is amortized each year over the term to maturity of the Bond on the basis of a constant interest rate compounded on each interest or principal payment date (with straight-line interpolations between compounding dates). Amortized Bond premium is not deductible for federal income tax purposes. Owners of premium Bonds, including purchasers who do not purchase in the original offering, should consult their own tax advisors with respect EXHIBIT 3
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60 to State of California personal income tax and federal income tax consequences of owning such Bonds.

California Tax Status. In the further opinion of Bond Counsel, interest on the Bonds is exempt from California personal income taxes.

Other Tax Considerations. Current and future legislative proposals, if enacted into law, clarification of the Tax Code or court decisions may cause interest on the Bonds to be subject, directly or indirectly, to federal income taxation or to be subject to or exempted from state income taxation, or otherwise prevent beneficial owners from realizing the full current benefit of the tax status of such interest. The introduction or enactment of any such legislative proposals, clarification of the Tax Code or court decisions may also affect the market price for, or marketability of, the Bonds. It cannot be predicted whether or in what form any such proposal might be enacted or whether, if enacted, such legislation would apply to bonds issued prior to enactment.

The opinions expressed by Bond Counsel are based upon existing legislation and regulations as interpreted by relevant judicial and regulatory authorities as of the date of such opinion, and Bond Counsel has expressed no opinion with respect to any proposed legislation or as to the tax treatment of interest on the Bonds, or as to the consequences of owning or receiving interest on the Bonds, as of any future date. Prospective purchasers of the Bonds should consult their own tax advisors regarding any pending or proposed federal or state tax legislation, regulations or litigation, as to which Bond Counsel expresses no opinion.

Owners of the Bonds should also be aware that the ownership or disposition of, or the accrual or receipt of interest on, the Bonds may have federal or state tax consequences other than as described above. Other than as expressly described above, Bond Counsel expresses no opinion regarding other federal or state tax consequences arising with respect to the Bonds, the ownership, sale or disposition of the Bonds, or the amount, accrual or receipt of interest on the Bonds.

LEGAL MATTERS
Legal Opinion
The legal opinion of Jones Hall, A Professional Law Corporation, San Francisco, California, Bond Counsel, approving the validity of the Bonds will be made available to purchasers at the time of original delivery and is attached in substantially final form as APPENDIX E.

Jones Hall, A Professional Law Corporation, San Francisco, California, is also serving as Disclosure Counsel to the City. The City Attorney will pass upon certain legal matters for the City. Kutak Rock LLP, San Francisco, California will pass upon certain legal matters for the Underwriter as counsel to the Underwriter.

No Litigation
At the time of delivery of and payment for the Bonds, the City Attorney will deliver his opinion that to the best of its knowledge there is no action, suit, proceeding, inquiry or investigation at law or in equity before or by any court or regulatory agency pending against the EXHIBIT 3
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61 City affecting its existence or the titles of its officers to office or seeking to restrain or to enjoin the issuance, sale or delivery of the Bonds, the application of the proceeds thereof in accordance with the Fiscal Agent Agreement, or the collection or application of the Special Tax to pay the principal of and interest on the Bonds, or in any way contesting or affecting the validity or enforceability of the Bonds, the Fiscal Agent Agreement or any action of the City contemplated by any of said documents, or in any way contesting the completeness or accuracy of this Official Statement or any amendment or supplement thereto, or contesting the powers of the City or its authority with respect to the Bonds or any action of the City contemplated by any of said documents.

CONTINUING DISCLOSURE
The City
The City will covenant for the benefit of owners of the Bonds to provide certain financial information and operating data relating to Improvement Area 2 (the “City Annual Report”) by not later than March 31 following the end of the City’s fiscal year, commencing March 31, 2023, with the report for the fiscal year ending June 30, 2022, and to provide notices of the occurrence of certain listed events (“Notice Events”). These covenants have been made in order to assist the Underwriter in complying with Securities Exchange Commission Rule 15c2-12(b)(5), as amended (the “Rule”). The specific nature of the information to be contained in the Annual Report or the notices of listed events is set forth in APPENDIX F.

In the preceding five years, the City failed to timely comply in certain respects with its previous undertakings with regard to the Rule to provide annual reports, adopted budgets, or notices of Notice Events, and in some instances, information was not associated with the correct CUSIP number. In addition, on occasions during the last five years the City failed to provide its audited or unaudited financial statements in the time required by its continuing disclosure undertakings and failure to file notices were not filed. [Underwriter to confirm] Richmond American Homes
Richmond American Homes will also agree for the benefit of the owners of the Bonds in a Continuing Disclosure Certificate to provide certain semi-annual information on March 31 and September 30 of each year (each, a “Developer Semi-Annual Report”), and notice of the occurrence of certain events with respect to itself and the property it owns in Improvement Area

2. The complete text of the Continuing Disclosure Certificate of Richmond American Homes is set forth in APPENDIX F.

Richmond American Homes’ obligation to provide the Developer Semi-Annual Reports and listed event disclosure will terminate when the Richmond American Homes and its affiliates, including successor thereto, own parcels in Improvement Area 2 that are subject to less than 20% of the annual Special Tax levy.

Meritage Homes
Meritage Homes will also agree for the benefit of the owners of the Bonds in a Continuing Disclosure Certificate to provide a Developer Semi-Annual Report on March 31 and September 30 of each year, and notice of the occurrence of certain events with respect to itself and the property it owns in Improvement Area 2. The complete text of the Continuing Disclosure Certificate of Meritage Homes is set forth in APPENDIX F.

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62 Meritage Homes’ obligation to provide the Developer Semi-Annual Reports and listed event disclosure will terminate when the Meritage Homes and its affiliates, including successor thereto, own parcels in Improvement Area 2 that are subject to less than 20% of the annual Special Tax levy.

NO RATINGS
The City has not applied to a rating agency for the assignment of a rating to the Bonds and does not contemplate applying for a rating.

UNDERWRITING
The Bonds are being purchased by Oppenheimer & Co. Inc. as underwriter (the “Underwriter”), at a purchase price of $________, which represents the aggregate principal amount of the Bonds ($________) less an Underwriter’s discount of $________ and [less/ plus] an original issue [discount/premium] of $_____________.

The purchase agreement relating to the Bonds provides that the Underwriter will purchase all of the Bonds, if any are purchased, the obligation to make such purchase being subject to certain terms and conditions set forth in such purchase agreement.

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

MUNICIPAL ADVISORS
KNN Public Finance of Berkeley, California is serving as municipal advisor to the City in connection with the offering of the Bonds. Del Rio Advisors, LLC of Modesto, California, serves as the City’s independent registered municipal advisor. All financial and other information presented in this Official Statement has been provided by the City and others from their records.

Unless otherwise footnoted, neither KNN Public Finance nor Del Rio Advisors, LLC takes responsibility for the accuracy or completeness of any data provided by the City or others and neither firm has undertaken to make an independent verification and neither firm assumes responsibility for the accuracy, completeness, or fairness of the information contained in this Official Statement. KNN Public Finance has assisted the City with the structure, timing and terms for the sale of the Bonds. Each municipal advisor firm provides municipal advisory services only and does not engage in the underwriting, marketing, or trading of municipal securities or other negotiable instruments. The fees of KNN Public Finance are contingent upon the successful closing of the Bonds.

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63 EXECUTION
The execution and delivery of the Official Statement by the City has been duly authorized by the City Council, acting as the legislative body of the District.

CITY OF STOCKTON
By:

Chief Financial Officer
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APPENDIX A

RATE AND METHOD OF APPORTIONMENT OF SPECIAL TAX
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APPENDIX B

THE APPRAISAL
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APPENDIX C

THE ABSORPTION REPORT
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APPENDIX D

SAN JOAQUIN COUNTY AND CITY OF STOCKTON

DEMOGRAPHIC INFORMATION
Improvement Area 2 of the District is located in the City of Stockton (the “City”), which is located in the center of San Joaquin County (the “County”), California (the “State”). Certain financial and economic data for the City, County and State are presented in this appendix for information purposes only. The Bonds are not a debt or obligation of the City, County or State, but are a limited obligation of the City secured solely by the Net Taxes generated in Improvement Area 2 and certain other funds held pursuant to the Fiscal Agent Agreement, all as described in more detail in this Official Statement.

General
The City is situated amidst the farmland of California’s San Joaquin Valley, a subregion of the Central Valley, whose boundaries encompass 64.8 square miles of waterways, which make up the California Delta. The City is located 78 miles east of the San Francisco Bay area, 345 miles north of San Francisco and 45 miles south of Sacramento. The Stockton Metropolitan Statistical Area, which encompasses the entire County, covers approximately 1,400 square miles.

The City was founded by Captain Charles Maria Weber in 1849 after he acquired Rancho de los Franceses and is named after Robert F. Stockton and was the first community in State to not have a name of Spanish or Native American origin. The City is located on the San Joaquin River in northern San Joaquin Valley. With 322,489 people, Stockton is the 13th largest city in California and the 63rd largest city in the United States. According to the United States Census Bureau, the city occupies a total area of 64.8 square miles, of which 61.7 square miles is land and 3.1 square miles (4.76%) is water. The City is a municipal corporation and a charter city, duly organized and existing under the constitution and laws of the State.

Stockton is the largest inland seaport in California. Since the California Gold Rush, it has served as a gateway to the Central Valley. It provided easy access for trade and transportation to the southern gold mines. It has been the location of the oldest chartered university in California, University of the Pacific, since 1923. Historically an agricultural community, Stockton’s economy has since diversified into other industries, which include telecommunications and manufacturing. Stockton’s central location, relative to both San Francisco, and Sacramento, as well as its proximity to the state and interstate freeway system, together with its comparatively inexpensive land costs, have prompted several companies to base their regional operations in the City.

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Population
Population figures for the City, the County and the State for the last five years are shown in the following table.

CITY OF STOCKTON, SAN JOAQUIN COUNTY AND THE STATE OF CALIFORNIA Population Estimates
Calendar Years 2018 through 2022 as of January 1
Calendar
Year
City of
Stockton
San Joaquin
County
State of
California
2018 315,099 752,958 39,519,535
2019 317,356 764,373 39,605,361
2020 323,456 779,233 39,538,223
2021 323,884 782,372 39,303,157
2022 322,489 784,298 39,185,605
Source: State Department of Finance estimates.

Major Employers
The following table lists the largest employers within the City.

CITY OF STOCKTON
Principal Employers
Fiscal Year 2020-21
Employer Name
No. of
Employees
Stockton Unified School District 5,205
St. Joseph’s Medical Center 4,600
Amazon 2,100
City of Stockton 2,099
San Joaquin County 2,000
Pacific Gas and Electric 1,550
Lincoln Unified School District 1,212
Kaiser Permanente 1,065
University of the Pacific 1,021
San Joaquin Delta College 1,007
Source: City of Stockton Annual Comprehensive Financial Report 2020-21.

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The County’s major employers are set forth below in alphabetized order.

COUNTY OF SAN JOAQUIN
Major Employers
(As of May 2022)
Employer Name Location Industry
A Sambado & Sons Inc Linden Nuts-Edible
Amazon Fulfillment Ctr Stockton Mail Order Fulfillment Service Ashley Lane LP Stockton Real Estate
Blue Shield of California Lodi Insurance
Dameron Hospital Stockton Hospitals
Deuel Vocational Instn Fire Tracy Fire Departments
Foster Care Svc Stockton Government Offices-County
Leprino Foods Co Tracy Cheese Processors (mfrs)
Lodi Health Home Health Agency Lodi Home Health Service Lodi Memorial Hospital Lodi Hospitals
NA Chaderjian Youth Stockton State Govt-Correctional Institutions Pacific Coast Producers Lodi Canning (mfrs)
Prima Frutta Packing Inc Linden Fruit & Produce Packers Safeway Distribution Ctr Tracy Distribution Centers (whls) San Joaquin County CA Pubc Stockton Government Offices-County San Joaquin County Human Svc Stockton Government Offices-County San Joaquin County Sch Stockton School Districts
San Joaquin General Hospital French Camp Hospitals
San Joaquin Sheriff's Office French Camp Government Offices-County Sjgov Stockton Government Offices-County
St Joseph's Cancer Ctr Stockton Cancer Treatment Centers St Joseph's Regional Health Stockton Hospitals
Stockton Police Dept Stockton Police Departments
Stockton Unified School Dist Stockton School Districts
Walmart Supercenter Stockton Department Stores
Source: California Employment Development Department, extracted from The America’s Labor Market Information System (ALMIS) Employer Database, 2022 2nd Edition.

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Employment and Industry
The Community Facilities District is included in the Stockton Metropolitan Statistical Area (“MSA”), which includes all of San Joaquin County. The unemployment rate in the San Joaquin County was 5.7 percent in March 2022, down from a revised 6.6 percent in February 2022, and below the year-ago estimate of 10.2 percent. This compares with an unadjusted unemployment rate of 4.2 percent for California and 3.8 percent for the nation during the same period.

Set forth below is data from calendar years 2017 to 2021 reflecting the County’s civilian labor force, employment and unemployment. These figures are county-wide statistics and may not necessarily accurately reflect employment trends in the Community Facilities District.

STOCKTON-LODI MSA
(San Joaquin County)
Annual Average Labor Force and Employment by Industry
Calendar Years 2017 through 2021
(March 2021 Benchmark)
2017 2018 2019 2020 2021
Civilian Labor Force (1) 323,000 324,100 327,100 334,300 334,300 Employment 300,200 304,200 307,500 295,600 305,300
Unemployment 22,700 19,900 19,600 38,700 29,000
Unemployment Rate 7.0% 6.1% 6.0% 11.6% 8.7%
Wage and Salary Employment: (2)
Agriculture 16,400 15,600 15,400 14,600 13,700
Mining and Logging 100 100 100 100 100
Construction 11,700 12,800 13,100 13,000 13,800
Manufacturing 20,300 20,600 20,600 20,200 20,900
Wholesale Trade 11,200 11,800 11,700 10,600 10,800
Retail Trade 26,800 26,700 26,200 24,600 26,100
Transportation, Warehousing and Utilities 26,200 28,400 31,300 38,800 41,700 Information 1,800 1,800 1,600 1,200 1,200
Financial Activities 7,800 7,800 7,900 7,800 8,000
Professional and Business Services 19,200 19,600 20,200 21,300 22,400 Educational and Health Services 38,200 38,800 39,100 37,300 38,400 Leisure and Hospitality 21,500 22,000 22,600 18,500 21,100 Other Services 7,600 7,600 7,800 6,800 7,100
Federal Government 3,100 3,100 3,200 3,300 3,100
State Government 6,600 6,700 6,800 6,800 6,000
Local Government 32,800 33,700 34,900 33,000 32,800
Total All Industries (3) 251,200 257,000 262,500 257,800 267,100 (1) Labor force data is by place of residence; includes self-employed individuals, unpaid family workers, household domestic workers, and workers on strike.
(2) Industry employment is by place of work; excludes self-employed individuals, unpaid family workers, household domestic workers, and workers on strike.
(3) Totals may not add due to rounding.

Source: State of California Employment Development Department.

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Construction Activity
The tables below summarize building activity in the City and the County from calendar years 2016 through 2020. Annual figures are not yet available for calendar year 2021.

CITY OF STOCKTON
Building Permit Activity
For Calendar Years 2016 through 2020
(Dollars in Thousands)
2016 2017 2018 2019 2020
Permit Valuation
New Single-family $58,734.6 $65,565.6 $104,468.2 $99,207.4 $129,515.4 New Multi-family 14,797.4 13,036.7 0.0 32,175.0 12,061.1 Res. Alterations/Additions 75,506.4 62,938.1 61,592.1, 66,557.3 11,378.0 Total Residential 149,038.4 141,540.40 166,060.3 197,939.7 152,954.5 New Commercial 6,368.7 9,109.4 21,301.7 20,758.4 25,926.8 New Industrial 1,890.0 140,561.4 68,896.1 104,091.5 7,898.5 New Other 3,068.0 1,823.1 665.0 1,684.1 5,213.4
Com. Alterations/Additions 112,910.9 104,330.1 109,640.5 179,066.8 46,657.9 Total Nonresidential 124,237.6 265,829.6 200,503.3 305,600.8 85,696.6 New Dwelling Units
Single Family 215 238 324 302 481
Multiple Family 25 115 0 262 93
TOTAL 240 353 324 564 574
Source: Construction Industry Research Board, Building Permit Summary.

COUNTY OF SAN JOAQUIN
Building Permit Activity
For Calendar Years 2016 through 2020
(Dollars in Thousands)
2016 2017 2018 2019 2020
Permit Valuation
New Single-family $467,494.7 $652,308.1 $883,071.1 $843,700.9 $870,859.6 New Multi-family 66,794.5 62,635.8 99,601.4 57,271.1 38,411.8 Res. Alterations/Additions 99,049.9 86,516.1 95,073.4 98,681.9 40,144.4 Total Residential 633,339.1 801,460.0 1,077,745.9 999,653.9 949,415.8 New Commercial 218,485.4 357,856.9 498,359.0 380,383.3 255,761.2 New Industrial 61,687.0 179,728.4 240,073.7 120,003.8 534,199.5 New Other 46,379.4 27,794.7 31,904.4 61,991.7 33,112.3
Com. Alterations/Additions 298,721.9 269,172.8 249,142.4 363,841.0 135,285.4 Total Nonresidential 625,273.7 834,552.8 1,019,479.5 926,219.8 958,358.4 New Dwelling Units
Single Family 1,754 2,078 2,765 2,564 2,843
Multiple Family 550 516 593 461 245
TOTAL 2,304 2,594 3,358 3,025 3,088
Source: Construction Industry Research Board, Building Permit Summary.

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Effective Buying Income
“Effective Buying Income” is defined as personal income less personal tax and nontax payments, a number often referred to as “disposable” or “after-tax” income. Personal income is the aggregate of wages and salaries, other labor-related income (such as employer contributions to private pension funds), proprietor’s income, rental income (which includes imputed rental income of owner-occupants of non-farm dwellings), dividends paid by corporations, interest income from all sources, and transfer payments (such as pensions and welfare assistance). Deducted from this total are personal taxes (federal, state and local), nontax payments (fines, fees, penalties, etc.) and personal contributions to social insurance.

According to U.S. government definitions, the resultant figure is commonly known as “disposable personal income.”
The following table summarizes the total effective buying income for the City, the County, the State and the United States for the period 2018 through 2022.

CITY OF STOCKTON, SAN JOAQUIN COUNTY AND THE STATE OF CALIFORNIA Effective Buying Income
2018 through 2022
Year Area
Total Effective
Buying Income
(000’s Omitted)
Median
Household
Effective Buying
Income
2018 City of Stockton $5,300 $42,327
San Joaquin County 14,793 49,883
California 1,113,648 59,646
United States 8,640,770 50,735
2019 City of Stockton $5,964 $46,022
San Joaquin County 16,801 55,534
California 1,183,264 62,637
United States 9,017,968 52,841
2020 City of Stockton $6,301,309 $47,701
San Joaquin County 17,868,858 58,141
California 1,243,564,816 65,870
United States 9,487,165,436 55,303
2021 City of Stockton $6,408,269 $49,625
San Joaquin County 18,493,713 59,914
California 1,290,894,604 67,956
United States 9,809,944,764 56,790
2022 City of Stockton $7,510,371 $58,964
San Joaquin County 21,672,926 68,971
California 1,452,426,153 77,058
United States 11,208,582,541 64,448
Source: The Nielsen Company (US), Inc for year 2018; Claritas, LLC for 2019 through 2022.

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Commercial Activity
A summary of historic taxable sales within the City and the County during the past five years in which data is available is shown in the following tables.

The total taxable sales during calendar year 2021 in the City were reported to be $6,108,929,148, a 29.18% increase from the total taxable sales of $ $4,729,022,477 reported during calendar year 2020.

CITY OF STOCKTON
Taxable Retail Sales
Number of Permits and Valuation of Taxable Transactions (Dollars in Thousands)
Retail Stores Total All Outlets
Number
of Permits
Taxable
Transactions
Number
of Permits
Taxable
Transactions
2017 3,932 $3,173,796 5,812 $4,211,728
2018 4,094 3,351,992 6,160 4,494,043
2019 4,262 3,458,758 6,470 4,694,505
2020 4,797 3,498,450 7,411 4,729,022
2021 4,729 4,477,798 7,347 6,108,929
Source: State of California, Board of Equalization.

The total taxable sales during calendar year 2021 in the County were reported to be $22,244,519,236, a 41.22% increase over the total taxable sales of $15,752,224,761 reported during calendar year 2020.

SAN JOAQUIN COUNTY
Taxable Retail Sales
Number of Permits and Valuation of Taxable Transactions (Dollars in Thousands)
Retail Stores Total All Outlets
Number
of Permits
Taxable
Transactions
Number
of Permits
Taxable
Transactions
2017 9,506 $7,994,473 14,758 $12,153,268
2018 9,660 8,855,169 15,473 13,457,721
2019 9,978 9,058,063 16,144 14,311,068
2020 11,188 10,122,979 18,358 15,609,880
2021 10,642 15,100,195 17,665 22,244,519
Source: State of California, Board of Equalization.

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Transportation
The City. The City is located on Interstate 5, the West Coast’s major route from Canada to Mexico. The City’s Crosstown Freeway connects Interstate 5 with State Route 99, the State’s other principal north-south freeway. Other freeway connections provide convenient access to the San Francisco Bay area and Reno. Thirty-five major transcontinental truck lines and nearly 200 contract carriers serve the City. The City is also served by Greyhound and the San Joaquin Regional Transit District.

The Port of Stockton, the largest inland deep water seaport in the State, is served by numerous international shipping companies through the Stockton Channel to the San Francisco Bay. The modem port facility handles dry and liquid bulk commodities and general cargo.

The Stockton Metropolitan Airport serves the San Joaquin Valley with passenger and air freight facilities, including regularly scheduled commercial passenger service.

Railroad service is provided to the City by Burlington Northern, Santa Fe and the Union Pacific railroads. Daily passenger service by Amtrak is available to San Francisco, San Francisco and Sacramento.

The County. Major highways in the County include: Interstate 5, Interstate 205, Interstate 580, State Route 99, State Route 4 (Crosstown Freeway/California Delta Highway) and State Route 120. The San Joaquin Regional Transit District provides bus service within the City of Stockton in addition to routes throughout the County and commuter routes to Livermore, Pleasanton, Sacramento and Santa Clara County. Greyhound and Amtrak also provide service.

The Stockton Metropolitan Airport serves the San Joaquin Valley with passenger and air freight facilities.

Education
Within the City, there are 4 colleges, Delta College, California State University Stanislaus extension (public), University of the Pacific, and Humphrey’s College with a total of approximately 13,250 students. There are 6 high schools, 7 middle schools and 35 elementary schools (17 private).

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E-1

APPENDIX E

FORM OF OPINION OF BOND COUNSEL
[Closing Date]
City Council
City of Stockton
425 N El Dorado Street
Stockton, California 95202
OPINION: $____________ Improvement Area 2 of the City of Stockton Community Facilities District No. 2018-2 (Westlake Villages II) Special Tax Bonds Series 2022
Members of the City Council:

We have acted as bond counsel to the City of Stockton (the “City”) in connection with the issuance by the City of its $____________ Improvement Area 2 of the City of Stockton Community Facilities District No. 2018-2 (Westlake Villages II) Special Tax Bonds Series 2022 (the “Bonds”), pursuant to the Mello-Roos Community Facilities Act of 1982, as amended, constituting Section 53311, et seq. of the California Government Code (the “Act”) and a Fiscal Agent Agreement dated as of July 1, 2022 (the “Fiscal Agent Agreement”) by and between the City and U.S. Bank Trust Company, National Association, as fiscal agent. We have examined the law and such certified proceedings and other papers as we deem necessary to render this opinion.

As to questions of fact material to our opinion, we have relied upon representations of the City contained in the Fiscal Agent Agreement, and in the certified proceedings and other certifications of public officials furnished to us, without undertaking to verify the same by independent investigation.

Based upon the foregoing, we are of the opinion, under existing law, as follows:

1. The City is duly created and validly existing as a public body, corporate and politic, with the power to adopt the resolution authorizing the issuance of the Bonds (the “Resolution”), enter into the Fiscal Agent Agreement, and perform the agreements on its part contained therein, and issue the Bonds.

2. The Bonds have been duly authorized, executed and delivered by the City and are valid and binding limited obligations of the City, payable solely from the sources provided therefor in the Fiscal Agent Agreement.

3. The Fiscal Agent Agreement has been duly entered into by the City and constitutes a valid and binding obligation of the City enforceable upon the City.

EXHIBIT 3
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4. Pursuant to the Act, the Fiscal Agent Agreement creates a valid lien on the funds pledged by the Fiscal Agent Agreement.

5. The interest on the Bonds is excluded from gross income for federal income tax purposes and is not an item of tax preference for purposes of the federal alternative minimum tax. The opinion set forth in the preceding sentence is subject to the condition that the City comply with all requirements of the Internal Revenue Code of 1986 that must be satisfied subsequent to the issuance of the Bonds in order that such interest thereon be, or continue to be, excluded from gross income for federal income tax purposes. The City has covenanted to comply with each such requirement. Failure to comply with certain of such requirements may cause the inclusion of interest on the Bonds in gross income for federal income tax purposes to be retroactive to the date of issuance of the Bonds. We express no opinion regarding other federal tax consequences arising with respect to the ownership, sale or disposition of the Bonds, or the amount, accrual or receipt of interest on the Bonds.

6. The interest on the Bonds is exempt from personal income taxation imposed by the State of California.

The rights of the owners of the Bonds and the enforceability of the Bonds, the Resolution and the Fiscal Agent Agreement may be subject to bankruptcy, insolvency, reorganization, moratorium and other similar laws affecting creditors’ rights heretofore or hereafter enacted and may also be subject to the exercise of judicial discretion in appropriate cases.

This opinion is given as of the date hereof, and we assume no obligation to revise or supplement this opinion to reflect any facts or circumstances that may hereafter come to our attention, or any changes in law that may hereafter occur. Our engagement with respect to this matter has terminated as of the date hereof.

Respectfully submitted,
A Professional Law Corporation
EXHIBIT 3
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APPENDIX F

FORM OF CONTINUING DISCLOSURE UNDERTAKINGS

CONTINUING DISCLOSURE CERTIFICATE
(City)
$________
IMPROVEMENT AREA 2 OF THE CITY OF STOCKTON
COMMUNITY FACILITIES DISTRICT NO. 2018-2
(WESTLAKE VILLAGES II)
SPECIAL TAX BONDS, SERIES 2022
This CONTINUING DISCLOSURE CERTIFICATE (this “Disclosure Certificate”), dated as of July 1, 2022 is executed and delivered by the CITY OF STOCKTON (the “City”), in connection with the execution and delivery of its Improvement Area 2 of the City of Stockton Community Facilities District No. 2018-2 (Westlake Villages II) Special Tax Bonds Series 2022 (the “Bonds”). The Bonds are being executed and delivered pursuant to a Fiscal Agent Agreement, dated as of July 1, 2022 (the “Fiscal Agent Agreement”), by and between the City and U.S. Bank Trust Company, National Association, as fiscal agent (the “Fiscal Agent”).

The City covenants and agrees as follows:

Section 1. Purpose of the Disclosure Certificate. This Disclosure Certificate is being executed and delivered by the City for the benefit of the holders and beneficial owners of the Bonds and in order to assist the Participating Underwriter in complying with the Rule.

EXHIBIT 3
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“MSRB” means the Municipal Securities Rulemaking Board, which has been designated by the Securities and Exchange Commission as the sole repository of disclosure information for purposes of the Rule, or any other repository of disclosure information that may be designated by the Securities and Exchange Commission as such for purposes of the Rule in the future.
“Official Statement” means the final official statement executed by the City in connection with the issuance of the Bonds.
“Participating Underwriter” means Oppenheimer & Co. Inc., as the original underwriter of the Bonds.
“Rule” means Rule 15c2-12(b)(5) adopted by the Securities and Exchange Commission under the Securities Exchange Act of 1934, as it may be amended from time to time.
“Special Taxes” means the special taxes levied on taxable property within Improvement Area 2 that are pledged to repayment of the Bonds.

Section 3. Provision of Annual Reports.
(a) The City shall, or shall cause the Dissemination Agent to, not later than March 31 following the end of the City’s Fiscal Year (presently June 30), commencing with the report for the 2021-22 Fiscal Year due March 31, 2023, provide to the MSRB, in an electronic format as prescribed by the MSRB, an Annual Report that is consistent with the requirements of Section 4 of this Disclosure Certificate. Not later than 15 Business Days prior to the Annual Report Date, the City shall provide the Annual Report to the Dissemination Agent (if other than the City). If by 15 Business Days prior to the Annual Report Date the Dissemination Agent (if other than the City) has not received a copy of the Annual Report, the Dissemination Agent shall contact the City to determine if the City is in compliance with the previous sentence. The Annual Report may be submitted as a single document or as separate documents comprising a package, and may include by reference other information as provided in Section 4 of this Disclosure Certificate; provided, that the audited financial statements of the City may be submitted separately from the balance of the Annual Report, and later than the Annual Report Date, if not available by that date. If the City’s Fiscal Year changes, it shall give notice of such change in the same manner as for a Listed Event. The City shall provide a written certification with each Annual Report furnished to the Dissemination Agent to the effect that such Annual Report constitutes the Annual Report required to be furnished by the City hereunder. (b) If the City does not provide (or cause the Dissemination Agent to provide) an Annual Report by the Annual Report Date, the City shall provide (or cause the Dissemination Agent to provide) to the MSRB in a timely manner, in an electronic format as prescribed by the MSRB, a notice in substantially the form attached as Exhibit A to this Disclosure Certificate. (c) With respect to each Annual Report, the Dissemination Agent shall:
(i) determine prior to each Annual Report Date the then-applicable rules and electronic format prescribed by the MSRB for the filing of annual continuing disclosure reports; and
EXHIBIT 3
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(ii) if the Dissemination Agent is other than the City, file a report with the City certifying that the Annual Report has been provided pursuant to this Disclosure Certificate, and stating the date it was provided.

Section 4. Content of Annual Reports. The City’s Annual Report shall contain or incorporate by reference the following:
(a) The City’s audited financial statements prepared in accordance with generally accepted accounting principles as promulgated to apply to governmental entities from time to time by the Governmental Accounting Standards Board. If the City’s audited financial statements are not available by the Annual Report Date, the Annual Report shall contain unaudited financial statements in a format similar to the financial statements contained in the Official Statement, and the audited financial statements shall be filed in the same manner as the Annual Report when they become available.
(b) For the report due no later than March 31, 2023 and each Annual Report due thereafter, the following additional information:
(i) A maturity schedule for the outstanding Bonds, and a listing of Bonds, if any, redeemed prior to maturity during the prior Fiscal Year. (ii) Balance in the Reserve Fund (and any accounts therein), and statement of the Reserve Requirement for the Bonds. Statement of projected reserve fund draw, if any.
(iii) Balance in other funds and accounts held by the City or Fiscal Agent related to the Bonds.
(iv) A table indicating the levy of Special Taxes, amount collected, delinquent amount and percent of Special Tax levy delinquent for the most recent Fiscal Year.
(v) The aggregate assessed value of the properties in Improvement Area 2 for the most recent Fiscal Year.
(vi) Identification of each delinquent property owner in Improvement Area 2 representing more than 5% of the levy of Special Taxes in Improvement Area 2, and the value-to-lien ratios of the corresponding property, together with the following information respecting each such parcel:
(A) the amount delinquent (exclusive of late charges and monthly penalties for reinstatement) and the assessed value of such parcel; (B) the date of the first delinquency;
(C) the status of any foreclosure action by the City;
(D) in the event a foreclosure complaint has been filed respecting such delinquent parcel and such complaint has not yet been dismissed, the date on which the complaint was filed in the California Superior Court; and EXHIBIT 3
1485
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(E) in the event a foreclosure sale has occurred respecting such delinquent parcel, a summary of the results of such foreclosure sale. (c) Any or all of the items listed above may be included by specific reference to other documents, including official statements of debt issues of the City or related public entities, which are available to the public on the MSRB’s Internet web site or filed with the Securities and Exchange Commission. The City shall clearly identify each such other document so included by reference.

Section 5. Reporting of Listed Events.
(a) The City shall give, or cause to be given, notice of the occurrence of any of the following Listed Events with respect to the Bonds:
(1) Principal and interest payment delinquencies.
(2) Non-payment related defaults, if material.
(3) Unscheduled draws on debt service reserves reflecting financial difficulties.
(4) Unscheduled draws on credit enhancements reflecting financial difficulties.
(5) Substitution of credit or liquidity providers, or their failure to perform. (6) Adverse tax opinions, the issuance by the Internal Revenue Service of proposed or final determinations of taxability, Notices of Proposed Issue (IRS Form 5701-TEB) or other material notices or determinations with respect to the tax status of the security, or other material events affecting the tax status of the security.
(7) Modifications to rights of security holders, if material. (8) Bond calls, if material, and tender offers.
(9) Defeasances.
(10) Release, substitution, or sale of property securing repayment of the securities, if material.
(11) Rating changes.
(12) Bankruptcy, insolvency, receivership or similar event of the City or other obligated person.
(13) The consummation of a merger, consolidation, or acquisition involving the City or an obligated person, or the sale of all or substantially all of the assets of the City or an obligated person (other than in the ordinary course of business), the entry into a definitive agreement to undertake such an action, or the termination of a definitive agreement relating to any such actions, other than pursuant to its terms, if material. (14) Appointment of a successor or additional fiscal agent or the change of name of the fiscal agent, if material.
(15) Incurrence of a financial obligation of the City, if material, or agreement to covenants, events of default, remedies, priority rights, or other similar terms of a financial obligation of the City, any of which affect security holders, if material (for the definition of financial obligation, see clause (e)).
(16) Default, event of acceleration, termination event, modification of terms, or other similar events under the terms of a financial obligation of the EXHIBIT 3
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City, any of which reflect financial difficulties (for the definition of financial obligation, see clause (e)).
(b) Whenever the City obtains knowledge of the occurrence of a Listed Event, the City shall, or shall cause the Dissemination Agent (if not the City) to, file a notice of such occurrence with the MSRB, in an electronic format as prescribed by the MSRB, in a timely manner not in excess of 10 business days after the occurrence of the Listed Event. (c) The City acknowledges that the events described in subparagraphs (a)(2), (a)(7), (a)(8) (if the event is a bond call), (a)(10), (a)(13), (a)(14) and (a)(15) of this Section 5 contain the qualifier “if material” and that subparagraph (a)(6) also contains the qualifier “material” with respect to certain notices, determinations or other events affecting the tax status of the Bonds. The City shall cause a notice to be filed as set forth in paragraph (b) above with respect to any such event only to the extent that it determines the event’s occurrence is material for purposes of U.S. federal securities law. Whenever the City obtains knowledge of the occurrence of any of these Listed Events, the City will as soon as possible determine if such event would be material under applicable federal securities law. If such event is determined to be material, the City will cause a notice to be filed as set forth in paragraph (b) above.
(d) For purposes of this Disclosure Certificate, any event described in paragraph (a)(12) above is considered to occur when any of the following occur: the appointment of a receiver, fiscal agent, or similar officer for the City in a proceeding under the United States Bankruptcy Code or in any other proceeding under state or federal law in which a court or governmental authority has assumed jurisdiction over substantially all of the assets or business of the City, or if such jurisdiction has been assumed by leaving the existing governing body and officials or officers in possession but subject to the supervision and orders of a court or governmental authority, or the entry of an order confirming a plan of reorganization, arrangement, or liquidation by a court or governmental authority having supervision or jurisdiction over substantially all of the assets or business of the City. (e) For purposes of Section 5(a)(15) and (16), “financial obligation” means a (i) debt obligation; (ii) derivative instrument entered into in connection with, or pledged as security or a source of payment for, an existing or planned debt obligation; or (iii) guarantee of (i) or (ii). The term financial obligation shall not include municipal securities as to which a final official statement has been provided to the MSRB consistent with the Rule.

Section 6. Identifying Information for Filings with the MSRB. All documents provided to the MSRB pursuant to this Disclosure Certificate shall be accompanied by identifying information as prescribed by the MSRB.

Section 7. Termination of Reporting Obligation. The City’s obligations under this Disclosure Certificate shall terminate upon the legal defeasance, prior redemption or payment in full of all of the Bonds. If such termination occurs prior to the final maturity of the Bonds, the City shall give notice of such termination in the same manner as for a Listed Event under Section 5(b).

Section 8. Dissemination Agent. The City may, from time to time, appoint or engage a Dissemination Agent to assist it in carrying out its obligations under this Disclosure Certificate, and may discharge any Dissemination Agent, with or without appointing a successor EXHIBIT 3
1487
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Dissemination Agent. Any Dissemination Agent may resign by providing 30 days’ written notice to the City.

Section 9. Amendment; Waiver. Notwithstanding any other provision of this Disclosure Certificate, the City may amend this Disclosure Certificate, and any provision of this Disclosure Certificate may be waived, provided that the following conditions are satisfied:
(a) if the amendment or waiver relates to the provisions of Sections 3(a), 4 or 5(a), it may only be made in connection with a change in circumstances that arises from a change in legal requirements, change in law, or change in the identity, nature, or status of an obligated person with respect to the Bonds, or type of business conducted; and
(b) the proposed amendment or waiver either (i) is approved by holders of the Bonds in the manner provided in the Fiscal Agent Agreement for amendments to the Fiscal Agent Agreement with the consent of holders, or (ii) does not, in the opinion of nationally recognized bond counsel, materially impair the interests of the holders or beneficial owners of the Bonds.

If the annual financial information or operating data to be provided in the Annual Report is amended pursuant to the provisions hereof, the first Annual Report filed pursuant hereto containing the amended operating data or financial information shall explain, in narrative form, the reasons for the amendment and the impact of the change in the type of operating data or financial information being provided.

If an amendment is made to this Disclosure Certificate modifying the accounting principles to be followed in preparing financial statements, the Annual Report for the year in which the change is made shall present a comparison between the financial statements or information prepared on the basis of the new accounting principles and those prepared on the basis of the former accounting principles. The comparison shall include a qualitative discussion of the differences in the accounting principles and the impact of the change in the accounting principles on the presentation of the financial information, in order to provide information to investors to enable them to evaluate the ability of the City to meet its obligations. To the extent reasonably feasible, the comparison shall be quantitative.

A notice of any amendment made pursuant to this Section 9 shall be filed in the same manner as for a Listed Event under Section 5(b).

Section 10. Additional Information. Nothing in this Disclosure Certificate shall be deemed to prevent the City from disseminating any other information, using the means of dissemination set forth in this Disclosure Certificate or any other means of communication, or including any other information in any Annual Report or notice of occurrence of a Listed Event, in addition to that which is required by this Disclosure Certificate. If the City chooses to include any information in any Annual Report or notice of occurrence of a Listed Event in addition to that which is specifically required by this Disclosure Certificate, the City shall have no obligation under this Disclosure Certificate to update such information or include it in any future Annual Report or notice of occurrence of a Listed Event.

Section 11. Default. If the City fails to comply with any provision of this Disclosure Certificate, the Participating Underwriter or any holder or beneficial owner of the Bonds may take such actions as may be necessary and appropriate, including seeking mandate or EXHIBIT 3
1488
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specific performance by court order, to cause the City to comply with its obligations under this Disclosure Certificate. A default under this Disclosure Certificate shall not be deemed an Event of Default under the Fiscal Agent Agreement, and the sole remedy under this Disclosure Certificate in the event of any failure of the City to comply with this Disclosure Certificate shall be an action to compel performance.

Section 12. Duties, Immunities and Liabilities of Dissemination Agent. (a) The Dissemination Agent shall have only such duties as are specifically set forth in this Disclosure Certificate, and the City agrees to indemnify and save harmless the Dissemination Agent, its officers, directors, employees and agents (each, an “Indemnified Party”), against any loss, expense and liability which it may incur arising out of or in the exercise or performance of its powers and duties hereunder, including the reasonable costs and expenses (including reasonable attorneys’ fees) of defending against any claim of liability, but excluding losses, liabilities, costs and expenses due to an Indemnified Party’s negligence, willful misconduct or failure to perform its duties hereunder. The Dissemination Agent shall have no duty or obligation to review any information provided to it by the City hereunder, and shall not be deemed to be acting in any fiduciary capacity for the City, the holders and beneficial owners from time to time of the Bonds or any other party. The obligations of the City under this Section shall survive resignation or removal of the Dissemination Agent and payment of the Bonds.
(b) The Dissemination Agent shall be paid compensation by the City for its services provided hereunder in accordance with its schedule of fees as amended from time to time, and shall be reimbursed for all reasonable and documented expenses, legal fees and advances made or incurred by the Dissemination Agent in the performance of its duties hereunder.

Section 13. Notices. Any notice or communications required to be given to the Dissemination Agent, the City or the Participating Underwriter may be given as follows:

To the Dissemination Agent: Willdan Financial Services
27368 Via Industria, Suite 200
Temecula, California 92590
To the City: City of Stockton
425 N. El Dorado Street
Stockton, California 95202
Attn: Chief Financial Officer
To the Participating Underwriter: Oppenheimer & Co. Inc. 580 California Street, Suite 2300
San Francisco, California 94104
Any person may, by written notice to the other persons listed above, designate a different address to which subsequent notices or communications should be sent.

Section 13. Beneficiaries. This Disclosure Certificate shall inure solely to the benefit of the City, the Dissemination Agent, the Participating Underwriter and the holders and beneficial owners from time to time of the Bonds, and shall create no rights in any other person or entity.

EXHIBIT 3
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Section 14. Counterparts. This Disclosure Certificate may be executed in several counterparts, each of which shall be regarded as an original, and all of which shall constitute one and the same instrument.

IN WITNESS WHEREOF, the parties hereto have executed this Disclosure Certificate as of the date first above written.

CITY OF STOCKTON, for and on behalf
of Improvement Area 2 of the City of
Stockton Community Facilities District No.
2018-2 (Westlake Villages II)
By:

Authorized Officer
Accepted by Dissemination Agent:

WILLDAN FINANCIAL SERVICES,
as Dissemination Agent
By:

Name:

Title:

EXHIBIT 3
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EXHIBIT A

NOTICE OF FAILURE TO FILE ANNUAL REPORT
Name of Issuer: City of Stockton
Name of Bond Issue: $____________ Improvement Area 2 of the City of Stockton Community Facilities District No. 2018-2 (Westlake Villages II) Special Tax Bonds, Series 2022
Date of Issuance: ________, 2022
NOTICE IS HEREBY GIVEN that the City of Stockton (the “City”), on behalf of Improvement Area 2 of the City of Stockton Community Facilities District No. 2018-2 (Westlake Villages II), has not provided an Annual Report with respect to the above-named Bonds as required by the Continuing Disclosure Certificate dated July 1, 2022. The City anticipates that the Annual Report will be filed by _____________.

Dated: _______________
[Dissemination Agent]
By:

Authorized Officer
cc: City of Stockton
EXHIBIT 3
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FORM OF CONTINUING DISCLOSURE CERTIFICATE
(Merchant Builder)
$________
IMPROVEMENT AREA 2 OF THE CITY OF STOCKTON
COMMUNITY FACILITIES DISTRICT NO. 2018-2
(WESTLAKE VILLAGES II)
SPECIAL TAX BONDS, SERIES 2022
THIS CONTINUING DISCLOSURE CERTIFICATE (the “Disclosure Certificate”) dated as of July 1, 2022, is executed by _______________ (the “Developer”) in connection with the execution and delivery by the City of Stockton (the “City”) of its City of Stockton Improvement Area 2 of the City of Stockton Community Facilities District No. 2018-2 (Westlake Villages II) Special Tax Bonds Series 2022 (the “Bonds”). The Bonds are being executed and delivered pursuant to a Fiscal Agent Agreement, dated as of July 1, 2022 (the “Fiscal Agent Agreement”), by and between the City and U.S. Bank Trust Company, National Association, as fiscal agent (the “Fiscal Agent”).

The Developer covenants and agrees as follows:

Section 1. Purpose of the Disclosure Certificate. This Disclosure Certificate is being executed and delivered by the Developer for the benefit of the holders and beneficial owners of the Bonds.

Section 2. Definitions. In addition to the definitions set forth above and in the Fiscal Agent Agreement, which apply to any capitalized term used in this Disclosure Certificate unless otherwise defined in this Section, the following capitalized terms shall have the following meanings:
“Affiliate” of another Person means (a) a Person directly or indirectly owning, controlling, or holding with power to vote, 5% or more of the outstanding voting securities of such other Person, (b) any Person, 5% or more of whose outstanding voting securities are directly or indirectly owned, controlled, or held with power to vote, by such other Person, and (c) any Person directly or indirectly controlling, controlled by, or under common control with, such other Person. For purposes hereof, control means the power to exercise a controlling influence over the management or policies of a Person, unless such power is solely the result of an official position with such Person.
“Assumption Agreement” means an undertaking of a Major Owner, or an Affiliate thereof, for the benefit of the holders and beneficial owners of the Bonds containing terms substantially similar to this Disclosure Certificate (as modified for such Major Owner’s development and financing plans with respect to Improvement Area 2), whereby such Major Owner or Affiliate agrees to provide periodic reports and notices of significant events, setting forth the information described in sections 4 and 5 hereof, respectively, with respect to the portion of the property in Improvement Area 2 owned by such Major Owner and its Affiliates and, at the option of the Developer or such Major Owner, agrees to indemnify the Dissemination Agent (if any) pursuant to a provision substantially in the form of Section 11 hereof.

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“Dissemination Agent” means ________, or any successor Dissemination Agent designated in writing by the Developer, and which has filed with the Developer, the City and the Fiscal Agent a written acceptance of such designation, and which is experienced in providing dissemination agent services such as those required under this Disclosure Certificate.
“District” means the City of Stockton Community Facilities District No. 2018-2 (Westlake Villages II).
“Improvement Area 2” means Improvement Area 2 of the City of Stockton Community Facilities District No. 2018-2 (Westlake Villages II).
“Listed Events” means any of the events listed in Section 5(a) of this Disclosure Certificate.
“Major Owner” means, as of any Report Date, an owner of land in Improvement Area 2 that is responsible in the aggregate for 20% or more of the Special Taxes in Improvement Area 2 anticipated to be levied at any time during the then-current fiscal year. “MSRB” means the Municipal Securities Rulemaking Board, which has been designated by the Securities and Exchange Commission as the sole repository of disclosure information for purposes of the Rule, or any other repository of disclosure information that may be designated by the Securities and Exchange Commission as such for purposes of the Rule in the future.
“Official Statement” means the final official statement executed by the City in connection with the issuance of the Bonds.
“Participating Underwriter” means Oppenheimer & Co. Inc., the original Underwriter of the Bonds.
“Periodic Report” means any Periodic Report provided by the Developer pursuant to, and as described in, Sections 3 and 4 of this Disclosure Certificate. “Person” means an individual, a corporation, a partnership, a limited liability company, an association, a joint stock company, a trust, any unincorporated organization or a government or political subdivision thereof.
“Property” means the property owned by the Developer or an Affiliate in Improvement Area 2.
“Report Date” means March 31 and September 30 of each fiscal year. “Rule” means Rule 15c2-12(b)(5) adopted by the Securities and Exchange Commission under the Securities Exchange Act of 1934, as the same may be amended from time to time.
“Special Taxes” means the special taxes levied on taxable property within Improvement Area that are pledged to repayment of the Bonds.

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Section 3. Provision of Periodic Reports.
(a) The Developer shall, or, upon written direction of the Developer the Dissemination Agent shall, not later than each Report Date, commencing March 31, 2023, file or cause to be filed with the MSRB a Periodic Report which is consistent with the requirements of Section 4 of this Disclosure Certificate with a copy to the Fiscal Agent (if different from the Dissemination Agent), the Participating Underwriter and the City. Not later than 15 calendar days prior to the Report Date, the Developer shall provide the Periodic Report to the Dissemination Agent (if different from the Developer). The Developer shall provide a written certification with (or included as a part of) each Periodic Report furnished to the Dissemination Agent (if different from the Developer), the Fiscal Agent (if different from the Dissemination Agent), the Participating Underwriter and the City to the effect that such Periodic Report constitutes the Periodic Report required to be furnished by it under this Disclosure Certificate. The Dissemination Agent, the Fiscal Agent, the Participating Underwriter and the City may conclusively rely upon such certification of the Developer and shall have no duty or obligation to review the Periodic Report. The Periodic Report may be submitted as a single document or as separate documents comprising a package, and may incorporate by reference other information as provided in Section 4 of this Disclosure Certificate.
(b) If the Dissemination Agent does not receive a Periodic Report by 15 calendar days prior to the Report Date, the Dissemination Agent shall send a reminder notice to the Developer that the Periodic Report has not been provided as required under Section 3(a) above. The reminder notice shall instruct the Developer to determine whether its obligations under this Disclosure Certificate have terminated (pursuant to Section 6 below) and, if so, to provide the Dissemination Agent with a notice of such termination in the same manner as for a Listed Event (pursuant to Section 5 below). If the Developer does not provide, or cause the Dissemination Agent to provide, a Periodic Report to the MSRB by the Report Date as required in subsection (a) above, the Dissemination Agent shall send a notice in a timely manner to the MSRB in substantially the form attached hereto as Exhibit A, with a copy to the Fiscal Agent (if other than the Dissemination Agent), the City and the Participating Underwriter.
(c) With respect to the Periodic Report, the Dissemination Agent shall, to the extent the Periodic Report has been furnished to it, file the Periodic Report with the MSRB and file a report with the Developer (if the Dissemination Agent is other than the Developer), the City and the Participating Underwriter certifying that the Periodic Report has been provided pursuant to this Disclosure Certificate, stating the date it was provided to and filed with the MSRB.

Section 4. Content of Periodic Reports. The Developer’s Periodic Report shall contain or incorporate by reference the information set forth in Exhibit B relating to the Developer, any or all of which may be included by specific reference to other documents, including official statements of debt issues of the Developer or related public entities, which have been submitted to the MSRB or the Securities and Exchange Commission. If the document included by reference is a final official statement, it must be available from the MSRB. The Developer shall clearly identify each such other document so included by reference.

In addition to any of the information expressly required to be provided in Exhibit B, the Developer’s Periodic Report shall include such further information, if any, as may be EXHIBIT 3
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necessary to make the specifically required statements, in the light of the circumstances under which they are made, not misleading.

Section 5. Reporting of Significant Events.
(a) The Developer shall give, or cause to be given, notice of the occurrence of any of the following Listed Events with respect to itself or the Property, if material:
(i) bankruptcy or insolvency proceedings commenced by or against the Developer and, if known, any bankruptcy or insolvency proceedings commenced by or against any Affiliate of the Developer that is reasonably likely to have a significant impact on the Developer’s ability to pay Special Taxes or to sell or develop the Property;
(ii) failure to pay any taxes, special taxes (including the Special Taxes) or assessments due with respect to the Property on or prior to the delinquency date; (iii) filing of a lawsuit of which the Developer is aware against the Developer or an Affiliate seeking damages, which is reasonably likely to have a significant impact on the Developer’s ability to pay Special Taxes or to sell or develop the Property; (iv) material damage to or destruction of any of the improvements on the Property; and
(v) any payment default or other material default by the Developer on any loan with respect to the construction of improvements on the Property. (b) Whenever the Developer obtains knowledge of the occurrence of a Listed Event, the Developer shall as soon as possible determine if such event would be material under applicable Federal securities law.
(c) If the Developer determines that knowledge of the occurrence of a Listed Event would be material under applicable Federal securities law, the Developer shall, or shall cause the Dissemination Agent to, promptly file a notice of such occurrence with the MSRB, with a copy to the Fiscal Agent, the City and the Participating Underwriter.

Section 6. Duration of Reporting Obligation.
(a) All the Developer’s obligations hereunder shall commence on the date hereof and terminate (except as provided in Section 11) on the earliest to occur of the following:
(i) upon the legal defeasance, prior redemption or payment in full of all the Bonds, or
(ii) at such time as the Developer and its affiliates, including successor thereto, own parcels in Improvement Area 2 that are subject to less than 20% of the annual Special Tax levy, or
(iii) the date on which the Developer prepays in full all of the Special Taxes attributable to the Property.

EXHIBIT 3
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The Developer shall give notice of the termination of its obligations under this Disclosure Certificate in the same manner as for a Listed Event under Section 5. (b) If a portion of the Property owned by the Developer, or any Affiliate of the Developer, is conveyed to a Person that, upon such conveyance, will be a Major Owner, the obligations of the Developer hereunder with respect to the property in Improvement Area 2 owned by such Major Owner and its Affiliates may be assumed by such Major Owner or by an Affiliate thereof, and if so assumed the Developer’s obligations hereunder with respect to such portion of the Property will be terminated. In order to effect such an assumption, such Major Owner or Affiliate shall enter into an Assumption Agreement in form and substance reasonably satisfactory to the City and the Participating Underwriter. If not so assumed, the Developer shall report the information, as applicable to the transferee, required herein so long as the transferee is a Major Owner.

Section 7. Dissemination Agent. The Developer may, from time to time, appoint or engage a Dissemination Agent to assist the Developer in carrying out its obligations under this Disclosure Certificate, and may discharge any such Dissemination Agent, with or without appointing a successor Dissemination Agent. The initial Dissemination Agent shall be the Developer. The Dissemination Agent may resign by providing 30 days’ written notice to the City, the Developer and the Participating Underwriter.

Section 8. Amendment; Waiver. Notwithstanding any other provision of this Disclosure Certificate, the Developer may amend this Disclosure Certificate, and any provision of this Disclosure Certificate may be waived, provided that the following conditions are satisfied (provided, however, that the Dissemination Agent shall not be obligated under any such amendment that modifies or increases its duties or obligations hereunder without its written consent thereto):
(a) if the amendment or waiver relates to the provisions of sections 3(a), 4 or 5(a), it may only be made in connection with a change in circumstances that arises from a change in legal requirements, change in law, or change in the identity, nature, or status of an obligated person with respect to the Bonds, or type of business conducted; and (b) the proposed amendment or waiver either (i) is approved by holders of the Bonds in the manner provided in the Fiscal Agent Agreement, with the consent of holders, or (ii) does not, in the opinion of nationally recognized bond counsel, materially impair the interests of the holders or beneficial owners of the Bonds.

Section 9. Additional Information. Nothing in this Disclosure Certificate shall be deemed to prevent the Developer from disseminating any other information, using the means of dissemination set forth in this Disclosure Certificate or any other means of communication, or including any other information in any Periodic Report or notice of occurrence of a Listed Event, in addition to that which is required by this Disclosure Certificate. If the Developer chooses to include any information in any Periodic Report or notice of occurrence of a Listed Event in addition to that which is specifically required by this Disclosure Certificate, the Developer shall have no obligation under this Disclosure Certificate to update such information or include it in any future Periodic Report or notice of occurrence of a Listed Event.

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Section 10. Default. In the event of a failure of the Developer to comply with any provision of this Disclosure Certificate, the Fiscal Agent shall (upon written direction and only to the extent indemnified to its satisfaction from any liability, cost or expense, including fees and expenses of its attorneys), and the Participating Underwriter and any holder or beneficial owner of the Bonds may, take such actions as may be necessary and appropriate, including seeking mandate or specific performance by court order, to cause the Developer to comply with its obligations under this Disclosure Certificate. A default under this Disclosure Certificate shall not be deemed an Event of Default under the Fiscal Agent Agreement, and the sole and exclusive remedy under this Disclosure Certificate in the event of any failure of the Developer to comply with this Disclosure Certificate shall be an action to compel performance.

Section 11. Duties, Immunities and Liabilities of Dissemination Agent. The Dissemination Agent shall have only such duties as are specifically set forth in this Disclosure Certificate, and the Developer agrees to indemnify and save the Dissemination Agent, its officers, directors, employees and agents (each, an “Indemnified Party”), harmless against any loss, expense and liabilities which it may incur arising out of or in the exercise or performance of its powers and duties hereunder, including the reasonable costs and expenses (including attorneys’ fees) of defending against any claim of liability, but excluding loss, liabilities, costs and expenses due to an Indemnified Party’s negligence or willful misconduct or failure to perform its duties hereunder. The Dissemination Agent shall be paid compensation for its services provided hereunder in accordance with its schedule of fees as amended from time to time, which schedule, as amended, shall be reasonably acceptable, and all reasonable expenses, reasonable legal fees and advances made or incurred by the Dissemination Agent in the performance of its duties hereunder. The Dissemination Agent shall have no duty or obligation to review any information provided to it hereunder and shall not be deemed to be acting in any fiduciary capacity for the City, the Developer, the Fiscal Agent, the Bond owners, or any other party. The obligations of the Developer under this Section shall survive resignation or removal of the Dissemination Agent and payment of the Bonds.

Section 12. Notices. Any notice or communications to the Developer, the City, the Dissemination Agent or the Participating Underwriter under this Disclosure Certificate may be given as follows:

To the Developer ___________
___________
___________
To the Dissemination Agent: ___________
___________
___________
To the City: City of Stockton
425 N. El Dorado Street
Stockton, California 95202
Attn: Chief Financial Officer
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To the Participating Underwriter: Oppenheimer & Co. Inc. 580 California Street, Suite 2300
San Francisco, California 94104
Any person may, by written notice to the other persons listed above, designate a different address to which subsequent notices or communications should be sent.

Section 13. Beneficiaries. This Disclosure Certificate shall inure solely to the benefit of the City, the Developer (its successors and assigns), the Fiscal Agent, the Dissemination Agent, the Participating Underwriter and holders and beneficial owners from time to time of the Bonds, and shall create no rights in any other person or entity. All obligations of the Developer hereunder shall be assumed by any legal successor to the obligations of the Developer as a result of a sale, merger, consolidation or other reorganization.

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

IN WITNESS WHEREOF, the Developer has executed this Disclosure Certificate as of the date first above written.

DEVELOPER:
____________________
By:

Name:

Title:

Accepted by Dissemination Agent:
__________,
as Dissemination Agent
By:

Name:

Title:

EXHIBIT 3
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EXHIBIT A

NOTICE TO REPOSITORIES OF FAILURE TO FILE PERIODIC REPORT Name of Issuer: City of Stockton
Name of Bond Issue: $____________ Improvement Area 2 of the City of Stockton Community Facilities District No. 2018-2 (Westlake Villages II) Special Tax Bonds, Series 2022
Date of Issuance: ________, 2022
NOTICE IS HEREBY GIVEN that __________________ (the “Developer”), on behalf of City of Stockton Improvement Area 2 of the City of Stockton Community Facilities District No. 2018-2 (Westlake Villages II), has not provided a Periodic Report with respect to the above-named Bonds as required by the Continuing Disclosure Certificate. The Developer anticipates that the applicable Periodic Report will be filed by _____________.

Dated: _______________
___________________________________,
Dissemination Agent
By: __________________________________
Its: __________________________________
cc: Developer
EXHIBIT 3
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EXHIBIT B

PERIODIC REPORT
This Periodic Report is hereby submitted under Section 4 of the Continuing Disclosure Certificate (the “Disclosure Certificate”) dated July 1, 2022 executed by the undersigned (the “Developer”) in connection with the issuance of the above-captioned bonds by the City of Stockton (the “City”) with respect to its Improvement Area 2 of the City of Stockton Community Facilities District No. 2018-2 (Westlake Villages II).

Capitalized terms used in this Periodic Report but not otherwise defined have the meanings given to them in the Disclosure Certificate.

I. Property Ownership and Development
The information in this section is provided as of ____________________ (this date must be not more than 30 days before the date of this Periodic Report).

A. Property currently owned by the Developer in Improvement Area 2 (the “Property”):

Development name:

Number of lots:

B. Status of home construction activities:
_____________________________________________________________________ _____________________________________________________________________ C. Status of building permits and any significant amendments to land use or development entitlements:
_____________________________________________________________________ _____________________________________________________________________ D. Aggregate property sold, optioned or leased by the Developer to end users or merchant builders:

Since the Date of Issuance
of the Bonds
Since the Last Periodic
Report
Lots ____ Lots ____
E. Status of any land purchase contracts (other than sales to homeowners) with regard to the Property.
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F. Number of Homes in Improvement Area 2 sold and closed to homeowners by the Developer to date: ___________
Number of Homes in Improvement Area 2 under contract for sale as of ___________, 20__: ___________
II. Legal and Financial Status of Developer
Unless such information has previously been included or incorporated by reference in a Periodic Report, describe any change in the legal structure of the Developer or the financial condition and financing plan of the Developer that would materially and adversely interfere with its ability to complete its development plan described in the Official Statement. _____________________________________________________________________ _____________________________________________________________________ III. Change in Development or Financing Plans
Unless such information has previously been included or incorporated by reference in a Periodic Report, describe any development plans or financing plans relating to the Property that are materially different from the proposed development and financing plan described in the Official Statement.
_____________________________________________________________________ _____________________________________________________________________ IV. Official Statement Updates
Unless such information has previously been included or incorporated by reference in a Periodic Report, describe any other significant changes in the information relating to the Developer or the Property contained in the Official Statement under the heading “OWNERSHIP AND DEVELOPMENT OF PROPERTY WITHIN IMPROVEMENT AREA 2 – [___________]” that would materially and adversely interfere with the Developer’s ability to develop and sell the Property as described in the Official Statement. _____________________________________________________________________ _____________________________________________________________________ V. Other Material Information
In addition to any of the information expressly required above, provide such further information, if any, as may be necessary to make the specifically required statements, in the light of the circumstances under which they are made, not misleading. _____________________________________________________________________ _____________________________________________________________________ EXHIBIT 3
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Certification
The undersigned Developer hereby certifies that this Periodic Report constitutes the Periodic Report required to be furnished by the Developer under the Disclosure Certificate.

ANY STATEMENTS REGARDING THE DEVELOPER, THE DEVELOPMENT OF THE PROPERTY, THE DEVELOPER’S FINANCING PLAN OR FINANCIAL CONDITION, OR THE

BONDS, OTHER THAN STATEMENTS MADE BY THE DEVELOPER IN AN OFFICIAL

RELEASE, OR FILED WITH THE MUNICIPAL SECURITIES RULEMAKING BOARD, ARE NOT AUTHORIZED BY THE DEVELOPER. THE DEVELOPER IS NOT RESPONSIBLE

FOR THE ACCURACY, COMPLETENESS OR FAIRNESS OF ANY SUCH UNAUTHORIZED STATEMENTS.

THE DEVELOPER HAS NO OBLIGATION TO UPDATE THIS PERIODIC REPORT OTHER THAN AS EXPRESSLY PROVIDED IN THE DISCLOSURE CERTIFICATE.

Dated:

DEVELOPER: __________________
By: _____________________________
_____________________________
_____________________________
EXHIBIT 3
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APPENDIX G

DTC AND THE BOOK-ENTRY ONLY SYSTEM
The following description of the Depository Trust Company (“DTC”), the procedures and record keeping with respect to beneficial ownership interests in the Bonds, payment of principal, interest and other payments on the Bonds (herein, the “Securities”) to DTC Participants or Beneficial Owners, confirmation and transfer of beneficial ownership interest in the Securities and other related transactions by and between DTC, the DTC Participants and the Beneficial Owners is based solely on information provided by DTC. Accordingly, no representations can be made concerning these matters and neither the DTC 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.

Neither the issuer of the Securities (the “Issuer”) nor the trustee, fiscal agent or paying agent appointed with respect to the Securities (the “Agent”) takes any responsibility for the information contained in this Appendix.

No assurances can be given that DTC, DTC Participants or Indirect Participants will distribute to the Beneficial Owners (a) payments of interest, principal or premium, if any, with respect to the Securities, (b) certificates representing ownership interest in or other confirmation or ownership interest in the Securities, or (c) redemption or other notices sent to DTC or Cede & Co., its nominee, as the registered owner of the Securities, or that they will so do on a timely basis, or that DTC, DTC Participants or DTC Indirect Participants will act in the manner described in this Appendix. The current “Rules” applicable to DTC are on file with the Securities and Exchange Commission and the current “Procedures” of DTC to be followed in dealing with DTC Participants are on file with DTC.

1. The Depository Trust Company (“DTC”) will act as securities depository for the securities (the “Securities”). The Securities 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 Security certificate will be issued for each issue of the Securities, each in the aggregate principal amount of such issue, and will be deposited with DTC. If, however, the aggregate principal amount of any issue exceeds $500 million, one certificate will be issued with respect to each $500 million of principal amount, and an additional certificate will be issued with respect to any remaining principal amount of such issue.

2. 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 electronic computerized book-entry transfers and pledges between Direct Participants’ accounts. This eliminates the need for physical movement of securities certificates. Direct Participants include both U.S. and non-U.S. securities brokers and EXHIBIT 3
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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 U.S. and non-U.S. securities brokers and dealers, banks, trust companies, and clearing corporations that clear through or maintain a custodial relationship with a Direct Participant, either directly or indirectly (“Indirect Participants”). DTC has a Standard & Poor’s rating of AA+.

The DTC Rules applicable to its Participants are on file with the Securities and Exchange Commission. More information about DTC can be found at www.dtcc.com. The information contained on this Internet site is not incorporated herein by reference.

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

4. To facilitate subsequent transfers, all Securities 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 Securities 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 Securities; DTC’s records reflect only the identity of the Direct Participants to whose accounts such Securities 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.

5. Conveyance of notices and other communications by DTC to Direct Participants, by Direct Participants to Indirect Participants, and by Direct Participants and Indirect Participants to Beneficial Owners will be governed by arrangements among them, subject to any statutory or regulatory requirements as may be in effect from time to time. Beneficial Owners of Securities may wish to take certain steps to augment the transmission to them of notices of significant events with respect to the Securities, such as redemptions, tenders, defaults, and proposed amendments to the Security documents. For example, Beneficial Owners of Securities may wish to ascertain that the nominee holding the Securities 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.

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

EXHIBIT 3
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7. Neither DTC nor Cede & Co. (nor any other DTC nominee) will consent or vote with respect to Securities unless authorized by a Direct Participant in accordance with DTC’s MMI Procedures. Under its usual procedures, DTC mails an Omnibus Proxy to Issuer 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 Securities are credited on the record date (identified in a listing attached to the Omnibus Proxy).

8. Redemption proceeds, distributions, and dividend payments on the Securities 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 Issuer or Agent, 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, Agent, or Issuer, 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 Issuer or Agent, 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.

9. DTC may discontinue providing its services as depository with respect to the Securities at any time by giving reasonable notice to Issuer or Agent. Under such circumstances, in the event that a successor depository is not obtained, Security certificates are required to be printed and delivered.

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

11. The information in this section concerning DTC and DTC’s book-entry system has been obtained from sources that Issuer believes to be reliable, but Issuer takes no responsibility for the accuracy thereof.

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APPENDIX H

SUMMARY OF CERTAIN PROVISIONS OF FISCAL AGENT AGREEMENT The following contains a brief summary of certain provisions of the Fiscal Agent Agreement not found in the main body of the Official Statement. Investors are hereby directed to obtain a complete copy of the Fiscal Agent Agreement, which is available from the City or the Fiscal Agent upon request.

Certain Definitions
“Act” means the Mello-Roos Community Facilities Act of 1982, as amended, being Sections 53311 et seq. of the California Government Code. “Administrative Expenses” means any or all of the following:
(a) the expenses directly related to the administration of Improvement Area 2, including, but not limited to, the costs of computing the Special Taxes and preparing the annual Special Tax collection schedules (whether by the City or a designee thereof or both); the costs of collecting the Special Taxes (whether by San Joaquin County, the City or otherwise); the costs of remitting the Special Taxes to the Fiscal Agent; the costs associated with preparing Special Tax disclosure statements and responding to the public inquiries regarding the Special Taxes; the costs of the City, Improvement Area 2 or any designee thereof related to an appeal of the Special Tax; (b) the costs of the Fiscal Agent (including its legal counsel) in the discharge of the duties of the Fiscal Agent pertaining to the Bonds required under this Fiscal Agent Agreement and any Supplemental Agreement;
(c) the costs of the City or any designee thereof of complying with the City, Improvement Area 2, or obligated person disclosure requirements associated with applicable federal or state securities laws of the Act pertaining to the Bonds; (d) any amounts required to be rebated to the federal government; and (e) all other costs and expenses of the City (including, but not limited to, an allocable share of the salaries of the City staff directly related to the foregoing, a proportionate amount of City general administrative overhead related to the foregoing, and amounts advanced by the City for any administrative purpose of Improvement Area 2, including costs related to prepayments of Special Taxes, recordings related to such prepayments and satisfaction of Special Taxes, amounts advanced to ensure maintenance of tax exemption, and the costs of prosecuting foreclosure of delinquent Special Taxes, which amounts advanced are subject to reimbursement from other sources, including proceeds of foreclosure) and the Fiscal Agent incurred in connection with the discharge of their respective duties hereunder and in any way related to the administration of Improvement Area 2 and all actual costs and expenses incurred in connection with the administration of the Bonds.
“Agreement” means the Fiscal Agent Agreement, as it may be amended or supplemented from time to time by any Supplemental Agreement.

EXHIBIT 3
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“Annual Debt Service” means, for each Bond Year and each Series of Outstanding Bonds, the sum of (i) the interest due on the respective Series of Outstanding Bonds in such Bond Year, assuming that such Outstanding Bonds are retired as scheduled, and (ii) the principal amount of the respective Series of Outstanding Bonds, including any mandatory sinking fund payments, due in such Bond Year.
“Authorized Officer” means the City Manager, Chief Financial Officer, City Clerk, City Attorney, including any deputy, acting or interim officer holding such position, or any other officer or employee authorized by the City Council of the City or by an Authorized Officer to undertake the action referenced in this Agreement as required to be undertaken by an Authorized Officer.
“Bond Counsel” means any attorney or firm of attorneys acceptable to the City and nationally recognized for expertise in rendering opinions as to the legality and tax-exempt status of securities issued by public entities.
“Bond Year” means each twelve-month period beginning on September 2 in any year and extending to the next succeeding September 1, both dates inclusive; except that the first Bond Year shall begin on the Closing Date and end on September 1, 2022. “Business Day” means any day other than (i) a Saturday or a Sunday or (ii) a day on which banking institutions in the state in which the Principal Office of the Fiscal Agent is located are authorized or obligated by law or executive order to be closed. “CDIAC” means the California Debt and Investment Advisory Commission of the office of the State Treasurer of the State of California or any successor agency or bureau thereto. “Closing Date” means the date upon which there is a physical delivery of the Bonds in exchange for the amount representing the purchase price of the Bonds by the Original Purchaser.
“Code” means the Internal Revenue Code of 1986 as in effect on the date of issuance of the Bonds or (except as otherwise referenced herein) as it may be amended to apply to obligations issued on the date of issuance of the Bonds, together with applicable temporary and final regulations promulgated, and applicable official public guidance published, under the Code.
“Continuing Disclosure Certificate” means the Continuing Disclosure Certificate, dated as of the Closing Date, related to the Bonds, as originally executed and as it may be amended from time to time in accordance with the terms thereof. “Debt Service” means the scheduled amount of interest and amortization of principal payable on the Bonds during the period of computation, excluding amounts scheduled during such period which relate to principal which has been retired before the beginning of such period. “District” means the City of Stockton Community Facilities District No. 2018-2 (Westlake Villages II) formed pursuant to the Resolution of Formation. “Fair Market Value” means the price at which a willing buyer would purchase the investment from a willing seller in a bona fide, arm’s length transaction (determined as of the date the contract to purchase or sell the investment becomes binding) if the investment is traded EXHIBIT 3
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on an established securities market (within the meaning of Section 1273 of the Code) and, otherwise, the term “Fair Market Value” means the acquisition price in a bona fide arm’s length transaction (as referenced above) if (i) the investment is a certificate of deposit that is acquired in accordance with applicable regulations under the Code, (ii) the investment is an agreement with specifically negotiated withdrawal or reinvestment provisions and a specifically negotiated interest rate (for example, a guaranteed investment contract, a forward supply contract or other investment agreement) that is acquired in accordance with applicable regulations under the Code, (iii) the investment is a United States Treasury Security—State and Local Government Series that is acquired in accordance with applicable regulations of the United States Bureau of Public Debt, or (iv) the investment is the Local Agency Investment Fund of the State of California, but only if at all times during which the investment is held its yield is reasonably expected to be equal to or greater than the yield on a reasonably comparable direct obligation of the United States.
“Federal Securities” means any of the following which are non-callable and which at the time of investment are legal investments under the laws of the State of California for funds held by the Fiscal Agent (the Fiscal Agent entitled to rely upon investment direction from the City as a certification that such investment constitutes a legal investment). (i) Direct general obligations of the United States of America (including obligations issued or held in book-entry form on the books of the United States Department of the Treasury) and obligations, the payment of principal of and interest on which are directly or indirectly guaranteed by the United States of America, including, without limitation, such of the foregoing which are commonly referred to as “stripped” obligations and coupons; or
(ii) Any of the following obligations of the following agencies of the United States of America: (i) direct obligations of the Export-Import Bank, (ii) certificates of beneficial ownership issued by the Farmers Home Administration, (iii) participation certificates issued by the General Services Administration, (iv) mortgage-backed bonds or passthrough obligations issued and guaranteed by the Government National Mortgage Association, (v) project notes issued by the United States Department of Housing and Urban Development, and (vi) public housing notes and bonds guaranteed by the United States of America.
“Chief Financial Officer “ means the duly acting Chief Financial Officer or Treasurer of the City, or if the City has no Chief Financial Officer, such officer of the City serving a similar role.
“Fiscal Agent” means the Fiscal Agent appointed by the City and acting as an independent fiscal agent with the duties and powers in the Agreement provided, its successors and assigns, and any other corporation or association which may at any time be substituted in its place, as provided in the Agreement.
“Fiscal Year” means the twelve-month period extending from July 1 in a calendar year to June 30 of the succeeding year, both dates inclusive. “Information Services” means “EMMA” or the “Electronic Municipal Market Access” system of the Municipal Securities Rulemaking Board; or, in accordance with then-current guidelines of the Securities and Exchange Commission, such other services providing EXHIBIT 3
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information with respect to called bonds as the City may designate in an Officer’s Certificate delivered to the Fiscal Agent.
“Maximum Annual Debt Service” means, for each Series of Outstanding Bonds, the largest Annual Debt Service for any Bond Year after the calculation is made through the final maturity date of the respective Series of Outstanding Bonds. “Officer’s Certificate” means a written certificate of the City signed by an Authorized Officer of the City.
“Ordinance” means any ordinance of the City levying the Special Taxes. “Original Purchaser” means the first purchaser of the Bonds from the City. “Outstanding,” when used as of any particular time with reference to Bonds, means (subject to the provisions of the Agreement) all Bonds except (i) Bonds theretofore canceled by the Fiscal Agent or surrendered to the Fiscal Agent for cancellation; (ii) Bonds paid or deemed to have been paid within the meaning of the Agreement; and (iii) Bonds in lieu of or in substitution for which other Bonds shall have been authorized, executed, issued and delivered by the City pursuant to the Agreement or any Supplemental Agreement. “Owner” or “Bondowner” means any person who shall be the registered owner of any Outstanding Bond.
“Participating Underwriter” shall have the meaning ascribed thereto in the Continuing Disclosure Certificate.
“Prepayment” means moneys received by the City from the prepayment of Special Taxes as provided in the “Rate, Method of Apportionment, and Manner of Collection of Special Tax” applicable to Improvement Area 2.
“Principal Office” means the corporate trust office of the Fiscal Agent set forth in the Agreement, or such other or additional offices as may be designated by the Fiscal Agent. “Record Date” means the fifteenth (15th) day of the month next preceding the month of the applicable Interest Payment Date whether or not such day is a Business Day. “Regulations” means temporary and permanent regulations promulgated under the Code.
“Resolution of Formation” means Resolution No. 2018-06-19-1502-01, adopted by the City Council of the City on June 19, 2018 establishing the District and Improvement Area 2 for the purpose of providing for the financing of certain public facilities in and for such District. “Supplemental Agreement” means an agreement the execution of which is authorized by a resolution which has been duly adopted by the City under the Act and which agreement is amendatory of or supplemental to the Agreement, but only if and to the extent that such agreement is specifically authorized under the Agreement.

EXHIBIT 3
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Certain Covenants
Punctual Payment. The City will punctually pay or cause to be paid the principal of, and interest and any premium on, the Bonds when and as due in strict conformity with the terms of the Agreement, and it will faithfully observe and perform all of the conditions covenants and requirements of the Agreement and all Supplemental Agreements and of the Bonds.

Extension of Time for Payment. In order to prevent any accumulation of claims for interest after maturity, the City shall not, directly or indirectly, extend or consent to the extension of the time for the payment of any claim for interest on any of the Bonds and shall not, directly or indirectly, be a party to the approval of any such arrangement by purchasing or funding said claims for interest or in any other manner. In case any such claim for interest shall be extended or funded, whether or not with the consent of the City, such claim for interest so extended or funded shall not be entitled, in case of default under the Agreement, to the benefits of the Agreement, except subject to the prior payment in full of the principal of all of the Bonds then Outstanding and of all claims for interest which shall not have been so extended or funded.

Against Encumbrances. The City will not encumber, pledge or place any charge or lien upon any of the Special Tax Revenues or other amounts pledged to the Bonds superior to or on a parity with the pledge and lien herein created for the benefit of the Bonds, except as permitted by the Agreement.

Books and Accounts. The City will keep, or cause to be kept, proper books of record and accounts, separate from all other records and accounts of the City, in which complete and correct entries shall be made of all transactions relating to the expenditure of amounts disbursed from the Special Tax Fund and to the Special Tax Revenues. Such books of record and accounts shall at all times during business hours be subject to the inspection of the Fiscal Agent and the Owners of not less than ten percent (10%) of the principal amount of the Bonds then Outstanding, or their representatives duly authorized in writing.

The Fiscal Agent will keep, or cause to be kept, proper books of record and accounts, separate from all other records and accounts of the Fiscal Agent, in which complete and correct entries shall be made of all transactions relating to the expenditure of amounts disbursed from the Bond Fund, the Reserve Fund and the Costs of Issuance Fund. Such books of record and accounts shall at all times during business hours and upon reasonable prior notice, be subject to the inspection of the City and the Owners of not less than ten percent (10%) of the principal amount of the Bonds then Outstanding, or their representatives duly authorized in writing.

Protection of Security and Rights of Owners. The City will preserve and protect the security of the Bonds and the rights of the Owners, and will warrant and defend their rights against all claims and demands of all persons. From and after the delivery of any of the Bonds by the City, the Bonds shall be incontestable by the City.

Private Activity Bond Limitation. The City shall assure that the proceeds of the Bonds are not so used as to cause the Bonds to satisfy the private business tests of Section 141(b) of the Code or the private loan financing test of Section 141(c) of the Code.

Federal Guarantee Prohibition. The City shall not take any action or permit or suffer any action to be taken if the result of the same would be to cause any of the Bonds to be “federally guaranteed” within the meaning of Section 149(b) of the Code.

EXHIBIT 3
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Collection of Special Tax Revenues. The City shall comply with all requirements of the Act so as to assure the timely collection of Special Tax Revenues, including without limitation, the enforcement of delinquent Special Taxes. On or within five (5) Business Days of each June 1, the Fiscal Agent shall provide the Chief Financial Officer with a notice stating the amount then on deposit in the Bond Fund and the Reserve Fund.

The City shall effect the levy of the Special Taxes each Fiscal Year in accordance with the Ordinance such that the computation of the levy is complete before the final date on which County Auditor will accept the transmission of the Special Tax amounts for the parcels within Improvement Area 2 for inclusion on the next secured real property tax roll. Upon the completion of the computation of the amounts of the levy, the City shall prepare or cause to be prepared, and shall transmit to the Chief Financial Officer , such data as the County Auditor requires to include the levy of the Special Taxes on the next secured real property tax roll.

The City covenants that it will receive Net Taxes in trust for the Owners and will instruct the Chief Financial Officer to deposit all Net Taxes with the Fiscal Agent at least three Business Days prior to each Interest Payment Date, and the City shall have no beneficial right or interest in the amounts so deposited, except as provided by this Agreement. All such Net Taxes shall be disbursed, allocated and applied solely to the uses and purposes set forth in this Agreement, and shall be accounted for separately and apart from all other money, funds, accounts or other resources of the City.

Further Assurances. The City will adopt, make, execute and deliver any and all such further resolutions, instruments and assurances as may be reasonably necessary or proper to carry out the intention or to facilitate the performance of the Agreement, and for the better assuring and confirming unto the Owners of the rights and benefits provided in the Agreement.

No Arbitrage. The City shall not take, or permit or suffer to be taken by the Fiscal Agent or otherwise, any action with respect to the gross proceeds of the Bonds which if such action had been reasonably expected to have been taken, or had been deliberately and intentionally taken, on the Closing Date would have caused the Bonds to be “arbitrage bonds” within the meaning of Section 148 of the Code and Regulations.

Maintenance of Tax-Exemption. The City shall take all actions necessary to assure the exclusion of interest on the Bonds from the gross income of the Owners of the Bonds to the same extent as such interest is permitted to be excluded from gross income under the Code as in effect on the date of issuance of the Bonds.

Yield of the Bonds. In determining the yield of the Bonds to comply with the Agreement, the City will take into account redemption (including premium, if any) in advance of maturity based on the reasonable expectations of the City, as of the Closing, without regard to whether or not redemption moneys are received or Bonds are redeemed.

EXHIBIT 3
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Modification or Amendment of the Fiscal Agent Agreement The Agreement and the rights and obligations of the City and of the Owners of the Bonds may be modified or amended at any time by a Supplemental Agreement pursuant to the affirmative vote at a meeting of Owners, or with the written consent without a meeting, of the Owners of at least sixty percent (60%) in aggregate principal amount of the Bonds then Outstanding, exclusive of Bonds disqualified as provided in the Agreement. No such modification or amendment shall (i) extend the maturity of any Bond or reduce the interest rate thereon, or otherwise alter or impair the obligation of the City to pay the principal of, and the interest and any premium on, any Bond, without the express consent of the Owner of such Bond, or (ii) permit the creation by the City of any pledge or lien upon the Special Taxes superior to or on a parity with the pledge and lien created for the benefit of the Bonds (except as otherwise permitted by the Act, the laws of the State of California or the Agreement), or reduce the percentage of Bonds required for the amendment hereof. No such amendment may modify any of the rights or obligations of the Fiscal Agent without its written consent.

The Agreement and the rights and obligations of the City and of the Owners may also be modified or amended at any time by a Supplemental Agreement, without the consent of any Owners, only to the extent permitted by law and only for any one or more of the following purposes:
(A) to add to the covenants and agreements of the City in the Agreement contained, other covenants and agreements thereafter to be observed, or to limit or surrender any right or power in the Agreement reserved to or conferred upon the City; (B) to make modifications not adversely affecting any outstanding series of Bonds of the City in any material respect;
(C) to make such provisions for the purpose of curing any ambiguity, or of curing, correcting or supplementing any defective provision contained in the Agreement, or in regard to questions arising under the Agreement, as the City and the Fiscal Agent may deem necessary or desirable, and which shall not adversely affect the rights of the Owners of the Bonds;
(D) to make such additions, deletions or modifications as may be necessary or desirable to assure compliance with Section 148 of the Code relating to required rebate of excess investment earnings to the United States or otherwise as may be necessary to assure exclusion from gross income for federal income tax purposes of interest on the Bonds or to conform with the Regulations.

No such amendment may modify any of the rights or obligations of the Fiscal Agent without its written consent.

If consent of the Owners is required, the Supplemental Agreement shall not become effective unless there shall be filed with the Fiscal Agent the written consents of the Owners of at least 60% in aggregate principal amount of the Bonds then Outstanding (exclusive of Bonds disqualified as provided in the Agreement) and a notice shall have been mailed as hereinafter provided. Each such consent shall be effective only if accompanied by proof of ownership of the Bonds for which such consent is given, which proof shall be such as is permitted by the Agreement. Any such consent shall be binding upon the Owner of the Bonds giving such EXHIBIT 3
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consent and on any subsequent Owner (whether or not such subsequent Owner has notice thereof) unless such consent is revoked in writing by the Owner giving such consent or a subsequent Owner by filing such revocation with the Fiscal Agent prior to the date when the notice hereinafter provided for has been mailed.

After the Owners of the required percentage of Bonds shall have filed their consents to the Supplemental Agreement, the City shall mail a notice to the Owners in the manner hereinbefore provided for the mailing of the Supplemental Agreement, stating in substance that the Supplemental Agreement has been consented to by the Owners of the required percentage of Bonds and will be effective as provided (but failure to mail copies of said notice shall not affect the validity of the Supplemental Agreement or consents thereto). Proof of the mailing of such notice shall be filed with the Fiscal Agent. A record, consisting of the papers required to be filed with the Fiscal Agent, shall be proof of the matters therein stated until the contrary is proved. The Supplemental Agreement shall become effective upon the filing with the Fiscal Agent of the proof of mailing of such notice, and the Supplemental Agreement shall be deemed conclusively binding (except as otherwise above specifically provided) upon the City and the Owners of all Bonds at the expiration of sixty (60) days after such filing, except in the event of a final decree of a court of competent jurisdiction setting aside such consent in a legal action or equitable proceeding for such purpose commenced within such sixty-day period.

Bonds owned or held for the account of the City, excepting any pension or retirement fund, shall not be deemed Outstanding for the purpose of any vote, consent or other action or any calculation of Outstanding Bonds provided for in the Agreement, and shall not be entitled to vote upon, consent to, or take any other action provided for in the Agreement. Upon request, the City shall provide an Officer’s Certificate to the Fiscal Agent listing those Bonds which are disqualified pursuant to the Agreement.

Defeasance and Discharge
If the City shall pay and discharge the entire indebtedness on all or any portion of the Bonds Outstanding in any one or more of the following ways:
(A) by well and truly paying or causing to be paid the principal of, and interest and any premium on, such Bonds Outstanding, as and when the same become due and payable;
(B) by depositing with the Fiscal Agent, in trust, at or before maturity, money which, together with (in the event that all of the Bonds are to be defeased) the amounts then on deposit in the funds and accounts provided for in the Agreement, is fully sufficient to pay such Bonds Outstanding, including all principal, interest and redemption premiums, or;
(C) by irrevocably depositing with the Fiscal Agent, in trust, cash and Federal Securities in such amount as the City shall determine as confirmed by an independent certified public accountant will, together with the interest to accrue thereon and (in the event that all of the Bonds are to be defeased) moneys then on deposit in the fund and accounts provided for in the Agreement, be fully sufficient to pay and discharge the indebtedness on such Bonds (including all principal, interest and redemption premiums) at or before their respective maturity dates; EXHIBIT 3
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and if such Bonds are to be redeemed prior to the maturity thereof notice of such redemption shall have been given as in the Agreement provided or provision satisfactory to the Fiscal Agent shall have been made for the giving of such notice, then, at the election of the City, and notwithstanding that any Bonds shall not have been surrendered for payment, the pledge of the Special Taxes and other funds provided for in the Agreement and all other obligations of the City under the Agreement with respect to such Bonds Outstanding shall cease and terminate, except only the obligations of the City related to certain tax matters and to pay or cause to be paid to the Owners of the Bonds not so surrendered and paid all sums due thereon and all amounts owing to the Fiscal Agent pursuant to the Agreement; and thereafter Special Taxes shall not be payable to the Fiscal Agent. Notice of such election shall be filed with the Fiscal Agent.

EXHIBIT 3
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City of Stockton
Community Facilities District 2018-2
(Westlake Villages II-Improvement Area 2)
Special Tax Bonds Series 2022
City Council Meeting
June 14, 2022
Item 15.3
1515
Westlake Villages: Improvement Area 2
 District: Westlake Villages II was formed in June 2018 with original size of 580 Gross Acres
 Location: North Stockton, South of Eight Mile Road and West of Highway 5
 Improvement Area 2: Includes 292 homes approved for
construction and as of May, 2022:
 93 Permits pulled 63 homes under construction 45 homes sold  Debt Issuance: Improvement Area 2 was approved for an original debt capacity of up to $60 million, but with earlier revisions to create Improvement Areas 3 and 4, lien will be closed off and nofurther debt will be issued  Use of Proceeds: The debt proceeds will be used to
finance/acquire the public infrastructure in Improvement Area 2 2
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Westlake Villages II – Boundary Map
3 1517
Debt Issuance- CFD 2018-2 (Imp. Area 2)
 Competitively selected vendor pool: Underwriter, Municipal Advisors, Bond Council
 This will be the only issuance to occur in this Improvement Area Tax assessments:
 The 93 lots, that have pulled final permits to construct homes, will be assessed in FY 2022-23
 The remainder of the first year debt service will be financed through Capitalized Interest
 All parcels in improvement areas will taxed starting in FY 2023-24  Maximum costs of issuance of $385,000 (“All-In”) Issuance planned as Public Offering 4 1518
Financing Comparison
5 “Not-To-Exceed” Parameters:Maximum Issue Size: $12,500,000Maximum True Interest Cost: 7.00% Staff Report Estimate (1)
Estimated Par Amount of Bonds $10,625,000Estimated Proceeds Available for Construction $8,650,000
True Interest Cost(2) 5.52%
Reserve Fund 125% of Avg. Annual Estimated Costs of Issuance (2) $374,228 Estimated Average Annual Debt Service $763,000Debt Service Coverage 1.10x (1) Assumes estimated interest rate as of May 17, 2022 (plus .30%)(2) True Interest Cost - includes all costs in the listed rate 1519
6 Proposed Timeline
Timeline ItemJune 14, 2022 City Council ConsiderationJune 16, 2022 Print and Post Preliminary Official StatementJune 28-29, 2022 Pre-Pricing and PricingJuly 7, 2022 Print Post Final Official Statement Finalize all Documents
July 13, 2022 Close the Transaction
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Documents for Consideration
 Fiscal Agent Agreement: This agreement governs the terms and conditions of the bonds and the role and responsibilities of theFiscal Agent.  Official Statement: (Including Continuing Disclosure Agreement):

Will be distributed as the primary marketing document toprospective bond purchasers. The agenda packet includes thePreliminary Official Statement deemed to be essentially final. Afinal version of this document, called the Final Official Statement,is estimated to be made available shortly after the bonds aresold and will reflect all the bond sale information.  Bond Purchase Agreement: Is a contract between the City and the Underwriter that provides the terms and conditions underwhich the underwriter will purchase the Series 2022 Bonds. 7 1521
Staff Recommendation
Adopt Resolution authorizing the issuance of special taxbonds for and on behalf of Community Facilities District No.2018-2 (Westlake Villages II), approving and directing theexecution of a fiscal agent agreement, approving the form ofPreliminary Official Statement, approving sale of such bonds,and approving other related documents and actions. 8 1522
City of Stockton
Legislation Text
File #: 22-0578, Version: 1
ACCEPT THE FISCAL YEAR 2021-22 SECOND QUARTER BUDGET STATUS UPDATE AND

AUTHORIZE BUDGET AMENDMENTS

RECOMMENDATION
It is recommended that the City Council adopt a resolution to:

1. Accept this budget status report on the financial results for the Second Quarter of Fiscal Year (FY) 2021-22, and

2. Authorize five budget amendments shifting General Fund support from the Recreation Fund to the Golf Fund, transferring the budget for the maintenance of VanBuskirk from the Community Services Department Golf Fund to the Public Works Department General Fund, increasing the Tax Collection budget, appropriating fund balance to the Other Benefits Fund, and appropriate from PFF Street Improvements fund balance to Thornton Rd/Hammer Left Turn Lanes project WT15018.

It is further recommended that the City Manager be authorized to take appropriate and necessary actions to carry out the purpose and intent of the resolution.

Summary
The Second Quarter financial review indicates General Fund revenues are projected to exceed budgeted levels and expenditures are projected to be slightly under budget. Expenses totaled $114.0 million through the first six months and are expected to end the year 4.3% below budget due primarily to lower-than-expected salary, benefit, and travel costs.

Through the Second Quarter, General Fund revenues totaled $59.1 million, which is consistent with the expected cash flow cycles for most revenue types. Based on preliminary information, year-end revenue projections are expected to exceed the budget by $32.3 million (+12.9%), a growth of 5% compare to prior year actual revenues. Staffing levels in the second quarter were lower than the level anticipated in the budget resulting in expenditure savings. Overall, second quarter expenditures of $114.0 million were at 38% of the budget and are projected to end the year within the total adjusted annual expenditure budget of $300.0 million. Expenditure activity is similar to the same period in prior years.

Staff reviewed all other City funds to determine significant budget variances and identified four instances where amendments to the current Approved Budget are necessary.

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DISCUSSION
Background
The City Council remains committed to transparency and financial responsibility with the continuation of Fiscal Sustainability as one of its strategic targets. Staff provides this budget status update in support of that objective.

Council adopted the FY 2021-22 annual city-wide budget of $991.8 million on June 22, 2021. The adopted General Fund expenditure budget was $255.9 million of the total City budget.

Present Situation
General Fund Budget Status Update
Staff reviewed General Fund expenditures and revenues for the first six months of the current fiscal year as shown in Attachments A and B. Attachment A summarizes the City's General Fund revenues, expenditures, and available balance by approved budget, activity as of December 31, 2021, year-end projections, and variance amounts. With mid-year budget adjustments, the General Fund is budgeted to end the fiscal year with an available balance of $33.9 million. Revised projections indicate revenues will end the year greater than the budgeted level by $32.3 million, with expenditures projected to be approximately $12.9 million less than budget. The information below indicates our best analysis of the trends through the first half of the year, with known timing variations taken into account, and provides projections for year-end performance compared to the budget based on this review. Revenue and expenditure projections will continue to be refined and provided to the City Council as part of subsequent budget updates.

Budget Adjustments
Throughout the fiscal year, the Council may adjust the budget. All Council approved adjustments and administrative entries made through the Second Quarter are incorporated in Attachment A in the column labeled "Approved Budget." The approved General Fund expenditure appropriation of $277.3 million reported in the First Quarter report has increased by $22.8 million with the appropriation of $10.2 million for Council Priority projects and $12.6 million for the Waterfront Office Towers-New City Hall capital project (both approved on May 3, 2022).

Revenues
Attachment B displays General Fund revenues collected through December 31, 2021, of $59.1 million. These year-to-date receipts are 23.6% of the $250.8 million total annual revenue budget, which is consistent with prior years and with staff's expectations. At the end of the Second Quarter, the General Fund was on track to exceed budget expectations. Sales tax receipts continue to preform better than expected with the year-end projection exceeding budget by 20.7% and growing

7.7% compared to FY 2020-21 receipts.

Taxes are the primary General Fund revenue source and are received throughout the year in an uneven pattern. For example, almost all the City's property tax receipts are received from San Joaquin County in two payments in the last half of the year. Consequently, only $702,294 of the City of Stockton Page 2 of 11 Printed on 6/8/2022
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$65.2 million budgeted for property tax revenues was received by December 31, 2021. Staff takes these unique cycles into consideration when making year-end projections, and also receives analyses from consultants several times during the year.

Sales Tax receipts make up nearly 38% of the total annual General Fund revenue. Remittances through the end of the Second Quarter from the State of California reflect sales through the fourth month of the fiscal year. Using current information, staff project the year-end sales tax collections for the General Fund, including Measure A receipts, will be $114.1 million, more than $19 million above the $94.6 million budgeted. The year-end projection is about $8.1 million more than sales tax receipts in FY 2020-21. Revenues have been difficult to project due to the unprecedented nature of the COVID-19 pandemic and numerous adjustments and corrections associated with reporting changes. Direct federal stimulus payments and the State's eviction moratorium insulated tenants, thus contributing to the unpredictability of revenue projections. With travel restrictions, live-event cancelations, and occupancy restrictions on indoor restaurant dining throughout the pandemic, spending habits shifted. Since the start of the pandemic, discretionary household spending has generally shifted from non-taxable services to taxable goods as well as from brick-and-mortar stores to online sales.

Property Taxes are 26% of the total annual General Fund revenue and are remitted to the City each year by San Joaquin County in January and April. Receipts for the first six months are approximately one percent of the annual estimate; however, assessment information is available that provides advance notice of the forthcoming payments and indicates FY 2021-22 property tax revenues will be $67.3 million, which is consistent with expectations and represents a 4.5% growth from the prior year.

The updated projected annual total, as shown in Attachment B, is $2.1 million greater than the approved budget of $65.2 million. New construction has been above average for the last few years contributing to property tax growth.

Utility Users Tax (UUT) is 14% of total annual General Fund revenue and is a tax imposed on the users of various utilities like water, electricity, natural gas, cable TV, and telecommunications services. UUT is subject to a certain degree of volatility as consumer use of utilities can be dependent on weather conditions, conservation efforts, and the availability of substitutes.

FY 2021-22 UUT revenues are estimated to be $37.4 million, $3.0 million greater than the annual budget of $34.3 million. This revenue projection is 2.6% above FY 2020-21 actual receipts. Based on revenues received through the Second Quarter, Water, Electric, and Gas UUT are projected to exceed the budgeted amount. Cable and Telecommunications UUT are expected to be at or slightly below the budgeted amount.

Franchise Fees generate approximately 7% of General Fund revenue and are charged to companies as a percentage of their income for the use of city streets and infrastructure. Because they are based on the revenue generated by a service provider, these fees tend to track parallel with UUT. Stockton charges franchise fees to PG&E, cable and video companies, and waste haulers.

PG&E pays its franchise fees in two payments late in the fiscal year, so year-end projections for the line item are based on prior year activity and trends evident in the UUT revenue category.

Franchise revenues are projected to be 2.1% greater than the $16.6 million budget with PG&E and waste hauler fees coming in over budget estimates. Cable/video revenues are projected to decline to $2.0 million compared to FY 2020-21 receipts of $2.2 million.

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Business License Taxes generate 4% of General Fund revenues. Business license tax revenue is projected to be $14.2 million, a 1%-increase compared to prior year revenues.

Other Taxes combined are under 1% of General Fund revenue. Hotel/Motel Taxes are showing a recovery from the COVID-19 pandemic with projected receipts of $3.1 million compared to $2.8 million for the previous two fiscal years. Document transfer taxes are projected to be up to $1.6 million compared to $912,000 two years ago.

The Interest line item includes proceeds from investments as well as interest on cash holdings. The City's investments are limited to secure/conservative instruments that are not expected to be hit as hard as other investment options. The revenue projection of $2.3 million assumes conservative earnings in the fiscal year and is $331,000 more than the annual budget.

Program Revenues consist primarily of revenues from fines, licenses, service contracts with other agencies, and code enforcement fees, and are 6% of total General Fund revenues. Year-end estimates for this category are $2.1 million (13.4%) greater than budget. Revenue from Other Agencies is projected to be higher than budget by $1.2 million with additional receipts for Wildland fire reimbursements and Successor Agency tax increment. The other large variance in this category is Code Enforcement which is expected to exceed the budget by $1.1 million. Most other program revenues are projected to be close to the annual budget.

Interfund reimbursements consist of cost recovery to the General Fund from other funds and other agencies for administrative services and facility space and constitute 4% of General Fund revenue.

As of December 31, 2021, interfund reimbursements totaled $3.1 million, or 34.2% of the category budgeted revenues. Revenues can be slow due to the timing of reimbursements as costs incurred in the first two quarters of the fiscal year are billed at the end of each quarter, and reimbursements are generally received in the next quarter. A decrease of 10.9% is anticipated in this category by fiscal year-end due to use of an updated Cost Allocation Plan.

Expenditures
General Fund expenditures in most departments are running close to or slightly below budgeted levels and are reflected in Attachment A and summarized in Figure 1 below as a percent of the respective budgets.

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Figure 1
Most of the lower spending levels are a result of programs that spend more in the last half of the year for items like debt, labor negotiation, election, tax collection, and audit contract costs. In addition, several departments continue to experience higher-than-budgeted staff vacancies, including Police, Public Works, Economic Development, City Clerk, Administrative Services, and Human Resources.

As shown below, the FY 2021-22 Adopted Budget included a total of $6.2 million in budgeted salary savings, which is divided into two areas: $5.3 million in the non-Marshall Plan portion of the General Fund, and $0.9 million in the Marshall Plan. Through December 31, 2021, actual General Fund salary savings were approximately $5.9 million more than the Budget anticipated at mid-year.

General Fund salary savings were 9.7% in the First Quarter and grew only slightly to 10% in the Second Quarter. Actual savings from vacancies will vary from the budgeted savings estimate, and staff will continue to monitor the actual salary savings and report any necessary adjustments in future quarterly reports.

Below is a summary of salary savings results for the first half of the fiscal year.

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Figure 2
Second Quarter Savings as a
Department Annual 2 Quarters Savings % of Budget
General Fund
Other Departments 291,120 145,560 355,934 11.2%
Administrative Services 217,898 108,949 374,779 14.7%
Human Resources 63,958 31,979 114,400 14.8%
Police 3,258,710 1,629,355 4,426,880 9.4%
Fire 1,145,999 573,000 660,123 3.5%
Public Works 319,677 159,839 467,238 11.8%
5,297,362 2,648,681 6,399,355 8.4%
Marshall Plan
Office of Violence Prevention - - 201,234 45.6%
Police 936,054 468,027 2,461,898 18.3%
936,054 468,027 2,663,132 19.2%
Total 6,233,416 3,116,708 9,062,486 10.0%
Total Savings above/(below) Budget 5,945,778
Budgeted Vacancy Savings
Department Expenditures
The Police Department is afforded 56% of the General Fund budget. The hiring of 6 new officers during the Second Quarter was offset by the attrition of 19 officers (five retired, three resigned or were released during probation, one failed the academy, and ten left to other agencies), resulting in 424 of the 485 authorized sworn positions being filled mid-year. Police Department expenses were at 45% of budget as of December 31, 2021. Overall, the Department estimates it will end the year approximately $9.9 million under budget primarily due to vacant positions and new employees starting at lower pay than departing employees.

The Fire Department accounts for 20% of the General Fund annual budget. The department’s overall actual expenditures amount to $23.1 million or 45% of the budget at the end of the second quarter. Seven or 63% of Firefighter recruits successfully completed Fire Academy 21-2 in December 2021. However, recruitment efforts continue for another fire academy to fill 9 new grantfunded and 14 General Fund sworn personnel vacancies at the end of the second quarter. Sufficient vacancy savings are generated to offset the additional overtime required to backfill vacant positions to meet the minimum staffing required to maintain current service levels. The department is expected to end the fiscal year below the budget by less than 1% due to academy recruits and regular sworn personnel attrition throughout the fiscal year.

The Public Works Department accounts for 7% of the General Fund annual budget. Approximately 43% of the department budget was expended as of December 31, 2021, and year-end projections are $1.1 million less than the approved budget of $19.2 million. Savings are primarily from vacancies or staff turnover and reduced training and travel expenses.

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The Economic Development Department budget includes approximately $2 million for economic incentive programs. Although these funds were not spent in the first half of FY 2021-22, the funded projects are expected to be underway or in contract by year-end. If most of the economic incentive funding is committed by year-end, the Economic Development Department will spend $4.8 million leaving $118,000 in savings from vacant positions and reduced training and travel costs.

Program Support for Other Funds accounts for 12% of the General Fund budget and includes appropriations for City libraries, recreation activities, grants, entertainment venues, marina and golf course operations, and development services. Most transfers occur in regular monthly intervals, whereas grant match transfers are recorded when expended. The Capital Improvement line has increased since the Adopted budget by $33.5 million with mid-year Council approvals funding Council priority projects and the Waterfront Office Towers-New City Hall project. These actions approved in November 2021 and May 2022 did not resulted in expenses during the first half of the Fiscal Year.

Another Council authorized budget amendment reducing the Contingency and transfer funds to the Successor Agency was approved in February 2022.

Expenses in the Tax Collection and Election categories are, for the most part, incurred later in the year. The City typically pays property tax administration fees to San Joaquin County in January and May. Sales tax administration fees are paid quarterly, with only one quarter paid through December.

Fees for collection of sales taxes and property taxes are projected to exceed the budget by $200,000. Election costs budgeted for the June 2022 election will be billed to the City a few months after the election.

Other Administration contains a variety of citywide costs that are not attributable to an individual department or specific group of programs. This category includes a negative budget for indirect cost charges and vacancy savings. The year-end projection currently shows an overage of $176,000, which will be resolved by redistributing budgeted vacancy savings at year-end to other departments experiencing vacant positions.

Expenses in the General Legal category were 27% of budget at the end of the Second Quarter.

Activity is expected to pick up in the last half of the year with active labor negotiations and normal legal expenses.

Debt Service payments by the City are not expended in any regular pattern but instead by the scheduled due dates to bondholders. The budget has been adjusted to reflect the FY 2020-21 trueup and FY 2021-22 estimated contingency payments to Assured Guaranty. The full appropriated amount of $5.8 million will be paid out by year-end with the largest payment due in June 2022.

General Fund Budget Amendments
Maintenance of the former VanBuskirk Golf Course has been transitioned from the Community Services Department to the Public Works Department. To reflect this change in responsibilities, budget was administratively transferred from the Community Services Golf Course fund budget to the Public Works General Fund budget. This move of $234,300 budgeted for maintenance also reduced the $350,000 General Fund transfer out to the Golf Course Fund by the same amount. While the budget move was completed under existing authority in the annual Budget Resolution, the action is being reported via the Second Quarter Report.

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Due a lower balance in the Golf Fund at June 30, 2021 than previously anticipated, the Golf Fund was left with insufficient resources to cover existing contract commitments. It is recommended that the General Fund increase its support of the Golf Fund by $120,000 to cover these expenses. The increase in General Fund support will be offset by a reduction in the General Fund transfer to the Recreation Fund for a net zero impact on the General Fund.

The third budget amendment recommended in the General Fund is for the overage projected in the Tax Collection budget. The administrative fees for the collection of sales tax and audit fees for revenues recovered is projected to be greater than the budget by $200,000. Additional revenues received in FY 2021-22 are more than enough to cover the increase. A budget amendment increasing both Sales Tax revenues and tax collection expenses by $200,000 is recommended.

Long-Range Financial Plan
Staff updates the Long-Range Financial Plan (L-RFP) as new information becomes available and evaluates the underlying assumptions during the annual budget process. Over the last few months, staff has made numerous updates to the model in an effort to update revenue forecasts during this unprecedented global pandemic. The updated model shown below and included in the FY 2022-23 Proposed Annual Budget incorporates FY 2021-22 year-end projections for revenues and expenditures.

The updated chart shows the General Fund balance staying above the 5% minimum for the full 20- year period with the balance very close to the minimum in the last 4 years. The City's current reserves enable the General Fund to weather the future recessions projected in fiscal years 2024-25 and 2031-32.

The major changes made since the FY 2020-21 year-end L-RFP were:

1. Revenue projections for FY 2021-22 and FY 2022-23, including Property Taxes and Sales Taxes, were updated.

2. Revenues assume the opening of two new hotels adding to future Hotel/Motel tax dollars.

3. Pension projections were first updated using the latest CalPERS valuation reports based on July 30, 2020 and CalPERS approved discount rate reduction from 7.0% to 6.8% effective in FY 2023-24. The CalPERS assumed rate for investment return is significant to the City's fiscal health and the CalPERS board is likely to consider reducing its long-term return on investment assumption. Given these trends, the L-RFP now projects that the CalPERS investment return assumption will be further reduced from 6.8% to 6.0% over a 10-year phase-in period. It also assumes earnings of less than 7.0% annually.

4. Model adds one to two new full-time positions annually versus previous versions that did not allow for any position growth.

5. Incorporate American Rescue Plan Act proposed revenue loss allocation of $4.5 million spread among the General Fund, Recreation Fund, Entertainment Venues Fund, and Parking Fund.

All of the above changes flow through the model and can impact other areas such as interest earnings and debt paid based on a share of General Fund revenues. The model continues to forecast that Measure M transaction tax revenues will end in March 2033. This is the primary driver behind the lower fund balance in the last years of the model. The General Fund continues to spend down the fund balance in 17 of the 20 fiscal years.

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The L-RFP model is being utilized to analyze the affordability of labor proposals as the City negotiates with the four public safety bargaining units. There will be additional updates to the model and assumptions incorporating any approved successor bargaining unit agreements.

The chart components are described below.
· Light Blue Bars - The lighter blue bars include available funds and the Working Capital reserve used to manage cash flow.
· Dark Blue Bars - The darker blue bars represent the remainder of funds not available for ongoing operating expenses, which are part of the reserves outlined in the City's reserve policy. These funds are set aside for:
o protection against economic uncertainties and downturns, o catastrophic events,
o future costs such as infrastructure repair and maintenance, replacement of the City's antiquated financial system, and pensions.
· Yellow Bars - The yellow bars represent the City’s Pension Trust. Funds in the trust can only used for retirement expenses.
· Top Red Line - The top red line is the Working Capital reserve goal (equal to 2 months of operating expenses) outlined in the City's reserve policy. · Bottom Red Line - The red bottom line is a warning level that indicates operating reductions may be required to maintain services. The warning level is when the available fund balance falls below 5% of operating expenses.

Figure 3 shows the ending available General Fund balance by fiscal year for a range of 20 years.

Figure 3
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Other City Funds
In addition to the detailed review of the General Fund expenditures and revenues described above, staff reviewed all City funds as part of the preparation of this report. Attachment C summarizes the FY 2021-22 Second Quarter results for other major City funds. Year-to-date activity on Attachment C is similar to the General Fund in that revenues and expenses can be seasonal and subject to irregular schedules. The Emergency Communication Fund, for example, looks out of balance with expenditures exceeding budget by $1.6 million. This is a result of quarterly billings processed after the close of each quarter. All expenses incurred will be fully paid by year-end. Some City funds in need of budget amendments were identified during staff's review of Second Quarter results. The funds and corrective actions are described below. All other funds were under the authorized budget appropriation.

An appropriation of $400,000 from the Other Benefits Internal Service Fund available balance to the Separation Pay expense account is recommended based on year-to-date expenses. The cost to pay out annual leave when employees separate was estimated to be $1,200,000 in the FY 2021-22 budget. Costs through March have exceeded this estimate due both a higher number of separations and higher payout amounts for long-tenured employees. The projected year end cost for separation payouts is $1.9 million. Approximately $300,000 was available within the Other Benefits Internal Service Fund budget to cover overages. The balance needed of $400,000 will need to be appropriated from fund balance, reducing the projected June 30, 2022 ending fund balance to $595,974.

Public Works department requests a capital appropriation of $208,000 from the Public Facilities Fee (PFF) Street Improvement fund balance necessary to cover the shortfall in the Thornton Rd/Hammer Left Turn Lanes, Project Number WT15018. The project was awarded for construction in January 2021. During construction, the project experienced increased costs due to unforeseen field conditions that require the addition of funds to close out the project. The project construction is complete, but the balancing change order and project closeout are still ongoing.

FINANCIAL SUMMARY
This report provides an analysis of the FY 2021-22 General Fund Second Quarter results. The review indicates revenues will exceed original estimates by $32.3 million (12.9%), and expenses are on track to achieve savings greater than the budget by $12.8 million. Both of these projections were factored into the FY 2022-23 budget development and Long-Range Financial Plan updates. Staff will continue to monitor trends and potential budget variances and will return to the Council with future recommendations where appropriate.

Staff also reviewed other City funds and recommends the following budget amendments:

1. Ratify the movement, including adjustments to the associated interfund transfers, of $234,300 in appropriation from the Community Services Golf Course fund (650) budget to the Public Works General Fund (account #4540; 100-000) budget for maintenance at VanBuskirk.

2. Increase the General Fund (100-000) transfer to the Golf Fund (650) by $120,000 and decrease the General Fund (100-000) transfer to the Recreation Fund (100-125) by $120,000.

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3. Increase the General Fund Sales Tax revenue (account #411010-100-000) budget by $200,000 and increase the Tax Collection expenditure (account #2060-016-630025-100-000) budget by $200,000.

4. Increase the Separation Pay expense (account #2520-000-610007-560-564) appropriation by $400,000 from the Other Benefits Internal Service Fund (560) available balance.

5. Appropriate $208,000 from PFF Street Improvement fund (310-312) available balance to the Thornton Rd/Hammer Left Turn Lanes, Project Number WT15018 (formerly PW1518).

Attachment A - FY 2021-22 Second Quarter Budget Update General Fund Attachment B - FY 2021-22 Second Quarter Revenues General Fund Attachment C - FY 2021-22 Second Quarter Report for Other Major Funds City of Stockton Page 11 of 11 Printed on 6/8/2022
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City of Stockton
FY 2021-22 Budget Update - Second Quarter
General Fund - 100 by Program (Budgetary Basis)
Year to Date Projection Variance
Approved Activity % of 2nd Quarter vs. Approved from
Budget As of 12/31/21 Budget Projection Budget Budget
Beginning Available Balance $ 37,724,307 $ 37,724,307 $ 37,724,307 Release of Funds* 45,316,050 45,316,050 45,316,050
83,040,357 83,040,357 83,040,357
Revenues
General Tax Revenues 190,006,818 36,068,978 19% 214,479,883 24,473,065 12.9% Measure A/B Sales Tax 36,132,000 12,996,534 36% 42,900,000 6,768,000 18.7% Program Revenues 15,522,155 6,882,827 44% 17,608,943 2,086,788 13.4% Interfund Reimbursements 9,186,977 3,143,692 34% 8,189,926 (997,051) -10.9% 250,847,950 59,092,031 24% 283,178,752 32,330,802 12.9% Expenditures
Programs
Police 144,733,264 65,494,579 45% 134,833,682 9,899,582 6.8% Fire 51,313,942 23,114,757 45% 51,095,835 218,106 0.4%
Public Works 19,170,693 8,288,145 43% 18,038,708 1,131,986 5.9% Economic Development 4,900,838 1,569,763 32% 4,783,186 117,653 2.4% Office of Violence Prevention 2,210,895 592,197 27% 1,513,221 697,673 31.6% 222,329,632 99,059,440 45% 210,264,632 12,065,000 5.4%
Program Support for Other Funds
Library 4,068,000 2,034,000 50% 4,068,000 - 0.0%
Recreation 3,497,150 1,748,575 50% 3,377,150 120,000 3.4% Entertainment Venues 3,285,000 1,642,500 50% 3,285,000 - 0.0% RDA Successor Agency 1,361,531 - 0% 1,361,531 - 0.0%
Downtown Marina 262,000 131,000 50% 262,000 - 0.0%
Capital Improvement 38,473,531 2,500,000 6% 38,473,531 - 0.0% Golf Course 115,700 175,000 151% 235,700 (120,000) -103.7% Grant Match 100,000 - 0% 100,000 - 0.0%
Development Services 800,000 400,000 50% 800,000 - 0.0% 51,962,912 8,631,075 17% 51,962,912 - 0.000%
Administration
City Council 1,209,297 429,255 35% 1,184,297 25,000 2.1% City Manager 2,696,992 1,149,481 43% 2,509,490 187,503 7.0% City Attorney 1,290,690 559,129 43% 1,167,391 123,299 9.6% City Clerk 1,101,840 484,555 44% 985,722 116,118 10.5%
City Auditor 802,420 91,461 11% 669,337 133,083 16.6%
Administrative Services 6,259,020 2,710,921 43% 6,185,344 73,676 1.2% Human Resources 3,720,342 969,806 26% 3,219,093 501,249 13.5% Tax Collection 2,233,456 556,640 25% 2,433,456 (200,000) -9.0% Elections 550,000 - 550,000 -
Other Administration (1,106,035) (784,140) 71% (929,792) (176,243) 15.9% General Legal 500,000 136,123 27% 500,000 - 0.0%
19,258,022 6,303,230 33% 18,474,338 783,684 4.1%
Debt Service 5,819,175 - 0% 5,819,175 - 0.0%
Contingency 638,469 0% - 638,469 - 0.0%
Total Expenditures 300,008,210 113,993,745 38% 287,159,526 12,848,684 4.3% Net Annual Activity (49,160,260) (54,901,714) (3,980,774) 45,179,486 Proj. Ending Available Balance 33,880,097 $ $ 79,059,583 $ 45,179,486 Fund Balance as % of Expenses 13% 26%

ATTACHMENT A
1534
City of Stockton
FY 2021-22 Second Quarter Revenues
General Fund - 100
Approved 2nd Quarter % of 2nd Quarter Projection % Variance Budget Actual Budget Projection vs. Budget vs. Budget
General Tax Revenues
Sales Tax
Point of Sale $ 56,076,000 $ 18,964,792 33.8% 68,644,000 $ $ 12,568,000 22.4% Measure A Transaction Tax 36,132,000 12,996,534 36.0% 42,900,000 6,768,000 18.7% Proposition 172 2,379,000 1,199,675 50.4% 2,584,000 205,000 8.6% 94,587,000 33,161,001 35.1% 114,128,000 19,541,000 20.7% Property Taxes
Property Taxes 702,294 38,416,000 1.8% 39,976,000 1,560,000 4.1% In-Lieu of Motor Vehicle Fees 26,791,495 - 0.0% 27,310,330 518,835 1.9% 702,294 65,207,495 1.1% 67,286,330 2,078,835 3.2%
Utility Users Tax
Water 4,923,000 1,353,023 27.5% 5,015,100 92,100 1.9%
Electric & Gas 22,500,000 2,321,077 10.3% 25,599,317 3,099,317 13.8% Cable 2,620,000 13,287 0.5% 2,476,644 (143,356) -5.5%
Telecommunications 4,299,000 213,457 5.0% 4,282,099 (16,901) -0.4% 34,342,000 3,900,844 11.4% 37,373,160 3,031,160 8.8%
Franchise Tax
Electric & Gas 2,328,000 70,923 3.0% 2,507,611 179,611 7.7% Cable/Video 2,160,000 293,307 13.6% 2,049,622 (110,378) -5.1% Waste Haulers 12,106,000 3,107,989 25.7% 12,392,210 286,210 2.4% Other 1,630 0.0% - 1,630 - 0.0%
16,595,630 3,472,219 20.9% 16,951,073 355,443 2.1%
Business License Tax 9,695,000 5,667,175 58.5% 14,200,000 4,505,000 46.5% Hotel/Motel Tax 2,648,000 1,012,167 38.2% 3,118,000 470,000 17.7% Document Transfer Tax 852,000 808,883 94.9% 1,610,000 758,000 89.0% Motor Vehicle License 200,000 0.0% - 370,693 170,693 85.3% Investment Proceeds 2,011,693 340,929 16.9% 2,342,627 330,934 16.5% 15,406,693 7,829,154 50.8% 21,641,320 6,234,627 40.5%
Program Revenues
Fire Contracts 4,691,240 2,401,807 51.2% 4,687,380 (3,860) -0.1% Code Enforcement 3,498,413 2,191,173 62.6% 4,618,863 1,120,450 32.0% Charges for Services 3,150,079 1,013,958 32.2% 2,859,888 (290,191) -9.2% Fines & Forfeitures 501,694 241,138 48.1% 513,722 12,028 2.4% Revenues from Other Agencies 3,253,496 769,651 23.7% 4,410,571 1,157,075 35.6% Licenses & Permits 577,014 232,242 40.2% 613,820 36,806 6.4% Sale of Fixed Assets 22,000 14,888 67.7% 69,376 47,376 215.3% Contributed Capital - 4,116 9,064 9,064
Misc. Other Revenues (171,781) 13,854 -8.1% (173,741) (1,960) 1.1% 15,522,155 6,882,827 44.3% 17,608,943 2,086,788 13.4%
Interfund Reimbursements
Indirect Cost Allocation 5,904,220 2,407,270 40.8% 4,861,010 (1,043,210) -17.7% Refunds & Reimbursements 230,309 196,388 85.3% 195,253 (35,056) -15.2% Rents/Leases/Concessions 3,052,448 540,035 17.7% 3,133,663 81,215 2.7% 9,186,977 3,143,692 34.2% 8,189,926 (997,051) -10.9%
Total Revenues $ 250,847,950 $ 59,092,031 23.6% $ 283,178,752 $ 32,330,802 12.9% % Change from Prior Year -7% 5%
FY 2021-22

ATTACHMENT B
1535
Attachment C
City of Stockton
FY 2021-22 Second Quarter
Financial Report for Other Major Funds
Measure A (Breakout of General Fund) Year to % of
Budget Date Actual Budget
Revenues 36,132,000 36% 12,996,534
Marshall Plan Expenditures
Office of Violence Prevention 1,254,496 298,227 24%
Police 30,220,848 12,810,572 42%
Total Expenses 31,475,344 13,108,799 42%
Funds Combined with General Fund in CAFR
Library 100-120 Fund Year to % of Emergency Dispatch 100-130 Fund Year to % of Budget Date Actual Budget Budget Date Actual Budget
Beginning Balance 2,077,097 2,077,097 Beginning Balance 354,130 354,130 Revenues 7,717,104 3,673,359 48% Revenues 4,363,520 438,857 10% General Fund Transfer 4,068,000 2,023,942 50% Expenditures 4,684,026 1,994,168 43% 5,697,301 11,785,104 48%
Expenditures Ending Balance 33,624 (1,201,181)
Administration 1,603,686 723,481 45%
Operations 1,508,949 527,300 35% Recreation 100-125 Fund Year to % of County Branches 6,533,374 2,609,623 40% Budget Date Actual Budget City Branches 3,770,270 1,685,161 45% Beginning Balance 202,092 202,092 Capital Projects - -
Total Expenses 13,416,279 5,545,565 41% Revenues 1,245,435 309,293 25% General Fund Transfer 3,497,150 1,746,554 50%
Ending Balance 445,922 2,228,833 4,742,585 2,055,847 43% Expenditures
Entertainment Venues 100-145 Fund Year to % of Administration 1,274,623 520,115 41% Budget Date Actual Budget Recreation Programs 3,666,396 1,355,176 37% Beginning Balance 1,689,146 1,689,146 Total Expenses 4,941,019 1,875,290 38% Revenues 3,117,187 1,561,742 50% Ending Balance 3,658 382,649 General Fund Transfer 3,285,000 1,636,139 50%
3,197,881 6,402,187 50% Boat Launch 100-140 Fund Year to % of Expenditures Budget Date Actual Budget
Administration 122,094 102,119 84% Beginning Balance 953,031 953,031 Venue Operations 7,683,046 2,520,618 33%
Maintenance & Equip./Capital 100,000 - 0% Revenues 227,932 137,598 60% Total Expenses 7,905,140 2,622,737 33% Expenditures 557,442 82,533 15% Ending Balance 186,193 2,264,290 Ending Balance 623,521 1,008,096 1536
Attachment C
City of Stockton
FY 2021-22 Second Quarter
Financial Report for Other Major Funds
Special Revenue Funds
Measure W 200 Fund Year to % of Development Services 220 Fund Year to % of Budget Date Actual Budget Budget Date Actual Budget
Beginning Balance 5,451,066 5,451,066 Beginning Balance 23,352,706 23,352,706 Revenues 11,829,000 3,996,877 34% Revenues 13,457,118 9,273,431 69% Expenditures General Fund Transfer 800,000 400,000 50%
Police 6,255,969 3,010,930 48% 14,257,118 9,673,431 68% Fire 6,203,923 2,830,414 46% Expenditures
Total Expenses 12,459,892 5,841,344 47% Community Development 13,189,401 5,058,899 38% Fire 3,440,988 1,386,557 40%
Ending Balance 4,820,174 3,606,599 Capital 5,700,000 -
Total Expenses 22,330,389 6,445,455 29%
Strong Communities (Measure M) 210 Fund Year to % of
Budget Date Actual Budget Ending Balance 15,279,435 26,580,681 Beginning Balance 9,726,545 9,726,545
Revenues 12,177,000 3,940,545 32%
Expenditures
Library Programs 3,252,326 1,091,776 34%
Recreation Programs 4,408,432 482,356 11%
Administration 894,487 424,460 47%
Capital Projects 3,235,000 1,077,843 33%
Total Expenses 11,790,245 3,076,435 26%
Ending Balance 10,113,300 10,590,655
Enterprise Funds
Water Utility 600 Fund Year to % of Parking Authority 630 Fund Year to % of Working Capital Budget Date Actual Budget Working Capital Budget Date Actual Budget Revenues 59,964,840 37,918,119 63% Revenues 4,746,246 2,379,288 50% Expenditures Expenditures
et Administration 5,369,174 2,092,181 39% Administration 925,180 243,728 26% Operations & Maintenance 32,987,291 27,271,462 83% Parking Operations 2,301,811 1,249,628 54% Debt Service 14,300,287 2,130,748 15% Parking Enforcement 839,760 228,830 27% Capital 12,563,570 2,076,863 17% Debt Service 2,217,311 209,209 9% Total Expenses 65,220,322 33,571,254 51% Facility Improvements 100,000 184,652 185% Total Expenses 6,384,062 2,116,047 33%
Wastewater Utility 610 Funds Year to % of
Working Capital Budget Date Actual Budget Downtown Marina 640 Fund Year to % of Revenues 184,874,743 46,514,392 25% Working Capital Budget Date Actual Budget Expenditures Revenues 372,828 242,022 65%
Administration 9,047,402 3,968,482 44% General Fund Transfer 262,000 131,000 50% Operations & Maintenance 47,182,882 21,424,486 45% 634,828 373,022 59% Debt Service 127,637,26 1,090,892 5 1% Expenditures
Capital 96,985,161 33% Administration 17,400 32,481,757 2,464 14% Total Expenses 280,852,710 58,965,616 21% Operations 617,136 277,799 45% Capital - - 0%
Stormwater Utility 620 Funds Year to % of Total Expenses 634,536 280,263 44% Working Capital Budget Date Actual Budget
Revenues 5,529,007 2,966,073 54% Golf 650 Fund Year to % of Expenditures Working Capital Budget Date Actual Budget
Administration 2,813,691 1,103,487 39% Revenues - 18,258 Operations & Maintenance 3,714,368 914,970 25% General Fund Transfer 350,000 175,000 50% Capital 1,102,155 542,994 49% 350,000 193,258 55%
Total Expenses 7,630,214 2,561,451 34% Expenditures
Administration 0%
Operator Cost 51,247 23,970 47%
Swenson Golf Course 62,500 133 0%
Van Buskirk Golf Course 234,300 101,575 43%
Total Expenses 348,047 125,677 36%
1537
Resolution No.

STOCKTON CITY COUNCIL
RESOLUTION ACCEPTING THE FISCAL YEAR 2021-22 SECOND QUARTER

BUDGET STATUS UPDATE REPORT, AND AUTHORIZE BUDGET AMENDMENTS Fiscal Sustainability is one of the City Council’s goals; and City Council adopted the Fiscal Year (FY) 2021-22 Annual Budget on June 22, 2021, following a duly noticed budget study session and a public hearing; and By the staff report accompanying this Resolution, incorporated into this Resolution by this reference (Staff Report), the Council has been provided with additional information upon which the actions set forth in this Resolution are based; now, therefore,

BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF STOCKTON, AS FOLLOWS:
1) Accept this budget status report on the results of the second quarter of Fiscal Year 2021-22.
2) Ratify the movement of $234,300 in existing appropriation from the Community Services Golf Course fund (650) budget to the Public Works General Fund (100) budget for maintenance at VanBuskirk.
3) Increase the General Fund (100) transfer to the Golf Fund (650) by $120,000 and decrease the General Fund (100) transfer to the Recreation Fund (100- 125) by $120,000.
4) Increase the General Fund Sales Tax revenue (100) budget by $200,000 and increase the General Fund Tax Collection expenditure budget (100) by $200,000. 5) Increase the Separation Pay expense appropriation by $400,000 from the Other Benefits Internal Service Fund (560) available balance. 6) Appropriate $208,000 from Public Facility Fee Street Improvement fund balance (310-312) to the Thornton Rd/Hammer Left Turn Lanes, Project Number WT15018.
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7) City Manager is authorized to take appropriate and necessary actions to carry out the purpose and intent of this Resolution.

PASSED, APPROVED, and ADOPTED June 14, 2022 .

KEVIN J. LINCOLN II
Mayor of the City of Stockton
ATTEST:

ELIZA R. GARZA, CMC
City Clerk of the City of Stockton
1539
FY 2021-22 Second
Quarter Budget Update
City of Stockton June 14, 2022Item 15.4
1540
FY 2021-22 Second Quarter
General Fund RevenuesAs of December 31, 2021:•Year to Date = $59.1 million
• 24% of the $250.8 million budget
Year
‐end Projection:
•$283.2 million
• $32.3 million, 13% over the budget
• Largest variances:
• Sales Tax +$19.5 million
• Utility Users Tax +3 million
1541
• Business License +$4.5 million
General Fund Revenues
by Quarter
1542
2nd Quarter FY 2021-22
General Fund ExpendituresAs of December 31, 2021:• Expenditures = $114.0 million
• 38% of the $300.0 million budget
Year
‐end Projection:
•$287.2 million
•$12.8 million, 4.3% under budget
• Police Department $9.9 million
• Public Works $1.1 million
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2nd Quarter FY 2021-22
General Fund Budget
1544
FY 2020-21 Year-End Version
Updated FY 2022-23 Budget Version
Long-Range Financial Plan
1545
Long-Range Financial Plan
Updates include:

1. Recession cycles start
changed from 2020, 2027, and 2034 to 2025 and 2032.

2. Annual CalPERS valuation
data and discount rate assumption change to 6.8% incorporated

3. FY 2021-22 and FY 2022-23
updated revenue projections

1. New hotel construction

4. Updates for other funds that
might need General Fund Support: Recreation, Measure W, Strong Communities, Fire Dispatch

5. Added 1-2 new FTE per year6. Incorporates FY 2022-23 Proposed Budget
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2nd Quarter FY 2021-22
Recommendation
• Accept this budget status report.
• Approve five budget amendments

1. Ratify the movement of $234,300 in appropriation from the Community Services Golf Course fund budget to the Public Works General Fund budget for maintenance at VanBuskirk

2. Increase the General Fund transfer to the Golf Fund by $120,000 and decrease the General Fund transfer to the Recreation Fund by $120,000

3. Increase the General Fund Sales Tax revenue budget by $200,000 to cover
a $200,000 increase in the Tax Collection expenditure budget

4. Increase the Separation Pay expense appropriation by $400,000 from the Other Benefits Internal Service Fund available balance

5. Appropriate $208,000 from PFF Street Improvement fund available balance to the Thornton Rd/Hammer Left Turn Lanes, Project Number WT15018
1547
City of Stockton
Legislation Text
File #: 22-0543, Version: 1
HOMELESS HOUSING, ASSISTANCE AND PREVENTION (HHAP) GRANT PROGRAM ROUND 3

DISCUSSION

RECOMMENDATION
Information only. No action is to be taken.

Summary
This will be an informational presentation from Economic Development on Homeless Housing, Assistance and Prevention (HHAP) Grant Program Round III.

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Stockton City Council
June 14, 2022
Agenda Item 15.5
Homeless Housing, Assistance and Prevention
(HHAP) Program Round 3 Discussion
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• SJCoC Meeting Minutes
• 2020 Homeless Strategic Plan
• 2021 Impact Report
• SJCoC Analysis of Racial Equity
Success of CoC-Funded Projects
• HHAP Rounds 1 & 2 Applications
• City Funding Detail
United Way, City of Stockton,
SJCoC Partnership Survey of
243 Unsheltered Individuals
Persons w/Lived
Experiences:
• Youth
• Adults
• Families
Research Methodology Mixed Methods
SJCoC PIT Count Data
HMIS Data
Housing Inventory Count Data
State HDIS Data for County
• Housing Justice
Coalition
• Housing Authority
• Health Care Services
• Whole Person Care
• SJCoC Strategic
Planning Committee
Discussions
Document Reviews
Encampment Survey
Local Data Analysis
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Trends in Homelessness San Joaquin County
1,708 1,552
2,629
2,319
1,173 985 1,071 964
535
567
1,558
1,355
2015 2017 2019 2022
Total Sheltered Unsheltered
Source: 2015 & 2017 CA-511 HUD PIT Report; 2019, 2022 SJCoC PIT Count; State HDIS Data Decrease in total persons
experiencing homelessness from
2,629 in 2019 to 2,319 in 2022
Veteran homelessness remains
unchanged, despite county goal (6%
of total homeless in 2019 and 2022)
Gap between sheltered and
unsheltered persons relatively
consistent from 2019 to 2022 (59%
and 58%, respectively)
Increase in persons experiencing
chronic homelessness from 27% in
2019 to 35% in 2022
Decrease in persons exiting
homelessness into permanent housing
by 19% from 2018 to 2020 1551
44%
12%
31% 28%
General
Population
General
Population
Homeless
Population
Homeless
Population
People Experiencing Homelessness City of Stockton
Hispanic or
Latino
Black/African
American
35%
Sheltered
477 persons
65%
Unsheltered
893 persons
1,370 people
experiencing homelessness in the
City of Stockton
1,370
people experiencing homelessness
in the City of Stockton
Source: 2022 SJCoC PIT Count; U.S. Census Bureau, QuickFacts Stockton. Retrieved 5/5/2022 from https://www.census.gov/quickfacts/fact/table/sanjoaquincountycalifornia,stocktoncitycalifornia/PST045221 1552
Key Findings Delivery system strengths and challenges
Strengths
The SJCoC is well attended and there are many
partners willing to collaborate
The 2020 Strategic Plan was adopted and serves
as a framework for coordination and collaboration
New and expanded shelters are being developed
and new navigation centers are being established
The service system has a solid agreement on the use
of a CES, HMIS and the Housing First model
Challenges
Many diverse service providers and new state
funding is scheduled to become available
Service system is hard to navigate; CES not fully
operational; HMIS is complicated and underutilized
Service system underfunded and under resourced;
need sustainable operational funding
The 2022 PIT Count considered to be inaccurate—
not standardized and did not reach all areas
Lacking sufficient coordination resulting in service
duplication and missed funding opportunities
There is no common understanding of equity
issues or actions to address them
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Strengths
Strong multi agency and muti jurisdictional
coordination on the development of permanent
housing and permanent supportive housing
Challenges
Key Findings Housing and Services Strengths and Challenges Many new affordable housing and permanent
housing units are under development
Emergency shelters
• Underfunded and understaffed
• Not all follow Housing First practices
• Not all housing focused
• Exclusionary policies for pets, partners,
possessions
Permanent Housing
• Short supply and long waiting lists
• Restrictive eligibility requirements
• Lack of landlords to offer Rapid Rehousing
• Lack of permanent supportive housing for large
unsheltered population with mental health and
physical health conditions
New and emerging grassroots movement for change
(e.g., Uplift, WE CAN, Housing Justice Coalition)
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Homeless Revenues and Expenditures Six-Year Plan
$-
$2,000,000.00
$4,000,000.00
$6,000,000.00
$8,000,000.00
$10,000,000.00
$12,000,000.00
$14,000,000.00
$16,000,000.00
$18,000,000.00
2022 - 2023 2023 - 2024 2024 - 2025 2025 - 2026 2026 - 2027 2027-2028 FY 2022-2023 through Fiscal Year 2027-2028
Revenues: $56,000,000
End
HHAP
End
HHAP
Round 3
End
ARPA
Funds
End
HHAP
Round 4
1555
HHAP
Round 3
Total Allocation
$7,893,270
Recommended
4-Year Spending
Plan
Recommendations applicable
through the anticipated HHAP
Round 4
$3.7M
$2.4M
$1.1M $552K
$1.9M
$552K
 Capacity building
 Coordinated Entry
 PIT Count
 Data and HMIS
 Shelter operations
 Tenant assistance*
 Meet basic needs*
 Affordable housing
 Rapid rehousing*
 Housing support services
GOAL 1: Coordinated
System
GOAL 2: Access to
Crisis Response
GOAL 3: Access to
Permanent Housing
* These projects are funded through HHAP Round 1, ESG, and CDBG.

Permanent housing
Systems support
Administrative
Operating subsidies – shelter
Operating subsidies – housing
1556
Outcome Goals For Preventing and Reducing Homelessness
Reducing the number of persons
experiencing homelessness (1a) and
homelessness on a daily basis (1b)
Reducing the number of persons who
become homeless for the first time
Increasing the number of people
exiting homelessness into permanent
housing
Reducing the length of time persons
remain homeless
Reducing the number of persons who
return to homelessness after exiting
homelessness to permanent housing
1 2
3 4
5  5% decrease in people accessing services who
are experiencing homelessness (400 fewer
people); 15% decrease in people experiencing
unsheltered homelessness (240 fewer people)
 5% decrease in people who become
homeless for the first time
(175 fewer people)
 18% increase in people exiting
homelessness into permanent housing
(150 more people)
 10% decrease in time to move-in into rapid
rehousing or permanent housing
(from 72 to 65 days)
 2% decrease in people who return to
homelessness after exiting homelessness to
permanent housing (8% fewer people)
6  1000% increase in successful placements
from street outreach (200 more people)
Increasing successful placements from
street outreach
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• Discuss Overall Plan
• Approve Plan and Submission of Grant Application on June 21, 2022

NEXT STEPS
1558
City of Stockton
Legislation Text
File #: 22-0545, Version: 1

ADOPT A RESOLUTION AUTHORIZING THE CITY TO APPLY FOR A GRANT AWARD FROM

THE COUNTY OF SAN JOAQUIN TO ACQUIRE AND DEVELOP A LOW-BARRIER SHELTER

PROGRAM FOR HOMELESS INDIVIDUALS

RECOMMENDATION
It is recommended that the City Council consider adopting a resolution to:

1. Authorize the City Manager to submit a request for, and accept, a one-time capital grant through the County of San Joaquin in the amount of $8,116,629 to support the creation of a low-barrier shelter program for homeless individuals.

2. Authorize an additional request to the County of San Joaquin of $1,371,450 to support the gap in operational funding for the first two years of operation.

3. Upon approval from the County, authorize the appropriation of $3,600,000 of American Rescue Plan Act funds, and total County grant funds, to the Salvation Army of Stockton for daily costs associated with operating a 125-bed shelter and capital project needs.

4. Authorize the City Manager, or designee, to take appropriate and necessary actions to carry out the purpose and intent of this resolution.

Summary
In 2019, the City of Stockton declared a local Homeless Emergency, and in 2020 adopted a Strategic Plan, outlining the intended Community Response to Homelessness. A key strategy is to increase the number of low-barrier shelter beds and to strengthen the ability of shelter programs to successfully assist homeless individuals in finding a permanent home. The general purpose of this recommendation is to pursue funds from San Joaquin County to support a local community-based organization to construct and develop a low barrier shelter program, and, if capital funds and additional support are authorized by the County, to provide operational support of $3,600,000 American Rescue Plan Act funds previously allocated for this purpose to the Salvation Army of Stockton (Attachment A - Salvation Army Application).

DISCUSSION
Background
On September 14, 2021, Council approved the City of Stockton’s American Rescue Plan Act (ARPA) funding distribution. This approval included $12.15 million for Homelessness/Housing, under which $3,600,000 was approved for Low Barrier Shelter Beds under the category, Housing Support:

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File #: 22-0545, Version: 1
Services for Unhoused Persons.

Under the rules issued by the United States Department of Treasury, ARPA funds must be obligated by December 31, 2024, and expended by December 31, 2026.

On December 12, 2021, Council directed the City Manager to pursue capital grant funds from San Joaquin County for 125 low barrier shelter beds.

On March 8, 2022, the City’s Department of Economic Development released a Notice of Request for Project Concepts and Funding Availability for Low Barrier Shelter Beds.

On April 18, 2022, four (4) submissions were received and reviewed, of which two were deemed incomplete without full narrative responses.

Submissions were received from:
· Gospel Center Rescue Mission (Gospel Center)
· Salvation Army of Stockton (Salvation Army)
· Uplift Foundation
· Fresh Start Transitional Housing and Reentry Program
A panel of four individuals reviewed and scored the proposals. Panel members included: a current county Health Care Services Agency employee, a current Continuum of Care board member, a retired member of San Joaquin County Behavioral Health Services’ executive team, and the City’s consultant providing staff augmentation to the Economic Development Department.

The review team submitted the following findings:
· Gospel Center proposed a shovel-ready project concept for a men’s sober-living program, but the review team questioned whether the project met the requested low-barrier shelter program specifications.
· Salvation Army submitted qualifications to operate and maintain a low-barrier shelter bed program, per City specifications, but the review team identified a deficiency in the application in that site control was not sufficiently demonstrated and questions remained about commitment to operating a low-barrier program.

Interviews were conducted by City staff to discuss their submissions. Interviews were the same length of time and used a standard set of questions. During the interviews the following findings were made.
· Gospel Center clarified that the project submitted for consideration was to complete the buildout of its Men’s New Life Program, a sober living program for men and that no portion of the funds would be allocated to the development of low-barrier shelter beds.

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However, the Gospel Center stated that if capital funding is received no requests would be made for operating funds, as Gospel Center leadership understands that its program activities fall outside of eligible uses for public funds.
· Salvation Army clarified its commitment to operating a low-barrier shelter program and described experience in operating more than 8,000 low-barrier shelter beds throughout California. Salvation Army staff described how a low-barrier shelter can provide reasonable accommodations for pets, partners, possessions, and privacy, while at the same time maintaining behavioral and safety expectations.

The Salvation Army described ongoing negotiations with the property owner of the proposed site and agreed to submit for the City’s consideration a signed letter from the property owner attesting to their willingness to enter into a long-term lease agreement with Salvation Army for the purpose of operating a homeless shelter, should the organization identify funding for the lease and associated build-to-suit renovations. In addition, a detailed operational budget was requested.

Present Situation
An estimated 800-900 individuals are sleeping outdoors, unsheltered on any given night in Stockton, based on current and historic Point-in-Time count results. There are a total of 554 homeless shelter beds in Stockton with an average occupancy rate of 61% (based on the January 2022 Housing Inventory Counts).

A recent survey of unsheltered homeless individuals in San Joaquin County found that chronic homelessness is severe and persistent with over 25% of those interviewed being homeless for five years or more and that only about half (52%) of the 243 persons interviewed had stayed in a shelter overnight. Among those that had previously stayed at least once in a shelter reported their reasons for not using shelters range from perceptions of safety (36%) to being welcomed (26%). Those who have never stayed in a shelter shared concerns about pets (20%) and being able to stay with a partner (12%).

Overall, the survey portrays a hesitation by those that are unsheltered to use shelter services, despite availability, and despite having nowhere else to go. Residents of local encampments recommended the development and design of more inclusive sheltering options that help them stay close to their pets (a third of participants have at least one pet) and with a spouse or partner (38% of participants mostly have someone they trust that is usually with them).

Based on the number of unsheltered homeless individuals and the needs expressed by survey respondents, the City is investing in the development of low-barrier shelter beds to augment existing capacity with enhanced design and programming approaches to accommodate pets, partners, possessions and provide for some privacy. New low- barrier shelter programs will allow guests to choose either night-by-night stays or to register as a guest for longer stays with more intensive housing navigation services.

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Shelter Beds in Stockton
Existing Shelter Beds (2022 Count) 554
Beds in the Pipeline (Stockton Shelter Expansion) Previously approved 180 Additional Expansion (Salvation Army) Proposed project 125 Total, if approved 859
If approved, a one-time capital grant will be sought from San Joaquin County for costs associated with leasing and improving a property located at:
1188 S. Airport Way
Stockton CA 95205
The proposed property is zoned light / limited industrial (IL). Emergency shelters are a permitted use, per Stockton municipal code.

The property owner is:

GBM Realty, LLC
June Chen,
Managing Partner
Currently, the property includes a large-paved area, a warehouse, and several smaller out-buildings.

The proposal is to convert the warehouse into a shelter and use the smaller out-buildings for various storage related purposes.

The development team, consisting of: RPM Team, a construction management team, and G&G Builders, a licensed general contractor, have agreed to work with the Salvation Army should funds be awarded in the design and renovations of the existing on-site facility.

The agreement with the landlord is to enter into a ten-year lease with an optional five-year renewal.

It is proposed that the first ten-years of the lease be paid up front with the capital grant. Additional funds would need to be identified to renew the lease.

Budget Submission by Applicant:

Estimated Costs Amount
10-year lease (Paid up front) 120 months at $19,000/mo. $2,280,000 Construction and Renovations $4,951,785
Additional Costs (11%) (permitting, fees, design, demolition, abatement, landscaping, insurance, and overhead)
$884,844
Total $8,116,629
For a capital project of this scope, the City should anticipate a significant amount of upfront costs City of Stockton Page 4 of 5 Printed on 6/8/2022
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File #: 22-0545, Version: 1
prior to service delivery. Upfront costs will likely include a range of expenses: site lease, project management, site design and permitting, site preparation and renovations, and hard costs associated with equipping and furnishing. To complete work on time and on budget the City should plan to advance funds for project development and program start-up.

A total of $3,600,000 of ARPA funds have been received and allocated to support low-barrier shelter beds. The estimated annual cost of operations of this shelter program exceeds the funds allocated by the City for sheltering. The two-year cost of operations for this program, which the County has asked the City to fund, is $4,971,450. The gap in funding is $1,371,450.

However, the City of Stockton has also approved the expansion of the Stockton Shelter for the Homeless, committing funding for the development of an additional 180 beds. The City has not committed or identified funds to support the operational costs expansion at the Stockton Shelter.

The estimated annual cost to operate the proposed Salvation Army shelter is $54.50 per day per person for 125 guests.

Operating Expenses Annual Cost
Salaries and Benefits $ 1,624,275
Supplies, Utilities, Trainings, Food, Hygiene, etc. $ 635,475 Administrative Overhead $ 225,975
Total $ 2,485,725

FINANCIAL SUMMARY
There is no financial impact to the City's General Fund or any other unrestricted fund as a result of taking the action. The Low-Barrier Shelter Program funds will be appropriated in the Economic Development Department Prepaid, Special Grants fund. Over the long-term, additional funding will need to be identified to sustain shelter operations, which may result in future requests for funding from the program operator. Approving this request may also have an impact on the City’s capacity to support existing shelter programs within the City that have historically received City funds.

Attachment A - Salvation Army Application
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Table of Contents
Letter of Interest …………………………………………………………………………………………….. 1 Agency Capacity to Develop Project ………………………………………………………………. 3 Project Vision and Implementation Plan ………………………………………………………….. 6 Analysis of Site and Project Readiness ……………………………………………………………… 11 Required Attachments …………………………………………………………………………………….. 17 Corporation Grant Deed …………………………………………………………………………….. 19 Coordinated Entry and HMIS Compliance ……………………………………………………….. 25 Required Forms ……………………………………………………………………………………………….. 27 Application Summary …………………………………………………………………………………. 28 Preliminary Budget …………………………………………………………………………………….. 29-30 Costs ……………………………………………………………………………………………………. 29
Funding Sources …………………………………………………………………………………. 31
Site Location ………………………………………………………………………………………………. 32
Project Schedule ………………………………………………………………………………………… 34
Related Project List ……………………………………………………………………………………. 35-36 Demonstration of Financial Capacity ……………………………………………………………… 37 Attachments ………………………………………………………………………………………………….. 63
Construction Contractors Resumes…………………………………………………………… 64 Organizational Chart …………………………………………………………………………………. 78 Professional Experience & Notable Projects …………………………………………….. 79-80 Stockton Salvation Army County Shelter Annual Budget ……………………………. 117 Pets, Possessions, and Partners …………………………………………………………………. 118 Staffing Table …………………………………………………………………………………………….. 119 Property Owner Letter ………………………………………………………………………………. 120 Attachment A
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Resolution No.

STOCKTON CITY COUNCIL

RESOLUTION AUTHORIZING THE CITY TO APPLY FOR A GRANT AWARD FROM

THE COUNTY OF SAN JOAQUIN TO ACQUIRE AND DEVELOP A LOW-BARRIER

SHELTER PROGRAM FOR HOMELESS INDIVIDUALS
The City of Stockton is eligible to submit a one-time capital grant request to the County of San Joaquin to support the creation of low-barrier shelter beds; and The grant opportunity aligns with the goal of creating an additional 125 low-barrier shelter beds; now, therefore,

BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF STOCKTON, AS FOLLOWS:

1. Hereby authorizes the City Manager to submit a request for a one-time capital grant through the County of San Joaquin in the amount of $8,116,629 to support the creation of a low-barrier shelter program for homeless individuals.

2. Authorizes an additional request to the County of San Joaquin of $1,371,450 to support the gap in operational funding.

3. Upon approval from the County, authorizes the appropriation of $3,600,000, and total County grant funds, to the Salvation Army of Stockton for daily costs associated with operating a 125-bed shelter and capital project need.

4. The City Manager is hereby authorized to take whatever actions are necessary and appropriate to carry out the purpose and intent of this Resolution.

PASSED, APPROVED and ADOPTED June 14, 2022 .

KEVIN J. LINCOLN II
Mayor of the City of Stockton
ATTEST:

ELIZA R. GARZA, CMC
City Clerk of the City of Stockton
1685
Low-Barrier Shelter Beds
Recommendation
Stockton City Council June 14, 2022Agenda Item 15.6
1686
Timeline and Process
September 2021
• Council approved American Rescue Plan Act (ARPA) funding distribution • $12.15 million for Homelessness/Housing• $3.6 was approved for Low Barrier Shelter Beds December 2021
• Council directed the City Manager to pursue $6.5 million of capital grant funds from San Joaquin County
January 2022
• Rane Community Development was contracted to assist with ARPA Homelessness Projects
March 2022
• A Notice of Request for Project Concepts and Funding Availability for Low Barrier Shelter Beds was issued.
1687
Timeline and Process
April 2022
• Four submissions were received and reviewed• Two were deemed incomplete • A panel of four individuals reviewed and scored the proposals (1) current county Health Care Services Agency employee(1) current Continuum of Care board member (1) retired SJ County Behavioral Health Services’ Executive Team member (1) City’s consultant to the Economic Development Department • Interviews were conducted with Gospel Center Rescue Mission and Salvation Army
May 2022
• Additional information was requested from Salvation Army regarding site control and operational budget
1688
Present Situation
800-900Individuals are sleeping outdoors554Homeless shelter beds in Stockton 61% Average occupancy rate Survey Results  Safety  Welcoming  Pets  Partners 180 Beds under construction 1689
Salvation Army Proposal
• One-time capital grant will be sought from
San Joaquin County
• Property location: 1188 S. Airport Way,
Stockton CA 95205
• Zoned light / limited industrial (IL). • Permitted use, per Stockton municipal code.• GBM Realty, LLC -- June Chen -- Managing Partner• 10-year lease with an optional five-year renewal.
• Large-paved area, a warehouse, and several
smaller buildings for storage.
• Development Team
• RPM Team (a construction management
team) and G&G Builders (LGC) licensed general contractor. 1690
Capital Budget
Estimated Costs Amount10-year lease (Paid up front) - 120 months at $19,000/mo. $ 2,280,000
Construction and Renovations $ 4,951,785Additional Costs (11%)(permitting, fees, design, demolition, abatement, landscaping, insurance, and overhead) $ 884,844
Total $8,116,629
1691
Operational Budget
Estimated Expenses Annual CostSalaries and Benefits $ 1,624,275Supplies, Utilities, Trainings, Food, Hygiene, etc. $ 635,475Administrative Overhead $ 225,975Total $ 2,485,725 1692
Recommendations

1. Authorize the City Manager to submit
a request for, and accept,
a one‐time
capital grant through the County of San Joaquin in the amount of $8,116,629 to support the creation of
a low‐barrier shelter program for homeless individuals;

2. Authorize an additional request to the County of San Joaquin of $1,371,450 to support the gap in operational funding for the first two years of operation;

4. Authorize the City Manager, or designee, to take appropriate and necessary actions to carry out the purpose and intent of this resolution. 1693
City of Stockton
Legislation Text
File #: 22-0579, Version: 1

APPOINTMENT TO THE STOCKTON CIVIL SERVICE/EQUAL EMPLOYMENT COMMISSION

RECOMMENDATION
Adopt a resolution appointing one member to the Civil Service Commission/Equal Employment Commission for a term commencing immediately and ending June 30, 2025.

Summary
The Civil Service Commission currently has one vacancy. The first step towards filling the stated vacancy was to recruit and engage the public to complete an application and interview. The City did and at the conclusion of the recruitment period seven applications were received and four individuals were interviewed. The interviews were recorded and broadcasted on the City’s website so that they could be viewed through the archive by the members of the City Council before tonight’s meeting.

The second step is the City Council appointment process, which is scheduled before you this evening.

DISCUSSION
Background
Pursuant to Stockton Charter Article XXV, Sections 2502 and 2503, the City Council appoints the five -member Civil Service Commission; each term is for three years. The function of the Stockton Civil Service Commission is as follows:
· To adopt, amend or repeal rules for the Civil Service System · To investigate either upon complaint or upon its own motion concerning any matter touching the administration of the Civil Service Commission
· To act in an advisory capacity to the City Manager on problems concerning personnel administration
· As provided by rule, to hear appeals of dismissals, demotions, or reductions submitted by any person in the competitive service. Prepare or cause to be prepared a written statement of facts, findings, and recommendations on every appeal. The effect of the Commission’s recommendation in case of discharge, demotion or reduction shall be final and binding upon all parties.
· To make an annual report and such other reports as it deems desirable to the City Council covering the administration of the personnel system.

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The Office of the City Clerk initiated the recruitment to fill the vacancy, which opened on April 5, 2021 and accepted applications until interviews were conducted on May 31, 2022, June 1, 2022, and June 7, 2022.

Pursuant to Council Policy Chapter 3.02, City Council and Mayoral Appointments to Boards, Commissions, and Committees, the following two-step interview and appointment process is used to fill current vacancies on boards and commissions:

1. The City Clerk conducts the initial applicant interviews, which are recorded so that the Council can view from the archive; and,

2. The Council makes the appointment at a regularly scheduled Council meeting.

The City Clerk's Office interviewed the following applicants Virtu Arora
Christina Mambourg
Nancy Muniz
Doug Vigil
All applicants were notified of tonight's meeting; however, their attendance is not mandatory.

Present Situation
Tonight, the City Council will proceed with the following method for appointment pursuant to Council Policy Chapter 3.02:

1. From the list so provided to the Council, each Councilmember, including the Mayor, will rank the applicants for each Commissioner such that the number of applicants that each Councilmember ranks will be one number greater than the number of vacancies and/or the number of Commission members whose terms will be expiring. (This will likely avoid tie votes.) For example, if there is only one vacancy or only one term expiring, the Councilmember’s first choice for appointment will be ranked with the number “2” and the Councilmember’s second choice with the number “1.” If because of a vacancy and/or because of an expiring term, there is more than one appointment to a Commission, the Councilmember will assign to the Councilmember’s first choice the higher(est) number and lesser number(s) to the Councilmember’s other choice(s). For example, if there were one vacancy and one term expiring, each Councilmember would rank three applicants, assigning the number “3” to the Councilmember’s first choice, the number “2” to the Councilmember’s second choice and the number “1” to the third choice.

2. After the Council has ranked the applicants, the City Clerk will tally the rankings and the applicant(s) receiving the highest number(s) would, subject to Council ratification, be appointed. If there is a tie, then the process described in A above will be repeated only as to the applicants who are tied.

The City Clerk will present the resolution upon appointment of the individuals selected to fill the vacancy effective immediately and ending on June 30, 2025.

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FINANCIAL SUMMARY
Civil Service Commissioners receive $25.00 remuneration per meeting with a monthly maximum of $150.00. Sufficient funds are available in account number 010-1621-510.01-12: Compensation Boards and Commissions, for this purpose.

Attachment A - Redacted Applications
City of Stockton Page 3 of 3 Printed on 6/8/2022
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Submit Date: May 27, 2021
Email Address
First Name Middle Initial Last Name
Street Address
City State Postal Code
Primary Phone Alternate Phone
Application for appointment and background information for City of Stockton Boards, Commissions, and Committees
Profile
Question applies to Civil Service Commission-Equal Employment Commission Concurrent Date of Birth
Ethnicity
Gender
If selected "Other," please specify.

Native American
What district do you live in? *
District 5
I declare under penalty of disqualification/termination that I have been a resident at the above address for years/months?
21 The City of Stockton uses email as the preferred method of communication regarding your application. Is this acceptable to you?
Yes No
Douglas I Vigil
Stockton CA
Douglas I Vigil
Attachment A
1697
Employer Job Title Occupation
If you have checked “No”, please identify how you prefer to be contacted:
[email protected]
Employer Address
Are you currently serving on a City of Stockton Board, Commission, or Committee? Yes No
Which Boards would you like to apply for?
Civil Service Commission-Equal Employment Commission Concurrent: Archived Question applies to Cultural Heritage Board
NOTE: To the maximum extent possible, the Board shall have at least one (1) member from each of the following categories: *
Member having extensive real estate experience in the City Question applies to multiple boards
NOTE: This Board requires membership with one of the following groups. If none, please remove board from your application. Are you knowledgeable, have experience in, or extensive background in any of the following areas? Select all that apply. * Active in community activities significant enough to confirm knowledge of issues and individuals within the community
Knowledge of new artistic & design expressions
Possess decision-making abilities
Understanding of Ethnic/Gender Diversity
Understanding of the Stockton Public Art Plan processes and implications for the City of Stockton Willingness to tolerate/promote change
I have been a resident of Stockton for at least 3 years.

Yes No
Douglas I Vigil
Attachment A
1698
Upload a Resume
Interests & Experiences
Please tell us about yourself and why you want to serve.

I'm want to volunteer my my time to the community in Stockton and I live my community and care about people well being, I am a Real Estate Agent and Loan Signing Agent Notary been working for 19 years of servicing and living in Stockton Ca. My interests involving range from local community volunteer teaching Basis Sign Language in Elementary School and Public Library. I have serve on the Boards, I'm serving on Stockton-San Joaquin Lions Club on Chair of Marketing. I been active involved on different community event, I have service on the City of Stockton Civil Service Commission and City of Stockton Mayor's Task Force on Persons on Disabilities Committee; and Cultural Heritage Board also I'm a Radio Host the Vigil Show on Sunday and Monday from 3pm to 4pm interview local community leader and nonprofit organization inclusive with Sign Language for the Deaf Community KXVS Radio, I am also interested in Public Advocacy for Disabilities Rights and Anti-Bully and Art Programs within community.

Please state the reason you would like to be a member of this board/commission.

I want to give fresh idea and new positive attitude and diversity on any board committee, hard decision making the board/commission
Have you served on an advisory group before?
Yes No
If yes, please explain.

Not Applicable
How did you hear about the position?
On-Line website and was encouragement to join and apply City Council Policy 100-2 states that Commissioners are required to attend meetings on a regular basis. If appointed, will you be able to attend meetings regularly and devote the time necessary to fulfill your duties as a member?
Yes No
Do you or immediate family members have any relationship (professional, financial, other) that may present a potential conflict of interest for this advisory group? Yes No
If yes, please explain
Not Applicable
Background Information
Douglas I Vigil
Attachment A
1699
Based on your best judgment, does this Commission make decisions that may affect any sources of income, interests in real property, or investments of you or your spouse? Yes No
Not Applicable
Voter Registration (Questions appear if required)
Question applies to multiple boards
I consent to the City of Stockton verifying my voter registration, if required.

Yes No
Question applies to multiple boards
If your name, address, city or zip code are different on your voter registration, please explain and give us the correct information below:

Submit Application
Please identify any specialized accommodations needed for equal participation:

Deaf Interpreter
Enter Your Initials:

DV
Date Signed
05/26/2021
Douglas I Vigil
Attachment A
1700
Submit Date: Feb 10, 2022
Email Address
First Name Middle Initial Last Name
Street Address
City State Postal Code
Primary Phone Alternate Phone
Employer Job Title Occupation
Application for appointment and background information for City of Stockton Boards, Commissions, and Committees
Profile
Ethnicity
Gender
What district do you live in? *
District 4
I declare under penalty of disqualification/termination that I have been a resident at the above address for years/months?
4/0
The City of Stockton uses email as the preferred method of communication regarding your application. Is this acceptable to you?
Yes No
Employer Address
Christina M Mambourg
Stockton CA
Christina M Mambourg
Attachment A
1701
Are you currently serving on a City of Stockton Board, Commission, or Committee? Yes No
Which Boards would you like to apply for?
Civil Service Commission-Equal Employment Commission Concurrent: Submitted Question applies to Central Parking District Advisory Board Do you own real property or are you an executive officer of a corporation that owns real property within the Central Parking District?
Yes No
Question applies to Central Parking District Advisory Board Specify property address(es):

N/A
Question applies to Port Commission
Do you reside within the Port District boundary or consistent with the City General Plan boundaries, plus a one-half mile strip on either side of the Stockton Ship Channel from the Port to Disappointment Slough?
Yes No
Question applies to Port Commission
If so, for how long?
4 years
Question applies to multiple boards
NOTE: This Board requires membership with one of the following groups. If none, please remove board from your application. Are you knowledgeable, have experience in, or extensive background in any of the following areas? Select all that apply. * Active in community activities significant enough to confirm knowledge of issues and individuals within the community
Possess decision-making abilities
Understanding of Ethnic/Gender Diversity
Willingness to tolerate/promote change
I have been a resident of Stockton for at least 3 years.

Yes No
Christina M Mambourg
Attachment A
1702
Question applies to San Joaquin Regional Transit District Board Have you resided within the Transit District boundaries for at least one year? Yes No
Question applies to San Joaquin Regional Transit District Board Are you a resident of the City of Stockton?
Yes No
Question applies to Strong Communities Advisory Committee,Measure W Oversight Committee Do you reside within Stockton’s geographic boundary?
Yes No
Question applies to Strong Communities Advisory Committee,Measure W Oversight Committee Are you an employee of any vendor, contractor or consultant doing business with the City of Stockton?
Yes No
Question applies to Strong Communities Advisory Committee Are you at least 18 years of age?
Yes No
Interests & Experiences
Please tell us about yourself and why you want to serve.

I am a 31 year old residing and working in the City of Stockton with my husband, Lucas, and seven year old daughter, Baylee. In May of 2020 I graduated from the University of San Francisco with a Masters in Public Administration. Since then I have continued to serve Hospice of San Joaquin to procure PPE, establish Telehealth solutions and provide more effective electronic solutions to the management and accessibility of Protected Health Information for the personnel and our patients. Though I have served this agency for nearly seven years and this work continues to be very fulfilling, my professional goal is to serve as a City Manager. To support this goal, I have been a member of the National Society Daughters of the American Revolution for six years working to promote education and patriotism in our county.

Additionally, I have served as a Commissioned Notary Public and volunteered at many of the community events attended by Hospice of San Joaquin. I am a civic minded individual hopeful to serve on a City of Stockton Board, Commission or Committee where I will obtain additional experience and expertise in the support, guidance and management of our community.

Please state the reason you would like to be a member of this board/commission.

Personally, to serve the community I live and work in. Professionally, as a third generation government leader helping to give our City a progressive edge whilst promoting and developing its efficacies and efficiencies.

Have you served on an advisory group before?
Yes No
Christina M Mambourg
Attachment A
1703
Upload a Resume
If yes, please explain.

I have served on a Board of Directors for the NSDAR as Recording Secretary, 2017-2018 How did you hear about the position?
I looked on the City of Stockton's website for opportunities.

City Council Policy 100-2 states that Commissioners are required to attend meetings on a regular basis. If appointed, will you be able to attend meetings regularly and devote the time necessary to fulfill your duties as a member?
Yes No
Do you or immediate family members have any relationship (professional, financial, other) that may present a potential conflict of interest for this advisory group? Yes No
Background Information
Based on your best judgment, does this Commission make decisions that may affect any sources of income, interests in real property, or investments of you or your spouse? Yes No
Voter Registration (Questions appear if required)
Question applies to multiple boards
I consent to the City of Stockton verifying my voter registration, if required.

Yes No
Submit Application
Please identify any specialized accommodations needed for equal participation:

None
Enter Your Initials:

CMM
Christina M Mambourg
Attachment A
1704
Date Signed
02/10/2022
Christina M Mambourg
Attachment A
1705
Submit Date: May 10, 2022
Email Address
First Name Middle Initial Last Name
Street Address
City State Postal Code
Primary Phone Alternate Phone
Application for appointment and background information for City of Stockton Boards, Commissions, and Committees
Profile
Question applies to Civil Service Commission-Equal Employment Commission Concurrent Date of Birth
Ethnicity
Gender
If selected "Other," please specify.

N/A
What district do you live in? *
District 1
I declare under penalty of disqualification/termination that I have been a resident at the above address for years/months?
9 The City of Stockton uses email as the preferred method of communication regarding your application. Is this acceptable to you?
Yes No
Nancy T Muniz
Stockton CA
Nancy T Muniz
Attachment A
1706
Employer Job Title Occupation
If you have checked “No”, please identify how you prefer to be contacted:
n/a
Employer Address
Are you currently serving on a City of Stockton Board, Commission, or Committee? Yes No
If yes, please list
n/a
Which Boards would you like to apply for?
Civil Service Commission-Equal Employment Commission Concurrent: Submitted Question applies to multiple boards
NOTE: This Board requires membership with one of the following groups. If none, please remove board from your application. Are you knowledgeable, have experience in, or extensive background in any of the following areas? Select all that apply. * Active in community activities significant enough to confirm knowledge of issues and individuals within the community
Possess decision-making abilities
Understanding of Ethnic/Gender Diversity
Understanding of the Stockton Public Art Plan processes and implications for the City of Stockton Willingness to tolerate/promote change
I have been a resident of Stockton for at least 3 years.

Yes No
Question applies to Strong Communities Advisory Committee,Measure W Oversight Committee Do you reside within Stockton’s geographic boundary?
Yes No
Nancy T Muniz
Attachment A
1707
Question applies to Strong Communities Advisory Committee,Measure W Oversight Committee Are you an employee of any vendor, contractor or consultant doing business with the City of Stockton?
Yes No
Question applies to Strong Communities Advisory Committee Are you at least 18 years of age?
Yes No
Interests & Experiences
Please tell us about yourself and why you want to serve.

My professional experience includes working with the general public population, through non-profit and community based organizations. I also have extensive experience in public service, public speaking, training and coaching teams from multiple agencies, research analysis, data reporting, and management.

I hold a deep passion for helping others along with a strong commitment to serving the needs of others in the City of Stockton along with surrounding areas in San Joaquin County and cities along the Central Valley.

Please state the reason you would like to be a member of this board/commission.

I am knowledgeable with federal and state labor requirements, policy, and procedures. I strongly promote collaborating with partnering agencies in providing services for enrichment, sufficient engagement, and efficiency in any workplace establishment. I have experience with state and federal program budgets, grants, community assessments, and project contracts, community events and survey of services. I am confident that my abilities match your need to fill this vacant commission position. I look forward to possibly join your team of impressive committed individuals.

Have you served on an advisory group before?
Yes No
If yes, please explain.

Head Start Parent Advisory Committee 2007, MHRCET Board Member How did you hear about the position?
City of Stockton immediate release
City Council Policy 100-2 states that Commissioners are required to attend meetings on a regular basis. If appointed, will you be able to attend meetings regularly and devote the time necessary to fulfill your duties as a member?
Yes No
Do you or immediate family members have any relationship (professional, financial, other) that may present a potential conflict of interest for this advisory group? Yes No
Nancy T Muniz
Attachment A
1708
Upload a Resume
If yes, please explain
n/a
Background Information
Based on your best judgment, does this Commission make decisions that may affect any sources of income, interests in real property, or investments of you or your spouse? Yes No
n/a
Voter Registration (Questions appear if required)
Question applies to multiple boards
I consent to the City of Stockton verifying my voter registration, if required.

Yes No
Submit Application
Please identify any specialized accommodations needed for equal participation:

None
Enter Your Initials:

NM
Date Signed
05/10/2022
Nancy T Muniz
Attachment A
1709
Submit Date: Feb 23, 2022
Email Address
First Name Last Name
Street Address
City State Postal Code
Primary Phone Alternate Phone
Application for appointment and background information for City of Stockton Boards, Commissions, and Committees
Profile
Ethnicity
Gender
What district do you live in? *
District 4
I declare under penalty of disqualification/termination that I have been a resident at the above address for years/months?
10 The City of Stockton uses email as the preferred method of communication regarding your application. Is this acceptable to you?
Yes No
Are you currently serving on a City of Stockton Board, Commission, or Committee? Yes No
Virtu Arora
Stockton CA
Virtu Arora
Attachment A
1710
Which Boards would you like to apply for?
Civil Service Commission-Equal Employment Commission Concurrent: Submitted Question applies to Arts Commission
NOTE: This Board requires membership with one of the following groups. If none, please remove board from your application. Outside of your profession, indicate what type of Arts you are active in? Select all that apply. *
Dance
Music
Theater
Photography
Visual Arts, including (but not limited to) the Public or Environmental Arts, Graphic Arts, Design, Drawing, Painting, Printmaking, Sculpture, Ceramics, and Art History\, Question applies to Arts Commission
Are you interested in or accomplished in fund-raising?
Yes No
Question applies to Cultural Heritage Board
NOTE: To the maximum extent possible, the Board shall have at least one (1) member from each of the following categories: *
None
Question applies to multiple boards
NOTE: This Board requires membership with one of the following groups. If none, please remove board from your application. Are you knowledgeable, have experience in, or extensive background in any of the following areas? Select all that apply. * Active in community activities significant enough to confirm knowledge of issues and individuals within the community
Activist for the Visual Environment, Public Art, or Regional/National Individual Artists' work I have been a resident of Stockton for at least 3 years.

Yes No
Interests & Experiences
Virtu Arora
Attachment A
1711
Please tell us about yourself and why you want to serve.

I have been a resident of city of Stockton for 22 years and have been involved in community service ever since. Now, with children in college, i can share the time and experience needed for a city position and give back to the society/ community I live in.

Please state the reason you would like to be a member of this board/commission.

Have you served on an advisory group before?
Yes No
How did you hear about the position?
website
City Council Policy 100-2 states that Commissioners are required to attend meetings on a regular basis. If appointed, will you be able to attend meetings regularly and devote the time necessary to fulfill your duties as a member?
Yes No
Do you or immediate family members have any relationship (professional, financial, other) that may present a potential conflict of interest for this advisory group? Yes No
Background Information
Based on your best judgment, does this Commission make decisions that may affect any sources of income, interests in real property, or investments of you or your spouse? Yes No
Voter Registration (Questions appear if required)
Question applies to multiple boards
I consent to the City of Stockton verifying my voter registration, if required.

Yes No
Submit Application
Virtu Arora
Attachment A
1712
Enter Your Initials:
va
Date Signed
2/23/2022
Virtu Arora
Attachment A
1713
Resolution No.

STOCKTON CITY COUNCIL

RESOLUTION APPOINTING ONE MEMBER TO THE STOCKTON CIVIL

SERVICE/EQUAL EMPLOYMENT COMMISSION
There is one vacancy on the Stockton Civil Service/Equal Employment Commission due to a commissioner resignation now, therefore

BE IT RESOLVED BY THE COUNCIL OF THE CITY OF STOCKTON, AS FOLLOWS:

The City Council hereby appoints to serve on the
Stockton Civil Service/Equal Employment Commission for a term commencing immediately and ending June 30, 2025
PASSED, APPROVED, and ADOPTED June 14, 2022 .

KEVIN J. LINCOLN II
Mayor of the City of Stockton
ATTEST:

ELIZA R. GARZA, CMC
City Clerk of the City of Stockton
1714
City of Stockton
Legislation Text
File #: 22-0436, Version: 1
ADOPT THE BUDGET FOR THE FISCAL YEAR 2022-23 CENTRAL STOCKTON LIGHTING

MAINTENANCE ASSESSMENT DISTRICT

RECOMMENDATION
This public hearing is to consider public comments and testimony regarding the Fiscal Year (FY) 2022-23 Central Stockton Lighting Maintenance Assessment District (District) Annual Engineer's Report, budget, and levy of assessments.

After the public hearing, if owners of more than 50 percent of the area of assessable lands within the District have not protested the proposed levy of annual maintenance assessments, it is recommended that the City Council adopt a resolution to:

1. Overrule any and all protests or objections (including all written protests not withdrawn in writing before the conclusion of the public hearing) to the proposed levy of assessments in the District in each zone.

2. Approve and adopt the District's Annual Engineer's Report for the FY 2022-23 containing the budget for each zone and confirm and levy the assessments for each zone as set forth in the Annual Engineer's Report.

3. Certify that the special assessment(s), fee(s), or charge(s) to be placed on the FY 2022-23 Secured Property Tax bill by the City of Stockton are certified to meet the requirements of Proposition 218 that added Articles XIIIC and XIIID to the California State Constitution.

4. Confirm that the assessments of the annual amount of costs and expenses for the maintenance and operation of the improvements upon the assessable lands in the District, as contained in the Annual Engineer's Report, shall be levied and collected for FY 2022-23. The assessments are in compliance with all laws pertaining to the levy of the annual assessment (State of California Streets and Highways Code Section 22500). The assessments are levied without regard to property valuation. The purpose of the assessments is to pay the costs and expenses for administration, maintenance, and operation of the Central Stockton Lighting Maintenance Assessment District, Zone 4, Oxford Manor.

It is also recommended that the City Manager be authorized to take appropriate and necessary actions to carry out the purpose and intent of this resolution.

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Summary
This public hearing is to consider public comments and testimony regarding the FY 2022-23 District's Annual Engineer's Report, budget, and levy of assessments. The Landscaping and Lighting Act of 1972 (Act), under which the District was formed, requires this public hearing and approval of the Annual Engineer's Report, budget, and levy of assessments. The FY 2022-23 Annual Engineer's Report for the District, which contains the budget, assessment amounts, and description of improvements eligible to be maintained, is on file with the City Clerk and is available for online viewing at:
2022-23_Central_Stockton_Lighting_Engineers_Report.pdf (stocktonca.gov) <http://www.stocktonca.gov/files/2022-23_Central_Stockton_Lighting_Engineers_Report.pdf> The District levies assessments to fund maintenance of specialty streetlights in the Oxford Manor area (Attachment A). All funds generated from the assessments in the Oxford Manor zone can only be used for specific work in that zone.

The assessment formula provides for an annual escalator to the maximum allowable assessment and for adjusting the actual assessment. It is recommended that the FY 2022-23 maximum assessment be increased per the formula at the regional Consumer Price Index (CPI) of 5.2 percent.

It is further recommended that the actual FY 2022-23 assessment increase by 7.12 percent over the FY 2021-22 assessment to adjust for inflation and track with the national CPI rate. This recommendation is a result of a comprehensive review and evaluation of current maintenance expenditures, long-term capital needs, and available reserves.

The recommended resolution overrules any and all protests; approves and adopts the District's Annual Engineer's Report for the FY 2022-23 containing the budget, and confirms and levies the assessments as set forth in the Annual Engineer's Report; certifies that the assessments meet the requirements of Proposition 218 that added Articles XIIIC and XIIID to the California State Constitution; confirms that the assessments are in compliance with State of California Streets and Highways Code Section 22500, that the assessments are levied without regard to property valuation, and that the assessments are to fund maintenance of streetlights in public rights-of-way; authorizes and directs the City Manager or designee to execute all documents, including, but not limited to, agreements and amendments; and authorizes the City Manager to take appropriate and necessary actions to carry out the purpose and intent of the resolution.

DISCUSSION
Background
The City operates and maintains approximately 19,000 streetlights. In most areas of the City, the cost of operating and maintaining streetlights is funded from the Measure K Fund. However, in the area of central Stockton, a special street lighting District was formed to provide enhanced lighting.

The enhanced lighting consists of more lights per block than a standard design would require and more expensive, non-standard poles and fixtures.

The District was formed in 2011 after achieving a passing vote in a voting process established by City of Stockton Page 2 of 5 Printed on 6/8/2022
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Proposition 218. This process requires all benefiting property owners to be given the opportunity to vote on the establishment of a maintenance assessment district. For an assessment district to be established, a majority of the votes cast must be in favor. The District consists of 278 non-City standard streetlights in the Oxford Manor area (Attachment A) and allows for assessments to be collected for the special benefit received as a result of the non-standard street lighting. The general benefit portion is included in the Public Works Operating budget.

The District sets annual assessments collected by the County with annual property taxes on each taxable parcel contained within the District. These annual assessments provide funding for operation, electricity, maintenance, and other administrative costs associated with the specialty lighting system, including preparing an Annual Engineer's Report and assessment roll. The Annual Engineer's Report contains the District's budget. The budget details the maintenance and administrative costs for the Oxford Manor zone.

The special benefit received by each parcel is directly proportional to the Linear Front Footage (LFF) of each parcel fronting the enhanced lighting corridor or street. Therefore, the assessment per parcel was determined by first defining a "Unit Assessment Rate" (dollars per LFF) for the Oxford Manor zone. This assessment rate was calculated by dividing the total special benefit cost in the zone by the total LFF of the zone. This Unit Assessment Rate (dollars per LFF) was then multiplied by each parcel's LFF to determine the special benefit assessment for each parcel. The actual FY 2021-22 LFF assessment rate was $0.287868. The maximum FY 2021-22 LFF assessment rate was $0.574687.

The District assessment was approved with an annual escalator. The escalator is the greater of three percent or the increase in the San Francisco-Oakland-Hayward All Urban CPI. The escalator allows the assessment, when necessary, to keep pace with inflation without having to go through the time and expense to ballot the property owners. The maximum allowable assessment annually adjusts by the CPI, while the actual assessment needed to cover a zone's expenses is determined based on the estimated expenses for the fiscal year. The annual increase in calendar year 2021 of the San Francisco-Oakland-Hayward All Urban CPI was 5.2 percent. Therefore, the maximum escalator that can be applied to the maximum allowable assessment for FY 2022-23 is 5.2 percent.

The maximum allowable assessment has been increased by the maximum allowable escalator each year since the District was formed.

On April 19, 2022, Council adopted Resolution No. 2022-04-19-1207, which preliminarily approved and confirmed the FY 2022-23 Annual Engineer's Report, the proposed actual assessments, set a public hearing for June 14, 2022, and authorized the City Clerk to publish notice of the public hearing.

The Annual Engineer's Report contains the budget, proposed assessment amounts, and a complete description of improvements eligible to be maintained. The Annual Engineer's Report is on file with the City Clerk.

Present Situation
A summary of the proposed FY 2022-23 budget for the District (Attachment B) is contained within the Annual Engineer's Report, which is on file with the City Clerk. The budgeted expenditures include energy use, bulb replacements, administration, replacement reserves, general maintenance, repainting, knockdowns, and contingency. Funding for expenditures is from assessments levied on the properties within the District and Public Works Operating budget.

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The total proposed FY 2022-23 cost of the Oxford Manor lighting is $56,276, which is an increase of $3,737.38 from FY 2021-22. The increase is attributable to anticipated increases in utility costs and costs to replace potential pole knockdowns due to vehicle collisions, and the recommendation to increase the actual FY 2022-23 assessment by 7.12 percent to adjust for inflation and track with the national CPI. Since the reserve is fully funded and growing, an appropriation from the reserve of $4,148.02 is proposed. The actual FY 2022-23 assessment rate is proposed to be $0.3080865 per LFF. The maximum assessment rate is recommended to be increased the allowed 5.20 percent to $0.604571992 per LFF.

At the end of each fiscal year, any unexpended funds are returned to the District's reserve, which can be used to fund major repairs, such as wire and/or conduit replacement, foundation replacements, or other major repair or improvement.

The District was established with the expectation that long-term refurbishment and gradual replacement of equipment would be accomplished utilizing a combination of operating and reserve funds. The reserve was reviewed and determined to be adequate. The District currently generates sufficient revenue for regular operation and has adequate reserves, so no change to the current assessment is in order.

The FY 2022-23 Annual Engineer's Report for the District, which contains the budget, assessment amounts for each property, and a description of improvements eligible to be maintained, is on file with the City Clerk. The assessments fund the special benefit of 278 non-standard streetlights within the District.

4. Confirm that the assessments of the annual amount of costs and expenses for the maintenance and operation of the improvements upon the assessable lands in the District, as contained in the Annual Engineer's Report, shall be levied and collected for FY 2022-23. The assessments are in compliance with all laws pertaining to the levy of the annual assessment (State of California Streets and Highways Code Section 22500). The assessments are levied without regard to property valuation. The purpose of the assessments is to pay the costs and City of Stockton Page 4 of 5 Printed on 6/8/2022
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expenses for administration, maintenance, and operation of the Central Stockton Lighting Maintenance Assessment District, Zone 4, Oxford Manor.

It is also recommended that the City Manager be authorized to take appropriate and necessary actions to carry out the purpose and intent of this resolution.

Public Notification
Notice of the Public Hearing was published in The Record on June 4, 2022. The notice is required to be published a minimum of 10 days prior to the public hearing.

FINANCIAL SUMMARY
Total Proposed FY 2022-23 Assessments $16,923.76
Total Proposed FY 2022-23 Appropriation from Reserves $4,148.02 TOTAL PROPOSED FY 2022-23 SPECIAL BENEFIT BUDGET $21,071.78 (FUND 270-001)
Assessments are collected to fund the special benefit costs received by the properties in the District and held in a separate fund (Fund 270-001) for this purpose. Funds for the general benefit costs will be presented to Council for consideration during the normal budget process for the FY 2022-23 and are estimated to be $35,204.22.

There is no impact to the City's General Fund or any other unrestricted fund as a result of taking the recommended actions.

Attachment A - Map of Central Stockton Lighting Maintenance Assessment District (Zone 4, Oxford Manor)
Attachment B - Proposed FY 2022-23 Budget
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ATTACHMENT A

ATTACHMENT A
1720
Dept/Division 071-6803
Activity.Elem-Obj OXFORD MANOR

OPERATION AND MAINTENANCE COSTS OXFORD MANOR LIGHTING
Painting (278 Fixtures @ $300/fixture once every 10 years) 540.20-25 $0.00 540.20-25 $14,354.08
540.20-25 $1,259.72
Cost of Energy
Wattage Voltage Count Cost/YR FY 22-23 Cost/YR FY 21-22 Total Energy 100 W 120 274 $109.08 $101.84 540.20-11 $29,887.92
150 W 120 2 $159.90 $149.28 540.20-11 $319.80
200 W 240 2 $215.82 $201.48 540.20-11 $431.64
Total Energy 540.20-11 $30,639.36
ESTIMATED OPERATION AND MAINTENANCE COSTS $46,253.16

DISTRICT ADMINISTRATION COSTS
Engineering Services 540.20-61 $2,678.00
City Administration 540.10- $1,419.34
Publicity/Advertising/Publication/Legal Notice 540.20-52 $482.04 Processing Fees/County Administration 540.20-57 $327.46 TOTAL ESTIMATED DISTRICT ADMIN. EXPENSES $4,906.84
Subtotal (Est. O&M Costs + Est. Admin. Costs) $51,160.00 Contingency; ±10% 540.40-98 $5,116.00
TOTAL ESTIMATED COST OF OXFORD MANOR LIGHTING $56,276.00 .20-25 $12,688.36
.20-25 $771.26
Wattage Voltage Number of
Lights
Cost/YR FY 22-23 Cost/YR FY 21-22 Total Energy
100 W 120 170 $109.08 $101.84 .20-11 $18,543.60
Subtotal General Benefit Value $32,003.22
Contingency; ±10% $3,201.00

TOTAL ESTIMATED GENERAL BENEFIT VALUE
$35,204.22

ESTIMATED SPECIAL BENEFIT VALUE TO OXFORD MANOR
Difference between "Oxford Manor Lighting" and "General Benefit Value" $21,071.78

APPROPRIATION FROM RESERVE FOR
CONTINUING APPROPRIATIONS $4,148.02
2022-23 TOTAL AMOUNT TO BE ASSESSED
$16,923.76
Total Oxford Manor Assessable Linear Frontage Footage (LFF) 54,931.84 $0.308086531
2022-2023 Proposed Potential per LFF Assessment $0.308086531 $0.604571992
GENERAL BENEFIT VALUE, Value determined on 170 lights if lights in the area were installed per City Standard
Central Stockton Lighting Maintenance Assessment District, Oxford Manor Area Budget
Fiscal Year 2022-2023
Knockdown Repair/Replacement; assumes 1 knockdown per year is assumed, cost represents one known down
Bulb Replacement and General Maintenance (278 lights @ 5 year bulb life @ $22.66/bulb) General Benefit of Knockdowns for Standard Fixtures (Assumes standard 30 foot galvanized pole; 1 knockdown per year)
General Benefit of bulb Replacements (Assume 170 lights at City Standard spacing @ 5 year bulb life @ $22.68/bulb)
General Benefit of Cost of Energy
(Total Est. Cost of Oxford Manor Lighting - Total Est. General Benefit - Approp. From Res.) Proposed Actual 2022-23 LFF Unit Assessment Rate (Total Amount To Be Assessed/Assessable LFF)
2022-2023 Max. Possible per LFF Assessment

ATTACHMENT B
1721
Resolution No.

STOCKTON CITY COUNCIL

RESOLUTION OVERRULING ANY AND ALL PROTESTS, ADOPTING THE ANNUAL ENGINEER'S REPORT FOR FISCAL YEAR 2022-23, APPROVING THE BUDGET FOR

EACH ZONE, CERTIFYING COMPLIANCE WITH THE REQUIREMENTS OF PROPOSITION 218 AND THE STATE OF CALIFORNIA STREETS AND HIGHWAYS

CODE, AND CONFIRMING AND LEVYING ASSESSMENTS FOR THE CENTRAL

STOCKTON LIGHTING MAINTENANCE ASSESSMENT DISTRICT
On April 19, 2022, the City Council of the City of Stockton adopted Resolution No. 2022-04-19-1207 to preliminarily approve the Annual Engineer's Report for the Fiscal Year (FY) 2022-23 (the "Annual Engineer's Report"), to provide preliminary approval of the proposed budget, and to set a public hearing for the Central Stockton Lighting Maintenance Assessment District (the "District"), pursuant to the Landscaping and Lighting Act of 1972; and
The only zone currently in the District is Zone 4, Oxford Manor, which currently comprises the entirety of the District subject to an annual assessment; and Notice of the public hearing that was held on June 14, 2022, was duly and regularly published in The Record, in the time, form, and manner required by law as evidenced by the declaration on file with the City Clerk; and
At the public hearing, the City Council afforded to every interested person an opportunity to make a protest to the Annual Engineer's Report, to the maximum annual assessment, the actual FY 2022-23 assessment, to the proposed budget, or to the proposed method and proportion of assessment, either in writing or orally, and this City Council has considered each protest, if any, and all matters and things pertaining to the Annual Engineer's Report were fully heard and considered by this Council; now, therefore,

BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF STOCKTON, AS FOLLOWS:

1. Protests or objections (including all written protests not withdrawn in writing before the conclusion of the public hearing) to the proposed levy of assessments in Zone 4, Oxford Manor, have not been made by the owners of the area of assessable lands subject to more than 50 percent of the total proposed levy of assessments within the District (Zone 4, Oxford Manor), and any and all protests or objections are overruled.

2. The Annual Engineer's Report for the District on file with the City Clerk for FY 2022-23, which includes the budget for Zone 4, Oxford Manor, is approved and 1722
adopted as the method of assessment for Zone 4, Oxford Manor, to be used to pay the costs and expenses for administration, maintenance, and operation.

3. The Council certifies that the special assessment(s), fee(s), or charge(s) as contained in the Annual Engineer's Report and to be placed on the FY 2022-23 Secured Property Tax bill by the City of Stockton are certified to meet the requirements of Proposition 218 that added Articles XIIIC and XIIID to the California State Constitution.

4. The assessments of the annual amount of costs and expenses for the maintenance and operation of the improvements upon the assessable lands in the District, as contained in the Annual Engineer's Report, are hereby approved and confirmed and shall be levied and collected for FY 2022-23. The assessments comply with all laws pertaining to the levy of the annual assessment (California Streets and Highways Code § 22500). The assessments are levied without regard to property valuation. The purpose of the assessments is to pay the costs and expenses for administration, maintenance, and operation of the Central Stockton Lighting Maintenance Assessment District, Zone 4, Oxford Manor.

5. The City Manager or designee, on behalf of the City Clerk, is hereby directed to file the assessments or a copy thereof certified by the City Clerk or other City official with the San Joaquin County Auditor and cause the assessments to be entered on the FY 2022-23 tax roll for the parcels in the District and each Zone within the District as set forth in the Annual Engineer's Report on file with the City Clerk.

6. The City Manager or designee is hereby authorized and directed to execute all documents, including, but not limited to, agreements and amendments.

7. The City Manager is hereby authorized to take whatever actions are necessary and appropriate to carry out the purpose and intent of this Resolution.

PASSED, APPROVED, and ADOPTED June 14, 2022 .

KEVIN J. LINCOLN II
Mayor of the City of Stockton
ATTEST:

ELIZA R. GARZA, CMC
City Clerk of the City of Stockton
1723

CENTRAL STOCKTON LIGHTING

MAINTENANCE ASSESSMENT

DISTRICT
FY 2022-23 Annual Engineer’s Report
Public Hearing
Public Works Department
June 14, 2022
Item No. 16.1
1724
Central Stockton Lighting Maintenance
Assessment District
 District established to fund increased costs to
maintain 278 total decorative streetlights that exceed City standard  Operation and Maintenance funded:
 Electricity Replace Broken Fixtures Replace Burned Out Bulbs Re-paint Poles Replace Damaged or Knocked Down Poles Administration 1725
Central Stockton Lighting Maintenance
Assessment District
 Each year Council adopts the following:
 Engineer’s Report Maximum Allowable Assessment Annual Budget/Actual Assessment  Provides funding for:
 Operation, maintenance, and preparation of an annual
Engineer’s Report and tax rolls; legal review; collection of assessments on San Joaquin County property taxes and City administration 1726
Maximum Allowable
vs
Actual Assessments
 Original Engineer’s Report approved by landowner
ballot – allows for annual Cost of Living Adjustment
 Approves annual maximum allowable, but collects only
what is needed for anticipated operational costs
 Allows for unanticipated emergencies – to collect only if necessary
1727

CENTRAL

STOCKTON

LIGHTING

MAINTENANCE

ASSESSMENT

DISTRICT
Oxford Manor Zone 4
1728
Annual Assessment
 Assessment based on parcel street frontage FY 2022-23 Maximum Assessment Adjustment: 5.20%  Based on San-Francisco-Oakland-Hayward All Urban
Consumers Price Index per original criteria
 FY 2022-23 Maximum Assessment $0.6045719 /Frontage
Foot
 FY 2022-23 Actual Assessment Adjustment: 7.12% FY 2022-23 Actual Assessment: $0.3080865/Frontage Foot Actual Assessment for typical 50 Foot Lot: $15.40 1729
FY 2022-23 Budget
Zone
No. Zone Name
Proposed Unit
Assessment
Rate
(per Linear
Frontage Foot)
Proposed
Budget
(Actual
Assessment)
4 Oxford Manor $0.3080865 $16,923.76
Proposed
Maximum
Allowable
Assessment
$33,210.25
1730
Recommended Actions
 Overrule all public hearing protests Approve and adopt:
 Central Stockton Lighting Maintenance Assessment District Annual Engineer’s Report
 Maximum Allowable Assessment  Annual Budget/Actual Assessment for each Zone of the District
 Confirm and levy assessment for each Zone
1731
City of Stockton
Legislation Text
File #: 22-0437, Version: 1
ADOPT THE BUDGET FOR THE FISCAL YEAR 2022-23 STOCKTON CONSOLIDATED LANDSCAPE MAINTENANCE ASSESSMENT DISTRICT NO. 96-2

RECOMMENDATION
This public hearing is to consider public comments and testimony regarding the Fiscal Year (FY) 2022-23 Stockton Consolidated Landscape Maintenance Assessment District No. 96-2 (Consolidated Landscape District) Annual Engineer's Report, budget, and levy of assessments.

After the public hearing, if owners of more than 50 percent of the area of assessable lands within the Consolidated Landscape District have not protested the proposed levy of annual maintenance assessments, it is recommended that the City Council adopt a resolution to:

2. Approve and adopt the Consolidated Landscape District's Annual Engineer's Report for the FY 2022-23 containing the budget for each zone and confirm and levy the assessments for each zone as set forth in the Annual Engineer's Report.

4. Confirm that the assessments of the annual amount of costs and expenses for the maintenance and operation of the improvements upon the assessable lands in the Consolidated Landscape District, as contained in the Annual Engineer's Report, shall be levied and collected for FY 2022-23. The assessments are in compliance with all laws pertaining to the levy of the annual assessment (State of California Streets and Highways Code Section 22500). The assessments are levied without regard to property valuation. The purpose of the assessments is to pay the costs and expenses for maintenance and operation of public parks and landscape improvements in public rights-of-way and public open spaces.

5. Authorize the City Manager or designee, on behalf of the City Clerk, to file the assessments or a copy thereof certified by the City Clerk with the San Joaquin County Auditor and cause the assessments to be entered on the 2022-23 tax roll for the parcels in the Consolidated Landscape District and each zone within the Consolidated Landscape District as set forth in the Annual Engineer's Report on file with the City Clerk.

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It is also recommended that the City Manager be authorized to take appropriate and necessary actions to carry out the purpose and intent of this resolution.

Summary
This public hearing is to consider public comments and testimony regarding the FY 2022-23 Consolidated Landscape District's Annual Engineer's Report, budget, and levy of assessments. The Landscaping and Lighting Act of 1972 (Act), under which the Consolidated Landscape District was formed, requires this public hearing and approval of the Annual Engineer's Report, budget, and levy of assessments. The FY 2022-23 Annual Engineer's Report for the Consolidated Landscape District, which contains the budget, assessment amounts, and description of improvements eligible to be maintained, is on file with the City Clerk and is available for online viewing at:
<http://www.stocktonca.gov/files/Consolidated_Landscape_Maintenance_Assessment_District_No- _96-2_Annual_Engineers_Reort_FY22-232022-2.pdf>
The Consolidated Landscape District levies assessments to fund maintenance of public parks, landscape improvements, and streetlights in public rights-of-way and public open spaces in 27 zones across the City. All funds generated from the assessments for each zone can only be used for specific work in that zone.

The assessments for seven zones of the Consolidated Landscape District are fixed and cannot be increased without approval by a majority of the property owners. For FY 2022-23, it is required and recommended the actual assessment, which is at the maximum, remain the same as FY 2021-22 for the seven zones with fixed assessments.

The assessment formula for the remaining 20 zones where assessments are levied provides an annual escalator to the maximum allowable assessment and adjusts the actual assessment. It is recommended that the FY 2022-23 maximum assessment be increased per the formula. It is further recommended that the actual FY 2022-23 assessment increase by a similar escalator over the FY 2021-22 assessment in all 20 zones. This recommendation is a result of a comprehensive review and evaluation of current maintenance expenditures, long-term capital needs, available reserves, and rapid inflation.

The recommended resolution overrules any and all protests; approves and adopts the Consolidated Landscape District's Annual Engineer's Report for the FY 2022-23 containing the budget for each zone; confirms and levies the assessments for each zone as set forth in the Annual Engineer's Report; certifies that the assessments meet the requirements of Proposition 218 that added Articles XIIIC and XIIID to the California State Constitution; confirms that the assessments are in compliance with State of California Streets and Highways Code Section 22500, that the assessments are levied without regard to property valuation, and that the assessments are to fund maintenance of public parks, landscape improvements, and streetlights in public rights-of-way and public open spaces; authorizes and directs the City Manager or designee to execute all documents, including, but not limited to, agreements and amendments; and authorizes the City Manager to take appropriate and necessary actions to carry out the purpose and intent of the resolution.

All costs are funded by assessments levied on the properties in the zones of the Consolidated Landscape District.

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DISCUSSION
Background
On February 26, 1996, Council adopted Resolution No. 96-0084 that consolidated the eight Landscape Maintenance Districts that existed at that time into a single Consolidated Landscape District. The City used the provisions of the Act to establish the original individual districts and the Consolidated Landscape District. The Act contains provisions for the City to form an assessment district, or annex territory to an existing district, for the maintenance and operation of improvements that impart a special benefit to an area. Though the title of the Act references landscaping and lighting, a district can be formed to maintain a variety of improvements. These improvements include but are not limited to landscaping, fountains, ornamental structures, public lighting (such as streetlights and traffic signals), walls, irrigation, parks, and park equipment. The Consolidated Landscape District provides for the maintenance of these types of improvements in certain subdivisions throughout the City.

The Consolidated Landscape District sets annual assessments, collected by the County with annual property taxes, on each taxable parcel contained within the Consolidated Landscape District. These annual assessments provide funding for maintenance of the improvements, parks, inspection, repair and replacement of improvements, and other associated administrative costs, including preparing an Annual Engineer's Report and assessment roll. The Annual Engineer's Report contains the Consolidated Landscape District's budget. The budget details the maintenance and administrative costs for all affected zones. The property owners are responsible to fund only those improvements within their zone.

The assessments are apportioned in a manner to distribute the amounts among all assessable parcels in proportion to the special benefit conferred on each parcel. Each year all properties are evaluated to determine if they meet the criteria to be assessed. A dwelling unit equivalent factor (dueF) is assigned to each parcel if they are to be assessed. The dueF is based on the parcel's use.

A single-family residential lot is equivalent to one dueF. The dueF for other classifications of properties, such as multi-family or commercial, is determined by the Allocation of Costs and Method of Assessment Spread contained in the Annual Engineer's Report.

There are 34 zones in the Consolidated Landscape District. During the FY 2021-22, no new zones were formed, and no new territory was annexed to any of the existing zones. Assessments are levied in 27 zones (Attachment A). Assessments are not levied in the remaining seven zones as there are no improvements to maintain.

Of the 27 zones where assessments are levied, seven of the zones (A-1 Weber/Sperry, A-2 Morada West, B-1 Long Park, B-2 Weston Ranch, B-3 Weston Park, C-1 Spanos East, and D-1 Bridgeport Trails) do not have a provision for an annual increase to the assessment. The assessment in these districts is at the same level as when the zones were originally formed in the early 1990's. Any increase in the annual assessment would have to be approved by a majority of the affected property owners. Consequently, not all of the current assessments collected are used for services. A portion of the current assessment collected is reserved to be able to afford future cost increases resulting from inflation.

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Assessments in the remaining 20 zones were approved with an annual escalator. The escalator is the greater of three percent or the increase in the San Francisco-Oakland-Hayward All Urban Consumers Price Index (CPI). The escalator allows the assessment, when necessary, to keep pace with inflation without having to go through the time and expense to ballot the property owners. The maximum allowable assessment annually adjusts by the CPI, while the actual assessment needed to cover a zone's expenses is determined based on the estimated expenses for the fiscal year. The annual increase in calendar year 2021 of the San Francisco-Oakland-Hayward All Urban CPI was 5.2 percent. Therefore, the maximum escalator that can be applied to the maximum allowable assessment for FY 2022-23 is 5.2 percent.

On April 19, 2022, Council adopted Resolution No. 2022-04-19-1208, which preliminarily approved and confirmed the FY 2022-23 Annual Engineer's Report, the proposed actual assessments, set a public hearing for June 14, 2022, and authorized the City Clerk to publish notice of the public hearing.

Present Situation
Attachment B is a summary of the proposed FY 2022-23 budget for the Consolidated Landscape District. It includes the proposed per dueF/single-family dwelling assessment for each zone where an assessment is proposed to be levied. The budgeted expenditures include contracted maintenance, utilities, administration, repair and replacement of plant material and infrastructure, allocation to the replacement reserve, and a contingency. The budgeted revenues are from assessments of the property owners. For the zones that have a provision for an annual escalator, it is proposed that the maximum allowable assessment be increased by 5.2 percent, which follows the local region CPI data, and the actual assessment be increased by 7.12 percent, which follows the national CPI data.

The overall budget for FY 2022-23 is based on current expenditure projections and is approximately $5.463 million. This increase of approximately $400,000 from the FY 2021-22 budget is primarily attributable to an increase of several hundred single-family dwelling units from new home construction in the Westlake Villages development in northwest Stockton. The anticipated cost increases across all budget line items are due to rapid inflation.

For FY 2022-23, it is recommended the assessment remain the same for the seven zones with fixed assessments. For the 20 zones where the assessment formula provides for an escalator, it is recommended that the maximum assessment be increased per the formula from the previous fiscal year. It is further recommended that the actual FY 2022-23 assessment increase by the same 7.12 percent in the 20 zones that allow for an annual adjustment. This recommendation is a result of a comprehensive review and evaluation of current maintenance expenditures, long-term capital needs, the Reserve for Continuing Appropriations fund balances, and rapid inflation.

The reserve funds have accumulated over a number of years to fund eventual replacement of improvements such as turf, trees, shrubs, irrigation system components, masonry block and pre-cast concrete back-up walls, and park improvements such as park play equipment, picnic structures, and bathroom buildings when those improvements reach the end of their service life. In zones where City of Stockton Page 4 of 8 Printed on 6/8/2022
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street lighting is an improvement whose maintenance is funded, the annual assessment is set at a rate to fund re-lamping and knock-down repairs/replacement as needed.

The comprehensive review and evaluation were completed by staff, following the completion of a capital needs analysis by Siegfried Engineering, Inc. This combined effort analyzed current maintenance tasks, long-term capital replacement needs, and reserve fund balance for each zone.

The analysis identified additional maintenance/service tasks that should be performed, quantified service life, and replacement estimates for the various improvements eligible to be funded by the Consolidated Landscape District. It is recommended the reserve amount be set aside each year.

The recommended reserve set aside is based on the current amount that is in reserve, the appropriate reserve balance for each zone (this number changes as the zone ages), and the recommended adjustment to each zone's assessment to reach those levels (Attachment C).

Zones with Fixed Assessments
Zones A-1, A-2, B-1, B-2, B-3, C-1, and D-1 do not have a provision for an annual increase to the maximum allowable assessment. Any increase in the annual assessment in these zones would have to be approved by a majority of the affected property owners. In these seven zones, there is a request for an appropriation from the reserve to balance each zone's budget. Each zone's budget anticipates contracted costs such as routine scheduled maintenance service and utilities and includes eventual but unscheduled expenditures such as wall repairs. If the eventual but unscheduled expenditure were not budgeted, a mid-year appropriation requiring City Council action would have to be processed. To avoid a mid-year appropriation, funds for this type of eventual but unscheduled expenditure are budgeted. If the funds are not used, they are returned to the zone at the end of the fiscal year and are available for the next year. An appropriation from the reserve is the only way to balance the budget and efficiently provide for these types of eventual but unscheduled expenditures. Ultimately, given increases in costs in future years, the reserves in each of the seven zones will be depleted. The zones will become unable to fund maintenance at the level currently provided. Current projections are that the reserves in Zones B-1, B-2, B3, and D-1 will be adequate to continue the current service levels for the next five years.

Reserves in Zones A-1, A-2, and C-1 are insufficient to continue appropriating funds at prior-year levels without the zones falling into insolvency within the next two years. It is recommended that these three zones cease funding wall repairs. All walls are a development requirement and are constructed on private property. Stockton Municipal Code Section 8.36.040.D obligates the property owner to repair any wall constructed as a condition of development.

The following actions are further recommended:
· Zone A-1 - Reduce the frequency of landscape maintenance services and irrigation. Water for irrigating the East Bay Municipal Utilities District property between Lorraine Avenue and West Lane is approximately 22 percent of the total proposed Zone A-1 Budget. · Zone C-1 - Fund the proportionate share of Baxter Park maintenance costs, estimated at $22,500, from the General Fund, or consider reduction in maintenance services. When Zone C-1 was originally formed, the budget was set based on maintaining only the street landscaping installed with the development. Baxter Park's maintenance cost was added to City of Stockton Page 5 of 8 Printed on 6/8/2022
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Zone C-1 in 1997 without an increase in the existing assessment. Annually increasing park maintenance costs are taking a larger percentage of the budget and requiring an everincreasing appropriation from the reserve. If appropriations continue at past year's magnitude, Zone C-1 will be insolvent in three years.

The table below shows the FY 2021-22 actual assessment, the recommended FY 2022-23 actual assessment, and what the per dueF assessment would be for budgeted expenditures. The 'Cost per dueF for Budgeted Expenditures' does not include an amount to capitalize a replacement reserve or fund replacement of larger expense items such as extensive landscape rehabilitation or booster pump replacement.

Zone FY 2021-22 FY 2022-23 Cost per dueF for
Actual (Fixed) Actual (Fixed) Budgeted Expenditures
A-1 $46.90 $46.90 $86.84
A-2 $79.88 $79.88 $84.58
B-1 $84.00 $84.00 $143.80
B-2 $117.82 $117.82 $211.01
B-3 $24.00 $24.00 $25.55
C-1 $119.24 $119.24 $141.35
D-1 $85.00 $85.00 $162.45
Zones with an Annual Escalator
It is recommended that the actual FY 2022-23 assessment increase by 7.12 percent in the 20 zones that allow for an annual adjustment. This recommendation is a result of a comprehensive review and evaluation of current maintenance expenditures, long-term capital needs, the Reserve for Continuing Appropriations fund balances, and rapid inflation. The recommended budget includes an appropriation from the reserves to fully fund each zone's operating budget. The table below shows the FY 2021-22 actual assessment, the recommended FY 2022-23 actual assessment, and the FY 2022-23 maximum assessment. The percentage increase in the actual assessment is not a uniform

7.12 percent due to rounding and truncating required to obtain an assessment divisible by two. The maximum assessment is set at a 5.2 percent increase as mandated by the original engineer’s report.

Zone FY 2021-22 FY 2022-23 Dollar Percentage FY 2022-23 Actual Actual Difference Difference Maximum
A-3 $253.00 $271.00 $18.00 7.11% $297.12
A-4 $171.40 $183.60 $12.20 7.12% $290.37
A-5 $550.00 $589.16 $39.16 7.12% $1,611.00
A-6 $293.80 $314.72 $20.92 7.12% $692.50
A-7 $99.80 $106.90 $7.10 7.12% $847.52
A-10 $154.50 $165.50 $11.00 7.12% $451.94
B-4 $97.00 $103.88 $6.88 7.09% $107.25
B-5 $75.60 $80.94 $5.34 7.06% $203.25
C-2 $250.00 $260.92 $10.92 7.07% $271.06
C-3 $142.00 $152.10 $10.10 7.11% $233.42
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C-4 $78.40 $83.98 $5.58 7.12% $309.06
C-6 $92.00 $98.52 $6.52 7.09% $215.09
C-7/7A $334.20 $358.00 $23.80 7.12% $505.26
D-3 $215.00 $230.04 $15.04 7.00% $282.33
D-4 $114.80 $122.96 $8.16 7.11% $1,344.90
D-6 $11.78 $12.60 $0.82 6.96% $549.43
E-1 $197.20 $211.22 $14.02 7.11% $277.00
E-3 $375.00 $401.68 $26.68 7.11% $921.79
E-4 $11.60 $12.40 $0.80 6.90% $327.28
E-5 $120.00 $128.52 $8.52 7.10% $567.91
The FY 2022-23 Annual Engineer's Report for the Consolidated Landscape District, which contains the budget, assessment amounts, and a description of improvements eligible to be maintained, is on file with the City Clerk. The assessments fund maintenance of over four million square feet of street landscaping, 68 acres of open space, 42 miles of back-up walls, 10.5 miles of bicycle/pedestrian paths, and 12 parks totaling over 114 acres. A brief summary of the improvements eligible to be maintained by each zone and the proposed actual assessment and proposed maximum assessment per dueF for each zone is contained in Attachment C.

5. Authorize the City Manager or designee, on behalf of the City Clerk, to file the assessments or a copy thereof certified by the City Clerk with the San Joaquin County Auditor and cause the assessments to be entered on the 2022-23 tax roll for the parcels in the Consolidated City of Stockton Page 7 of 8 Printed on 6/8/2022
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Landscape District and each zone within the Consolidated Landscape District as set forth in the Annual Engineer's Report on file with the City Clerk.

It is also recommended that the City Manager be authorized to take appropriate and necessary actions to carry out the purpose and intent of this resolution.

Financial Health of Zones
Later this year staff will prepare a workplan to address zone shortfalls with deliberate rate escalators to provide gain in fund reserves over the next five years. As noted previously, several zones, either with fixed assessments or annual escalators, are on track for becoming insolvent. In some cases, special benefits are no longer being provided, and fund reserves have sustained their respective operation. To implement this future workplan, the City will need to seek approval through the constitutional mandates of the Proposition 218 election process.

Public Notification
Notice of the Public Hearing was published in The Record on June 4, 2022. The notice is required to be published a minimum of 10 days prior to the public hearing.

FINANCIAL SUMMARY
Total Proposed FY 2022-23 Assessments $4,028,634
Total Proposed FY 2022-23 Appropriation from Reserves $1,434,741 TOTAL PROPOSED FY 2022-23 BUDGET $5,463,375
TOTAL CURRENT FY 2021-22 BUDGET $5,063,696
INCREASE/(DECREASE) $ 399,679
The requested appropriation from the reserves will leave an estimated $14,431,241.56 in total reserve funds available for future programming. The reserve analysis recommends that there should be a total of $20,049,350.69 in reserve. Additional details for all zones are included in Attachment C.

There may be a cost shortfall of $22,500 to the City's General Fund as a result of taking the recommended actions. This cost may be budgeted in the Parks Operating fund (4540-700-630006) through the annual budgeting process; otherwise, maintenance services at Baxter Park may be reduced accordingly. Otherwise, the City makes no financial contribution to the Consolidated Landscape District. All fees, costs, and expenses, including staff costs, are paid from the proceeds of the annual assessments to be levied.

Attachment A - Vicinity Map
Attachment B - Proposed FY 2022-23 Budget
Attachment C - Summary of Zones
City of Stockton Page 8 of 8 Printed on 6/8/2022
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STOCKTON CONSOLIDATED LANDSCAPE
MAINTENANCE ASSESSMENT DISTRICT NO. 96-2

ATTACHMENT A
1740
Dept./Division 072-6907
Fiscal Year 2022-2023
Total Estimated
Expenditure
Activity. Elem-obj WEBER
SPERRY
A-1

MAINTENANCE, REPAIRS AND UTILITIES
Landscape and Open Spaces
Contracted Scheduled Landscape and Open Spaces Services Subtotal .20-25 Contracted Scheduled Services $789,336.52 590.20-25 50,695.00 Incidental Services -
Subtotal Incidental Services $329,671.00 590.20-25 3,430.00 TOTAL .20-25 LANDSCAPE & OPEN SPACES SERVICES $1,119,007.52 590.20-25 54,125.00 Landscape and Open Spaces Utilities -
TOTAL LANDSCAPE AND OPEN SPACES UTILITIES $786,733.00 26,566.00 TOTAL ESTIMATED LANDSCAPE AND OPEN SPACES EXPENSES $1,905,740.52 80,691.00 Walls/Signs/Bridge Railings -
TOTAL ESTIMATED WALL/SIGN/BRIDGE RAIL EXPENSES $460,836.00 - GRAFFITI ABATEMENT, performed by Neighborhood Services $66,689.00 590.20-67 2,143.00 Parks -
Contracted Scheduled Park Services -
Subtotal .20-25 Contracted Scheduled Park Services $369,137.00 - Incidental Parks Services -
Subtotal Incidental Services $257,395.00 590.20-25 -
TOTAL .20-25 PARKS SERVICES $626,532.00 590.20-25 -
Parks Utilities -
TOTAL PARKS UTILITIES $513,254.00 -
Graffiti Abatement in Parks - By PW Staff $25,432.00 590.10- - TOTAL ESTIMATED PARKS EXPENSES $1,165,218.00 -
Materials and Supplies -
TOTAL ESTIMATED MATERIALS AND SUPPLIES $44,639.00 590.30-50 674.00 Street Lights -
TOTAL STREET LIGHT MAINTENANCE & REPAIRS $138,301.00 -
Street Light Utilities -
TOTAL STREET LIGHTS UTILITIES $58,438.00 -
TOTAL ESTIMATED STREET LIGHTS EXPENSES $196,739.00 -
SUBTOTAL ESTIMATED EXPENSES $3,839,861.52 83,508.00
CONTINGENCY; Varies 0 to 10±% of Subtotal Estimated Expenses $360,846.00 590.40-98 4,176.00 SPECIAL DIST./STORM BASIN MAINT. DIST. $7,726.00 640.90-74 - TOTAL ESTIMATED MAINT/UTIL/REPAIR EXPENSES $4,208,433.52 87,684.00

REPLACEMENT RESERVE -
Replacement Reserve: L/S, Walls, Lights $81,422.00 590.20-25 - Replacement Reserve: Park $78,850.00 590.20-25 -
TOTAL REPLACEMENT RESERVE $160,272.00 590.20-25 -

DISTRICT ADMINISTRATION -
Subtotal District Administration Expenses $1,001,984.00 26,024.00 CONTINGENCY: Varies 0 to 10±% of Subtotal Admin. Expenses $92,685.62 590.40-98 1,302.00 TOTAL ESTIMATED DISTRICT ADMIN. EXPENSES $1,094,669.62 27,326.00

TOTAL ESTIMATED REVENUE REQUIRED
2022-23 FISCAL YEAR $5,463,375.14 115,010.00

TOTAL APPROPRIATION FROM RESERVE
FOR CONTINUING APPROPRIATIONS $1,434,740.68 52,892.82

TOTAL ESTIMATED ASSESSMENT
2022-2023 FISCAL YEAR $4,028,634.46 62,117.18
2022-2023 Proposed Potential per dueF Assessment $46.90 2022-2023 Max. Possible per dueF Assessment $46.90
Difference in Potential per dueF Assessment (FY2021-22 to FY2022-23) $0.00 Stockton Consolidated Landscape Maintenance Assessment District 96-2 Budget 1 ATTACHMENT B
1741
Dept./Division
Fiscal Year 2022-2023
Total Estimated
Expenditure
Activity. Elem-obj

MAINTENANCE, REPAIRS AND UTILITIES
Landscape and Open Spaces
Contracted Scheduled Landscape and Open Spaces Services Subtotal .20-25 Contracted Scheduled Services $789,336.52 590.20-25 Incidental Services
Subtotal Incidental Services $329,671.00 590.20-25
TOTAL .20-25 LANDSCAPE & OPEN SPACES SERVICES $1,119,007.52 590.20-25 Landscape and Open Spaces Utilities
TOTAL LANDSCAPE AND OPEN SPACES UTILITIES $786,733.00
TOTAL ESTIMATED LANDSCAPE AND OPEN SPACES EXPENSES $1,905,740.52 Walls/Signs/Bridge Railings
TOTAL ESTIMATED WALL/SIGN/BRIDGE RAIL EXPENSES $460,836.00 GRAFFITI ABATEMENT, performed by Neighborhood Services $66,689.00 590.20-67 Parks
Contracted Scheduled Park Services
Subtotal .20-25 Contracted Scheduled Park Services $369,137.00 Incidental Parks Services
Subtotal Incidental Services $257,395.00 590.20-25
TOTAL .20-25 PARKS SERVICES $626,532.00 590.20-25
Parks Utilities
TOTAL PARKS UTILITIES $513,254.00
Graffiti Abatement in Parks - By PW Staff $25,432.00 590.10- TOTAL ESTIMATED PARKS EXPENSES $1,165,218.00
Materials and Supplies
TOTAL ESTIMATED MATERIALS AND SUPPLIES $44,639.00 590.30-50 Street Lights
TOTAL STREET LIGHT MAINTENANCE & REPAIRS $138,301.00
Street Light Utilities
TOTAL STREET LIGHTS UTILITIES $58,438.00
TOTAL ESTIMATED STREET LIGHTS EXPENSES $196,739.00
SUBTOTAL ESTIMATED EXPENSES $3,839,861.52
CONTINGENCY; Varies 0 to 10±% of Subtotal Estimated Expenses $360,846.00 590.40-98 SPECIAL DIST./STORM BASIN MAINT. DIST. $7,726.00 640.90-74 TOTAL ESTIMATED MAINT/UTIL/REPAIR EXPENSES $4,208,433.52

REPLACEMENT RESERVE
Replacement Reserve: L/S, Walls, Lights $81,422.00 590.20-25 Replacement Reserve: Park $78,850.00 590.20-25
TOTAL REPLACEMENT RESERVE $160,272.00 590.20-25

DISTRICT ADMINISTRATION
Subtotal District Administration Expenses $1,001,984.00 CONTINGENCY: Varies 0 to 10±% of Subtotal Admin. Expenses $92,685.62 590.40-98 TOTAL ESTIMATED DISTRICT ADMIN. EXPENSES $1,094,669.62

TOTAL ESTIMATED REVENUE REQUIRED
2022-23 FISCAL YEAR $5,463,375.14

TOTAL APPROPRIATION FROM RESERVE
FOR CONTINUING APPROPRIATIONS $1,434,740.68

TOTAL ESTIMATED ASSESSMENT
2022-2023 FISCAL YEAR $4,028,634.46
2022-2023 Proposed Potential per dueF Assessment
2022-2023 Max. Possible per dueF Assessment
Difference in Potential per dueF Assessment (FY2021-22 to FY2022-23) Stockton Consolidated Landscape Maintenance Assessment District 96-2 Budget 072-6913
MORADA
WEST
A-2
2,197.00
-
108.00
2,305.00
-
804.00
3,109.00
-
-
268.00
-
-
-
-
- -
-
-
-
-
-
116.00
-
-
-
-
-
3,493.00
350.00
-
3,843.00
-
-
-
-
-
3,580.00
358.00
3,938.00
7,781.00
432.04
7,348.96
$79.88
$79.88
$0.00 1

ATTACHMENT B
1742
Dept./Division
Fiscal Year 2022-2023
Total Estimated
Expenditure
Activity. Elem-obj

MAINTENANCE, REPAIRS AND UTILITIES
Landscape and Open Spaces
Contracted Scheduled Landscape and Open Spaces Services Subtotal .20-25 Contracted Scheduled Services $789,336.52 590.20-25 Incidental Services
Subtotal Incidental Services $329,671.00 590.20-25
TOTAL .20-25 LANDSCAPE & OPEN SPACES SERVICES $1,119,007.52 590.20-25 Landscape and Open Spaces Utilities
TOTAL LANDSCAPE AND OPEN SPACES UTILITIES $786,733.00
TOTAL ESTIMATED LANDSCAPE AND OPEN SPACES EXPENSES $1,905,740.52 Walls/Signs/Bridge Railings
TOTAL ESTIMATED WALL/SIGN/BRIDGE RAIL EXPENSES $460,836.00 GRAFFITI ABATEMENT, performed by Neighborhood Services $66,689.00 590.20-67 Parks
Contracted Scheduled Park Services
Subtotal .20-25 Contracted Scheduled Park Services $369,137.00 Incidental Parks Services
Subtotal Incidental Services $257,395.00 590.20-25
TOTAL .20-25 PARKS SERVICES $626,532.00 590.20-25
Parks Utilities
TOTAL PARKS UTILITIES $513,254.00
Graffiti Abatement in Parks - By PW Staff $25,432.00 590.10- TOTAL ESTIMATED PARKS EXPENSES $1,165,218.00
Materials and Supplies
TOTAL ESTIMATED MATERIALS AND SUPPLIES $44,639.00 590.30-50 Street Lights
TOTAL STREET LIGHT MAINTENANCE & REPAIRS $138,301.00
Street Light Utilities
TOTAL STREET LIGHTS UTILITIES $58,438.00
TOTAL ESTIMATED STREET LIGHTS EXPENSES $196,739.00
SUBTOTAL ESTIMATED EXPENSES $3,839,861.52
CONTINGENCY; Varies 0 to 10±% of Subtotal Estimated Expenses $360,846.00 590.40-98 SPECIAL DIST./STORM BASIN MAINT. DIST. $7,726.00 640.90-74 TOTAL ESTIMATED MAINT/UTIL/REPAIR EXPENSES $4,208,433.52

REPLACEMENT RESERVE
Replacement Reserve: L/S, Walls, Lights $81,422.00 590.20-25 Replacement Reserve: Park $78,850.00 590.20-25
TOTAL REPLACEMENT RESERVE $160,272.00 590.20-25

TOTAL ESTIMATED REVENUE REQUIRED
2022-23 FISCAL YEAR $5,463,375.14

TOTAL APPROPRIATION FROM RESERVE
FOR CONTINUING APPROPRIATIONS $1,434,740.68

LA MORADA
A-3
200,637.00
-
63,907.00
264,544.00
-
131,758.00
396,302.00
-
70,700.00
5,356.00
-
-
47,403.00
-
36,323.00
83,726.00
-
40,627.00
2,515.00
126,868.00
-
7,794.00
-
-
-
-
-
607,020.00
60,702.00
-
667,722.00
-
73,496.00
27,412.00
100,907.00
-
144,301.00
12,556.68
156,857.68
925,486.68
925,486.68
$271.00
$297.12
$18.00 1

ATTACHMENT B
1743
Dept./Division
Fiscal Year 2022-2023
Total Estimated
Expenditure
Activity. Elem-obj

MAINTENANCE, REPAIRS AND UTILITIES
Landscape and Open Spaces
Contracted Scheduled Landscape and Open Spaces Services Subtotal .20-25 Contracted Scheduled Services $789,336.52 590.20-25 Incidental Services
Subtotal Incidental Services $329,671.00 590.20-25
TOTAL .20-25 LANDSCAPE & OPEN SPACES SERVICES $1,119,007.52 590.20-25 Landscape and Open Spaces Utilities
TOTAL LANDSCAPE AND OPEN SPACES UTILITIES $786,733.00
TOTAL ESTIMATED LANDSCAPE AND OPEN SPACES EXPENSES $1,905,740.52 Walls/Signs/Bridge Railings
TOTAL ESTIMATED WALL/SIGN/BRIDGE RAIL EXPENSES $460,836.00 GRAFFITI ABATEMENT, performed by Neighborhood Services $66,689.00 590.20-67 Parks
Contracted Scheduled Park Services
Subtotal .20-25 Contracted Scheduled Park Services $369,137.00 Incidental Parks Services
Subtotal Incidental Services $257,395.00 590.20-25
TOTAL .20-25 PARKS SERVICES $626,532.00 590.20-25
Parks Utilities
TOTAL PARKS UTILITIES $513,254.00
Graffiti Abatement in Parks - By PW Staff $25,432.00 590.10- TOTAL ESTIMATED PARKS EXPENSES $1,165,218.00
Materials and Supplies
TOTAL ESTIMATED MATERIALS AND SUPPLIES $44,639.00 590.30-50 Street Lights
TOTAL STREET LIGHT MAINTENANCE & REPAIRS $138,301.00
Street Light Utilities
TOTAL STREET LIGHTS UTILITIES $58,438.00
TOTAL ESTIMATED STREET LIGHTS EXPENSES $196,739.00
SUBTOTAL ESTIMATED EXPENSES $3,839,861.52
CONTINGENCY; Varies 0 to 10±% of Subtotal Estimated Expenses $360,846.00 590.40-98 SPECIAL DIST./STORM BASIN MAINT. DIST. $7,726.00 640.90-74 TOTAL ESTIMATED MAINT/UTIL/REPAIR EXPENSES $4,208,433.52

REPLACEMENT RESERVE
Replacement Reserve: L/S, Walls, Lights $81,422.00 590.20-25 Replacement Reserve: Park $78,850.00 590.20-25
TOTAL REPLACEMENT RESERVE $160,272.00 590.20-25

TOTAL ESTIMATED REVENUE REQUIRED
2022-23 FISCAL YEAR $5,463,375.14

TOTAL APPROPRIATION FROM RESERVE
FOR CONTINUING APPROPRIATIONS $1,434,740.68

BLOSSOM
RANCH
A-4
5,679.00
-
5,516.00
11,195.00
-
9,320.00
20,515.00
-
21,424.00
536.00
-
-
7,201.00
-
3,917.00
11,118.00
-
10,768.00
418.00
22,304.00
-
1,059.00
-
-
-
-
-
65,838.00
5,926.00
-
71,764.00
-
-
-
-
-
18,532.00
1,668.00
20,200.00
91,964.00
24,950.00
67,014.00
$183.60
$290.37
$12.20 1

ATTACHMENT B
1744
Dept./Division
Fiscal Year 2022-2023
Total Estimated
Expenditure
Activity. Elem-obj

MAINTENANCE, REPAIRS AND UTILITIES
Landscape and Open Spaces
Contracted Scheduled Landscape and Open Spaces Services Subtotal .20-25 Contracted Scheduled Services $789,336.52 590.20-25 Incidental Services
Subtotal Incidental Services $329,671.00 590.20-25
TOTAL .20-25 LANDSCAPE & OPEN SPACES SERVICES $1,119,007.52 590.20-25 Landscape and Open Spaces Utilities
TOTAL LANDSCAPE AND OPEN SPACES UTILITIES $786,733.00
TOTAL ESTIMATED LANDSCAPE AND OPEN SPACES EXPENSES $1,905,740.52 Walls/Signs/Bridge Railings
TOTAL ESTIMATED WALL/SIGN/BRIDGE RAIL EXPENSES $460,836.00 GRAFFITI ABATEMENT, performed by Neighborhood Services $66,689.00 590.20-67 Parks
Contracted Scheduled Park Services
Subtotal .20-25 Contracted Scheduled Park Services $369,137.00 Incidental Parks Services
Subtotal Incidental Services $257,395.00 590.20-25
TOTAL .20-25 PARKS SERVICES $626,532.00 590.20-25
Parks Utilities
TOTAL PARKS UTILITIES $513,254.00
Graffiti Abatement in Parks - By PW Staff $25,432.00 590.10- TOTAL ESTIMATED PARKS EXPENSES $1,165,218.00
Materials and Supplies
TOTAL ESTIMATED MATERIALS AND SUPPLIES $44,639.00 590.30-50 Street Lights
TOTAL STREET LIGHT MAINTENANCE & REPAIRS $138,301.00
Street Light Utilities
TOTAL STREET LIGHTS UTILITIES $58,438.00
TOTAL ESTIMATED STREET LIGHTS EXPENSES $196,739.00
SUBTOTAL ESTIMATED EXPENSES $3,839,861.52
CONTINGENCY; Varies 0 to 10±% of Subtotal Estimated Expenses $360,846.00 590.40-98 SPECIAL DIST./STORM BASIN MAINT. DIST. $7,726.00 640.90-74 TOTAL ESTIMATED MAINT/UTIL/REPAIR EXPENSES $4,208,433.52

REPLACEMENT RESERVE
Replacement Reserve: L/S, Walls, Lights $81,422.00 590.20-25 Replacement Reserve: Park $78,850.00 590.20-25
TOTAL REPLACEMENT RESERVE $160,272.00 590.20-25

TOTAL ESTIMATED REVENUE REQUIRED
2022-23 FISCAL YEAR $5,463,375.14

TOTAL APPROPRIATION FROM RESERVE
FOR CONTINUING APPROPRIATIONS $1,434,740.68

WEBER WOODS
A-5
1,019.00
-
3,056.00
4,075.00
-
2,010.00
6,085.00
-
16,068.00
268.00
-
-
-
-
-
-
-
-
-
-
-
302.00
-
-
-
-
-
22,723.00
2,046.00
-
24,769.00
-
-
-
-
-
7,403.00
666.72
8,069.72
32,838.72
22,823.00
10,015.72
$589.16
$1,611.00
$39.16 1

ATTACHMENT B
1745
Dept./Division
Fiscal Year 2022-2023
Total Estimated
Expenditure
Activity. Elem-obj

MAINTENANCE, REPAIRS AND UTILITIES
Landscape and Open Spaces
Contracted Scheduled Landscape and Open Spaces Services Subtotal .20-25 Contracted Scheduled Services $789,336.52 590.20-25 Incidental Services
Subtotal Incidental Services $329,671.00 590.20-25
TOTAL .20-25 LANDSCAPE & OPEN SPACES SERVICES $1,119,007.52 590.20-25 Landscape and Open Spaces Utilities
TOTAL LANDSCAPE AND OPEN SPACES UTILITIES $786,733.00
TOTAL ESTIMATED LANDSCAPE AND OPEN SPACES EXPENSES $1,905,740.52 Walls/Signs/Bridge Railings
TOTAL ESTIMATED WALL/SIGN/BRIDGE RAIL EXPENSES $460,836.00 GRAFFITI ABATEMENT, performed by Neighborhood Services $66,689.00 590.20-67 Parks
Contracted Scheduled Park Services
Subtotal .20-25 Contracted Scheduled Park Services $369,137.00 Incidental Parks Services
Subtotal Incidental Services $257,395.00 590.20-25
TOTAL .20-25 PARKS SERVICES $626,532.00 590.20-25
Parks Utilities
TOTAL PARKS UTILITIES $513,254.00
Graffiti Abatement in Parks - By PW Staff $25,432.00 590.10- TOTAL ESTIMATED PARKS EXPENSES $1,165,218.00
Materials and Supplies
TOTAL ESTIMATED MATERIALS AND SUPPLIES $44,639.00 590.30-50 Street Lights
TOTAL STREET LIGHT MAINTENANCE & REPAIRS $138,301.00
Street Light Utilities
TOTAL STREET LIGHTS UTILITIES $58,438.00
TOTAL ESTIMATED STREET LIGHTS EXPENSES $196,739.00
SUBTOTAL ESTIMATED EXPENSES $3,839,861.52
CONTINGENCY; Varies 0 to 10±% of Subtotal Estimated Expenses $360,846.00 590.40-98 SPECIAL DIST./STORM BASIN MAINT. DIST. $7,726.00 640.90-74 TOTAL ESTIMATED MAINT/UTIL/REPAIR EXPENSES $4,208,433.52

City Council and Concurrent AuthoritiesJune 14, 2022

City Council and Concurrent Authorities
June 14, 2022