City Council and Concurrent Authorities
March 19, 2024

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indemnify, and hold harmless the City of Stockton, its officers, officials, employees, and volunteers from and against any and all claims and causes of action which result in liabilities, judgments, awards, losses, damages, expenses, and costs (including reasonable attorneys’ fees, expert and consultant fees, and other expenses of litigation) including, but not limited to, death or injury to persons, or damage to property, which arise out of any violation of federal, state, or municipal law or ordinance, to the extent damages are caused by the Consultant’s negligent services provided under this Agreement, or are in any way caused by the negligent performance of work by the Consultant or Consultant’s officers, agents, employees, or subcontractors. Consultant shall not be obligated to indemnify or defend City for claims finally determined by a court of law or arbitrator to arise from the negligence or willful misconduct of the City. It is the intent of the Parties that this indemnity obligation is at least as broad as is permitted under California law. To the extent California Civil Code sections 2782, et seq., limit the defense or indemnity obligations of Consultant to City, the intent hereunder is to provide the maximum defense and indemnity obligations allowed by Consultant under the law. The indemnity set forth in this section shall not be limited by insurance requirements or by any other provision of this Agreement.

With the exception that this section shall in no event be construed to require indemnification by Consultant to a greater extent than permitted under the public policy of the State of California, and in addition to the other indemnity obligations in this Agreement, Consultant shall indemnify, defend, and hold harmless the City of Stockton, its officers, officials, employees, and volunteers from and against claims, losses, expenses, and costs including, but not limited to, reasonable attorneys’ fees, arising out of any claim brought against the City by an employee of Consultant, regardless of whether such claim may be covered by any applicable workers compensation insurance.

Consultant’s indemnification obligation is not limited in any way by any limitation on the amount or type of damages, compensation, or benefits payable by or for the Consultant under workers’ compensation acts, disability acts, or other employee benefit acts.

5. SCHEDULE AND TERM. Consultant shall perform the scope of work as described in Exhibit A according to the schedule detailed in Exhibit C, which is attached to this Contract and incorporated by this reference. This Contract shall commence on the date written above and shall expire on July 31, 2025 , unless extended by mutual agreement through the issuance of a Contract Amendment.

a. Invoices submitted by Consultant to City must contain a brief description of work performed, time used, and include the City project number. Payment shall be made within thirty (30) days of approval of invoice by City.

b. Upon completion of work and acceptance by City, Consultant shall have sixty (60) days in which to submit final invoicing for payment. An extension may be granted by City upon receiving a written request thirty (30) days in advance of said time limitation. City shall have no obligation or liability to pay any invoice for work performed which Consultant fails or neglects to

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submit within sixty (60) days, or any extension thereof granted by the City, after work is accepted by City.

6. CONFORMANCE TO APPLICABLE LAWS. Consultant shall comply with all applicable federal, State, and Municipal laws, rules, and ordinances. Consultant shall not discriminate in the employment of persons or in the provision of services under this Contract on the basis of any legally protected classification, including race, color, national origin, ancestry, sex or religion of such person.

a. TITLE VI
Title VI of the Civil Rights Act of 1964 requires that “no person in the United States shall, on the grounds of race, color, or national origin, be excluded from participation in, be denied the benefits of, or be subjected to discrimination under any program or activity receiving federal financial assistance.” (42 USC Section 2000d).
http://www.dol.gov/oasam/regs/statutes/titlevi.htm .

The City of Stockton requires compliance with the requirements of Title VI in all of its programs and activities regardless of funding source.

b. DISCRIMINATION AND HARASSMENT POLICY
The City of Stockton has a Discrimination and Harassment Policy ( Exhibit E). The purpose of this policy is to reaffirm the Cit y’s commitment to demonstrating respect for all individuals by strictly prohibiting discrimination and harassment, including sexual harassment in the workplace, to define the types of behavior and conduct prohibited by this policy, and to set forth a procedure for reporting, investigating, and resolving complaints of discrimination and harassment in the workplace.

c. LABOR STANDARDS PROVISIONS/CALIFORNIA LABOR CODE
The bidder shall understand that conditions set forth in Chapter 1, Part 7, Division 2 of the California Labor Code shall be considered part of the contract
agreement. https://leginfo.legislature.ca.gov/faces/codes_displayText.xht ml?lawCode=LAB&division=2.&title=&part=7.&chapter=1.&article=2.

d. PREVAILING WAGE RATES
Consultant and any subcontractor shall pay each employee engaged in the trade or occupation not less than the prevailing hourly wage rate. In accordance with the provisions of Section 1770 of the Labor Code, the Director of Department of Industrial Relations of the State of California has

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determined the general prevailing rates of wages and employer payments for health and welfare, pension, vacation, travel time, and subsistence pay as provided for in Section 1773.1, apprenticeship or other training programs authorized by Section 3093 and similar purposes applicable to the work to be done. Consultant performing the work under this contract shall obtain a copy of the wage rate determination and shall distribute copies to each subcontractor. As the wage determination for each craft reflects an expiration date, it shall be the prime Consultant and each subcontractor's responsibility to ensure that the prevailing wage rates of concern is current and paid to the employee.

i. The Consultant performing the work shall be responsible for obtaining a copy of the State wage rate determination. State wage rates may be obtained at
http://www.dir.ca.gov/OPRL/pwd/Determinations/Northern/Northern.p df. The Consultant shall be responsible for posting said wage rates at a prominent location at the work site and shall maintain same in a good readable condition for the duration of the work.

ii. Should the Consultant choose to work on a Saturday, Sunday or on a holiday recognized by the Labor Unions, the Consultant shall reimburse the City the actual cost of engineering, inspection, superintendence, and or other overhead expenses which are directly chargeable to the contract. Should such work be undertaken at the request of the City, reimbursement will not be required. To conform strictly with the provisions of Division 2, Part 7, Chapter 1, Article 2, of the Labor Code of the State of California. To forfeit as a penalty to City the sum of TWENTY-FIVE AND NO/100 DOLLARS ($25.00) for each laborer, worker, or mechanic employed by CONTRACTOR, or by any subcontractor under Consultant, in the execution of this contract, for each calendar day during which any laborer, worker, or mechanic is required or permitted to work more than eight (8) hours and who is not paid the general prevailing rate of per diem wages for holiday and overtime work in violation of the provisions of Sections 1770 to 1781 of the Labor Code of the State of California. That all sums forfeited under the provisions of the foregoing sections shall be deducted from the payments to be made under the terms of this contract.

iii. PAYROLL RECORDS - The Consultant to whom the contract is awarded shall ensure that the prime and each subcontractor will, in accordance with Section 1776 of the Labor Code, maintain certified payroll records. A copy of said records shall be provided with each invoice to the Public Works Department, Attention: Contract Compliance Officer. It shall be the Consultant’s responsibility to obtain copies of the current prevailing wage rate determination for all

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subcontractors. Additionally, certified payroll records must be uploaded to the DIR website as required by labor code.
iv. APPRENTICESHIP STANDARDS - The Consultant shall comply with the provisions established in Section 1777.5 of the Labor Code concerning the 1) certified approval by local joint apprenticeship committees for the employment and training of apprentices, and 2) contribution of funds to administer and conduct apprenticeship programs, if applicable to the job.

e. SANCTIONS
Deliverables must conform with all applicable federal, state, and local laws.

Such conformity includes compliance with federal sanctions, and Contractor certifies that it has not and will not engage in prohibited transactions with sanctioned persons or entities.

7. RIGHTS AND DUTIES OF CITY. City shall make available to Consultant all data and information in the possession of City which both parties deem necessary to complete the work, and City shall actively aid and assist Consultant in obtaining such information as may be deemed necessary from other agencies and individuals.

8. OBLIGATIONS OF CONSULTANT. Throughout the term of this Contract, Consultant represents and warrants that it has or will have at the time this Contract is executed, all licenses, permits, qualifications, insurance, and approvals of whatsoever nature which are legally required for the Consultant to practice its professions, and Consultant shall, at its own cost and expense, keep in effect during the life of this Contract all such licenses, permits, qualifications, insurance, and approvals. Consultant shall meet with the Public Works Director or other personnel of City or third parties as necessary on all matters connected with the carrying out of Consultant’s services. Such meetings shall be held at the request of either party hereto. Consultant further warrants that it will follow the best current, generally accepted and professional practices to make findings, render opinions, prepare factual presentations, and provide professional advice and recommendations regarding this project.

9. OWNERSHIP OF WORK. All reports, drawings, designs, plan review comments, work product, and all other documents completed or partially completed by Consultant in the performance of this Contract shall become and remain the property of the City. Any and all copyrightable subject matter in all materials is hereby assigned to the City and the Consultant agrees to execute any additional documents that may be necessary to evidence such assignment. All materials shall be delivered to the City upon completion or termination of the work under this Contract. If any materials are lost, damaged, or destroyed before final delivery to the City, the Consultant shall replace them at its own expense. Consultant shall keep materials confidential. Materials shall not be used for purposes other than performance of services under this Contract and shall not

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be disclosed to anyone not connected with these services unless the City expressly provides prior written consent.

10. CONTRACT AMENDMENTS. City reserves the right to make such alterations as may be deemed necessary or advisable and to require such extra work as may be required for the proper completion of the work contemplated by Consultant. Any such changes will be set forth in a Contract Amendment which will specify, in addition to the work done in connection with the change made, adjustment of contract time, if any, and the basis of compensation for such work. A Contract Amendment will not become effective until approved by the authorized City official.

11. TERMINATION. The City may terminate this Contract at any time by mailing a notice in writing to Consultant. The Contract shall then be deemed terminated and no further work shall be performed by Consultant. If the Contract is so terminated, the Consultant shall be paid for that percentage of work actually completed at the time the notice of termination is received.

12. CONSULTANT STATUS. In performing the obligations set forth in this Contract, Consultant shall have the status of an independent contractor and Consultant shall not be considered to be an employee of the City for any purpose. All persons working for or under the direction of Consultant are its agents and employees, and are not agents of the City. Subcontractors shall not be recognized as having any direct or contractual relationship with the City. The persons engaged in the work, including employees of subcontractors and suppliers, will be considered employees of Consultant.

The Consultant shall be responsible for the work of subcontractors, which shall be subject to the provisions of this Contract. The Consultant is responsible to the City for the acts and omissions of its subcontractors and persons directly or indirectly employed by them.

a. If in the performance of this Contract any third persons are employed by Consultant, such persons shall be entirely and exclusively under the direction, supervision, and control of Consultant. All terms of employment including hours, wages, working conditions, discipline, hiring, and discharging or any other term of employment or requirement of law shall be determined by Consultant.

i. It is further understood and agreed that Consultant must issue W-2 forms or other forms as required by law for income and employment tax purposes for all of Consultant’s personnel.

ii. As an independent contractor, Consultant hereby indemnifies and holds City harmless from any and all claims that may be made against the City based upon any contention by any third party that employer-employee relationship exists by reason of this Contract.

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13. ASSIGNMENT. Consultant shall not assign, sublet, or transfer this Contract or any interest or obligation in the Contract without the prior written consent of the City, and then only upon such terms and conditions as City may set forth in writing. Consultant shall be solely responsible for reimbursing subcontractors.

14. HEADINGS NOT CONTROLLING. Headings used in the Contract are for reference purposes only and shall not be considered in construing this Contract.

15. NOTICES. Any and all notices herein required shall be in writing and shall be sent by certified or registered mail, postage prepaid, addressed as follows:

To Consultant: Arc Document Solutions, LLC To City: Public Works Director 444 N. El Dorado Street City of Stockton
Stockton, CA 95202 22 E. Weber Ave., Rm. 301
Stockton, CA 95202

16. LICENSES, CERTIFICATIONS, AND PERMITS. Prior to the City’s execution of this Contract and prior to t he Consultant’s engaging in any operation or activity set forth in this Contract, Consultant shall obtain a City of Stockton business license, which must be kept in effect during the term of this Contract. Consultant covenants that it has obtained all certificates, licenses, permits and the like required to perform the services under this Contract.

17. RECORDS AND AUDITS. City reserves the right to periodically audit all charges made by Consultant to City for services under this Contract. Upon request, Consultant agrees to furnish City, or a designated representative, with necessary information and assistance.

Consultant agrees that City or its delegate shall have the right to review, obtain, and copy all records pertaining to performance of the Contract. Consultant agrees to provide City or its delegate with any relevant information requested, and shall permit City or its delegate access to its premises, upon reasonable notice, during normal business hours for the purpose of interviewing employees and inspecting and copying such books, records, accounts, and other material that may be relevant to a matter under investigation for the purposes of determining compliance with this Contract. Consultant agrees to maintain such records for a period of three years from the date that final payment is made.

18. CONFIDENTIALITY. Consultant shall exercise reasonable precautions to prevent the unauthorized disclosure and use of City reports, information or conclusions.

19. CONFLICTS OF INTEREST. Consultant covenants that other than this Contract, Consultant has no financial interest with any official, employee, or other representative of the City. Consultant and its principals do not have any financial interest in real property, sources of income or investment that would be affected in any manner

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or degree by the performance of Consultant’s services under this Contract. If such an interest arises, Consultant will immediately notify City.

20. WAIVER. In the event either City or Consultant at any time waive any breach of this Contract by the other, such waiver shall not constitute a waiver of any other or succeeding breach of this Contract, whether of the same or of any other covenant, condition, or obligation.

21. GOVERNING LAW. California law shall govern any legal action pursuant to this Agreement with venue for all claims in the Superior Court of the County of San Joaquin, Stockton Branch or, where applicable, in the federal District Court of California, Eastern District, Sacramento Division.

22. NO PERSONAL LIABILITY. No official or employee of City shall be personally liable to Consultant in the event of any default or breach by City or for any amount due Consultant.

23. INTEGRATION AND MODIFICATION . The response by Consultant to the Request for Proposals and the Request for Proposals on file with the City Clerk are hereby incorporated herein by reference to the extent that such documents do not differ from the provisions and terms of this Contract that shall supersede such response to Request for Proposals. This Contract represents the entire integrated agreement between Consultant and City, supersedes all prior negotiations, representations, or agreements, either written or oral, between the parties, and may be amended only by written instrument signed by Consultant and City. All exhibits and this contract are intended to be construed as a single document. Should any inconsistency occur between the specific terms of this Contract and the attached exhibits, the terms of this Contract will prevail.

24. SEVERABILITY. The provisions of this Contract are severable to the extent that should any of its provisions or terms be declared void in whole or in part by operation of law or agreement of the parties, the remainder of the provisions or terms not expressly declared void shall remain enforceable and in full effect.

25. THIRD PARTY RIGHTS. Nothing in this Contract shall be construed to give any rights or benefits to anyone other than City and Consultant.

26. AUTHORITY. The undersigned hereby represent and warrant that they are authorized by the parties to execute this Contract.
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IN WITNESS WHEREOF: the parties have executed this Contract the day and year first hereinabove written.

CITY OF STOCKTON ARC DOCUMENT SOLUTIONS, LLC
By: By:

HARRY BLACK Signature

CITY MANAGER
ATTEST:

Print Name
BY:

ELIZA R. GARZA, CMC Title:

CITY CLERK
APPROVED AS TO FORM:

BY:

DEPUTY CITY ATTORNEY

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RFP / Project Number: SEB 23 003
RFP / Project Name: File Room Scanning and Digital Storage Attention: Mr. Wes Johnson
ARC Document Solutions executive summary of scope of work Prepared by Kevin Grimes – Sales Director, ARC Northern CA To execute this project, and meet any volume and timeline requirements, ARC will provide the Document Conversion Services off site, at its Production Centers in Stockton and Sacramento. Both Service Centers employ redundant, state of the art production equipment, with a dedicated and experienced staff including a service center manager (Don Rader – Stockton native) with over 10 years of document digitization experience.

The conversion process includes the scanning of all hard copy documents, into a digital facsimile image, captured at 300 DPI using a programmatic “Auto Color” detection for small format documents. The resultant source images will be compiled into an Image Only PDF file, in page sequence order, where each document (marked by ta b, blank sheet separator, or other) within each file folder will result in one PDF file. In addition, appropriate index data will be collected from each document, and associated to the resultant PDF file (named & foldered) through an accompanying CSV text file. The specific file naming and folder structuring plan is to have box level index fields (name conventions as marked on boxes), followed by folder level index fields (name conventions as found on folder tabs), and document level index fields (approximately 30 standard document name conventions found on individual multi page documents).

ARC will perform the following services on site at The City’s Weber Avenue location:

Barcode Labeling of each box targeted for conversion
Inventory to spreadsheet and photo recording of each box Loading of secured boxes into ARC transport vehicle
Secure non stop transport of box collection to designated ARC Facility ARC will perform the following services off site at the ARC Facility, 4 blocks (Stockton) or 40 miles (Sacramento) from The City:

Receiving boxes in ARC vehicle from The City office
Validation of box inventory and security seals in tact
Document inventory creation, inserting uniquely barcoded folder separation sheets into each hard copy files folder
Recording of separator barcodes into inventory spreadsheet Indexing of box information and folder details into index database Document preparation:
o Insertion of unique barcoded document separators, before the first page of each document (as designated by The City) within each folder.

Removal of binding materials

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o Unfolding pages
o Removal and/or repositioning of post it notes, flags, and other attachments.

Image Acquisition (Document Scanning)
Scanned Image QC
Document level indexing
Document De Prep:
o Returning hard copy document pages to their source folder & box, without replacement of binding materials or attachments
Return of completed documents in original boxes and in original order Processing of QC’d Images:
o Programmatic compilation of PDF files
o Running OCR against all PDF files to create Searchable Image PDF output (Optional) o Programmatic file naming, based on index data collected o Programmatic folder structuring, based on index data collected o Placing completed images and folders into encrypted hard drive for return to The City, or uploading to The City SFTP site
Inventory spreadsheet validation of each box for return Secure non stop transport of returning boxes to The City Offices Close out chain of custody process controls
The following chart and narrative illustrate the workflow process that we currently plan to utilize for this project.

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Budgetary Pricing for City of Stockton, File Room Scanning and Digital Storage, Project Number: SEB 23 003 UNIT PRICE Estimate ASSUMPTIONS
LABOR FOR BOXING $55.00/hr $2,640.00 900 BOXES
DOC SCANNING SMALL FORMAT $0.065/PDF PAGE $117,000.00 2000 IMAGES PER BOX DOC SCANNING LARGE FORMAT $0.85/PDF PAGE $15,300.00 18000 MYLAR FOLDER INDEXING $0.12/PER FOLDER $1,080.00 AVE. 10 FILES PER BOX = 9000 FILES TAB INDEXING $0.12/PER TAB $14,400.00 30 TABS PER FOLDER(SAMPLE FILE) CERTIFIED DOC DESTRUCTION $15 PER BOX $13,500.00 900 BOXES CD/MEDIA EXTRACTION $15/PER MEDIA $13,500.00 AVE 1 PER BOX = 900 PROFESSIONAL SERVICES $85/PER HOUR $1,020.00 Approx. 12 Hours TOTAL $178,440.00

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Proposed Schedule for City of Stockton (refer to scope of work document for additional details ) Proposed Date Process
1/15/2024 Stage/Box/Pallatize 1st Group of documents (300 boxes 1/3rd of collection) 1/16/2024 Transport Documents to Service Center
1/17 1/19 Scan representative sample and prepare proof of concept 1/22 1/26 Proof of concept approval process
1/29/2024 City approval / Production begins
2/14/2024 Digitized file batches deliverd monthly to The City / QC & Confirmation by the Cit y 6/7/2024 Complete Phase 1 (300 boxes) / Document destruction TB D 4/15/2024 Stage/Box/Pallatize 2nd Group of documents (300 boxes 1/3rd of collection) 4/16/2024 Transport Documents to Service Center
4/17 4/19 Scan representative sample and prepare proof of concept 4/22 4/26 Proof of concept approval process
4/29/2024 City approval / Production begins
5/14/2024 Digitized file batches deliverd monthly to The City / QC & Confirmation by the Cit y 9/7/2024 Complete Phase 2 (300 boxes) / Document destruction TB D 7/15/2024 Stage/Box/Pallatize 3rd Group of documents (300 boxes 1/3rd of collection) 7/16/2024 Transport Documents to Service Center
7/17 7/19 Scan representative sample and prepare proof of concept 7/22 7/26 Proof of concept approval process
7/29/2024 City approval / Production begins
8/14/2024 Digitized file batches deliverd monthly to The City / QC & Confirmation by the Cit y 12/7/2024 Complete Phase 3 (300 boxes) / Document destruction TB D

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Insurance Requirements
Contractor shall procure and maintain for the duration of the contract insurance against claims for injuries to persons or damages to property which may arise from or in connection with the performance of the work hereunder and the results of that work by the Contractor, his agents, representatives, employees or subcontractors.

MINIMUM SCOPE AND LIMIT OF INSURANCE
Coverage shall be at least as broad as:

1. Commercial General Liability (CGL): Insurance Services Office Form CG 00 01 covering CGL on an “occurrence” basis, including products and completed operations, property damage, bodily injury and personal & advertising injury with limits no less than $2,000,000 per occurrence. If a general aggregate limit applies, either the general aggregate limit shall apply separately to this project/location (ISO CG 25 03 or 25 04) or the general aggregate limit shall be twice the required occurrence limit.

2. Automobile Liability: ISO Form Number CA 00 01 covering any auto (Code 1), or if Contractor has no owned autos, hired, (Code 8) and non-owned autos (Code 9), with limit no less than $1,000,000 per accident for bodily injury and property damage.

3. Workers’ Compensation: as required by the State of California, with Statutory Limits, and Employer’s Liability Insurance with limit of no less than $1,000,000 per accident for bodily injury or disease.

If the Contractor maintains broader coverage and/or higher limits than the minimums shown above, the City of Stockton requires and shall be entitled to the broader coverage and/or the higher limits maintained by the contractor. Any available insurance proceeds in excess of the specified minimum limits of insurance and coverage shall be available to the City of Stockton.

Other Insurance Provisions
The insurance policies are to contain, or be endorsed to contain, the following provisions:

The City of Stockton, its officers, officials, employees, and volunteers are to be covered as additional insureds on the CGL policy with respect to liability arising out of work or operations performed by or on behalf of the Contractor including materials, parts, or equipment furnished in connection with such work or operations. General liability coverage can be provided in the form of an endorsement to the Contractor’s insurance

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(at least as broad as ISO Form CG 20 10 11 85 or if not available, through the addition of both CG 20 10, CG 20 26, CG 20 33, or CG 20 38; and CG 20 37 if a later edition is used). Additional insured Name of Organization shall read “City of Stockton, its officers, officials, employees, and volunteers.” Policy shall cover City of Stockton, its officers, officials, employees, and volunteers for all locations work is done under this contract.

For any claims related to this contract, the Contractor’s insurance coverage shall be primary and non-contributory and at least as broad as ISO CG 20 01 04 13 as respects the City of Stockton, its officers, officials, employees, and volunteers. Any insurance or self-insurance maintained by the City of Stockton, its officers, officials, employees, or volunteers shall be excess of the Contractor’s insurance and shall not contribute with it. This requirement shall also apply to any Excess or Umbrella liability policies. The City of Stockton does not accept endorsements limiting the Contractor’s insurance coverage to the sole negligence of the Named Insured.

The Contractor may use Umbrella or Excess Policies to provide the liability limits as required in this agreement. This form of insurance will be acceptable provided that all of the Primary and Umbrella or Excess Policies shall provide all of the insurance coverages herein required, including, but not limited to, primary and non-contributory, additional insured, Self-Insured Retentions (SIRs), indemnity, and defense requirements. The Umbrella or Excess policies shall be provided on a true “following form” or broader coverage basis, with coverage at least as broad as provided on the underlying Commercial General Liability insurance. No insurance policies maintained by the Additional Insureds, whether primary or excess, and which also apply to a loss covered hereunder, shall be called upon to contribute to a loss until the Contractor’s primary and excess liability policies are exhausted.

Each insurance policy required above shall provide that coverage shall not be canceled, except with notice to the City of Stockton.

Contractor hereby grants to City of Stockton a waiver of any right to subrogation which any insurer of said Contractor may acquire against the City of Stockton by virtue of the payment of any loss under such insurance. Contractor agrees to obtain any endorsement that may be necessary to affect this waiver of subrogation, but this provision applies regardless of whether or not the City of Stockton has received a waiver of subrogation endorsement from the insurer.

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Self-insured retentions must be declared to and approved by the City of Stockton. The City of Stockton may require the Contractor to purchase coverage with a lower retention or provide proof of ability to pay losses and related investigations, claim administration, and defense expenses within the retention. The policy language shall provide, or be endorsed to provide, that the self-insured retention may be satisfied by either the named insured or City of Stockton. The CGL and any policies, including Excess liability policies, may not be subject to a self-insured retention (SIR) or deductible that exceeds $25,000 unless approved in writing by City of Stockton. Any and all deductibles and SIRs shall be the sole responsibility of Contractor or subcontractor who procured such insurance and shall not apply to the Indemnified Additional Insured Parties. City of Stockton may deduct from any amounts otherwise due Contractor to fund the SIR/deductible. Policies shall NOT contain any self-insured retention (SIR) provision that limits the satisfaction of the SIR to the Named. The policy must also provide that Defense costs, including the Allocated Loss Adjustment Expenses, will satisfy the SIR or deductible. City of Stockton reserves the right to obtain a copy of any policies and endorsements for verification.

Insurance is to be placed with insurers authorized to conduct business in the state with a current A.M. Best’s rating of no less than A:VII, unless otherwise acceptable to the City of Stockton.

Contractor shall furnish the City of Stockton with original certificates and amendatory endorsements or copies of the applicable policy language effecting coverage required by this clause and a copy of the Declarations and Endorsements Pages of the CGL and any Excess policies listing all policy endorsements. All certificates and endorsements and copies of the Declarations & Endorsements pages are to be received and approved by the City of Stockton before work commences. However, failure to obtain the required documents prior to the work beginning shall not waive the Contractor’s obligation to provide them. The City of Stockton reserves the right to require complete, certified copies of all required insurance policies, including endorsements required by these specifications, at any time. City of Stockton reserves the right to modify these requirements, including limits, based on the nature of the risk, prior experience, insurer, coverage, or other special circumstances.

City of Stockton reserves the right to modify these requirements, including limits, based on the nature of the risk, prior experience, insurer, coverage, or other special circumstances.

Certificate Holder Address

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The address for mailing certificates, endorsements and notices shall be:

City of Stockton
Its Officers, Officials, Employees, and Volunteers
400 E Main St, 3
rd Floor – HR
Stockton, CA 95202

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City of Stockton
Legislation Text
File #: 24-0198, Version: 1
RATIFY SUBMITTAL OF 2024 RAISE GRANT APPLICATION TO THE DEPARTMENT OF

TRANSPORTATION FOR ADVANCING COMMUNITY CONNECTIVITY AND EQUITY FOR SOUTH

STOCKTON PROJECT

RECOMMENDATION
It is recommended that the City Council approve a motion to ratify submittal of the Rebuilding American Infrastructure with Sustainability and Equity (RAISE) Grant application for Advancing Community Connectivity and Equity for South Stockton in the amount of $8,150,000.

It is also recommended that the City Manager, or designee, be authorized to take appropriate and necessary actions to carry out the purpose and intent of this motion.

Summary
In December 2023, the Department of Transportation (DOT) published the Notice of Funding Opportunity (NOFO) for the federally funded RAISE Grant. Funds for the Fiscal Year 2024 RAISE Grant program will be awarded on a competitive basis for surface transportation infrastructure projects that will improve safety, environmental sustainability, quality of life, mobility, and community connectivity.

On February 28, 2024, the Public Works Department, with support from the Economic Development Department and City Manager’s Office, submitted an application in the amount of $8.15 million for the Advancing Community Connectivity and Equity for South Stockton (“ACCESS”) project. The NOFO for the RAISE Grant contained an aggressive application submittal deadline. Staff worked diligently across departments to submit the application and not miss the funding opportunity. Staff recommends a motion be approved to ratify submittal of the RAISE Grant application to the DOT for the ACCESS project.

DISCUSSION
Background
Advancing Community Connectivity and Equity for South Stockton, also known as the ACCESS project, is a comprehensive effort to restore mobility, dignity, and public health by mitigating multiple transportation barriers that divide historically disadvantaged and marginalized communities in the city of Stockton. The Project will deploy a comprehensive community-based planning study to develop and evaluate alternatives to mitigate the significant health and community impacts created by three major transportation facilities: State Route (SR) 4, Interstate (I)-5, and the Union Pacific/BNSF rail yards. With heavy input from residents, the Project will identify alternatives and preferred outcomes City of Stockton Printed on 3/15/2024Page 1 of 2
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for each facility and advance at least one alternative through design and environmental review to create immediate opportunities for implementation and realized benefits to the community.

In September 2023, this project was submitted for consideration under the DOT Reconnecting Communities and Neighborhoods Program.

In December 2023, the DOT published the NOFO for the federally funded RAISE Grant. Funds for the 2024 RAISE Grant program will be awarded on a competitive basis for surface transportation infrastructure projects that address Merit Criteria for improving Safety, Environmental Sustainability, Quality of Life, and Mobility and Community Connectivity. The ACCESS Project is a strong candidate for funding under a RAISE Planning Grant through its responsiveness to additional Merit Criteria such as Economic Competitiveness and Opportunity, State of Good Repair, Partnership and Collaboration, and Innovation. On February 28, 2024, the Public Works Department, with support from the Economic Development Department and City Manager’s Office, submitted an application in the amount of $8.15 million for the ACCESS project.

Present Situation
The NOFO for the RAISE Grant contained an aggressive application submittal deadline. Staff worked diligently across departments to submit the application and not miss the funding opportunity.

Staff recommends a motion be approved to ratify submittal of the RAISE Grant to the DOT for the ACCESS project.

FINANCIAL SUMMARY
The planning area is entirely comprised of disadvantaged and underserved communities, so the City is seeking federal funds to fund 100% of the ACCESS plan development. The City has included a 10% contingency as part of the total project cost. Additionally, City staff have included considerations for inflation and associated potential increase in cost of professional services over the planning and design phases of the project as part of the project cost.

There is no additional impact to the City’s General Fund or any other unrestricted fund as a result of taking the recommended actions.

Attachment A - Project Location Map
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Advancing Community Connectivity and
Equity for South Stockton (ACCESS)
Project Location Map

ATTACHMENT A
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City of Stockton
Legislation Text
File #: 24-0200, Version: 1
APPROVE THE 2024 STATE AND FEDERAL LEGISLATIVE PROGRAM

RECOMMENDATION
It is recommended that the City Council adopt by motion the 2024 State and Federal Legislative Program and authorize the City Manager to pursue the objectives outlined in these Programs through advocacy efforts in Sacramento and Washington, D.C.

Summary
Maintaining a strong presence in both Sacramento and Washington, D.C., is essential to the City of Stockton to ensure funding, advance beneficial legislation, and prevent harmful legislation or rulemaking. This is most effectively done using consulting services to represent the City of Stockton (City) in carrying out its legislative programs and advocating its public policy, positions, concerns, needs, and recommendations at the state and federal levels.

In recent years the City has developed, and Council has adopted, legislative programs that outline the City’s advocacy priorities and positions. This allows the City to be responsive to developments in state and federal issues and pursue funding and legislation that benefits our community. The State and Federal Legislative Program has proven to be a valuable tool to direct the City’s legislative advocacy efforts.

The legislative program presented for Council consideration and approval has been updated for the 2024 legislative sessions to adjust for the City’s priorities, leverage advocacy efforts, and address emerging issues.

DISCUSSION
Background
The City of Stockton (City) adopted its first formal State and Federal Legislative Program for the calendar year 2012. Prior to 2012, the City of Stockton had not adopted formal legislative programs and, as a result, the City’s legislative priorities and the impacts of legislation on the City were not entirely clear to our legislative delegations. Since then, the City has been diligent in developing and adopting State and Federal Legislative Programs to provide a unified focus and establish principles, priorities, and City positions related to state and federal legislative matters.

Throughout each year, the State Legislature and the United States Congress initiate legislation, some of which affects local government. The League of California Cities and contracted legislative advocacy firms keep the City of Stockton informed on proposed legislation from these bodies. The National League of Cities (NLC) also provides information and advocacy for municipalities at the City of Stockton Printed on 3/15/2024Page 1 of 4
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federal level. At times, it is in the City’s best interest to take a position on proposed legislation or funding opportunities. The Council adopts the annual legislative program to provide the parameters and authority for staff and designated City advocates to pursue the City’s interests in a timely manner within a rapidly changing environment.

Legislative programs are coordinated by staff in the City Manager’s Office based on previous legislative positions taken by the City, the adopted Council goals, benchmarking of other comparable municipalities, and in anticipation of key issues coming forward in each respective year. The legislative program is also revised in consultation with City departments, state and federal legislative advocates, and then presented to the City Council for consideration and adoption.

On February 21, 2024, City staff coordinated the annual Strategic Planning and Goals Setting workshop with Mayor and Councilmembers to provide an overview of past accomplishments and update the current federal and state administration priorities. During the workshop, the Mayor and Council provided input into the City’s state and federal priorities to refine the most significant issues.

The result is the combined efforts of staff and our legislative advocates, which will continue to inform legislative advocacy efforts in Sacramento and Washington, D.C.

Some examples of priorities pursued in recent years through our State Legislative Programs include assisting the City by working with the Big City Mayors’ Coalition to secure an additional $1 billion in Round 5 of Homeless Housing, Assistance and Prevention (HHAP) funds; advocating for legislation to support mental health and legislation to allow the City to achieve a 200-year event level of flood protection; working with a coalition of advocates to stop inclusion of the Delta Conveyance Project in the Governor’s Infrastructure Package (SB 149); securing funding for waterway improvements via a bubbler system and trash boom at Morelli Park; securing funding for aquatics infrastructure; continuing to advocate for active transportation, infrastructure, and affordable housing resources, as well as reasonable and measured relief from state-regulated flood requirements.

Examples of priorities pursued through our Federal Legislative Program in recent years include assistance in securing a $108 million loan through the Water Infrastructure Finance and Innovation Act (WIFIA); working with the US Army Corps of Engineers to expedite permitting of the Alexandria and Five Mile Slough Culvert Replacement project; providing status updates and informational documentation on federal legislation such as American Rescue Plan Act (ARPA); monitoring and advising City staff of federal grant funding opportunities such as Department of Transportation RAISE and Safe Streets for All; and providing guidance on submitting applications for Community Project Funding House and Senate appropriations for the 2024 year.

In recent years, the legislative programs were shared by our legislative advocates with all members of our respective legislative delegations as well as with key staffers in both state and federal executive departments. This made our positions and priorities clear and public before legislation began to be drafted and project lists established.

Present Situation
Over the past year, City Staff has engaged with our advocates to assess the needs and opportunities of the City, determine areas of improvement, and prepare legislative priorities for the coming year.

The proposed 2024 State and Federal Legislative Program (Attachment A) was developed by Staff in the City Manager’s Office in consultation with City Council, City Staff, and with feedback from our City of Stockton Printed on 3/15/2024Page 2 of 4
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legislative advocates. Input from the February Strategic Planning workshop, held on February 21, 2024, has also been incorporated into the State and Federal Legislative Program.

The Legislative Program continues to follow the outline established in previous years, including Legislative Principles, Priorities, and Positions.
· Legislative Principles are foundational statements of broad legislative objectives or philosophies that form the basis for establishing legislative priorities/positions. · Legislative Priorities are the key issues that the City and contracted advocates will be pursuing; it is the task list or scope of work for advocacy in a given year. · Legislative Positions are statements related to other legislative themes or issues that have come up in the past or that the City anticipates may come up in the future. They are not priority issues, but if legislation arises and the City needs to issue a letter of support or opposition, the position of the City has already been established.

The intent is to annually update the Legislative Program at the beginning of each legislative session, which convenes on July 1 for the State Legislature and October 1 for the Federal Legislature.

Legislative Priorities may vary significantly from year to year while Legislative Positions may somewhat change, and Legislative Principles should remain fairly consistent.

Priorities for the City of Stockton established in the State and Federal Legislative Program not only represent the City’s key interests, but they align with present and emerging state and federal administration priorities. The 2024 State Priorities seek funding for site work and construction management as the next phase of the Van Buskirk Park Reuse Plan, which would support an award of $7 Million in amenities provided by California Statewide Park Development and Community Revitalization Program and funding to plan a Complete Street transformation addressing pedestrian and traffic safety in the heavily traveled Pershing Avenue Corridor. Through Stockton Police, funding is being pursued for full renovation of the Stockton Animal Shelter to include project alternatives and new kennels that meet industry standards. As new initiatives, the City will seek funding for Workforce Infrastructure Upsizing by integrating development of the Stockton Arena Parking Garage/Food Incubator through general and youth workforce development and entrepreneurship leverage, and the City will seek funding for the Restorative Justice Adult Housing Support Project, encompassing 12 months of safe, permanent housing and intensive wraparound services to young individuals seeking an alternative to gun and gang violence. As was the focus in 2023, the City will continue to target youth resiliency and expand youth workforce development opportunities by increasing access to training programs, technical education, and job placement and retention services. State advocacy efforts include incentivizing missing middle housing stock, pursuing funding for workforce housing, fostering innovation and entrepreneurship with Downtown Stockton economic development, and supporting efforts to increase funding to local government for Homeless Housing, Assistance and Prevention (HHAP), and affordable housing.

The proposed 2024 Federal Legislative Priorities reflect an emphasis on securing the next phase of funding for improvements to Van Buskirk Park, as well as identifying funding to launch the Restorative Justice Adult Housing Support Project. The City will actively seek budget allocations for major transportation infrastructure projects to improve roadway efficiency and pedestrian safety at critical roadways throughout the City, such as the Pershing Avenue Corridor, and will seek DOT grant funding to mitigate transportation barriers that divide historically disadvantaged and marginalized City of Stockton Printed on 3/15/2024Page 3 of 4
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communities, for example through the City’s RAISE Grant application for the ACCESS (Advancing Community Connectivity and Equity for South Stockton) Project. Through collaboration of Public Works and the Environmental Sustainability Office, the City proposed an Urban Forestry Development project that would plant and maintain trees throughout Stockton. Along with the Workforce Infrastructure Upsizing proposal, the City will seek funding for two additional initiatives fueling the engines of economic development and infrastructure through Redevelopment & Blight Abatement and Downtown Business Emergency Infrastructure.

For proposed legislation either consistent with the City’s legislative program or with legislative positions the City has taken in the past, adoption of the 2024 Legislative Program will provide necessary authorization that will allow City staff, under direction of the City Manager, to prepare position letters for signature. All members of Council will receive copies of position letters that are sent. The City’s advocacy firms may also be authorized to express the City’s position in person to legislative representatives.

Once adopted, the 2024 State and Federal Legislative Program will provide the parameters and authority for staff and advocates to pursue City of Stockton interests with the state and federal governments. This will allow the City to act quickly and efficiently in cases where we have simply been unable to represent our interests in the past. As stated before, it will also notify our delegations in advance of our positions and priorities on key issues. Overall, adoption of the 2024 State and Federal Legislative Program will allow the City to be more organized, transparent, and efficient in our advocacy efforts at both levels of government.

FINANCIAL SUMMARY
There is no financial impact to the City of Stockton directly related to this agenda item.

Attachment A - 2024 State and Federal Legislative Program City of Stockton Printed on 3/15/2024Page 4 of 4
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2024 STATE and FEDERAL

LEGISLATIVE PROGRAM
Presented to City Council on March 19, 2024
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ATTACHMENT A
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STOCKTON CITY COUNCIL

Kevin J. Lincoln II ................................................................................ Mayor

Michele Padilla .............................................................................. District 1

Dan Wright ..................................................................................... District 2

Michael Blower .............................................................................. District 3

Susan Lenz .................................................................................... District 4

Brando Villapudua .......................................................................... District 5

Kimberly Warmsley ..................................................... Vice Mayor / District 6

Harry Black
City Manager
City of Stockton
425 N. El Dorado Street
Stockton, CA 95202
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ATTACHMENT A
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TABLE OF CONTENTS
Legislative Program Summary and Descriptions ..................................................5 State of California Delegation ..............................................................................6 Washington, DC Delegation .................................................................................7 City Council Strategic Work Plan and Council Goals ...........................................8 Legislative Program .............................................................................................. 9 Legislative Principles ...........................................................................................10 2024 State Legislative Priorities ............................................................................11

1. Integrate development of Stockton Arena Parking Garage/Food Incubator with youth and general workforce development and leverage entrepreneurship.

2. Fund and implement the Restorative Justice Housing Vouchers program to assist young individuals seeking an alternative to gun/gang violence by establishing twelve months of safe permanent housing.

3. Secure funding for site work and construction management for the next phase of the Van Buskirk Park Reuse project.

4. Develop a Precise Road Plan to transform the Pershing Avenue Corridor into a Complete Street.

5. Complete funding for full renovation of the Stockton Animal Shelter.

6. Pursue funding for the remodel of the rollcall room at the Police Operations Building. 2024 State Legislative Positions ...........................................................................14 2024 Federal Legislative Priorities ........................................................................21

1. Integrate development of Stockton Arena Parking Garage/Food Incubator with youth and general workforce development and leverage entrepreneurship.

2. Strategic acquisition and demolition funding to incentivize revitalization and develop blight abatement strategies.

3. Foster emergency preparedness of infrastructure of vacant buildings in Historic Downtown.
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2024 Federal Legislative Priorities Continued

4. Fund and implement the Restorative Justice Housing Vouchers program to assist young individuals seeking an alternative to gun/gang violence by establishing twelve months of safe permanent housing.

5. Secure funding for site work and construction management for the next phase of the Van Buskirk Park Reuse project.

6. Develop a Precise Road Plan to transform the Pershing Avenue Corridor into a Complete Street.

7. Plant and maintain trees throughout Stockton for Urban Forestry Development.

8. Pursue funding for remodel of the Roll Call Room at the Police Operations Building. 2024 Federal Legislative Positions ........................................................................25

Van Buskirk Community Center - New Gymnasium Floor
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ATTACHMENT A
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Legislative Program Summary

The Stockton City Council will adopt a Legislative Program in the beginning of each calendar year. The Legislative Program will set forth the City of Stockton ’s legislative priorities and interests, and will provide general authority and direction regarding advocacy efforts on behalf of the City to the City Manager ’s Office; City departments; and the City’s state and federal legislative advocates.

Legislative Program Descriptions

Legislative Principle

Legislative Principles are foundational statements of broad legislative objectives or philosophies that form the basis for establishing Legislative Priorities and Positions.

Legislative Priority

Items receive designation as Legislative Priorities within the Legislative Program when it is anticipated that they will (1) have a significant impact on the City of Stockton; (2) require significant effort by City staff and/or the City’s state/federal advocates; and (3) have a strategic action identified to address a high-level priority for the City.

Legislative Position

The City of Stockton has numerous legislative interest areas beyond those that rise to the surface as Legislative Priorities. The City prepares position statements for both the themes of legislation and funding that regularly recur at the state level, as well as new issues that arise each year in the legislative process. Legislative Positions provide background as to the importance of the issue to the City of Stockton and state the position of the City and any action that will be pursued to address it. 263

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State of California Delegation

Governor Gavin Newsom
State of California
1303 10th Street, Suite 9000
Sacramento, CA 95814

State Senate
The Honorable Susan Talamantes Eggman
Senate District 5
1021 O Street, Suite 8530
Sacramento, CA 95814

State Assembly
The Honorable Carlos Villapudua
Assembly District 13
PO Box 942849
Sacramento, CA 94249-0013

State Advocate:

Emanuels Jones and Associates
Kyra Emanuels Ross, President
1400 K Street, Suite 306
Sacramento, CA 95814
Phone: (916) 444-6789
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Washington, D.C. Federal Delegation

The Honorable Alex Padilla
United States Senator
112 Hart Senate Office Building
Washington, DC 20510

The Honorable Laphonza Butler
United States Senator
112 Hart Senate Office Building
Washington, DC 20510

The Honorable Josh Harder
9th Congressional District
U.S. House of Representatives
209 Cannon House Office Building
Washington, DC 20515

Federal Advocate:

Summit Strategies Government Affairs LLC
440 1st Street NW, Suite 440
Washington, DC 20001
(202) 638-3307
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City Council Strategic Plan
One Page Strategic Plan® (OGSP®)

Strategic Targets

• Housing / Homelessness

• Crime Reduction

• Economic Development

• Quality of Life / Youth Workforce and Programs

• Community Wellness

Council Priority Goals

• Develop solutions to address homelessness, including increasing the affordable and workforce housing supply

• Focus on crime reduction in identified areas

• Prioritize inclusive economic development to grow the local economy and create employment opportunities for residents

• Work with partners to improve quality of life, increase literacy, develop the youth and general workforce, and expand youth programming

• Leverage City and partner resources
in impacting overall public health,
community wellbeing, and
community resiliency

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Legislative Program

Purpose

Throughout each year, the State Legislature proposes and enacts legislation, some of which affects local municipal government. The League of California Cities and contracted legislative advocacy firms keep the City of Stockton informed opposed legislation from these bodies. At times, it is in the interests of the City to take a position on proposed legislation. The State Legislative Program establishes Legislative Principles, Priorities and Positions that provide direction for advocating for the City of Stockton with the State government.

Process

For proposed legislation, either consistent with the
City’s Legislative Program or consistent with legislative positions the City has taken in the past, City staff shall be authorized to prepare position letters for the Mayor’s signature. Should availability be an issue, at times in which the City has a Vice Mayor, the Vice Mayor or City Manager shall be authorized to sign position letters in lieu of the Mayor. All members of City Council shall
receive copies of submitted position letters. The City’s advocacy firm may also be authorized to express the
City’s position in person to legislative representatives.

Items not addressed in the City ’s Legislative Priorities may require they be brought to the City Council for consideration. These legislative priorities may only address issues directly relevant to or impacting the provision of municipal services. Generally, the City will not address matters that are not pertinent to the City ’s local government services such as partisan, socially divisive, or international issues.

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Legislative Principles

In its relationship with the State and Federal governments, the City will always:

• Seek the broadest authority for our citizens and the City Council to make decisions locally

• Seek out, develop, and support legislative and budget efforts that protect and/or enhance local government ’s revenues, maximize the City ’s access to funding, and/or increase local funding flexibility

• Support legislative and budget action that will provide robust funding for domestic infrastructure, public safety, community development and environmental pro- grams which support City efforts to maintain and enhance the quality of life

• Encourage and seek legislation to facilitate orderly and sustainable economic expansion and growth, and increase the opportunity for discretionary revenues and programmatic and financial flexibility for the City

• Seek opportunities to help our partners achieve success in order to further improve the community

• Support legislation that furthers the adopted City Council Goals

• Oppose legislative or administrative actions that have negative fiscal impacts to the City

• Oppose legislative or administrative actions which would create unfunded mandates and/or preempt local decision-making authority

It is within this philosophy that the attached State and Federal Legislative Priorities and Positions are adopted.

Stockton Memorial Civic Auditorium
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ATTACHMENT A
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2024 State Legislative Priorities

1. Integrate development of Stockton Arena Parking Garage/Food Incubator with youth and general workforce development and leverage entrepreneurship.

2. Fund and implement the Restorative Justice Housing Vouchers program to assist young individuals seeking an alternative to gun/gang violence by establishing twelve months of safe permanent housing.

3. Secure funding for site work and construction management for the next phase of the Van Buskirk Park Reuse project.

4. Develop a Precise Road Plan to transform the Pershing Avenue Corridor into a Complete Street.

5. Complete funding for full renovation of the Stockton Animal Shelter.

6. Pursue funding for the remodel of the rollcall room at the Police Operations Building.

1. Integrate development of Stockton Arena Parking Garage/Food Incubator with youth and general workforce development, and leverage entrepreneurship.

Background: The commercial space on the ground floor of the Adventist Health Arena has been vacant since construction was completed 20 years ago. The City received a grant from the Small Business Administration to design a food incubator space at the vacant commercial space to fill a gap in available food outside of the Adventist Health Arena and Banner Island Ballpark. Staff is currently conducting outreach to those who attend events downtown to better understand market demand.

Completion of the project further enhances activation of the downtown core resident experience.

Action: Pursue resources to implement the construction of a food incubator space at the commercial space below the Adventist Health Arena. This initiative will support job and economic opportunities for both youth and entrepreneurs engaged in the food -based industry.

2. Fund and implement the Restorative Justice Housing Vouchers Program to assist young individuals seeking an alternative to gun and gang violence by establishing twelve months of safe permanent housing.

Background: A significant issue contributing to the root causes of gang and gun violence in our community is the lack of stable housing for individuals facing housing and homelessness barriers. Individuals face challenges in securing housing due to factors like poor credit, limited rental history and criminal records. The City ’s Office of 269

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Violence Prevention (OVP) works closely with individuals who are transitioning back into the community after involvement with the criminal justice system.

Action: The Restorative Justice Housing Vouchers Program would aim to empower individuals at the highest risk of gun and gang violence by offering comprehensive support services including financial assistance, monthly check-ins and conflict resolution.

3. Secure funding for site work and construction management for the next phase of the Van Buskirk Park Reuse Plan.

Background: The former Van Buskirk Golf Course property has been closed for three years. The proposed park revitalization project will be the first step in transforming a portion of the former golf course into an outdoor park and providing more equitable recreation facilities to the surrounding neighborhoods. The revitalization of Van Buskirk Park will create no-cost recreational opportunities within this neighborhood and the city as a whole for families who otherwise could not afford to access physical activity programs or facilities.

Action: Conduct site work and construction management for the Van Buskirk Golf Course Reuse Project to prepare for $7 Million in amenities provided by California Statewide Park Development and Community Revitalization Program. Work includes, but is not limited to, surveying, clearing, grading, leveling and compacting.

4. Develop a Precise Road Plan to transform the Pershing Avenue Corridor into a Complete Street.

Background: Pershing Avenue is primarily a four-lane arterial corridor that carries 24,000 to 29,000 vehicles per day. The northern portion of Pershing Avenue passes through residential areas then through a combination of residential and commercial zones from Hammer Lane to Fremont Street. The City’s 2040 General Plan envisions transportation policies to develop and interconnect bicycle and pedestrian facilities including along “complete” streets that target travel modes. The General Plan also envisions land use policies to improve all modes of travel including pedestrian and bicycle connectivity between the downtown and local colleges/universities. Pershing Avenue represents a corridor that best fits the Goals and Policies of the City ’s 2040 General Plan.

Action: In support of goals of Envision Stockton 2040 General Plan and the Greater Downtown Active Transportation Plan, Pershing Avenue is a candidate for a Precise Road Plan to develop and design transportation amenities to improve connectivity 270

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and safety along the corridor by enhancing connectivity of local businesses, parks, schools, and other points of interest.

5. Complete funding for full renovation of the Stockton Animal Shelter.

Background: The Animal Shelter is in the 100% architectural design phase with an an- ticipated Request for Proposals (RFP) for the construction project anticipated to be is- sued in Q4 of FY 2024 , and construction to begin in October 2024. While the scope of the project has remained limited to the original needs, rising costs in materials and la- bor have necessitated an increase in budget. An increased budget of $4 Million is need- ed to complete the project as designed.

Action: This project provides a new public-facing building with dedicated space for adoptions and pet interaction to a facility that is almost 60 years old. The new facility will provide a cattery, updated medical facilities, and the ability to offer low or no cost spay and neutering to the public.

6. Pursue funding for the remodel of the Roll Call Room at the Police Operations Building.

Background: The Roll Call Room at Police Operations was previously the Telecommu- nications Center (CTC). When CTC relocated to the Stewart Eberhardt Building, the Roll Call Room received a flooring upgrade and a barrier wall. There were no up- dates to the lighting, the fabric wall, ceiling, or the glass wall housing a technology room. The Roll Call Room was not expanded and as such, has capacity issues during roll call at least once a week. The issue will be exacerbated when the Department is at full staffing.

Action: This project will provide updated lighting, wall finishes, and expansion into the previous technology area so that officers can begin their shifts in a modern Roll Call Room consistent with other agencies that are recruiting our valued staff. The upgrades will provide a morale boost and investment in employee retention.

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ATTACHMENT A
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2024 State Legislative Positions

1. Protect Local Control

2. Protect Local Revenues and Funding for Vital Community Services

3. Public Safety

4. Infrastructure Investment

5. Improve the Quality of Life and Sustainability of the City

6. Delta Protection and Enhancement

1. Protect Local Control

Support efforts that are consistent with the doctrine of "home rule" and the local exercise of police powers, through planning and zoning processes, over local land use.

Oppose legislation that negatively impacts the City Council's authority to manage and control the public right-of-way and for the City to receive compensation for its use.

Oppose any legislation that attempts to limit the ability of the City to avail ourselves of the protections offered under Chapter 9 or any other action that undermines the City ’s ability to restructure our finances. Oppose any legislation that limits the ability of the City to move beyond chapter 9 protection or places burdens or mandates on municipalities exiting chapter 9 protection.

2. Protect Local Revenues and Funding for Vital Community Services

Support full reimbursement to cities for all State mandates.

Support legislation that protects the ability of cities to recover the costs of mandated programs through fees that are exempt from Proposition 218 as well as potential exemp- tions for stormwater infrastructure projects.

Support efforts to restore local authority and control over revenues, governance, and service delivery as well as to protect local governments against unfunded mandates.

Support efforts to allocate State Cap-and-Trade revenues to local government projects that will reduce greenhouse gas emissions.

Advocate for grants or loans to upgrade municipal irrigation systems and install smart controls. This will reduce water use due to leakage loss and over -irrigation. Advocate for further grants to upgrade and maintain the urban forest.

Advocate for state taxation policies and procedures that ensure that taxing authorities and services provided by the City are fairly and adequately funded. 272

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Support legislative efforts that maximize reimbursement to local governments for medical transport and fire responder paramedic services to individuals that are beneficiaries of state and federal medical coverage.

Support legislation and regulations that protect Proposition 64 funding for local agencies and maintain local control of cannabis regulations, both medicinal and recreational.

Oppose efforts that capture or divert local revenue or efforts which shift responsibility for State services or programs to local government without commensurate revenue.

Oppose legislation that eliminates or restricts the taxing authority of cities; weakens existing Government Code section 66000 fee authority; or redefines any development tax, condition, or other monetary change as development fees.

Oppose any legislation that attempts to allocate additional general liability exposure to cities or that seeks to prohibit the ability of cities to seek maximum indemnification from other parties in the contractual process.

3. Public Safety

Support funding for local law enforcement equipment, services, or personnel.

Support legislation that allows use of state public safety grants for intervention and prevention efforts to curb group gun violence and youth violence.

Support legislation that would provide cities with a greater share of fines and forfeitures.

Support legislation that allows law enforcement to better combat gun violence through investigation, interdiction, and prevention of firearm-related crimes.

Support legislation that allows use of state public safety grants for maintenance efforts in addition to service increases.

Support legislation and administrative actions that protect the City ’s interests related to the AB109 public safety realignment initiative, including but not limited to equitable distribution of funding and policies that do not unfairly impact Stockton and San Joaquin County.

Support legislation and administrative actions that protect the City ’s interests related to Proposition 47, the Safe Neighborhood and Schools Act of 2014, which reduced penalties for certain lower-level drug possession and thefts under $950 from a felony to a misdemeanor.

Support funding for local emergency operations including equipment, services, and personnel. 273

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Ensure local discretion in the adoption and implementation of health and safety standards contained in the building and fire codes.

Oppose legislation that mandates local building and fire code standards which negatively impact the health and safety of the community and add undue burden and investment in the City.

4. Infrastructure Investment
Advocate for state funding and transportation re -authorizations that support City infrastruc- ture projects and City programs, including projects adopted in the Capital Improvement Plan (CIP).

Support increased funding to enhance existing public transportation programs.

Advocate for state funding for street, road, and alleyway repair within the City of Stockton.

Advocate that fundamental responsibility for transportation decision -making should be at the local level.

Support equitable long-range, statewide infrastructure investment.

Advocate for fair implementation and distribution of state infrastructure bond funds to assure the City receives an adequate share for local improvements and programs.

Support efforts to provide high-speed capacity broadband provisions for all libraries to ensure full, equitable electronic services.

Support legislation and regulations that provide additional funding for public parks, and advocate that Stockton receive equitable funding from statewide revenues.

Advocate for state funding opportunities that support energy -efficient technology initiatives (i.e. Green data center) or those that support Digital Cities initiatives (i.e. Mobile City Hall, Public Wi-Fi).

Oppose any state reductions to existing transportation grants and programs.

Oppose legislation that limits and/or decreases the existing amount of retention proceeds withheld from any payment by a public entity to a contractor on a public project.

5. Improve the Quality of Life and Sustainability of the City

Support efforts that impact the City’s ability to enhance well-being, quality of life, health, and safety of residents; stabilize and enhance jobs and economic growth; improve environment. 274

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Support legislation that provides economic development and redevelopment tools and programs for municipalities, particularly tools to assist urban revitalization.

Support legislation and State funding that is consistent with the City ’s Economic Development Strategic Action Plan.

Support legislation and State funding that would support educational efforts in the City of Stockton and improve educational outcomes.

Support legislation and State funding that would increase access to higher education for Stockton residents.

Support and work in coalition to bring a CSU Stockton Campus to our community.

Support legislation that provides financial assistance for local public libraries without the imposition of new taxes.

Support legislation that makes funds available to upgrade, remodel existing libraries, and build new libraries.

Ensure that funding and support for technology are present for workforce development efforts, individual learning, entrepreneurial/business centers, and lifelong learning.

Support legislation that provides financial support and incentives, and protects and maintains programs which provide affordable housing for disabled and low -income residents, families, and senior adults.

Support legislation and funding for energy-efficiency projects and programs for public buildings and facilities.

Support legislation providing funding for the acquisition and restoration of wildlife habitat.

Support statewide funding for rehabilitation, development and capital improvements for local and state park and recreation agencies.

Support the enactment of policies and encourage state funding opportunities to assist agen- cies in meeting sustainability objectives including energy and water efficiencies, non-motorized trail development and connectivity, carbon sequestration through natural environment management, protection, and enhancement.

Advocate for legislation that requires manufacturers and retailers to address hazardous, expensive, or difficult to manage waste streams that are a burden to local governments.

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Support access for all Californians to physical activity and nutrition through parks and open space, active transportation (bicycles and pedestrians, trails, complete streets, use of ease- ments), healthy foods, youth programs, and joint use of schools.

Reduce barriers to development, including funding for Brownfields cleanup and infrastructure and infill development.

Oppose legislation that reduces funding for libraries, including public library funds.

Oppose legislation that has a negative impact on park and recreation agencies including the sale of parks and open space.

6. Delta Protection and Enhancement

Advocate for balanced processes and equitable sharing of resources related to new State funding sources or State Bond issuances. Advocate for equity in allocating new funding for water resources, groundwater management, floodplain management, and critical utilities.

Support programs and funding opportunities for Integrated Regional Water Management, Delta Water Quality, Drought Protection and Sustainable Groundwater Management within the Eastern San Joaquin Sub-Basin.

Support coalition-building and funding opportunities at the State and Federal level with those that share common interests in prudently and equitably allocating funding for water projects, programs, mitigations and/or those that share common interests in protecting water rights and quality within the Delta.

Support programs and funding opportunities for 200 -year level of flood protection in needed areas of the City of Stockton and the San Joaquin Area Flood Control Agency regional floodplain management and protection activities.

Protect the City’s interests in the Sacramento-San Joaquin River Delta

Background: Stockton is the largest municipality wholly within the Sacramento -San Joaquin River Delta. Stockton derives a substantial percentage of its municipal water supply from Delta surface waters. The current and future well -being of the City, its residents, and econo- my is inextricably linked to the Delta, the quantity and quality of Delta water supplies, and the Delta ecosystem. Stockton and its water supply could be uniquely impacted by the State ’s Delta Conveyance Project and a changing climate. It is critical that the State ’s Water Resili- ence Portfolio Initiatives prioritize and protect the health and safety of Stockton, its Delta economy and environment.

Position: No actions should be taken related to the Delta that negatively impact the City ’s water rights, water supply, water quality, air quality, economic vitality, and local land use 276

ATTACHMENT A
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control in the Delta.

Advocate for the City ’s interest throughout the review and development of the Delta Conveyance Project. Work proactively to protect City ’s rights and interests related to water resources, flood protection and the achievement of tangible near -term progress on economic benefits and workforce development needs for the community.

Advocate for close interaction and active engagement with those agencies responsible for development for the Delta Conveyance Project to ensure that the City of Stockton ’s goals and objectives are achieved as a measure of any successful negotiation or discussion.

Support legislation that maintains local control of water rights, water supplies and land use.

Support legislation and other processes that address the needs and concerns of Delta communities in a balanced and objective manner to improve the economics, work -force opportunities, and quality of life for the region.

Oppose any legislation or administrative action that negatively impacts the City of Stockton ’s interests in the Delta.

Oppose changes that would alter operation of the Delta Cross Channel in a way that would negatively affect water quality at the Delta Water Supply Project (DWSP) intake or at the discharge location for the RWCF.

Delta Water Supply and Quality Protection

Advocate for the State to take full responsibility and establish concrete assurances in the form of Delta Conveyance Project design and operation commitments that avoid or fully mitigate adverse effects on Stockton’s water supply, including water quality and availability.

Advocate for the State to construct permanent improvements that build the capacity of the City and its surrounding Delta community to withstand floods, droughts, and a changing climate.

Advocate for the State to take full responsibility and carry out the necessary actions for the remediation of harmful algal blooms (HABs) and the removal of invasive species that negatively impact the Delta, in particular the annual infestation of water hyacinth in local waterways.

Support administrative actions and funding to promote channel dredging, aquatic weed removal and other maintenance of waterways within the Delta. 277

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Sustainable Groundwater Management of the Eastern San Joaquin Sub-basin

Support programs and funding opportunities for the Eastern San Joaquin Groundwater Sustainability Plan project investigation, development, and implementation.

Support legislation or other administrative actions that protects the interests of the City regarding groundwater management in the basin, the consolidation of water districts or other agencies and reinforces the powers and improves collaboration between groundwater sustainability agencies.

Delta Water Treatment Plant
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ATTACHMENT A
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2024 Federal Legislative Priorities

1. Integrate development of Stockton Arena Parking Garage/Food Incubator with youth and general workforce development and leverage entrepreneurship.

2. Strategic acquisition and demolition funding to incentivize revitalization and develop blight abatement strategies.

3. Foster emergency preparedness of infrastructure of vacant buildings in Historic Downtown.

4. Fund and implement the Restorative Justice Housing Vouchers program to assist young individuals seeking an alternative to gun/gang violence by establishing twelve months of safe permanent housing.

5. Secure funding for site work and construction management for the next phase of the Van Buskirk Park Reuse project.

6. Develop a Precise Road Plan to transform the Pershing Avenue Corridor into a Complete Street.

7. Plant and maintain trees throughout Stockton for Urban Forest Development.

8. Pursue funding for remodel of the Roll Call Room at the Police Operations Building.

1. Integrate development of Stockton Arena Parking Garage/Food Incubator with youth and general workforce development, and leverage entrepreneurship.

Background: The commercial space on the ground floor of the Adventist Health Arena has been vacant since construction was completed 20 years ago. The City received a grant from the Small Business Administration to design a food incubator space at the vacant commercial space to fill a gap in available food outside of the Adventist Health Arena and Banner Island Ballpark. Staff is currently conducting outreach to those who attend events downtown to better understand market demand.

Completion of the project further enhances activation of the downtown core resident experience.

Action: Pursue resources to implement the construction of a food incubator space at the commercial space below the Adventist Health Arena. This initiative will support job and economic opportunities for both youth and entrepreneurs engaged in the food -based industry.

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ATTACHMENT A
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2. Strategic acquisition and demolition funding to incentivize revitalization and develop blight abatement strategies.

Background: A key redevelopment strategy is the pursuit of acquisition and develop- ment funds to incentivize revitalization efforts and to address blighted properties.

Focusing on land assembly within the Downtown Core will help spur development and unlock opportunities to provide jobs, housing, and services to members of the Stockton community.

Action: Pursue the receipt of resources that can be deployed for strategic acquisition and demolition of blighted properties, promoting land assembly opportunities for the City of Stockton .

3. Foster emergency preparedness of infrastructure of vacant buildings in Historic Downtown.

Background: A barrier for revitalization within the Historic Downtown is the lack of adequate infrastructure and interior improvements that would make vacant buildings suitable for occupancy. Having flexible resources to address needed improvements at vacant buildings will prime them for redevelopment opportunities, while also ensuring that building safety and fire compliance requirements are met.

Action: Pursue the receipt of resources that would enable the creation of programs and incentives that can be used to address infrastructure and interior improvement deficiencies at vacant buildings in the Historic Downtown. This could include seismic retrofitting, installation of fire suppression systems, and other capital improvements that will be required for vacant buildings to be safely occupied.

4. Fund and implement the Restorative Justice Housing Vouchers Program to assist young individuals seeking an alternative to gun and gang violence by establishing twelve months of safe permanent housing.

Background: A significant issue contributing to the root causes of gang and gun violence in our community is the lack of stable housing for individuals facing housing and homelessness barriers. Individuals face challenges in securing housing due to factors like poor credit, limited rental history and criminal records. The City ’s Office of Violence Prevention (OVP) works closely with individuals who are transiting back into the community after involvement with the criminal justice system.

Action: The Restorative Justice Housing Vouchers Program would aim to empower individuals at the highest risk of gun and gang violence by offering comprehensive support services including financial assistance, monthly check-ins and conflict resolution.

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ATTACHMENT A
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5. Secure funding for site work and construction management for the next phase of the Van Buskirk Park Reuse Plan.

Background: The former Van Buskirk Golf Course property has been closed for three years. The proposed park revitalization project will be the first step in transforming a portion of the former golf course into an outdoor park and providing more equitable rec- reation facilities to the surrounding neighborhoods. The revitalization of Van Buskirk Park will create no-cost recreational opportunities within this neighborhood and the city as a whole for families who otherwise could not afford to access physical activity pro- grams or facilities.

Action: Conduct site work and construction management for the Van Buskirk Golf Course Reuse Project to prepare for $7 Million in amenities provided by California Statewide Park Development and Community Revitalization Program. Work includes, but is not limited to, surveying, clearing, grading, leveling and compacting.

6. Develop a Precise Road Plan to transform the Pershing Avenue Corridor into a Complete Street.

Background: Pershing Avenue is primarily a four-lane arterial corridor that carries 24,000 to 29,000 vehicles per day. The northern portion of Pershing Avenue passes through residential areas then through a combination of residential and commercial zones from Hammer Lane to Fremont Street. The City’s 2040 General Plan envisions transportation policies to develop and interconnect bicycle and pedestrian facilities in- cluding along “complete” streets that target travel modes. The General Plan also envi- sions land use policies to improve all modes of travel including pedestrian and bicycle connectivity between the downtown and local colleges / universities. Pershing Avenue represents a corridor that best fits the Goals and Policies of the City ’s 2040 General Plan.

Action: In support of goals of Envision Stockton 2040 General Plan and the Greater Downtown Active Transportation Plan (ATP), Pershing Avenue is a candidate for a Precise Road Plan to develop and design transportation amenities to improve connectivity and safety along the corridor by enhancing connectivity of local
businesses, parks, schools, and other points of interest.

Constitution Park
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ATTACHMENT A
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7. Plant and maintain trees throughout Stockton for Urban Forest Development.

Background: The City of Stockton has an aging urban forest in need of renovation.

New trees were not planted for several years outside of capital improvement projects.

While the City has invested in maintenance and planting, it has been limited to smaller areas. A citywide tree inventory/assessment is being prepared and funding is required for future growth.

Action: Funding will allow for citywide tree planting in all disadvantaged neighbor- hoods and often provides a mechanism to fund workforce training with partnering community-based organizations who work on tree maintenance activities. Concurrent work on City tree policies will allow for urban forest growth, and community engagement will grow support for the same. Increased tree canopy will provide a healthier community through reducing greenhouse gas and carbon emissions, cool heat islands and natural infrastructure for better mental and physical health.

8. Pursue funding for the remodel of the Roll Call Room at the Police Operations Building.

Background: The Roll Call Room at Police Operations was previously the Telecom- munications Center (CTC). When CTC relocated to the Stewart Eberhardt Building, the Roll Call Room received a flooring upgrade and a barrier wall. There were no updates to the lighting, the fabric wall, ceiling, or the glass wall housing a technology room. The Roll Call Room was not expanded and as such, has capacity issues during roll call at least once a week. The issue will be exacerbated when the Department is at full staffing.

Action: This project will provide updated lighting, wall finishes, and expansion into the previous technology area so that officers can begin their shifts in a modern Roll Call Room consistent with other agencies that are recruiting our valued staff. The upgrades will provide a morale boost and investment in employee retention.

Equestrian Unit, Stockton Police
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ATTACHMENT A
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2024 Federal Legislative Positions

1. Protect Local Control

2. Protect Local Revenues and Funding for Vital Community Services

3. Public Safety

4. Infrastructure Investment

5. Improve the Quality of Life and Sustainability of the City

6. Delta Protection and Enhancement

1. Protect Local Control

Support efforts that are consistent with the doctrine of "home rule" and the local exercise of police powers, through planning and zoning processes, over local land use.

Oppose legislation that negatively impacts the City Council's authority to manage and control the public right-of-way and for the City to receive compensation for its use.

2. Protect Local Revenues and Funding for Vital Community Services

Support full reimbursement to cities for all federal mandates.

Support efforts to restore local authority and control over revenues, governance, and service delivery as well as to protect local governments against unfunded mandates.

Support legislation that would allow local discretion in expending Public Education Govern- ment (PEG) Access fee revenues; advocate in particular for legislation that identifies programming and operating costs as allowable expenditures.

Oppose legislation that would negatively impact the City ’s ability to issue municipal bonds, including elimination of the tax-exempt status for municipal bonds.

Oppose legislation that would eliminate or limit existing local taxing authority including internet sales tax collection and broadband internet taxes; support legislation that would protect local control of taxing authority and revenue collection.

Oppose reductions to federal agency programs that fund local government services, particularly when communities have come to depend on federal funding to maintain services.

3. Public Safety

Support funding for local law enforcement equipment, services, or personnel.

Support legislation that allows use of federal public safety grants for intervention and prevention efforts to curb gang crime and youth violence. 283

ATTACHMENT A
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Support legislation that would provide cities with a greater share of fines and forfeitures.

Support legislation that allows law enforcement to better combat gun violence through investigation, interdiction, and prevention of firearm related crimes.

Support legislation that allows the use of federal public safety grants for maintenance efforts in addition to service increases.

Ensure local discretion in the adoption and implementation of health and safety standards contained in the building and fire codes.

Support funding for local emergency operations including equipment, services, personnel.

4. Infrastructure Investment

Advocate for federal funding for transportation and other infrastructure that support City projects and City programs, including projects adopted in the Capital Improvement Plan (CIP).

Support increased funding to enhance existing public transportation programs.

Advocate for federal funding for street, road, and alleyway repair within the City of Stockton.

Advocate that fundamental responsibility for transportation decision-making should be at the local level.

Advocate for streamlining and greater efficiencies related to environmental restrictions and obstacles on major federally funded projects. Advocate for revisions to the transportation funding process to waive National Environmental Policy Act (NEPA) requirements in deference to California Environmental Quality Act (CEQA) requirements.

Support executive actions or legislation that streamlines federal transportation and other infrastructure funding processes or the federal stimulus funding process, if applicable.

Advocate to our delegation for legislative adjustments that would streamline the transporta- tion and other infrastructure funding processes.

Support legislation or executive rule -making that balances scarcity of local infrastructure resources, scope of street resurfacing projects and the City ’s commitment to enhancing accessibility of City infrastructure. Advocate for revisions to Americans with Disability Act (ADA) rules requiring extensive accessibility modifications on street resurfacing projects with- out capacity improvements or geometric changes.

Support legislation and executive programs providing funding or tax credits for broadband internet infrastructure to public facilities.
284

ATTACHMENT A
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Support legislation or executive programs that provide local communities with low -cost loans to build networks of sidewalks, bikes lanes and paths.

Support federal funding for parks and recreation infrastructure in metropolitan areas, including appropriate revisions to the Land and Water Conservation Fund that would provide for a larger allocation of state and local grants for recreation and conservation.

Support legislation and regulation that respond to recurring drought conditions and earth- quake preparedness and provide increased opportunity for water conservation, storage, watershed planning, and water infrastructure improvement.

Oppose any federal reductions to existing transportation grants and programs.

Oppose legislation that limits and/or decreases the existing amount of retention proceeds withheld from any payment by a public entity to a contractor on a public project.

5. Improve the Quality of Life and Sustainability of the City

Support efforts that impact the City ’s ability to enhance the well -being, quality of life, health, and safety of residents; stabilize and enhance jobs and economic growth; and improve the environment.

Support legislation and funding that is consistent with the City ’s Economic Development Strategic Action Plan.

Support legislation that provides financial support and incentives, and protects and maintains programs that provide affordable housing for disabled and low -income residents, families, and senior adults.

Support legislation which addresses the health, welfare, and economic needs of older individuals.

Support federal funding of programs providing nutrition for children, older individuals, and other at-risk populations.

Support legislation or executive programs that strengthen and expand environmental education and encourage partnerships between school districts, parks, and other community -based organizations in an effort to help children and families be more physically active outdoors.

Support legislation and funding for energy -efficiency and water conservation projects and programs for public buildings and facilities.

Support legislation providing funding for the acquisition and restoration of wildlife habitat.

Support legislation that would provide cities with a greater share of fines and forfeitures. 285

ATTACHMENT A
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Support the enactment of policies and funding opportunities to assist agencies in meeting sustainability objectives including energy and water efficiencies, non-motorized trail develop- ment and connectivity, and carbon sequestration through natural environment management, protection, and enhancement.

Reduce barriers to development including funding for Brownfields cleanup and infrastructure and infill development.

Oppose legislation that has a negative impact on park and recreation agencies, including the sale of parks and open space.

6. Delta Protection and Enhancement

Action: Advocate for the Federal Government to support programs and continue funding opportunities for water supply and quality protection, groundwater sustainability & manage- ment and flood control/protection, planning, investigations and infrastructure projects in the City of Stockton, its Critical Infrastructure and Eastern San Joaquin Hydrologic Region.

Advocate for federal funding for flood protection improvements to protect critical utility infrastructure.

Advocate for federal funding for flood and stormwater protection improvements to critical utility infrastructure and transportation corridors.

Support funding to develop flood protection and resilience mitigation initiatives.

Action: Advocate for the Federal government to establish concrete assurances and protec- tions regarding their participation in the Delta Conveyance Project design, permitting and operations that avoid or fully mitigate adverse effects on Stockton ’s water supply, including water quality and availability.

Support legislation protecting existing water rights, contracts, and supplies.

Support legislation providing funding and other means for improved delta stewardship and environmental protection.

Flood Control & Protection

Support legislation and regulation that encourages public and private investment in flood control and floodplain management projects.

Support continued authorization and funding of SJAFCA projects including the U.S. Army Corps of Engineers Lower San Joaquin River Project - Phase 1 (City of Stockton) and Phase 2 Feasibility Study (Mossdale Tract).

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Support administrative actions and funding to promote dredging, aquatic weed removal and other maintenance of waterways within the Delta.

Oppose changes to the Bay Delta Conservation Plan that would alter Central Valley Project, State Water Project or Combined Operations of the Delta Cross Channel in a way that would negatively affect water quality at the Delta Water Supply Project (DWSP) intake or at the dis- charge location for the RWCF.

Victory Park and Haggin Museum
Stockton Downtown Marina
287

ATTACHMENT A
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2024 State and Federal
LegislativeProgram
City Council Meeting
March 19, 2024
Agenda Item 15.1
288
Legislative
Advocacy
Program
Objectives
• Advocate in S acramento and
Washington, D.C. to accurately
and persuasively present the
positions of the City of Stockton
• Establish r elationships with key
Legislators and Staff
• Provide e arly intelligence on
emerging issues
• Share kno wledge of trade-offs
impacting legislative framing
and funding
• Target f unding allocations and
grant applications
• Achieve th e priority State and
Federal objectives of the City
289
LegislativeAdvocacy
Program
Scope
• Legislative P rogram Consultation - Annual Legislative Programs, government relations strategy and funding
strategy development
• Legislative A dvocacy – Represent the City; review
executive proposals, legislation, administrative rules; provide regular reports; prepare letters and testimony; facilitate communication and meetings
• Funding A dvocacy and Assistance – Advise and assist in the preparation of appropriations, earmarks and other
funding opportunities requests
• Political R eform (State Program) – Register on behalf of the City, and comply with all reporting requirements
mandated by the Lobbying Disclosure Act
290
LegislativeProgram
Timeline& Process
State Legislative Year: July 1 – June 30
Federal Legislative Year: October 1 – September 30
• Biweekly Meetings: Te ams update meetings scheduled throughout year.
• October-December: Di scuss City fundingand policy environment in preparation for new calendar year.
• January: Departmental legislative discussionswi th Federal and State lobbyists throughout month.
• January-February: S tate bill season. Conduct City staff brainstorming and planning session for appropriations.
• February-Mar ch: Develop funding and policy proposals to present to Council at Strategic Planning and Goal Setting Workshop. • March – April: P resent Federal and State Legislative Advocacy Programs at Council meeting. Submit appropriation requests. • May: Federal SJCOG O ne Voice project proposal and advocacy during annual trip to Washington, D.C.
291
StateLevelAdvocacy
Emanuels Jones and Associates (EJA)
• Sacramento-bas ed non-partisan government relations
firm established in 1987
• Consultant has p rovided state legislative advocacy
services to the City of Stockton since 2012
• Specializes in Cal ifornia local government issues, with experience in local government, municipal law,
municipal finance
• Expertise in ar eas of public works, transportation,
public safety, telecommunications, environmental
issues and community services issues
• Employs state-of-th e-art bill tracking systems for
delivery of information to clients
• From p olicy review, strategic planning to legislative development and regulatory implementation, EJA
assists and positions clients for success
292
LegislativeProgram
Accomplishmentsin 2023
State Level
• Workedw ith Assemblymember Villapudua,
Senator Eggman and a coalition of advocates to
stop inclusion of Delta Conveyance Projectin
Governor’s InfrastructurePackage (SB 149).
• Workedw ith coalition of lobbyists to stop key
water rights bills, that would have severely
restrictedthe City’s water rights.
• Workedw ith Big City Mayors to secure $1 Billion
in funding for Round 5 of HHAP in State Budget.
• Workedto p rotect funding for urban flood risk
reduction projects in the State Budget.
• Workedw ith Assemblymember Villapudua’s and
Senator Eggman’s Offices on letter of support for
the City’s Homekeyapplication.
• Supported m ental health legislation as well as
legislation to allow the City to achieve a 200-year
event level of flood protection.
293
LegislativeProgram
Fundingin 2023
State Level
• Bubbler Syst em & Trash Boom at
Morelli Park - $3 Million
• Miracle M ile Public Safety Maintenance
Substation and Parking - $3.1 Million
• Aquatics Inf rastructure - $4 Million
• Vocational O pportunities for People/Adults
with Intellectual Disabilities - $1 Million
294
City of
Stockton
Priorities
2024
State Level

1. Workforce Inf rastructure Upsizing: Integratedevelopment of Stockton Arena Parking Garage/FoodIncubator with workforcedevelopment and leverage entrepreneurship.

2. Restorative J ustice Adult Housing Support: Fundand implement the RestorativeJustice Housing Vouchers Program to assist young individuals seeking an alternative to gun and gun violence by establishing 12 months of safe permanent housing.The program would build relationshipswith property managers to encourage housing for individuals with lived experiences,and would cover move- in costs, up to three months of rent, and intensivewraparound services for clients to maintain stable housing.

3. Van B uskirk Park Reuse: Site work and construction management for the Van Buskirk Golf Course Reuse Project to prepare for $7M in amenities provided by California StatewidePark Development and Community RevitalizationProgram.Work includes - but is not limited to - surveying, clearing, grading,leveling and compacting.

4. Complete St reets Project on PershingAvenue: Develop a Precise Road Plan to transform the Pershing Avenue corridor into a Complete Street to support multi-modal transportation and safety improvements.

5. Animal Sh elter Renovation : Completefunding for full renovation of Animal Shelter to include project alternativesand new kennels to align with industry standards.

6. Police O perations Building Remodel: RemodelRoll Call Room to include a classroom for trainingneeds and upfitting of the new Wellness Fitness Room.
295
StateLegislative
Challenges
• Taxpayer Protection and G overnment
Accountability Act – November 2024 Ballot
• Protection of Lo cal Government Funds in
the State Budget – HHAP Grant funds,
Transportation and other funding
• Legislation on Del ta Conveyance and Water
Rights Curtailment
• Legislation related to F lood Protection
• Legislation related to P roposition 47 and
Retail Theft
• Legislation related to Ho melessness and
Affordable Housing
296
FederalLevel Advocacy
Summit Strategies Government Affairs
• Washington, D .C.- based national strategic government affairs consulting firm establishedin 2015
• Specializesi n federaland state lobbying, legislative and regulatory monitoring, public policy analysis and development, grant support andcoalition building
• Summit’s p ractice includes municipal and county governments, parks and recreationdistricts, port authorities, freightrail and transportation agencies, environmentalentities throughout U.S. • Areas of E xpertise
• Transportation
• Economic D evelopment
• Environment, En ergy & Natural Resources
• Technology
• Labor
• Taxes& T rade
297
LegislativeProgram
Accomplishmentsin 2023
Federal Level
• Support of C ongressionally directed spending requests. • Support of F ederal transportation grants, including SS4A and RAISE.
• Worked to str engthen Stockton’srelationship with federal agencies and Congressional offices.
• Met wi th City Department Directors to learn about City priorities. Reviewed federal programs and monitored
federal grant opportunities to identify federal programs to meet needs.
• Met bi -weekly with Stockton Government Affairs staff to discuss local priorities and ways the revised federal
policies or federal funding could help resolve or support. 298
City of
Stockton
Priorities
2024
Federal Level

1. Workforce I nfrastructure Upsizing: Integrate development of Stockton Arena Parking Garage/Food Incubator with workforce development and leverage entrepreneurship.

2. Redevelopment & Bl ight Abatement : Strategic acquisition and demolition funding to incentivize revitalization and develop blight abatement strategies.

3. Downtown B usiness Emergency Infrastructure: Foster emergency preparedness of Historic Downtown vacant buildings through fire sprinkler installation/earthquake remediation to encourage economic activity and support health and safety of “mom-and-pop businesses”.

4. Restorative J ustice Adult Housing Support : Fund and implement the Restorative Justice Housing Vouchers Program to assist young individuals seeking an alternative to gun and gun violence by establishing 12 months of safe permanent housing.

5. Van B uskirk Park Reuse: Site work and construction management for the Van Buskirk Golf Course Reuse Project to prepare for $7M in amenities provided by California Statewide Park Development and Community Revitalization Program. Work includes - but is not limited to- surveying, clearing, grading, leveling and compacting.

6. Complete S treets Project on Pershing Avenue: Develop a Precise Road Plan to transform the Pershing Avenue corridor into a Complete Street to support multi-modal transportation and safety improvements.

7. Urban F orestry Development: Plant and maintain trees throughout Stockton to beautify City, provide greening and shade, regulate temperature extremes, reduce carbon emission/greenhouse effect, and reduce public health disparities.

8. Police Op erations Building Remodel: Remodel Roll Call Room to include a classroom for training needs and upfitting of the new Wellness Fitness Room.
299
Questions and
Comments on
2024 Legislative
Program
300
City of Stockton
Legislation Text
File #: 24-0196, Version: 1

ADOPT RESOLUTION AUTHORIZING THE ISSUANCE OF SPECIAL TAX BONDS FOR AND ON BEHALF OF IMPROVEMENT AREA 3 OF THE CITY OF STOCKTON COMMUNITY FACILITIES DISTRICT NO. 2018-2 (WESTLAKE VILLAGES II), APPROVING AND DIRECTING THE

EXECUTION OF A FISCAL AGENT AGREEMENT, APPROVING THE FORM OF PRELIMINARY

OFFICIAL STATEMENT, APPROVING THE SALE OF SUCH BONDS, AND APPROVING OTHER

RELATED DOCUMENTS AND ACTIONS

RECOMMENDATION
It is recommended that City Council adopt a resolution to authorize the issuance and sale of Special Tax Bonds, payable from Special Taxes, for and on behalf of Improvement Area 3 of the City of Stockton Community Facilities District No. 2018-2 (Westlake Villages II) in the estimated amount of $13,960,000 (not-to-exceed $15,500,000), and directing the execution of a Fiscal Agent agreement approving as to form a preliminary official statement, and approving all other documents and actions in connection with the issuance.

Summary
The City Council established the City of Stockton Community Facilities District No. 2018-2 (Westlake Villages II) (the “District”) on June 19, 2018, to provide financing for the acquisition of a portion of the public infrastructure improvements for the District. To date, the District has sold three bonds for Improvement Areas 1 and 2 totaling $23,280,000.

Development of Improvement Area 3 is now sufficiently advanced to support a bond issue for this phase of the development. Approval of the Resolution authorizes the issuance of special tax bonds for Improvement Area 3 of the District (the “2024 Bonds”) in the estimated amount of $13,960,000 and a not-to-exceed amount of $15,500,000 (with the actual principal amount being a factor of market conditions at the time of sale). This bond issue will reimburse the developer for the cost of public capital improvements in Improvement Area 3 of the District, consisting primarily of roadway, bridge, sewer, water, reclaimed water, dry utilities, storm drain, stormwater basin, street and parkway landscaping, curb and gutter, medians, median landscaping, traffic signals, entry signage, parks, trails, lakes, and pump stations.

In addition to the special taxes collected by the City to repay bonds issued to acquire improvements from the developer, the City also collects special taxes for authorized services and maintenance in each improvement area for or related to police and criminal justice, fire, ambulance, and paramedic, maintenance of parks, parkways, roads, streets, open space, and the maintenance and operation of any city real property including incidental expenses related to any authorized service.

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File #: 24-0196, Version: 1
The City also collects special taxes in each improvement area for administrative fees of the City and for those of the Fiscal Agent and the reimbursement of costs related to the formation of the District and each improvement area advanced by the City or the landowner(s).

DISCUSSION
Background
The City Council established the District in June 2018 to provide the funding necessary for the acquisition of certain public infrastructure improvements authorized for the District. The District was split off from CFD 2006-2 (Westlake Villages), which was dormant for many years after 322 out of the 2,622 planned homes had been built.

CFD 2018-2 (Westlake Villages II) comprises the remaining 580 acres of the original roughly 855 gross acres of contiguous parcels made up CFD 2006-2. The District is in North Stockton, South of Eight Mile Road and West of Highway 5, just east of White Slough and the Delta. The District is planned for 2,163 homes ranging in size from 1,400 to 3,500 square feet, and when fully developed, will 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.

The City formed the District via Resolution 2018-06-19-1501, which moved undeveloped parcels from CFD 2006-2 into the District and authorized special taxes to pay for administrative costs, the costs of acquiring public facilities through the issuance of bonds, and the provision of services. On February 4, 2020, a revision to Improvement Area 1 within the District was approved, which decreased the size of Improvement Area 1 and increased the area of Improvement Area 2 (via Resolution 2020-02-04- 1501).

On December 7, 2021, the City Council adopted a Resolution of Consideration to begin the process of changing the boundary map to reduce the size of Improvement Area 2 by creating Improvement Area 3 and Improvement Area 4 out of the remaining area of Improvement Area 2. This process was concluded on January 11, 2022, after a public hearing and landowner election.

The District sold bonds for Improvement Area 1 in 2020 in the amount of $8,970,000 and in 2021 in the amount of $4,535,000. The District sold bonds for Improvement Area 2 in 2022 in the amount of $9,775,000. The maximum bond authorization for Improvement Area 3 was established at $18,500,000.

Present Situation
All of the 277 residential lots in Improvement Area 3 have been completed and sold to Lennar Homes of California, LLC (“Lennar”). All of the required backbone and in-tract improvements to develop the lots are now in place, including paved access and public utilities to the lots, and home building and sales activity is underway by Lennar. As of February 12, 2024, 191 building permits had been pulled, with home construction activities ongoing. As of January 15, 2024, 67 homes had been sold and closed to individual homeowners.

Approval of the Resolution authorizes the issuance of the 2024 Bonds in the estimated amount of $13,960,000 and a not-to-exceed amount of $15,500,000 (with the actual principal amount being a City of Stockton Printed on 3/15/2024Page 2 of 5
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factor of market conditions at the time of sale). Approval of the Resolution also directs the execution of a Fiscal Agent Agreement, approves the form of Preliminary Official Statement and approves all the other related documents and actions required to bring the 2024 Bonds to market and to close the transaction.

Financing Team
The financing team consists of representatives from the appropriate City vendor pools:
· Bond Counsel: Jones Hall
· Municipal Advisor: Del Rio Advisors, LLC
· Underwriter: Oppenheimer & Co. Inc.
· Fiscal Agent: US Bank National Association
Legal Authority and Procedures
The Special Taxes levied in the District are paid on the property tax bill and are treated the same as other taxes, such as the ad valorem, general obligation bonds for schools, and other overlapping assessments and special taxes from other jurisdictions. Should a property owner become delinquent on any portion of their property tax bill, the property is subject to accelerated judicial foreclosure, and the amount of lien on the property associated with the special taxes can be paid from the proceeds of any foreclosure action. This process provides security to the bondholders.

Schedule
If approved by the City Council, the transaction schedule is as follows:

Timeline Item
Friday, March 22nd Post Preliminary Official Statement
Tuesday, April 2nd Pre-market the 2024 Bonds
Wednesday, April 3rd Market the 2024 Bonds
Wednesday, April 17th Closing and Transfer of Funds
Documents for Consideration

1. Fiscal Agent Agreement: This Agreement governs the terms and conditions of the bonds and the role and responsibilities of the Fiscal Agent. It also includes the covenants of the City concerning the levy of the special tax, foreclosure of delinquent parcels, and related matters.

2. Preliminary Official Statement: This is the offering document provided to investors with all material information related to the proposed bonds and the District. This document includes a Continuing Disclosure Certificate, which is the document detailing what ongoing information will be provided to investors.

3. Bond Purchase Agreement:

This document details the agreement related to the terms of the negotiated sale of the bonds to the underwriter and the conditions for closing the bond issue.

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FINANCIAL SUMMARY
There is no impact on the City’s General Fund or any other unrestricted fund as a result of taking the recommended action.

Capitalized Interest is being funded as part of the 2024 Bonds. The capitalized interest will pay interest on the bonds due on September 1, 2024, and will partially cover the interest on the 2024 Bonds payable on March 1, 2025, and September 1, 2025. The debt service balance due on March 1, 2025, and September 1, 2025, will be paid from the collection of special taxes placed on the tax roll around August 1, 2024. Final sizing of the 2024 Bonds will ensure that the special taxes are sufficient to consider City administrative fees and debt service coverage beyond actual debt service payments. Bond investors take the risk that if delinquencies were to exceed 10% and the funded debt service reserve fund was depleted, there may not be sufficient funds to pay debt service when due.

However, the foreclosure remedy remains a potential source of later payment.

This CFD issuance is reported in a custodial fund that does not report revenues and expenditures.

For this reason, the adoption of this resolution approves the costs related to the transaction, which include those costs shown in the good faith estimates (See “SB 450 Compliance”).

The estimated costs of issuance are $275,000, which includes fixed costs for the fees and expenses of bond counsel, disclosure counsel, municipal advisor, fiscal agent, special tax consultant, the City’s administrative fee of approximately $62,500, the appraiser and other costs including printing the preliminary and final official statements. The other primary cost is the compensation to the Underwriter as the underwriter’s discount in the estimated amount of $132,620 (0.95% of the principal amount of bonds).

SB 450 Compliance (“Good Faith Estimates”)
California Government Code Section 5852.1 requires that the City disclose specified information obtained as good faith estimates from an underwriter or municipal advisor prior to authorization of the issuance of the 2024 Bonds. The City has received such information from the Underwriter, which is set forth below:
(1) Name of Underwriter: Oppenheimer & Co. Inc.
(2) City Council Meeting Date: March 19, 2024
(3) Name of Bond Issue: Improvement Area 3 of the City of Stockton, Community Facilities District No. 2018-2 (Westlake Villages II), Special Tax Bonds, Series 2024 (4) The Underwriter has provided to the City the following required good faith estimates relating to the 2024 Bonds:
a) The true interest cost of the 2024 Bonds, which means the rate necessary to discount the amounts payable on the respective principal and interest payment dates to the purchase price received for the new issue of bonds: 4.972164%.

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b) The finance charge of the 2024 Bonds, which means the sum of all fees and charges paid to third parties: $407,620.00, which includes both the underwriter’s discount in the estimated amount of $132,620.00 and fixed costs of issuance in the estimated amount of $275,000.00.
c) The amount of proceeds received by the public body for sale of the 2024 Bonds less the finance charge of the 2024 Bonds described in subparagraph b) and less any reserves or capitalized interest paid or funded with proceeds of the: $11,772,349.93. d) The total payment amount, which means the sum total of all payments the public body will make to pay debt service on the 2024 Bonds (which total payment amount is calculated to the final maturity of the 2024 Bonds): $29,534,311.11.

The foregoing estimates constitute good faith estimates only. The actual principal amount of the 2024 Bonds issued and sold, the true interest cost thereof, the finance charges thereof, the amount of proceeds received therefrom and total payment amount with respect thereto may differ from such good faith estimates due to a variety of factors. The actual interest rates borne by the 2024 Bonds and the actual amortization of the 2024 Bonds will depend on market interest rates at the time of sale thereof. Market interest rates are affected by economic and other factors beyond the control of the City.

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RESOLUTION NO.

STOCKTON CITY COUNCIL

RESOLUTION AUTHORIZING ISSUANCE OF SPECIAL TAX BONDS FOR AND ON BEHALF OF IMPROVEMENT AREA 3 OF THE CITY OF STOC KTON COMMUNITY FACIL ITIES DISTRICT NO. 2018 -2 (WESTLAKE VILLAGES I I), APPROVING AND DI RECTING THE

EXECUTION OF A FISCA L AGENT AGREEMENT, A PPROVING THE FORM OF

PRELIMINARY OFFICIAL STATEMENT, APPROVING THE SALE OF SUCH B ONDS, AND

APPROVING OTHER RELATED DOCUMENTS AND ACTIONS

The City Council (the “Council”) of the City of Stockton (the “City”) has conducted proceedings under and pursuant to the Mello-Roos Community Facilities Act of 1982, as amended, Chapter 2.5 of Part 1 of Division 2 of Title 5, commencing at section 53311, of the California Government Code (the “Act”), to form (i) City of Stockton Community Facilities District No. 2018 -2 (Westlake Villages II) (the “CFD”), (ii) Improvement Area 1 of the City of Stockton Community Faci lities District No. 2018 -2 (Westlake Villages II) (“Improvement Area 1 ”), (iii) Improvement Area 2 of the City of Stockton Community Facilities District No. 2018 -2 (Westlake Villages II) (“Improvement Area 2 ”) and (i v) Improvement Area 3 of the City of Stockton Community Facilities District No. 2018 -2 (Westlake Villages II) (“Improvement Area 3” and together with Improvement Area 1 and Improvement Area 2, the “Improvement Areas”), to authorize the levy of special taxes upon the land within the Improvement Areas, and to issue bonds secured by said special taxes for the purpose of providing moneys for the construction and acquisition of authorized improvements for the District; and

Subsequent to the initial formation of the District, the Ci ty Council adopted (i) “Resolution Ordering Change to Rate and Method for Improvement Area No. 1 and 2 and Adjusting Improvement Area Boundaries for a Community Facilities District and Directing Recording of Notice of Special Tax Lien,” Resolution No. 2020 -02-04-1501, on February 4, 2020, officially reforming the boundaries of Improvement Area No. 1 and Improvement Area No. 2 and amending the Rate and Method of Apportionment of Special Tax for Improvement Area 1 and Improvement Area 2 , and (ii) “Resolution Ordering Changes Affecting Certain Parcels Within Improvement Area 2 of Community Facilities District No. 2018 -2 (Westlake Villages II), Establishing Improvement Area 3 and Improvement Area 4 in the District, and Directing Recording of Amended Notice of Special Tax Lien,” Resolution No. 2022-01-11-1601, on January 11, 2022, officially reforming the boundaries of Improvement Area No. 2 and forming Improvement Area 3 and Improvement Area 4, all pursuant to the Act; and

The Council, as legislative body of the District, authorized the issuance of special tax bonds of the City for Improvement Area 3 in the maximum principal amount of not to exceed $18,500,000 (the “Bond Authorization”), and the Council, as legislative body of the District, now desires to issue a series of bonds for Improvement Area 3 (the “Bonds”) 306

to finance public infrastructure , as further detailed in the Fiscal Agent Agreement approved herein; and

The Council, as legislative body of the District, has obtained and disclosed all of the information required to be obtained and disclosed related to the Bonds under section 5852.1 of the California Government Code in the staff report accompanying this Resolution; and

There has been submitted to the Council a Fiscal Agent Agreeme nt (the “ Fiscal Agent Agreement”) (attached as Exhibit 1, incorporated by reference), between the City and U.S. Bank Trust Company, N ational Association, as fiscal agent , providing for the issuance and terms of the Bonds, and the Council, with the aid of City staff, has reviewed the Fiscal Agent Agreement and found it to be in proper order, and now desires to approve the Fiscal Agent Agreement, the issuance of the Bonds and the execution of those and related documents; and

The City proposes to sell the Bo nds to Oppenheimer & Co. Inc., as underwriter (the “Underwriter”), pursuant to the terms of a Bond Purchase Agreement by and between the City and the Underwriter, and the Underwriter proposes to offer the Bonds to the investing public by means of a Preliminary Official Statement, and the Council, with the aid of City staff, has reviewed the Bond Purchase Agreement (attached as Exhibit 2 , incorporated by reference) and the Preliminary Official Statement (attached as Exhibit 3, incorporated by referen ce) and found them to be in proper order, and now desires to approve said documents; and

All conditions, things and acts required to exist, to have happened and to have been performed precedent to and in the issuance of the Bonds as contemplated by this Resolution and the documents referred to herein exist, have happened and have been performed in due time, form and manner as required by the laws of the State of California, including the Act; now, therefore,

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

1. This Council finds and determines that it is prudent in the management and development of land in the City and the District to issue the Bonds for the purpose of providing moneys for the construction and acquisition of authorized improvements for the District.

2. For the purposes of these proceedings in and for Improvement Area 3 of the District, the Act shall be the authority for the issuance of the Bonds.

3. Pursuant to the Act, this Resolution and the Fiscal Agent Agreement, special tax bonds of the City for Improvement Area 3 of the District designated as “Improvement Area 3 of the City of Stockton Community Facilities District No. 2018-2 (Westlake Villages II) Special Tax Bonds Series 2024” in an aggregate principal amount estimated at 307

$13,960,000 (not to exceed $15,500,000) are hereby authorized to be issued. The Bonds shall be executed in the form set forth in, and otherwise as provided in the Fiscal Agent Agreement.

The Bonds shall not be issued unless the value of the real propert y within Improvement Area 3 subject to the special tax to pay debt service on the Bonds, based on assessed values and/or an appraisal by an independent appraiser hired by the City for the purpose of determining such value, is at least three (3) times the proposed principal amount of the outstanding Bonds proposed to be issued and secured by a special tax levied pursuant to the Act on property within Improvement Area 3.

4. The Council hereby approves the Fiscal Agent Agreement and the terms therein, subst antially in the form presented to the Council at this meeting. The City Manager, Chief Financial Officer or such other person or persons as any of them may designate (collectively, the “Authorized Officers”), each acting alone or together with any other Authorized Officer, are each hereby authorized and directed to execute the Fiscal Agent Agreement, for and in the name and on behalf of the City and Improvement Area 3 of the District, in such form, together with any additions thereto or changes therein deemed necessary or advisable by the Authorized Officer executing such document upon consultation with Jones Hall, A Professional Law Corporation, as bond counsel to the City (“Bond Counsel”). The proceeds of the Bonds shall be applied by the City for the purposes and in the amounts as set forth in the Fiscal Agent Agreement . The Council hereby authorizes the delivery and performance by the City of the Fiscal Agent Agreement.

5. The City hereby covenants, for the benefit of the owners of the Bonds, to commence and diligently pursue to completion any foreclosure action regarding delinquent installments of any amount levied as a special tax for the payment of interest or principal of the Bonds, said foreclosure action to be commenced and pursued as more completely set forth in the Fiscal Agent Agreement.

6. The Council hereby approves the Preliminary Official Statement with respect to the Bonds, in substantially the form on file wi th the City Clerk. Distribution of the Preliminary Official Statement by the City and the Underwriter is hereby approved, and, prior to the distribution of the Preliminary Official Statement, and each Authorized Officer, each acting alone or together with any other Authorized Officer, is authorized and directed, on behalf of the City, to deem the Preliminary Official Statement “final” pursuant to Rule 15c2-12 under the Securities Exchange Act of 1934 (the “Rule”). The execution of the final Official State ment, which shall include such changes and additions thereto deemed advisable by the Authorized Officer executing the same, and such information permitted to be excluded from the Preliminary Official Statement pursuant to the Rule, is hereby approved for delivery to the purchasers of the Bonds, and each Authorized Officer, each acting alone or together with any other Authorized Officer, is authorized and directed to execute and deliver the final Official Statement for and on behalf of the City, to deliver to the Underwriter a certificate with respect to the information set forth therein and to deliver to the Underwriter the Continuing Disclosure Undertaking in substantially the form 308

on file with the City Clerk, together with such changes and additions theret o deemed advisable by the Authorized Officer executing the same.

7. The Council hereby approves the Bond Purchase Agreement in substantially the form on file with the City Clerk; provided, that the aggregate principal amount of Bonds shall not exceed $15,500,000 or result in an Underwriter’s discount in excess of 1.00%, or a true interest cost in excess of 6.00%. Subje ct to the foregoing parameters, an Authorized Officer is hereby authorized and directed to execute the Bond Purchase Agreement in substantially the form on file with the City Clerk, together with such changes and additions thereto deemed advisable by the Authorized Officer executing the same.

The Council hereby finds and determines that the sale of the Bonds at negotiated sale as contemplated by the Bond Purchase Agreement will result in a lower overall cost.

8. All actions heretofore taken by the officers, employees and agents of the City with respect to the establishment of the District and the Improvement Areas and the sale and issuance of the Bonds are hereby approved, confirmed and ratified, and the Authorized Officers of the City are hereby authorized and directed to do any and all things and take any and all actions and execute any and all certificates, agreements and other documents, which they, or any of them, may deem necessary or advisable in order to consummate the lawful issuance and delivery of the Bonds in accordance with this resolution, and any certificate, agreement, and other document described in the documents herein approved. All actions to be taken by a specified Authorized Officer as specified herein, may be taken by the Authorized Officer (including any person holding such office on an interim basis) or any designee, with the same force and effect as if taken by such Authorized Officer.

9. This Resolution shall take effect immediately upon its adoption.

10. 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 March 19, 2024 .

KEVIN J. LINCOLN II
Mayor of the City of Stockton

ATTEST:

ELIZA R. GARZA, CMC
City Clerk of the City of Stockton
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Jones Hall Draft 1.15.24

FISCAL AGENT AGREEMENT
by and between

CITY OF STOCKTON
and

U.S. BANK TRUST COMPANY, NATIONAL ASSOCIATION,
as Fiscal Agent
Dated as of _______ 1, 2024
Relating to:
$__________
Improvement Area 3 of the City of Stockton
Community Facilities District No. 2018-2 (Westlake Villages II) Special Tax Bonds
Series 2024
EXHIBIT 1
310

i

TABLE OF CONTENTS

ARTICLE I

STATUTORY AUTHORITY AND DEFINITIONS
Section 1.01. Authority for this Agreement ......................................................................................... 3 Section 1.02. Agreement for Benefit of Bondowners ......................................................................... 3 Section 1.03. Definitions ..................................................................................................................... 3

ARTICLE II
THE 2024 BONDS
Section 2.01. Principal Amount; Designation ................................................................................... 12 Section 2.02. Terms of the 2024 Bonds ........................................................................................... 12 Section 2.03. Redemption ................................................................................................................ 13 Section 2.04. Form of Bonds ............................................................................................................ 16 Section 2.05. Execution of Bonds ..................................................................................................... 16 Section 2.06. Transfer of Bonds ....................................................................................................... 17 Section 2.07. Exchange of Bonds .................................................................................................... 17 Section 2.08. Bond Register ............................................................................................................. 17 Section 2.09. Temporary Bonds ....................................................................................................... 18 Section 2.10. Bonds Mutilated, Lost, Destroyed or Stolen ............................................................... 18 Section 2.11. Limited Obligation ....................................................................................................... 18 Section 2.12. Book-Entry Only System ............................................................................................ 18 Section 2.13. No Acceleration .......................................................................................................... 20

ARTICLE III

ISSUANCE OF BONDS
Section 3.01. Issuance and Delivery of Bonds ................................................................................. 21 Section 3.02. Application of Proceeds of Sale of 2024 Bonds ......................................................... 21 Section 3.03. Special Tax Fund ........................................................................................................ 21 Section 3.04. Improvement Fund ..................................................................................................... 23 Section 3.05. Costs of Issuance Fund .............................................................................................. 24 Section 3.06. Surplus Fund .............................................................................................................. 24

ARTICLE IV
PLEDGE OF NET TAXES; RESERVE FUND
Section 4.01. Pledge of Net Taxes and Other Amounts. .................................................................. 26 Section 4.02. Reserve Fund ............................................................................................................. 26

ARTICLE V

OTHER COVENANTS OF THE CITY
Section 5.01. Punctual Payment ...................................................................................................... 29 Section 5.02. Limited Obligation ....................................................................................................... 29 Section 5.03. Extension of Time for Payment .................................................................................. 29 Section 5.04. Against Encumbrances ............................................................................................... 29 Section 5.05. Books and Accounts ................................................................................................... 29 Section 5.06. Protection of Security and Rights of Owners .............................................................. 29 Section 5.07. Collection of Special Taxes; Transfer of Net Taxes ................................................... 30 Section 5.08. Covenant to Foreclose ............................................................................................... 30 Section 5.09. Additional Bonds ......................................................................................................... 31 Section 5.10. Compliance with Law; Completion of Project ............................................................. 31 Section 5.11. Continuing Disclosure to Owners ............................................................................... 31 Section 5.12. Private Activity Bond Limitation .................................................................................. 31 Section 5.13. Federal Guarantee Prohibition ................................................................................... 32 Section 5.14. No Arbitrage ............................................................................................................... 32 Section 5.15. Maintenance of Tax-Exemption .................................................................................. 32 Section 5.16. Yield of the 2024 Bonds ............................................................................................. 32 EXHIBIT 1
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ii
Section 5.17. Annual State Reports ................................................................................................. 32 Section 5.18. Further Assurances .................................................................................................... 33

ARTICLE VI
INVESTMENTS; DISPOSITION OF INVESTMENT PROCEEDS;

LIABILITY OF THE CITY
Section 6.01. Deposit and Investment of Moneys in Funds ............................................................. 34 Section 6.02. Rebate of Excess Investment Earnings to the United States ..................................... 35 Section 6.03. Limited Obligation ....................................................................................................... 35

ARTICLE VII

THE FISCAL AGENT
Section 7.01. Appointment of Fiscal Agent ....................................................................................... 36 Section 7.02. Liability of Fiscal Agent ............................................................................................... 36 Section 7.03. Information .................................................................................................................. 38 Section 7.04. Notice to Fiscal Agent ................................................................................................. 38 Section 7.05. Compensation, Indemnification .................................................................................. 39

ARTICLE VIII

MODIFICATION OR AMENDMENT OF THIS AGREEMENT
Section 8.01. Amendments Permitted .............................................................................................. 40 Section 8.02. Owners' Meetings ....................................................................................................... 40 Section 8.03. Procedure for Amendment with Written Consent of Owners ...................................... 41 Section 8.04. Disqualified Bonds ...................................................................................................... 41 Section 8.05. Effect of Supplemental Agreement ............................................................................. 41 Section 8.06. Endorsement or Replacement of Bonds Issued After Amendments .......................... 42 Section 8.07. Amendatory Endorsement of Bonds .......................................................................... 42 Section 8.08. Opinion of Counsel Regarding Supplemental Agreement .......................................... 42

ARTICLE IX

MISCELLANEOUS
Section 9.01. Benefits of Agreement Limited to Parties ................................................................... 43 Section 9.02. Successor is Deemed Included in All References to Predecessor ............................ 43 Section 9.03. Discharge of Agreement ............................................................................................. 43 Section 9.04. Execution of Documents and Proof of Ownership by Owners ................................... 44 Section 9.05. Waiver of Personal Liability ........................................................................................ 44 Section 9.06. Notices to and Demands on City and Fiscal Agent .................................................... 44 Section 9.07. Partial Invalidity .......................................................................................................... 45 Section 9.08. Unclaimed Moneys ..................................................................................................... 45 Section 9.09. Applicable Law ........................................................................................................... 45 Section 9.10. Conflict with Act .......................................................................................................... 45 Section 9.11. Conclusive Evidence of Regularity ............................................................................. 45 Section 9.12. Payment on Business Day ......................................................................................... 45 Section 9.13. Counterparts ............................................................................................................... 45

EXHIBIT A FORM OF BOND
EXHIBIT B OFFICER’S CERTIFICATE REQUESTING DISBURSEMENT FROM

IMPROVEMENT FUND
EXHIBIT 1
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1 FISCAL AGENT AGREEMENT

THIS FISCAL AGENT AGREEMENT (the “Agreement”) is made and entered into as of _______ 1, 2024, by and between the City of Stockton, California, a charter city and public body, corporate and politic, organized and existing under and by virtue of the Constitution and laws of the State of California (the “City”) for and on behalf of Improvement Area 3 of the City of Stockton Community Facilities District No. 2018-2 (Westlake Villages II) (the “District”), and U.S.

Bank Trust Company, National Association, a national banking association organized under the laws of the United States of America as fiscal agent (the “Fiscal Agent”).

W I T N E S S E T H :

WHEREAS, the City Council of the City has conducted proceedings under and pursuant to the Mello- Roos Community Facilities Act of 1982, as amended, Chapter 2.5 of Part 1 of Division 2 of Title 5, commencing at section 53311, of the California Government Code (the “Act”) and Resolution No. 2018-06-19-1502-01 of the City Council adopted on June 19, 2018, to form (i) City of Stockton Community Facilities District No. 2018 -2 (Westlake Villages II) (the “District”), (ii) Improvement Area 1 of the City of Stockton Community Facilities District No. 2018-2 (Westlake Villages II) (“ Improvement Area 1”), (iii) Improvement Area 2 of the City of Stockton Community Facilities District No. 2018 -2 (Westlake Villages II) (“Improvement Area 2”), and (iv) Improvement Area 3 of the City of Stockton Community Facilities District No. 2018 - 2 (Westlake Villages II) (“Improvement Area 3” and together with Improvement Area 1 and Improvement Area 2, the “Improvement Areas”), to authorize the levy of special taxes upon the land within the Improvement Areas, and to issue bonds secured by said special taxes for the purpose of providing moneys for the construction and acquisition of authorized improvements for the District; and

WHEREAS, subsequent to the initial formation of the District , the C ity Council adopted (i) “Resolution Ordering Change to Rate and Method for Improvement Area No. 1 and 2 and Adjusting Improvement Area Boundaries for a Community Facilities District and Directing Recording of Notice of Special Tax Lien, ” Resolution No. 2020 -02-04-1501, on February 4, 2020, officially reforming the boundaries of Improvement Area No. 1 and Improvement Area No. 2 and amending the Rate and Method of Apportionment of Special Tax for Improvement Area 1 and Improvement Area 2, and (ii) “Resolution Ordering Change s Affecting Certain Parcels Within Improvement Area 2 of Community Facilities District No. 2018- 2 (Westlake Villages II), Establishing Improvement Area 3 and Improvement Area 4 in the District, and Directing Recording of Amended Notice of Special Tax Lien ,” Resolution No. 2022-01-11-1601, on January 11, 2022, officially reforming the boundaries of Improvement Area No. 2 and forming Improvement Area 3 and Improvement Area 4, all pursuant to the Act; and

WHEREAS, the City Council, as the legislative body of the District, is authorized under the Act to levy special taxes to pay for the costs of facilities within the District and the Improvement Areas therein, and to authorize the issuance of bonds secured by said special taxes under the Act; and

WHEREAS, under the provisions of the Act, on _______, 2024, the City Council of the City adopted its Resolution No. ________ (the “Resolution”), which resolution, among other matters, authorized the issuance of the Improvement Area 3 of the City of Stockton Community Facilities District No. 2018-2 (Westlake Villages II ) Special Tax Bonds Series 2024, to provide moneys for the construction and acquisition of improvements within or of benefit to Improvement EXHIBIT 1
313

2 Area 3 and provided that said issuance would be in accordance with the Act and this Agreement, and authorized the execution hereof; and

WHEREAS, i t is in the public interest and for the benefit of the City, the District, the persons responsible for the payment of special taxes and the Owners of the Bonds that the City enter into this Agreement to provide for the issuance of the Bonds, the disbursement of proceeds of the Bonds, the disposition of the special taxes securing the Bonds and any additional bonds authorized to be issued hereunder and the administration and payment of the Bonds; and

WHEREAS, the City has determined that all things necessary to cause the Bonds, when authenticated by the Fiscal Agent for the District and issued as in the Act, the Resolution and this Agreement provided to be legal, valid and binding and special obligations of the City for Improvement Area 3 in accordance with their terms, and all things necessary to cause the creation, authorization, execution and delivery of this Agreement and the creation, authorization, execution and issuance of the Bonds, subject to the terms hereof, have in all respects been duly authorized.

NOW, THEREFORE, in consideration of the covenants and provisions herein set forth and for other valuable consideration the receipt and sufficiency of which are hereby acknowledged, the parties hereto do hereby agree as follows:

EXHIBIT 1
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3 ARTICLE I

STATUTORY AUTHORITY AND DEFINITIONS

Section 1.01. Authority for this Agreement. This Agreement is entered into pursuant to the provisions of the Act and the Resolution.

Section 1.02. Agreement for Benefit of Bondowners . The provisions, covenants and agreements herein set forth to be performed by or on behalf of the City shall be for the equal benefit, protection and security of the Owners. All of the Bonds, without regard to the time or times of their issuance or maturity, shall be of equal rank without preference, priority or distinction of any of the Bonds over any other thereof, except as expressly provided in or permitted by this Agreement. The Fiscal Agent may become the Owner of any of the Bonds in its own or any other capacity with the same rights it would have if it were not Fiscal Agent.

Section 1.03. Definitions . Unless the context otherwise requires, the terms defined in this Section 1.03 shall, for all purposes of this Agreement, of any Supplemental Agreement, and of any certificate, opinion or other document herein mentioned, have the meanings herein specified. All references herein to “Articles,” “ Sections” and other subdivisions are to the corresponding Articles, Sections or subdivisions of this Agreement, and the words “herein,” “hereof,” “hereunder” and other words of similar import refer to this Agreement as a whole and not to any particular Article, Section or subdivision hereof.

“Additional Bonds ” means any series of bonds other than the 2024 Bonds issued pursuant to Section 5.09.

“Administrative Expenses” means any or all of the following:

(a) the expenses directly related to the administration of the District, 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, the District 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, the District, 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 the District, EXHIBIT 1
315

4 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 the District and all actual costs and expenses incurred in connection with the administration of the Bonds.

“Agreement” means this Fiscal Agent Agreement, as it may be amended or supplemented from time to time by any Supplemental Agreement.

“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 Jones Hall, A Professional Law Corporation, and its successors; or any other attorney at law or firm of attorneys selected by the City, of nationally recognized standing in matters pertaining to the federal tax exemption of interest on bonds issued by states and political subdivisions, and duly admitted to practice law before the highest court of any state of the United States of America.

“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, 2024.

“Bonds” means the 2024 Bonds and any Additional Bonds.

“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.

“Chief Financial Officer ” means the duly acting Chief Financial Officer of the City, or if the City has no Chief Financial Officer, such officer of the City serving a similar role.

“City” means the City of Stockton, California, and any successor thereto.

“Closing Date” means ________, 2024, the date upon which there is a physical delivery of the 2024 Bonds in exchange for the amount representing the purchase price of the 2024 Bonds by the Original Purchaser.

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5 “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, by and between the City and Willdan Fi nancial Services , or successors, in its capacity as Dissemination Agent, as originally executed and as it may be amended from time to time in accordance with the terms thereof.

“Cost of Issuance ” means items of expense payable or reimbursable directly or indirectly by the City and related to the authorization, sale and issuance of the Bonds, which items of expense shall include, but not be limited to, printing costs, costs of reproducing and binding documents, closing costs, filing and recording fees, initial fees, expenses and charges of the Fiscal Agent , including its first annual administration fee, and expenses and fees of counsel to the Fiscal Agent, expenses incurred by the City in connection with the issuance of the Bonds, financial advisor fees, Bond (underwriter ’s) discount or underwriting fee, legal fees and charges, including bond counsel, charges for execution, transportation and safekeeping of the Bonds and other costs, charges and fees in connection with the foregoing.

“Costs of Issuance Fund ” means the fund by that name established pursuant to Section 3.05(A).

“DTC” means the Depository Trust Company, and its successors and assigns.

“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.

“Depository” means (a) initially, DTC, and (b) any other Securities Depository acting as Depository pursuant to Section 2.12.

“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 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 investm ent 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 Gove rnment 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 EXHIBIT 1
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6 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: ( a) direct obligations of the Export -Import Bank, ( b) certificates of beneficial ownership issued by the Farmers Home Administration, ( c) participation certificates issued by the General Services Administration, ( d) mortgage-backed bonds or passthrough obligations issued and guaranteed by the Government National Mortgage Association, ( e) project notes issued by the United States Department of Housing and Urban Development, and (f) public housing notes and bonds guaranteed by the United States of America.

“Fiscal Agent ” means the Fiscal Agent appointed by the City and acting as an independent fiscal agent with the duties and powers herein provided, its successors and assigns, and any other corporation or association which may at any time be substituted in its place, as provided in Section 7.01.

“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.

“Gross Taxes” means the proceeds of the Special Taxes received by the City, including any scheduled payments and any prepayments thereof, 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.

“Improvement Area 3” means Improvement Area 3 of the City of Stockton Community Facilities District No. 2018-2 (Westlake Villages II).

“Improvement Fund ” means the fund by that name established pursuant to Section 3.04(A) hereof.

“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 information with respect to called bonds as the City may designate in a n Officer’s Certificate delivered to the Fiscal Agent.

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7 “Interest Payment Dates” means March 1 and September 1 of each year, commencing September 1, 2024.

“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 throu gh the final maturity date of the respective Series of Outstanding Bonds.

“Net Taxes ” means Gross Taxes minus amounts set aside to pay Administrative Expenses.

“Officer’s Certificate ” means a written certificate of the City signed by an Authorized Officer.

“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 Section 8.04) 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 Section 9.03; 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.

“Permitted Investments” means any of the following, to the extent that they are lawful investments for City funds at the time of investment, and are acquired at Fair Market Value (the Fiscal Agent is entitled to rely upon investment direction from the City as a certification that such investment constitutes a Permitted Investment):

(i) Federal Securities;

(ii) any of following obligations of federal agencies not guaranteed by the United States of America: (a) debentures issued by the Federal Housing Administration; (b) participation certificates or senior debt obligations of the Federal Home Loan Mortgage Corporation or Farm Credit Banks (consisting of Federal Land Banks, Federal Intermediate Credit Banks or Banks for Cooperatives); (c) bonds or debentures of the Federal Home Loan Bank Board established under the Federal Home Loan Bank Act, bonds of any federal home loan bank established under said act and stocks, bonds, debentures, participations and other obligations of or issued by the Federal National Mortgage Association, the Student Loan Marketing Association, the Government National Mortgage Association and the Federal Home Loan Mortgage Corporation; and (d) bonds, notes or other obligations issued or assumed by the International Bank for Reconstruction and Development;

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8 (iii) interest-bearing demand or time deposits (including certificates of deposit) in federal or State of California chartered banks (including the Fiscal Agent and its affiliates), provided that (a) the unsecured obligations of such savings and loan association shall be rated in one of the top two rating categories by a nationally recognized rating service, or the unsecured obligations of such bank (or the unsecured obligations of the parent bank holding company of which such bank is the lead bank) shall be rated at the time of purchase in one of the top two rating categories by a nationally recognized rating service; or (b) such deposits consist of U.S. dollar denominated deposit accounts, federal funds and banker’s acceptances with domestic commercial banks, which may include the Fiscal Agent and its affiliates , have a rating on their short term certificates of deposit on the date of purchase of “A” or better by S&P, maturing no more than 360 days after the date of purchase, provided that ratings on holding companies are not considered as the rating of the bank;

(iv) repurchase agreements with a registered broker/dealer subject to the Securities Investors Protection Corporation Liquidation in the event of insolvency, or any commercial bank provided that: (a) the unsecured obligations of such bank shall be rated in one of the top two rating categories by a nationally recognized rating service, or such bank shall be the lead bank of a banking holding company whose unsecured obligations are rated in one of the top two rating categories by a nationally recognized rating service; (b) the most recent reported combined capital, surplus and undivided profits of such bank shall be not less than $100 million; (c) the repurchase obligation under any such repurchase obligation shall be required to be performed in not more than thirty (30) days; (d) the entity holding such securities as described in clause (c) shall have a pledged first security interest therein for the benefit of the Fiscal Agent under the California Commercial Code or pursuant to the book -entry procedures described by 31 C.F.R. 306.1 et seq. or 31 C.F.R. 350.0 et seq. and are rated in one of the top two rating categories by a nationally recognized rating service;

(v) bankers acceptances endorsed and guaranteed by banks described in clause (iv) above;

(vi) obligations, the interest on which is exempt from federal income taxation under Section 103 of the Code and which are rated in the one of the top two rating categories by a nationally recognized rating service;

(vii) money market funds which invest solely in Federal Securities or in obligations described in the preceding clause (ii) of this definition, or money market funds which are rated in the highest rating category by Standard & Poor ’s Ratings Services or Moody ’s Investor Service, including such funds for which the Fiscal Agent, its affiliates or subsidiaries provide investment advisory or other management services or for which the Fiscal Agent or an affiliate of the Fiscal Agent serves as investment administrator, shareholder servicing agent, and/or custodian or subcustodian, notwithstanding that (a) the Fiscal Agent or an affiliate of the Fiscal Agent receives and retains a fee for services provided to the fund, (b ) the Fiscal Agent collects fees for services rendered pursuant to this Agreement, which fees are separate from the fees received from such funds, and (c) services performed for such funds and pursuant to this Agreement may at times duplicate those provided to such funds by the Fiscal Agent or an affiliate of the Fiscal Agent;

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9 (viii) units of a taxable government money market portfolio comprised solely of obligations listed in (i) and (iv) above, such funds for which the Fiscal Agent, its affiliates or subsidiaries provide investment advisory or other management services or for which the Fiscal Agent or an affiliate of the Fiscal Agent serves as investment administrator, shareholder servicing agent, and/or custodian or subcustodian, notwithstanding that ( a) the Fiscal Agent or an affiliate of the Fiscal Agent receives and retains a fee for services provided to the fund, (b) the Fiscal Agent collects fees for services rendered pursuant to this Agreement, which fees are separate from the fees received from such funds, and (c) services performed for such funds and pursuant to this Agreement may at times duplicate those provided to such funds by the Fiscal Agent or an affiliate of the Fiscal Agent;

(ix) any investment which is a legal investment for proceeds of the Bonds at the time of the execution of such agreement, and which investment is made pursuant to an agreement between the City or the Fiscal Agent or any successor Fiscal Agent and a financial institution or governmental body whose long term debt obligations are rated in one of the top two rating categories by a nationally recognized rating service;

(x) commercial paper which at the time of purchase is of “prime” quality of the highest ranking or of the highest letter and numerical rating as provided for by Moody’s Investors Service, or Standard and Poor ’s Corporation, of issuing corporations that are organized and operating within the United States and having total assets in excess of five hundred million dollars ($500,000,000) and having an “AA” or higher rating for the issuer ’s debentures, other than commercial paper, as provided for by Moody ’s Investors Service or Standard and Poor ’s Corporation, and provided that purchases of eligible commercial paper may not exceed 180 days maturity nor represent more than 10 percent of the outstanding paper of an issuing corporation;

(xi) any general obligation of a bank or insurance company whose long term debt obligations are rated in one of the two highest rating categories of a national rating service;

(xii) shares in a common law trust established pursuant to Title 1, Division 7, Charter 5 of the Government Code of the State which invests exclusively in investments permitted by Section 53635 of Title 5, Division 2, Chapter 4 of the Government Code of the State, as it may be amended;

(xiii) shares in the California Asset Management Program; or

(xiii) the Local Agency Investment Fund established pursuant to Section 16429.1 of the Government Code of the State of California, provided, however, that the Fiscal Agent shall be permitted to make investments and withdrawals in its own name and the Fiscal Agent may restrict investments in the such fund if necessary to keep moneys available for the purposes of this Fiscal Agent Agreement.

(xiv) any other lawful investment for City funds.

“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 3.

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10 “Principal Office ” means the corporate trust office of the Fiscal Agent set forth in Section 9.06, or such other or additional offices as may be designated by the Fiscal Agent.

“Project” means the acquisitions and improvements described in the Resolution of Formation, including Administrative Expenses related thereto.

“Qualified Reserve Fund Credit Instrument” means an irrevocable standby or direct-pay letter of credit or surety bond issued by a commercial bank or insurance company and deposited with the Fiscal Agent pursuant to Section 4.0 2, 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 with respect to which funds are proposed to be released pursuant to Section

4.02; 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 Section 4.0 2 or the amount to be restored to the Reserve Fund if not timely renewed or extended.

“Record Date ” means the 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.

“Reserve Fund” means the fund by that name established pursuant to Section 4.02(A).

“Reserve Requirement ” m eans, for the 2024 Bonds, an amount calculated as of the Closing Date equal to the lesser of (a) Maximum Annual Debt Service on the 2024 Bonds, (b) 125% of the average Annual Debt Service on the 2024 Bonds, or (c) 10% of the original principal amount of the 2024 (or the issue price of the 2024 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 the2024 Bonds), as calculated by the City. In connection with issuance of Additional Bonds with a debt service reserve (1) in no event shall the City, in connection with the issuance of Additional Bonds covered by the Reserve Fund pursuant to a Supplemental Agreement be obligated to deposit an amount in the Reserve Fund which is in excess of the amount permitted by the applicable provisions of the 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 shall, in connection with the issuance of such Additional Bonds, be increased only by the amount of such de posit as permitted by the Code, and (2) the City may meet all or a portion of the Reserve Requirement by depositing a Qualified Reserve Fund Credit Instrument in the Reserve Fund in accordance with Section 4.02(A).

“Resolution” means Resolution No. 2024-__________ adopted by the City Council of the City on __________, 2024, which resolution, among other matters, authorized the issuance of the Bonds.

“Resolution of Formation ” means collectively, (i) Resolution No. 2018-06-19-1502-01 of the City Council adopted on June 19, 2018, establishing the District and the Improvement Areas EXHIBIT 1
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11 for the purpose of providing for the financing of certain public facilities in and for such District, (ii) Resolution No. 2020-02-04-1501 of the City Council adopted on February 4, 2020, reforming the boundaries of Improvement Area No. 1 and Improvement Area No. 2 and amending the Rate and Method of Apportionment of Special Tax for Improvement Area 1 and Improvement Area 3, and (iii) Resolution No. 2022-01-11-1601 of the City Council adopted on January 11, 2022, reforming the boundaries of Improvement Area No. 2 and establishing Improvement Area No. 3 and Improvement Area No. 4 of the District.

“Securities Depositories ” means The Depository Trust Company; and, in accordance with then current guidelines of the Securities and Exchange Commission, such other addresses and/or such other securities depositories as the City may designate in an Officer ’s Certificate delivered to the Fiscal Agent.

“Series” means a series of Bonds issued under this Fiscal Agent Agreement.

“Special Tax Fund” means the fund by that name established by Section 3.03(A).

“Special Taxes” means the special taxes levied within Improvement Area 3 pursuant to the Act, the Ordinance and this Agreement.

“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 this Agreement, but only if and to the extent that such agreement is specifically authorized hereunder.

“Teeter Plan” means the County of San Joaquin ’s program of distributing special taxes as described under the Alternative Method of Distribution of Tax Levies and Collections and of Tax Sale Proceeds, as provided for in Sections 4701 through 4717, inclusive, of the Revenue and Taxation Code of the State of California.

“Term 2024 Bonds” means the 2024 Bonds maturing on September 1, _____, September 1, _____, and September 1, _____.

“2024 Bonds” means the Improvement Area 3 of the City of Stockton Community Facilities District No. 2018-2 (Westlake Villages II) Special Tax Bonds, Series 2024.

“2024 Reserve Account ” means the account within the Reserve Fund by that name established pursuant to Section 4.02(A).

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12 ARTICLE II

THE 2024 BONDS

Section 2.01. Principal Amount; Designation . The 2024 Bonds in the aggregate principal amount of $__________ are hereby authorized to be issued by the City for Improvement Area 3 under and subject to the terms of the Resolution and this Agreement, the Act and other applicable laws of the State of California. The 2024 Bonds shall be designated the “Improvement Area 3 of the City of Stockton Community Facilities District No. 2018-2 (Westlake Villages II) Special Tax Bonds Series 2024.”

Section 2.02. Terms of the 2024 Bonds.

(A) Form; Denominations . The 2024 Bonds shall be issued as fully registered Bonds without coupons in denominations of $5,000 or any integral multiple thereof. The 2024 Bonds shall be lettered and numbered in a customary manner as determined by the Fiscal Agent.

(B) Date of the 2024 Bonds. The 2024 Bonds shall be dated the Closing Date.

(C) CUSIP Identification Numbers . “CUSIP” identification numbers shall be imprinted on the 2024 Bonds, but such numbers shall not constitute a part of the contract evidenced by the 2024 Bonds and any error or omission with respect thereto shall not constitute cause for refusal of any purchaser to accept delivery of and pay for the 2024 Bonds.

In addition, failure on the part of the City or the Fiscal Agent to use such CUSIP numbers in any notice to Owners shall not constitute an event of default or any violation of the City ’s contract with such Owners and shall not impair the effectiveness of any such notice.

(D) Maturities. The 2024 Bonds shall be issued as term bonds and shall mature and become payable as follows:

Maturity
(Sept 1)
Principal
Amount
Interest
Rate

(T) Term Bond.

(E) Interest. The 2024 Bonds shall bear interest at the rates set forth above payable on the Interest Payment Dates in each year. Interest shall be calculated on the basis of a 360 -day year composed of twelve 30 -day months. Each 2024 Bond shall bear interest from the Interest Payment Date next preceding the date of authentication thereof unless (i) it is EXHIBIT 1
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13 authenticated on an Interest Payment Date, in which event it shall 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 shall 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 shall bear interest from the Closing Date; provided, however, that if at the time of authentication of a 2024 Bond, interest is in default thereon, such 2024 Bond shall bear interest from the Interest Payment Date to which interest has previously been paid or made available for payment thereon.

(F) Method of Payment . Interest on the 2024 Bonds (including the final interest payment upon maturity or earlier redemption) is payable by check of the Fiscal Agent mailed on the Interest Payment Dates 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 Record Date preceding the Interest Payment Date, or by wire 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 2024 Bonds; provided that so long as any 2024 Bonds are in book- entry form, payments with respect to such 2024 Bonds shall be made by wire transfer or such other method acceptable to the Fiscal Agent and to the Depository. The principal of the 2024 Bonds and any premium on the 2024 Bonds are payable in lawful money of the United States of America upon surrender of the 2024 Bonds at the Principal Office of the Fiscal Agent. All 2024 Bonds paid by the Fiscal Agent pursuant to this Section shall be cancelled by the Fiscal Agent. The Fiscal Agent shall destroy the cancelled 2024 Bonds in accordance with its records retention policy then in effect.

Section 2.03. Redemption.

(A) Redemption Dates.

(i) Optional Redemption . The 2024 Bonds are subject to optional redemption from any source of available funds other than Prepayments 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 2024 Bonds to be redeemed), plus accrued interest thereon to the date of redemption:

Redemption Dates Redemption Price
September 1, _____ through August 31, _____ 103%
September 1, _____ through August 31, _____ 102%
September 1, _____ through August 31, _____ 101%
September 1, _____ and any date thereafter 100%

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14 (ii) Mandatory Redemption From Prepayments . The 2024 Bonds shall be subject to mandatory redemption from Prepayments of the Special Tax by property owners, in whole or in part among maturities as shall be specified by the City and by lot within a maturity, o n any Interest Payment Date at the following respective redemption prices (expressed as percentages of the principal amount of the 2024 Bonds to be redeemed), plus accrued interest thereon to the date of redemption:

Redemption Dates Redemption Price
Interest Payment Dates through March 1, _____ 103%
September 1, _____ and March 1, _____ 102
September 1, _____ and March 1, _____ 101
September 1, _____ and Interest Payment Dates thereafter 100

(iii) Mandatory Sinking Fund Redemption . The 2024 Bonds maturing September 1, _____, September 1, _____ and September 1, _____ (collectively, the “Term Bonds”) are subject to mandatory sinking payment redemption in part on September 1, _____, 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:

2024 Term Bonds Due September 1, _____

Mandatory
Redemption Date
(September 1)

Sinking Fund
Payment

(Maturity)

2024 Term Bonds Due September 1, _____

Mandatory
Redemption Date
(September 1)

Sinking Fund
Payment

(Maturity)

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15 2024 Term Bonds Due September 1, _____

Mandatory
Redemption Date
(September 1)

Sinking Fund
Payment

(Maturity)

The amounts in the foregoing tables shall be reduced pro rata , at the direction of the City in an Officer’ s Certificate, in order to maintain substantially uniform debt service, as a result of any prior partial optional or mandatory redemption of the Term 2024 Bonds pursuant to Section 2.03(A)(i) or (ii) above. In the event of a redemption pursuant to Section 2.03(A)(i) or (ii), the City shall provide the Fiscal Agent with a revis ed sinking fund schedule giving effect to the redemption so completed.

In lieu of redemption under this Section 2.03, moneys in the Special Tax Fund may be used and withdrawn by the Fiscal Agent for purchase of Outstanding 2024 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 2024 Bonds be purchased at a price in excess of the principal amount thereof, plus interest accrued to the date of purchase.

(B) Notice to Fiscal Agent . The City shall give the Fiscal Agent an Officer ’s Certificate containing notice of its intention to redeem 2024 Bonds pursuant to Section

2.03(A)(i) and (ii) not less than 60 days prior to the applicable redemption date.

(C) Redemption Procedure by Fiscal Agent ; Rescission. The Fiscal Agent shall 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 2024 Bonds designated for redemption, at their addresses appearing on the 2024 Bond registration books in the Principal Office of the Fiscal Agent; but such mailing shall not be a condition precedent to such redemption and failure to mail or to receive any such notice, or any defect therein, shall not affect the validity of the proceedings for the redemption of such 2024 Bonds.

Such notice shall state the redemption date and the redemption price and, if less than all of the then Outstanding 2024 Bonds are to be called for redemption, shall designate the CUSIP numbers and 2024 Bond numbers of the 2024 Bonds to be redeemed by giving the individual CUSIP number and 2024 Bond number of each 2024 Bond to be redeemed or shall state that all 2024 Bonds between two stated 2024 Bond numbers, both inclusive, are to be redeemed or that all of the 2024 Bonds of one or more maturities have been called for redemption, shall state as to any 2024 Bond called in part the principal amount thereof to be redeemed, and shall require that such 2024 Bonds be then surrendered at the Principal Office of the Fiscal Agent for redemption at the said redemption price, and shall state that further interest on such 2024 Bonds will not accrue from and after the redemption date.

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16 Upon the payment of the redemption price of 2024 Bonds being redeemed, each check or other transfer of funds issued for such purpose shall, to the extent practicable, bear the CUSIP number identifying, by issue and maturity, of the 2024 Bonds being redeemed with the proceeds of such check or other transfer.

The City has the right to rescind any notice of the redemption of 2024 Bonds under Section 2.03(A)(i) by written notice to the Fiscal Agent on or prior to two Business Days prior the date fixed for redemption. Any notice of redemption shall 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 2024 Bonds then called for redemption, and such cancel lation shall not constitute an event of default. The City and the Fiscal Agent have no liability to the Owners or any other party related to or arising from such rescission of redemption. The Fiscal Agent shall mail notice of such rescission of redemption in the same manner as the original notice of redemption was sent under this Section.

Whenever provision is made in this Agreement for the redemption of less than all of the 2024 Bonds of any maturity, the Fiscal Agent shall select the 2024 Bonds to be redeemed, from all 2024 Bonds or such given portion thereof of such maturity by lot in any manner which the Fiscal Agent in its sole discretion shall deem appropriate.

Upon surrender of 2024 Bonds redeemed in part only, the City shall execute and the Fiscal Agent shall authenticate and deliver to the registered Owner, at the expense of the City, a new 2024 Bond or 2024 Bonds, of the same series and maturity, of authorized denominations in an aggregate principal amount equal to the unredeemed portion of the 2024 Bond or 2024 Bonds.

(D) 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 2024 Bonds so called for redemption shall have been deposited in the Special Tax Fund, such 2024 Bonds so called shall cease to be entitled to any benefit under this Agreement other than the right to receive payment of the redemption price, and no interest shall accrue thereon on or after the redemption date specified in such notice.

All 2024 Bonds redeemed and purchased by the Fiscal Agent pursuant to this Section shall be canceled by the Fiscal Agent. The Fiscal Agent shall destroy the cancelled 2024 Bonds it has received in accordance with its records retention policy then in effect.

Section 2.04. Form of Bonds . The 2024 Bonds, the form of Fiscal Agent ’s certificate of authentication and the form of assignment, to appear thereon, shall be substantially in the forms, respectively, set forth in Exhibit A attached hereto and by this reference incorporated herein, with necessary or appropriate variations, omissions and insertions, as permitted or required by this Agreement, the Resolution and the Act.

Section 2.05. Execution of Bonds. The Bonds shall be executed on behalf of the City by the Mayor and the City Clerk of the City who are in office on the date of adoption of this Agreement or at any time thereafter, and the seal of the City may be impressed, imprinted or reproduced by facsimile thereon. If any officer whose signature appears on any Bond ceases to be such officer before delivery of the Bonds to the Owner, such signature shall nevertheless be as effective as if the officer had remained in office until the delivery of the Bonds to the Owner.

Any Bond may be signed and attested on behalf of the City by such persons as at the actual EXHIBIT 1
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17 date of the execution of such Bond shall be the proper officers of the City although at the nominal date of such Bond any such person shall not have been such officer of the City.

Only such Bonds as shall bear thereon a certificate of authentication in substantially the form set forth in Exhibit A, executed and dated by the Fiscal Agent, shall be valid or obligatory for any purpose or entitled to the benefits of this Agreement, and such certificate of authentication of the Fiscal Agent shall be conclusive evidence that the Bonds registered hereunder have been duly authenticated, registered and delivered hereunder and are entitled to the benefits of this Agreement.

Section 2.06. Transfer of Bonds . Any Bond may, in accordance with its terms, be transferred, upon the books required to be kept pursuant to the provisions of Section 2.08 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 acceptable to the Fiscal Agent. The cost for any services rendered or any expenses incurred by the Fiscal Agent in connection with any such transfer shall be paid by the City. The Fiscal Agent shall collect from the Owner requesting such transfer any tax or other governmental charge required to be paid with respect to such transfer.

Whenever any Bond or Bonds shall be surrendered for transfer, the City shall execute and the Fiscal Agent shall authenticate and deliver a new Bond or Bonds, for a like aggregate principal amount of Bonds of authorized denominations and of the same maturity.

No transfers of Bonds shall 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 such Bond has been selected for redemption.

The transferor of any Bond shall also provide or cause to be provided to the Fiscal Agent all information necessary to allow the Fiscal Agent to comply with any applicable tax reporting obligations, including without limitation any cost basis reporting obligations under Internal Revenue Code Section 6045. The Trustee may rely on the information provided to it and shall have no responsibility to verify or ensure the accuracy of such information.

Section 2.07. Exchange of Bonds . Bonds may be exchanged at the Principal Office of the Fiscal Agent for a like aggregate principal amount of Bonds of authorized denominations and of the same maturity. The cost for any services rendered or any expenses incurred by the Fiscal Agent in connection with any such exchange shall be paid by the City. The Fiscal Agent shall collect from the Owner requesting such exchange any tax or other governmental charge required to be paid with respect to such exchange.

No exchanges of Bonds shall 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 such Bond has been selected for redemption.

Section 2.08. Bond Register . The Fiscal Agent will keep or cause to be kept, at its Principal Office, sufficient books for the registration and transfer of the Bonds (the “Bond Register”), which books shall show the series number, date, amount, rate of interest and Owner of each Bond and shall at all times be open to inspection by the City during regular business hours upon reasonable notice; and, upon presentation for such purpose, the Fiscal Agent shall, under such reasonable regulations as it may prescribe, register or transfer or cause to be registered or transferred, on said books, the ownership of the Bonds as hereinbefore provided.

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18 Section 2.09. Temporary Bonds . The Bonds may be initially issued in temporary form exchangeable for definitive Bonds when ready for delivery. The temporary Bonds may be printed, lithographed or typewritten, shall be of such denominations as may be determined by the City, and may contain such reference to any of the provisions of this Agreement as may be appropriate. Every temporary Bond shall be executed by the City upon the same conditions and in substantially the same manner as the definitive Bonds. If the City issues temporary Bonds it will execute and furnish definitive Bonds without delay and thereupon the temporary Bonds shall be surrendered, for cancellation, in exchange for the definitive Bonds at the Principal Office of the Fiscal Agent or at such other location as the Fiscal Agent shall designate, and the Fiscal Agent shall authenticate and deliver in exchange for such temporary Bonds an equal aggregate principal amount of definitive Bonds of authorized denominations. Until so exchanged, the temporary bonds shall be entitled to the same benefits under this Agreement as definitive Bonds authenticated and delivered hereunder.

Section 2.10. Bonds Mutilated, Lost, Destroyed or Stolen . If any Bond shall become mutilated, the City shall execute, and the Fiscal Agent shall authenticate and deliver, a new Bond of like tenor and principal amount in exchange and substitution for the Bond so mutilated, but only upon surrender to the Fiscal Agent of the Bond so mutilated. Every mutilated Bond so surrendered to the Fiscal Agent shall be canceled by it and destroyed by the Fiscal Agent in accordance with its records retention policy then in effect . If any Bond shall be lost, destroyed or stolen, evidence of such loss, destruction or theft may be submitted to the Fiscal Agent and, if such evidence be satisfactory to it and indemnity for the Fiscal Agent and the City satisfactory to the Fiscal Agent shall be given, the City shall execute, and the Fiscal Agent shall authenticate and deliver, a new Bond of like tenor and principal amount in lieu of and in substitution for the Bond so lost, destroyed or stolen. The City may require payment of a sum not exceeding the actual cost of preparing each new Bond delivered under this Section and of the expenses which may be incurred by the City and the Fiscal Agent for the preparation, execution, authentication and delivery. Any Bond delivered under the provisions of this Section in lieu of any Bond alleged to be lost, destroyed or stolen shall constitute an original additional contractual obligation on the part of the City whether or not the Bond so alleged to be lost, destroyed or stolen is at any time enforceable by anyone, and shall be equally and proportionately entitled to the benefits of this Agreement with all other Bonds issued pursuant to this Agreement.

Section 2.11. Limited Obligation. All obligations of the City under this Agreement and the Bonds shall be special obligations of the City, payable solely from the Net Taxes and the funds pledged therefore hereunder. Neither the full faith and credit nor the taxing power of the City (except to the limited extent set forth herein) or the State of California or any political subdivision thereof is pledged to the payment of the Bonds.

Section 2.12. Book-Entry Only System. DTC shall act as the initial Depository for the Bonds. One Bond for each maturity of the Bonds shall be initially executed, authenticated, and delivered as set forth herein as a separate fully registered certificate (in printed or typewritten form). Upon initial execution, authentication, and delivery, the ownership of the Bonds shall be registered in the Bond Register kept by the Fiscal Agent for the Bonds in the name of Cede & Co, as nominee of DTC or such nominee as DTC shall appoint in writing.

The Authorized Officers and the Fiscal Agent are hereby authorized to take any and all actions as may be necessary and not inconsistent with this Agreement to qualify the Bonds for the Depository ’s book- entry system, including the execution of the Depository ’s required representation letter.

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19 With respect to Bonds registered in the Bond Register in the name of Cede & Co, as nominee of DTC, the Fiscal Agent shall not have any responsibility or obligation to any broker-dealer, bank, or other financial institution for which DTC holds Bonds as Depository from time to time (the “DTC Participants ”) or to any person for which a DTC Participant acquires an interest in the Bonds (the “Beneficial Owners”). Without limiting the immediately preceding sentence, the Fiscal Agent shall not have any responsibility or obligation with respect to (i) the accuracy of the records of DTC, Cede & Co, or any DTC Participant with respect to any ownership interest in the Bonds, (ii) the delivery to any DTC Participant, any Beneficial Owner, or any other person, other than DTC, of any notice with respect to the Bonds, including any notice of redemption or mandatory tender, (iii) the selection by the Depository of the beneficial interests in the Bonds to be redeemed in the event the City elects to redeem the Bonds in part, (iv) the payment to any DTC Participant, any Beneficial Owner, or any other person, other than DTC, of any amount with respect to the principal of or interest on the Bonds, or (v) any consent given or other action taken by the Depository as Owner of the Bonds.

The Fiscal Agent may treat as and deem DTC to be the absolute Owner of each Bond for which DTC is acting as Depository for the purpose of payment of the principal of and interest on such Bonds, for the purpose of giving notices of prepayment and other matters with respect to such Bonds, for the purpose of registering transfers with respect to such Bonds, and for all purposes whatsoever. The Fiscal Agent shall pay all principal of and interest on the Bonds only to the Owners as shown on the Registration Books, and all such payments shall be valid and effective to fully satisfy and discharge all obligations with respect to the principal of and interest on the Bonds to the extent of the sum or sums so paid.

No person other than an Owner, as shown on the Bond Register, shall receive a physical Bond. Upon delivery by DTC to the Fiscal Agent of written notice to the effect that DTC has determined to substitute a new nominee in place of Cede & Co., and subject to the transfer provisions in Section 2.06 hereof, references to “Cede & Co.” in this Section 2.12 shall refer to such new nominee of DTC.

DTC may determine to discontinue providing its services with respect to the Bonds at any time by giving written notice to the Fiscal Agent and the City during any time that the Bonds are Outstanding, and discharging its responsibilities with respect thereto under applicable law. The City may terminate the services of DTC with respect to the Bonds if it determines that DTC is unable to discharge its responsibilities with respect to the Bonds or that continuation of the system of book-entry transfers through DTC is not in the best interest of the Beneficial Owners, and the City shall mail notice of such termination to the Fiscal Agent.

Upon the termination of the services of DTC as provided in the previous paragraph, and if no substitute Depository willing to undertake the functions hereunder can be found which is able to undertake such functions upon reasonable or customary terms, or if the City determines that it is in the best interest the Beneficial Owners of the Bonds that they be able to obtain certificated Bonds, the Bonds shall no longer be restricted to being registered in the Bond Register of the Fiscal Agent in the name of Cede & Co., as nominee of DTC, but may be registered in whatever name or name s the Owners shall designate at that time, in accordance with Section 2.06.

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20 To the extent that the Beneficial Owners are designated as the transferee by the Owners, in accordance with Section 2.06, the Bonds will be delivered to such Beneficial Owners as soon as practicable.

Section 2.13. No Acceleration . The principal of the Bonds shall not be subject to acceleration hereunder. Nothing in this Section 2.13 shall in any way prohibit the prepayment or redemption of Bonds under Section 2.03 hereof, or the defeasance of the Bonds and discharge of this Agreement under Section 9.03 hereof.

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21 ARTICLE III

ISSUANCE OF BONDS

Section 3.01. Issuance and Delivery of Bonds. At any time after the execution of this Agreement, the City may issue the Bonds for Improvement Area 3 in the aggregate principal amount set forth in Section 2.01 or as authorized in any supplemental agreement and deliver such Bonds to the Original Purchaser. The Authorized Officers of the City are hereby authorized and directed to deliver any and all documents and instruments necessary to cause the issuance of Bonds in accordance with the provisions of the Act, the Resolution and this Agreement, to authorize the payment of Costs of Issuance of the Bonds from the proceeds of the Bonds and to do and cause to be done any and all acts and things necessary or convenient for delivery of the Bonds to the Original Purchaser.

Section 3.02. Application of Proceeds of Sale of 2024 Bonds. (a) The proceeds of the purchase of the 2024 Bonds by the Original Purchaser in the amount of $_________ (being the principal amount thereof, less a net original issue discount of $ _________, less an Underwriter’s discount of $ _________), shall be paid to the Fiscal Agent, who shall forthwith set aside, pay over and deposit such proceeds on the Closing Date as follows:

(i) Deposit in the Improvement Fund $_________;

(ii) Deposit in the 2024 Reserve Account of the Reserve Fund $_________, equaling the initial Reserve Requirement;

(iii) Deposit in the Costs of Issuance Fund $_________; and

(iv) Deposit in the Interest Account of the Special Tax Fund $_________.

(b) The Fiscal Agent may establish such temporary funds or accounts as reasonably necessary to complete the foregoing deposits.

Section 3.03. Special Tax Fund.

(A) Establishment and Disbursements. There is hereby established as a separate fund to be held by the Fiscal Agent, the Community Facilities District No. 2018-2 (Westlake Villages II) Special Tax Bonds Special Tax Fund to be held by the Fiscal Agent for the benefit of the Owners. Except for the portion of any Prepayment to be deposited to the Redemption Account as specified in a n Officer’s Certificate delivered to the Fiscal Agent , the Fiscal Agent shall, on each date on which Net Taxes are received from the City (pursuant to Section 5.07), deposit the Net Taxes in the Special Tax Fund. The Fiscal Agent shall transfer the Net Taxes on deposit in the Special Tax Fund on the dates and in the amounts set forth in this Section, in the following order of priority:

(1) To the Interest Account of the Special Tax Fund;

(2) To the Principal Account of the Special Tax Fund;

(3) To the Redemption Account of the Special Tax Fund;

(4) To the Reserve Fund; and
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22 (5) To the Surplus Fund.

(B) Interest Account and Principal Account of the Special Tax Fund. The principal of and interest due on the Bonds until maturity, other than principal due upon optional or special mandatory redemption, shall be paid by the Fiscal Agent from the Principal Account and the Interest Account of the Special Tax Fund, respectively. For the purpose of assuring that the payment of principal of and interest on the Bonds will be made when due (including mandatory sinking fund payments) , at least one Business Day prior to each Interest Payment Date, the Fiscal Agent shall transfer from the Special Tax Fund, first to the Interest Account and then to the Principal Account, the amount required to pay interest on and 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 or the Principal 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.

(C) Redemption Account of the Special Tax Fund.

(1) In accordance with the City ’s election to call 2024 Bonds for optional redemption as set forth in Section 2.03(A)(i), or to call Additional Bonds for optional redemption as set forth in any Supplemental Agreement for Additional Bonds, the Fiscal Agent shall transfer from the Special Tax Fund and deposit in the Redemption Account of the Special Tax Fund moneys available for the purpose and sufficient to pay the principal, interest and premium, if any, payable on the 2024 Bonds or Additional Bonds called for optional redemption.

(2) The portion of any Prepayment specified in a n Officer’ s Certificate delivered to the Fiscal Agent to be deposited to the Redemption Account pursuant to Section 3.03(A) , shall be deposited to the Redemption Account and applied on the redemption date established pursuant to Section 2.03(A)(ii) for the 2024 Bonds, and in any Supplemental Agreement for any Additional Bonds, for the payment of the principal, interest and the premium, if any, payable on the 2024 Bonds or Additional Bonds to be redeemed with such Prepayments.

(3) Moneys set aside in the Redemption Account shall be used solely for the purpose of redeeming Bonds and shall be applied on or after the redemption date to the payment of principal, interest and premium, if any, on the Bonds to be redeemed; provided, that in lieu or partially in lieu of such call and redemption, moneys deposited in the Redemption Account may be used to purchase Outstanding Bonds in the manner hereinafter provided. Purchases of Outstanding Bonds may be made by the City at public or private sale as and when and at such prices as the City may in its discretion determine but only at prices (including brokerage or other expenses) not more than par plus accrued interest, plus, in the case of moneys set aside for an optional redemption, the premium applicable at the next following call date according to the premium schedule established for such Bonds. Any accrued interest payable upon the purchase of Bonds may be paid from the amount reserved in the Interest Account of the Special Tax Fund for the payment of interest on the next following Interest Payment Date.

(D) Reserve Fund. After making the transfers required by the foregoing provisions of this Section 3.03, the Fiscal Agent shall, after taking into account amounts then on deposit in the Reserve Fund (including the accounts therein), transfer amounts needed from the EXHIBIT 1
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23 Special Tax Fund to the Reserve Fund so that the amount in the Reserve Fund equals the Reserve Requirement for each Series of Bonds.

(E) Surplus Fund. After making the transfers required by the foregoing provisions of this Section 3.03, as soon as practicable after each September 2, the Fiscal Agent shall transfer all remaining amounts in the Special Tax Fund to the Surplus Fund, unless on or prior to such date, it has received an Officer’s Certificate directing that certain amounts be retained in the Special Tax Fund because the City has assumed such amounts would be available in the Special Tax Fund in calculating the amount of the levy of Special Taxes for such Bond Year pursuant to Section 5.07.

(F) Investment. Moneys in the Special Tax Fund shall be invested and deposited in accordance with Section 6.01. Interest earnings and profits resulting from such investment and deposit shall be retained in the Special Tax Fund to be used for the purposes thereof.

Section 3.04. Improvement Fund.

(A) Establishment of Improvement Fund. There is hereby established as a separate fund to be held by the Fiscal Agent, the Community Facilities District No. 2018-2 (Westlake Villages II ) Special Tax Bonds Improvement Fund to the credit of which a deposit shall be made as required by Section 3.02. Moneys in the Improvement Fund shall be held in trust and shall be disbursed as provided in subsection (B) of this Section for the payment or reimbursement of costs of the Project. Prior to disbursement, amounts on deposit in the Improvement Fund shall be subject to a lien in favor of the Owners of the Bonds.

(B) Procedure for Disbursement . Disbursements from the Improvement Fund shall be made by the Fiscal Agent upon receipt of an Officer ’s Certificate substantially in the form of Exhibit B attached hereto which shall:

(i) set forth the amount required to be disbursed, the purpose for which the disbursement is to be made, the person to which the disbursement is to be paid and state that such disbursement is for a Project cost; and

(ii) certify that no portion of the amount then being requested to be disbursed was set forth in any Officer ’s Certificate previously filed requesting disbursement.

Each such Officer ’s Certificate shall be sufficient evidence to the Fiscal Agent of the facts stated therein and the Fiscal Agent shall have no duty to confirm the accuracy of such facts.

(C) Investment. Moneys in the Improvement F und and the accounts established thereunder shall be invested and deposited in accordance with Section 6.01. Interest earnings and profits from the investment of amounts in the Improvement Fund shall be retained by the Fiscal Agent in the Improvement Fund to be used for the purposes of the Improvement Fund.

(D) Closing of Fund . Upon the earlier of three years after the Closing Date or the filing of an Officer ’s Certificate stating that the portion of the Project to be financed from the Improvement Fund has been completed and that all costs of such portion of the Project have been paid, the Fiscal Agent shall transfer the amount, if any, remaining in the Improvement EXHIBIT 1
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24 Fund to the Special Tax Fund for application to the payment of principal of and interest on the Bonds, and the Improvement Fund shall be closed.

Section 3.05. Costs of Issuance Fund.

(A) Establishment of Costs of Issuance Fund . There is hereby established as a separate fund to be held by the Fiscal Agent, the Community Facilities District No. 2018-2 (Westlake Villages II ) Special Tax Bonds Costs of Issuance Fund, to the credit of which a deposit shall be made as required by Section 3.02. Moneys in the Costs of Issuance Fund shall be held in trust by the Fiscal Agent and shall be disbursed as provided in subsection (B) of this Section for the payment or reimbursement of Costs of Issuance of the Bonds.

(B) Disbursement; Closing of Fund. Amounts in the Costs of Issuance Fund shall be disbursed from time to time to pay Costs of Issuance, as set forth in an Officer ’s Certificate containing respective amounts to be paid to the designated payees, signed by an Authorized Officer or a designee thereof and delivered to the Fiscal Agent. The Fiscal Agent shall pay all Costs of Issuance of the Bonds upon receipt of an invoice from any such payee which requests payment in an amount which is less than or equal to the amount set forth with respect to such payee in such Officer’ s Certificate, or upon receipt of an Officer ’s Certificate requesting payment of a Cost of Issuance not listed on the initial Officer’s Certificate delivered to the Fiscal Agent on the Closing Date of the Bonds. Each such Officer ’s Certificate shall be sufficient evidence to the Fiscal Agent of the facts stated therein and the Fiscal Agent shall have no duty to confirm the accuracy of such facts.

The Fiscal Agent shall maintain the Costs of Issuance Fund for a period of 6 months from the Closing Date of the Bonds and then shall transfer any moneys remaining therein, including any investment earnings thereon, to the Improvement Fund, unless such fund has been closed, in which event the moneys shall be transferred to the Special Tax Fund and the Costs of Issuance Fund shall be closed . Thereafter, any cost of issuance invoice received by the Fiscal Agent shall be submitted to the Chief Financial Officer for payment.

(C) Investment. Moneys in the Costs of Issuance Fund shall be invested and deposited in accordance with Section 6.01. Interest earnings and profits resulting from said investment shall be retained by the Fiscal Agent in the Costs of Issuance Fund to be used for the purposes of the Costs of Issuance Fund.

Section 3.06. Surplus Fund.

(A) Establishment of Surplus Fund. There is hereby established as a separate fund to be held by the Fiscal Agent, the Community Facilities District No. 2018-2 (Westlake Villages II) Special Tax Bonds Surplus Fund, to the credit of which a deposit shall be made as required by Section 3.03(E). Moneys in the Surplus Fund shall be held in trust by the Fiscal Agent for the benefit of the City.

(B) Disbursement. 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, as set forth in an Officer’s Certificate delivered to the Fiscal Agent.

(C) Investment. Moneys in the Surplus Fund shall be invested and deposited in accordance with Section 6.01. Interest earnings and profits resulting from said investment EXHIBIT 1
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25 shall be retained by the Fiscal Agent in the Surplus Fund to be used for the purposes of such fund.

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26 ARTICLE IV
PLEDGE OF NET TAXES; RESERVE FUND

Section 4.01. Pledge of Net Taxes and Other Amounts. All of the Net Taxes and all moneys deposited in the Special Tax Fund, the Reserve Fund and, until disbursed as provided herein, in the Improvement Fund , are hereby pledged to secure the repayment of the Bonds.

Such pledge shall constitute a first lien on the Net Taxes and said amounts. The Net Taxes and all moneys deposited into such funds (except as otherwise provided herein) are hereby dedicated in their entirety to the payment of the principal of, including any mandatory sinking fund payments, and interest and any premium on, the Bonds as provided herein and in the Act until all of the Bonds have been paid and retired or until moneys or Federal Securities have been set aside irrevocably for that purpose in accordance with Section 9.03.

Amounts in the Costs of Issuance Fund for any Series of Bonds are not pledged to the repayment of the Bonds. The facilities acquired with the proceeds of the Bonds are not in any way pledged to pay the Debt Service on the Bonds. Any proceeds of condemnation, destruction or other disposition of any facilities financed with the proceeds of the Bonds are not pledged to pay the Debt Service on the Bonds and are free and clear of any lien or obligation imposed hereunder.

Notwithstanding any provision contained in this Agreement to the contrary, Net Taxes deposited in the Surplus Fund shall no longer be considered to be pledged to the Bonds, and none of the Surplus Fund shall be construed as a trust fund held for the benefit of the Owners.

Section 4.02. Reserve Fund.

(A) Establishment of Fund . There is hereby established as a separate fund to be held by the Fiscal Agent , the Community Facilities District No. 2018-2 (Westlake Villages II ) Special Tax Bonds Reserve Fund , and within the Reserve Fund shall be established a 2024 Reserve Account, to the credit of which a deposit shall be made as required by Section 3.02 and deposits shall be made as provided in Section 3.03(D). 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 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. Moneys in each 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 shall be subject to a lien in favor of the Owners of the Bonds.

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 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 dep osit 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 expiration) .

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27 Any Qualified Reserve Fund Credit Instrument deposited with the Fisca l Agent shall contain instructions to the Fiscal Agent with respect to the purpose and use thereof.

(B) Use of Fund . Except as otherwise provided in this Section, all amounts deposited in the Reserve Fund shall be used and withdrawn by the Fiscal Agent solely for the purpose of making transfers to the Special Tax Fund one Business Day prior to any Interest Payment Date for which there is a deficiency in the amount required for payment of the principal of, and interest on, the Bonds on such Interest Payment Date. Whenever transfer is made from the Reserve Fund to the Special Tax Fund due to a deficiency in the Special Tax Fund, the Fiscal Agent shall provide written notice thereof to the Chief Financial Officer.

To the extent the Fiscal Agent is required to draw on amounts in the Reserve Fund, the Fiscal Agent shall draw on such amounts from any accounts within the Reserve Fund on a pro rata basis based upon the amounts produced by calculating the Reserve Requirement for each Series of Bonds related to such accounts; provided, that because the accounts are established within the Reserve Fund solely for the purpose of complying with federal tax law, nothing in this Section shall be construed to limit the availability of amounts in any account within the Reserve Fund to pay debt service on any Series of Bonds.

(C) Transfer of Excess of Reserve Requirement . Whenever the amount in the Reserve Fund exceeds the then applicable Reserve Requirement, the Fiscal Agent shall provide written notice to the Chief Financial Officer of the amount of the excess. The Chief Financial Officer shall advise the Fiscal Agent in writing of the amount, if any, of any transfer required pursuant to Section 4.02(D) and 6.02 below, and otherwise direct the Fiscal Agent to 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 covered by the Reserve Fund in accordance with Section 3.03; provided, that to the extent that such excess results from the Prepayment of Special Taxes and redemption of Bonds as provided in an Officer’s Certificate in accordance with this Agreement, such amount shall be transferred to the Redemption Account and applied to the corresponding special mandatory redemption of Bonds.

(D) Transfer for Rebate Purposes. 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 Section 6.02.

(E) Transfer When Balance Exceeds Outstanding Bonds. Whenever the balance in the Reserve Fund exceeds the amount required to redeem or pay the Outstanding Bonds covered by the Reserve Fund, including interest accrued to the date of payment or redemption and premium, if any, due upon redemption, and after making any transfer required under Section 4.02(D) above and upon receipt of an Officer ’s Certificate directing it to do so, the Fiscal Agent shall transfer the amount in the Reserve Fund to the Special Tax Fund to be applied, on the next succeeding Interest Payment Date to the payment and redemption, in accordance with Section 3.03, of all such Outstanding Bonds. In the event that the amount so transferred from the Reserve Fund to the Special Tax Fund exceeds the amount required to pay and redeem the Outstanding Bonds covered by the Reserve Fund, the balance in the Reserve Fund shall be transferred to the City, after payment of any amounts due the Fiscal Agent hereunder, to be used for any lawful purpose of the City.

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28 Notwithstanding the foregoing, no amounts shall be transferred from the Reserve Fund pursuant to this Section 4.02(E) until after the calculation, pursuant to Section 6.02, of any amounts due to the federal government following payment of the respective Series of Bonds and withdrawal of any such amount under Section 4.02(D) for purposes of making such payment to the federal government, and payment of any fees and expenses due to the Fiscal Agent.

(F) Investment. Moneys in the Reserve Fund shall be invested and deposited in accordance with Section 6.01. Interest earnings and profits resulting from such investment and deposit shall be retained in the Reserve Fund to be used and disbursed as provided in this Section 4.02.

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29 ARTICLE V

OTHER COVENANTS OF THE CITY

Section 5.01. 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 this Agreement, and it will faithfully observe and perform all of the conditions covenants and requirements of this Agreement and all Supplemental Agreements and of the Bonds.

Section 5.02. Limited Obligation. The Bonds are limited obligations of the City on behalf of Improvement Area 3 and are payable solely from and secured solely by the Net Taxes and the amounts in certain funds created hereunder as, and to the extent, set forth in Section 4.01.

Section 5.03. 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 hereunder, to the benefits of this 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.

Section 5.04. Against Encumbrances . The City will not encumber, pledge or place any charge or lien upon any of the Net Taxes 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 this Agreement.

Section 5.05. 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 of the City relating to the Special Taxes. 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 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 Special Tax 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 10% of the principal amount of the Bonds then Outstanding, or their representatives duly authorized in writing. The Fiscal Agent may establish and maintain for so long as is necessary one or more temporary funds and accounts under this Agreement.

Section 5.06. 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.

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30 Section 5.07. Collection of Special Taxes; Transfer of Net Taxes. The City shall comply with all requirements of the Act so as to assure the timely collection of the Special Taxes, including without limitation, the enforcement of delinquent Special Taxes.

On or within 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 Special Tax Fund, the Reserve Fund and the Surplus Fund. The receipt of such notice by the Chief Financial Officer shall in no way affect the obligations of the Chief Financial Officer under the following two paragraphs. Upon receipt of such notice, the Chief Financial Officer shall ascertain the relevant parcels on which the Special Taxes are to be levied, taking into account any parcel splits during the preceding and then current year.

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 the County Treasurer-Tax Collector will accept the transmission of the Special Tax amounts for the parcels within Improvement Area 3 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 3 required for the payment of principal of and interest on any outstanding Bonds of Improvement Area 3 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 3 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. Notwithstanding the foregoing, the Special Taxes may be collected in such other manner as the City shall prescribe if necessary to pay the debt service on the Bonds.

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 leas t 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.

Section 5.08. Covenant to Foreclose . The City hereby covenants 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:

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31 (a) 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 take appropriate steps to 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 3 for which such installment of the Special Tax is delinquent, and will diligently prosecute and pursue such foreclosure proceedings to judgment and sale; or

(b) the amount so collected is deficient by less than 5% of the total amount of the Special Tax levied in Improvement Area 3 in such Fiscal Year, but that property owned by any single property owner in Improvement Area 3 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 take appropriate steps to 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.

Section 5.09. Additional Bonds . I The City may issue one or more additional series of special tax bonds, payable from Net Taxes and secured by the Net Taxes equally and ratably with, or subordinate to, Bonds previously issued, 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 is less than debt service on the Bonds refunded.

Section 5.10. Compliance with Law; Completion of Project. The City will comply with all applicable provisions of the Act and the law in completing the acquisition and construction of the Project; provided that the City shall have no obligation to advance any funds to complete the Project in excess of the amounts available therefor in the Improvement Fund.

Section 5.11. Continuing Disclosure to Owners. The City hereby covenants and agrees that it will comply with and carry out all of the provisions of the Continuing Disclosure Certificate.

Notwithstanding any other provision of this Agreement, failure of the City to comply with the Continuing Disclosure Certificate shall not be considered a default hereunder; however, any Participating Underwriter or any holder or beneficial owner of the 2024 Bonds may take such actions as may be necessary and appropriate to compel performance by the City of its obligations thereunder, including seeking mandate or specific performance by court order.

Section 5.12. Private Activity Bond Limitation . The City shall assure that the proceeds of the 2024 Bonds are not so used as to cause the 2024 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.

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32 Section 5. 13. 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 2024 Bonds to be “federally guaranteed” within the meaning of Section 149(b) of the Code.

Section 5.14. 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 2024 Bonds which if such action had been reasonably expected to have been taken, or had been deliberately and intentionally taken, on the Closing Date for the 2024 Bonds would have caused the 2024 Bonds to be “arbitrage bonds” within the meaning of Section 148 of the Code and Regulations.

Section 5. 15. Maintenance of Tax -Exemption. The City shall take all actions necessary to assure the exclusion of interest on the 2024 Bonds from the gross income of the Owners of the 2024 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 2024 Bonds.

Section 5.16. Yield of the 2024 Bonds. In determining the yield of the 2024 Bonds to comply with Section 5.14 and 6.02 hereof, 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 date of the 2024 Bonds, without regard to whether or not redemption moneys are received or 2024 Bonds are redeemed.

Section 5.17. Annual State Reports . The following requirements shall apply to each Series of the Bonds:

(A) CDIAC Annual Reporting . Not later than October 30 of each calendar year, beginning with the October 30 first succeeding the date of the Bonds, and in each calendar year thereafter until the October 30 following the final maturity of the Bonds, the City shall prepare and supply the California Debt and Investment Advisory Commission, by mail, postage prepaid, with the information required to be supplied by Government Code Section 53359.5(b).

The annual reporting shall be made using such form or forms as may be prescribed by CDIAC.

(B) CDIAC Other Reporting. If within 10 days prior to any Interest Payment Date it appears to the Fiscal Agent that there is a danger of deficiency in the Special Tax Fund and that the Fiscal Agent may be unable to pay regularly scheduled debt service on the Bonds in a timely manner or if the Fiscal Agent is unable to pay principal, interest and premium, if any, due on any Interest Payment Date for the Bonds due to insufficient funds in the Special Tax Fund, or if funds are withdrawn from the Reserve Fund to pay principal and/or interest on the Bonds, then in accordance with Government Code Section 53359.5(c), the Fiscal Agent shall notify the Chief Financial Officer in writing of such fact, and the Chief Financial Officer shall notify CDIAC of such fact within 10 days of such Interest Payment Date.

(C) Governing Body Annual Reporting. Not later than January 1, 2021, and at least once a year thereafter, the Chief Financial Officer shall file a report with the City Council in accordance with the requirements of Government Code Section 53411, which report shall contain: (a) the amount of Special Taxes collected and expended; and (b) the status of the Project financed by the Bonds.

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33 (D) Amendment. The reporting requirements of this Section shall be amended from time to time, without action by the City or the Fiscal Agent, to reflect any amendments to Section 53359.5(b) or Section 53359.5(c) of the Act or Government Code Section 53411.

(E) No Liability. None of the City and its officers, agents and employees, or the Fiscal Agent shall be liable for any inadvertent error in reporting the information required by this Section.

Section 5.18. 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 this Agreement, and for the better assuring and confirming unto the Owners of the rights and benefits provided in this Agreement.

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34 ARTICLE VI

INVESTMENTS; DISPOSITION OF INVESTMENT PROCEEDS;

LIABILITY OF THE CITY

Section 6.01. Deposit and Investment of Moneys in Funds. Subject in all respects to the provisions of Section 6.02, moneys in any fund or account created or established by this Agreement and held by the Fiscal Agent, shall be invested by the Fiscal Agent in Permitted Investments, as directed pursuant to an Officer’s Certificate filed with the Fiscal Agent at least 2 Business Days in advance of the making of such investments. In the absence of any such Officer’s Certificate, the Fiscal Agent shall invest any such moneys in Permitted Investments described in clause (vii) of the definition thereof which by their terms mature prior to the date on which such moneys are required to be paid out hereunder provided, however, that any such investment shall be made by the Fiscal Agent only if, prior to the date on which such investment is to be made, the Fiscal Agent shall have received an Officer ’s Certificate specifying a specific money market fund and, if no such Officer ’s Certificate is so received, the Fiscal Agent shall hold such moneys uninvested. Subject in all respects to the provisions of Section 6.02, moneys in any fund or account created or established by this Agreement and held by the Chief Financial Officer shall be invested by the Chief Financial Officer in any lawful investments that the City may make, which by their terms mature prior to the date on which such moneys are required to be paid out hereunder. Obligations purchased as an investment of moneys in any fund shall be deemed to be part of such fund or account, subject, however, to the requirements of this Agreement for transfer of interest earnings and profits resulting from investment of amounts in funds and accounts.

The Fiscal Agent or the City may act as principal or agent in the acquisition or disposition of any investment. Neither the Fiscal Agent nor the City shall incur any liability for losses arising from any investments made pursuant to this Section. Any losses arising from any investments made pursuant to this Section shall be offset against interest earnings and profits retained in the same fund.

Except as otherwise provided in the next sentence, all investments of amounts deposited in any fund or account created by or pursuant to this Agreement, or otherwise containing gross proceeds of the Bonds (within the meaning of Section 148 of the Code), shall be acquired, disposed of, and valued (as of the date that valuation is required by this Agreement or the Code) at Fair Market Value. Investments in funds or accounts (or portions thereof) that are subject to a yield restriction under applicable pr ovisions of the Code and (unless valuation is undertaken at least annually) investments in the Reserve Fund shall be valued by the City at their present value (within the meaning of Section 148 of the Code). For purposes of any Fair Market Value determination hereunder, the Fiscal Agent shall be entitled to conclusively rely on an Officer ’s Certificate of the City and shall be fully protected in relying thereon.

Investments in any and all funds and accounts may be commingled in a separate fund or funds for purposes of making, holding and disposing of investments, notwithstanding provisions herein for transfer to or holding in or to the credit of particular funds or accounts of amounts received or held by the Fiscal Agent or the Chief Financial Officer hereunder, provided that the Fiscal Agent or the Chief Financial Officer , as applicable, shall at all times account for such investments strictly in accordance with the funds and accounts to which they are credited and otherwise as provided in this Agreement.

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35 The Fiscal Agent or the City, as applicable, shall sell or present for redemption, any investment security whenever it shall be necessary to provide moneys to meet any required payment, transfer, withdrawal or disbursement from the fund or account to which such investment security is credited and neither the Fiscal Agent nor the City shall be liable or responsible for any loss resulting from the acquisition or disposition of such investment security in accordance herewith.

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

Section 6.02. Rebate of Excess Investment Earnings to the United States . The City covenants to calculate and rebate to the federal government, in accordance with the Regulations, excess investment earnings to the extent required by Section 148(f) of the Code.

The City shall notify the Fiscal Agent of any amounts determined to be due to the federal government, and the Fiscal Agent shall, upon receipt of an Officer ’s Certificate of the City, withdraw such amounts from the Reserve Fund pursuant to Section 4.02(D), and pay such amounts to the federal government as required by the Code and the Regulations. In the event of any shortfall in amounts available to make such payments under Section 4.02(D), the Fiscal Agent shall notify the Chief Financial Officer in writing of the amount of the shortfall and the Chief Financial Officer shall make such payment from any amounts available in the Special Tax Fund. Any fees or expenses incurred by the Fiscal Agent or the City under or pursuant to this Section 6.02 shall be Administrative Expenses. The Fiscal Agent may rely conclusively upon the City’s determinations, calculations and certifications required by this Section. The Fiscal Agent shall have no responsibility to independently make any calculation or determination or to review the City’s calculations hereunder.

In order to provide for the administration of this Section 6.02, the City may provide for the employment of independent attorneys, accountants and consultants compensated on such reasonable basis as the City may deem appropriate.

Section 6.03. Limited Obligation . The City’ s obligations hereunder are limited obligations of the City on behalf of Improvement Area 3 and are payable solely from and secured solely by the Net Taxes and the other amounts pledged to the Bonds hereunder.

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36 ARTICLE VII

THE FISCAL AGENT

Section 7.01. Appointment of Fiscal Agent . U.S. Bank Trust Company, National Association, at its Principal Office, is hereby appointed Fiscal Agent for the Bonds. The Fiscal Agent undertakes to perform such duties, and only such duties, as are specifically set forth in this Agreement, and no implied covenants or obligations shall be read into this Agreement against the Fiscal Agent.

Any company into which the Fiscal Agent may be merged or converted or with which it may be consolidated or any company resulting from any merger, conversion or consolidation to which it shall be a party or any company to which the Fiscal Agent may sell or transfer all or substantially all of its corporate trust business, provided such company shall be eligible under the following paragraph of this Section, shall be the successor to such Fiscal Agent without the execution or filing of any paper or any further act, anything herein to the contrary notwithstanding.

The City may remove the Fiscal Agent initially appointed, and any successor thereto, and may appoint a successor or successors thereto, but any such successor shall be a bank , national banking association or trust company having a combined capital (exclusive of borrowed capital) and surplus of at least $50,000,000 , including, for such purpose, the combined capital and surplus of any parent holding company, and subject to supervision or examination by federal or state authority. If such bank, national banking association or trust company publishes a report of condition at least annually, pursuant to law or to the requirements of any supervising or examining authority above referred to, then for the purposes of this Section 7.01, combined capital and surplus of such bank, national banking association or trust company shall be deemed to be its combined capital and surplus as set forth in its most recent report of condition so published.

The Fiscal Agent may at any time resign by giving written notice to the City and by giving to the Owners notice by mail of such resignation. Upon receiving notice of such resignation, the City shall promptly appoint a successor Fiscal Agent by an instrument in writing. Any resignation or removal of the Fiscal Agent shall become effective upon acceptance of appointment by the successor Fiscal Agent.

If no appointment of a successor Fiscal Agent shall be made pursuant to the foregoing provisions of this Section within 30 days after the Fiscal Agent shall have given to the City written notice or after a vacancy in the office of the Fiscal Agent shall have occurred by reason of its inability to act, the Fiscal Agent or any Bondowner may apply to any court of competent jurisdiction to appoint a successor Fiscal Agent. Said court may thereupon, after such notice, if any, as such court may deem proper, appoint a successor Fiscal Agent.

Section 7.02. Liability of Fiscal Agent. The recitals of facts, covenants and agreements herein and in the Bonds contained shall be taken as statements, covenants and agreements of the City, and the Fiscal Agent assumes no responsibility for the correctness of the same, or makes any representations as to the validity or sufficiency of this Agreement or of the Bonds, or shall incur any responsibility in respect thereof, other than in connection with the duties or obligations herein or in the Bonds assigned to or imposed upon it. The Fiscal Agent shall not be liable in connection with the performance of its duties hereunder, except for its own negligence or willful misconduct. The Fiscal Agent assumes no responsibility or liability for any information, EXHIBIT 1
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37 statement or recital in any offering memorandum or other disclosure material prepared or distributed with respect to the issuance of the Bonds. The Fiscal Agent has no liability regarding the use of the proceeds from the purchase of the Bonds deposited in funds held by the City.

In the absence of bad faith, the Fiscal Agent may conclusively rely, as to the truth of the statements and the correctness of the opinions expressed therein, upon certificates or opinions furnished to the Fiscal Agent and conforming to the requirements of this Agreement, including all Officer ’s Certificates of the City meeting such requirements; but in the case of any such certificates or opinions by which any provision hereof are specifically required to be furnished to the Fiscal Agent, the Fiscal Agent shall be under a duty to examine the same to determine whether or not they conform to the requirements of this Agreement. Except as provided above in this paragraph, the Fiscal Agent shall be protected and shall incur no liability in acting or proceeding, or in not acting or not proceeding, in good faith, reasonably and in accordance with the terms of this Agreement, upon any resolution, order, notice, request, consent or waiver, certificate, statement, affidavit, or other paper or document which it shall in good faith reasonably believe to be genuine and to have been adopted or signed by the proper person or to have been prepared and furnished pursuant to any provision of this Agreement, and the Fiscal Agent shall not be under any duty to make any investigation or inquiry as to any statements contained or matters referred to in any such instrument.

The Fiscal Agent shall not be liable for any error of judgment made in good faith by a responsible officer unless it shall be proved that the Fiscal Agent was negligent in ascertaining the pertinent facts.

No provision of this Agreement shall require the Fiscal Agent to expend or risk its own funds or otherwise incur any financial liability in the performance of any of its duties hereunder, or in the exercise of any of its rights or powers, if it shall have reasonable grounds for believing that repayment of such funds or adequate indemnity against such risk or liability is not reasonably assured to it.

The Fiscal Agent shall be under no obligation to exercise any of the rights or powers vested in it by this Agreement at the request or direction of any of the Owners pursuant to this Agreement unless such Owners shall have offered to the Fiscal Agent reasonable security or indemnity against the costs, expenses and liabilities which might be incurred by it in compliance with such request or direction.

The Fiscal Agent shall not be considered in breach of or in default in its obligations hereunder or progress in respect thereto in the event of unavoidable delay in the performance of such obligations due to unforeseeable causes beyond its control and without its fault or negligence, including, but not limited to, Acts of God or of the public enemy or terrorists, acts of a government, acts of the other party, fires, floods, epidemics, quarantine restrictions, strikes, freight embargoes, earthquakes, explosion, mob violence, riot, inability to procure or general sabotage or rationing of labor, equipment, facilities, sources of energy, material or supplies in the open market, litigation or arbitration involving a party or others relating to zoning or other governmental action or inaction pertaining to the project, malicious mischief, condemnation, and unusually severe weather or delays of suppliers or subcontractors due to such causes or any similar event and/or occurrences beyond the control of the Fiscal Agent.

The Fiscal Agent may become the owner of the Bonds with the same rights it would have if it were not the Fiscal Agent.

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38 The Fiscal Agent shall not be concerned with or accountable to anyone for the subsequent use or application of any moneys which shall be released or withdrawn in accordance with the provisions hereof.

The permissive right of the Fiscal Agent to do things enumerated in this Agreement shall not be construed as a duty and it shall not be answerable for other than its negligence or willful misconduct.

Section 7.03. Information. The Fiscal Agent shall provide to the City such information relating to the Bonds and the funds and accounts maintained by the Fiscal Agent hereunder as the City shall reasonably request, including but not limited to quarterly statements reporting funds held and transactions by the Fiscal Agent.

Section 7.04. Notice to Fiscal Agent . The Fiscal Agent may rely and shall be protected in acting or refraining from acting upon any Officer ’s Certificate, notice, resolution, request, consent, order, certificate, report, facsimile transmission, electronic mail, warrant, Bond or other paper or document believed by it to be genuine and to have been signed or presented by the proper party or proper parties and given in accordance with the requirements hereof. The Fiscal Agent may execute any of the powers hereunder or perform any duties hereunder either directly or by or through agents or attorneys and the Fiscal Agent shall not be responsible for any misconduct or negligence on the part of any agent or attorney appointed with due care by it hereunder. The Fiscal Agent may consult with counsel, who may be counsel to the City, with regard to legal questions, and the opinion of such counsel shall be full and complete authorization and protection in respect of any action taken or suffered by it hereunder in good faith and in accordance therewith.

The Fiscal Agent shall have the right to accept and act upon instructions, including funds transfer instructions ( “Instructions”) given pursuant to this Agreement and delivered using Electronic Means by an Authorized Officer (or his or her designee) (“ Electronic Means” shall mean the following communications methods: e -mail, facsimile transmission, secure electronic transmission containing applicable authorization codes, passwords and/or authentication keys issued by the Fiscal Agent, or another method or s ystem specified by the Fiscal Agent as available for use in connection with its services hereunder); provided, however, that the City shall provide to the Fiscal Agent an incumbency certificate for each person with the authority to provide such Instructions and containing specimen signatures of such persons, which incumbency certificate shall be amended by the City whenever a person is to be added or deleted from the listing. If the City elects to give the Fiscal Agent Instructions using Electronic Means a nd the Fiscal Agent in its discretion elects to act upon such Instructions, the Fiscal Agent’s understanding of such Instructions shall be deemed controlling. The City understands and agrees that the Fiscal Agent cannot determine the identity of the actual sender of such Instructions and that the Fiscal Agent shall conclusively presume that directions that purport to have been sent by an Authorized Officer (or designee) listed on the incumbency certificate provided to the Fiscal Agent have been sent by such Authorized Officer (or designee). The City shall be responsible for ensuring that only Authorized Officers (or their designees) transmit such Instructions to the Fiscal Agent and that the City is solely responsible to safeguard the use and confidentiality of applicable user and authorization codes, passwords and/or authentication keys upon receipt by the City. The Fiscal Agent shall not be liable for any losses, costs or expenses arising directly or indirectly from the Fiscal Agent ’s reliance upon and compliance with such Instructions notwithstanding such directions conflict or are inconsistent with a subsequent written instruction. The City agrees: (i) to assume all risks arising out of the use of Electronic Means to submit Instructions to the Fiscal Agent, including without limitation the risk of the EXHIBIT 1
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39 Fiscal Agent acting on unauthorized Instructions, and the risk of interception and misuse by third parties; (ii) that it is fully informed of the protections and risks associated with the various methods of transmitting Instructions to the Fiscal Agent and that there may be more secure methods of transmitting Instructions than the method(s) selected by the City; (iii) that the security procedures (if any) to be followed in connection with its transmission of Instructions provide to it a commercially reasonable degree of protection in light of its particular needs and circumstances; and (iv) to notify the Fiscal Agent immediately upon learning of any compromise or unauthorized use of the security procedures.

The Fiscal Agent shall not be bound to recognize any person as the Owner of a Bond unless and until such Bond is submitted for inspection, if required, and his title thereto satisfactorily established, if disputed.

Whenever in the administration of its duties under this Agreement the Fiscal Agent shall deem it necessary or desirable that a matter be proved or established prior to taking or suffering any action hereunder, such matter (unless other evidence in respect thereof be herein specifically prescribed) may, in the absence of willful misconduct on the part of the Fiscal Agent, be deemed to be conclusively proved and established by a certificate of the City, and such certificate shall be full warrant to the Fiscal Agent for any action taken or suffered under the provisions of this Agreement or any Supplemental Agreement upon the faith thereof, but in its discretion the Fiscal Agent may, in lieu thereof, accept other evidence of such matter or may require such additional evidence as to it may seem reasonable.

Section 7.05. Compensation, Indemnification . The City shall pay to the Fiscal Agent from time to time reasonable compensation for all services rendered as Fiscal Agent under this Agreement, and also all reasonable expenses, charges, counsel fees and other disbursements, including those of their attorneys, agents and employees, incurred in and about the performance of their powers and duties under this Agreement, but the Fiscal Agent shall not have a lien therefor on any funds at any time held by it under this Agreement. The City further agrees, to the extent permitted by applicable law, to indemnify and save the Fiscal Agent, its officers, employees, directors and agents harmless against any costs, claims, damages, expenses or liabilities, including, without limitation, fees and expenses of its attorneys which it may incur in the exercise and performance of its powers and duties hereunder which are not due to its negligence or willful misconduct. The obligation of the City under this Section shall survive resignation or removal of the Fiscal Agent under this Agreement and payment of the Bonds and discharge of this Agreement.

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40 ARTICLE VIII

MODIFICATION OR AMENDMENT OF THIS AGREEMENT

Section 8.01. Amendments Permitted . This 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 60% in aggregate principal amount of the Bonds then Outstanding, exclusive of Bonds disqualified as provided in Section 8.04. 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 Net 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 this 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.

This 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 this Agreement contained, other covenants and agreements thereafter to be observed, or to limit or surrender any right or power herein 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 , including in connection with the issuance of Additional Bonds in accordance with this Agreement;

(C) to make such provisions for the purpose of curing any ambiguity, or of curing, correcting or supplementing any defective provision contained in this Agreement, or in regard to questions arising under this 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; and

(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.

Section 8.02. Owners’ Meetings . The City may at any time call a meeting of the Owners. In such event the City is authorized to fix the time and place of said meeting and to provide for the giving of notice thereof and to fix and adopt rules and regulations for the conduct of said meeting.

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41 Section 8.03. Procedure for Amendment with Written Consent of Owners . The City and the Fiscal Agent may at any time enter into a Supplemental Agreement amending the provisions of the Bonds or of this Agreement or any Supplemental Agreement, to the extent that such amendment is permitted by Section 8.01, to take effect when and as provided in this Section. A copy of such Supplemental Agreement, together with a request to Owners for their consent thereto, if such consent is required under Section 8.01, shall be mailed by first class mail, by the Fiscal Agent to each Owner of Bonds Outstanding, but failure to mail copies of such Supplemental Agreement and request shall not affect the validity of the Supplemental Agreement when assented to as in this Section provided.

If consent of the Owners is required under Section 8.01, such Supplemental Agreement shall not become effective unless there shall be filed with the Fiscal Agent the written consents of the Owners of at leas t 60% in aggregate principal amount of the Bonds then Outstanding (exclusive of Bonds disqualified as provided in Section 8.04) and a notice shall have been mailed as hereinafter in this Section 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 Section 9.04. Any such consent shall be binding upon the Owner of the Bonds giving such 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 in this Section 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 in this Section 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 in this Section (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 by this Section 8.03 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 herein above specifically provided in this Article) upon the City and the Owners of all Bonds at the expiration of 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.

Section 8.04. Disqualified Bonds . 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 this Article VIII, and shall not be entitled to vote upon, consent to, or take any other action provided for in this Article VIII. Upon request, the City shall provide an Officer ’s Certificate to the Fiscal Agent listing those Bonds which are disqualified pursuant to this Section 8.04.

Section 8.05. Effect of Supplemental Agreement . From and after the time any Supplemental Agreement becomes effective pursuant to this Article VIII, this Agreement shall be deemed to be modified and amended in accordance therewith, the respective rights, duties and obligations under this Agreement of the City and all Owners of Bonds Outstanding shall thereafter be determined, exercised and enforced hereunder subject in all respects to such EXHIBIT 1
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42 modifications and amendments, and all the terms and conditions of any such Supplemental Agreement shall be deemed to be part of the terms and conditions of this Agreement for any and all purposes.

Section 8.06. Endorsement or Replacement of Bonds Issued After Amendments . The City may determine that Bonds issued and delivered after the effective date of any action taken as provided in this Article VIII shall bear a notation, by endorsement or otherwise, in form approved by the City, as to such action. In that case, upon demand of the Owner of any Bond Outstanding at such effective date and presentation of his Bond for that purpose at the Principal Office of the Fiscal Agent or at such other office as the City may select and designate for that purpose, a suitable notation shall be made on such Bond. The City may determine that new Bonds, so modified as in the opinion of the City is necessary to conform to such Owners’ action, shall be prepared, executed and delivered. In that case, upon demand of the Owner of any Bonds then Outstanding, such new Bonds shall be exchanged at the Principal Office of the Fiscal Agent without cost to any Owner, for Bonds then Outstanding, upon surrender of such Bonds.

Section 8.07. Amendatory Endorsement of Bonds . The provisions of this Article VIII shall not prevent any Owner from accepting any amendment as to the particular Bonds held by him, provided that due notation thereof is made on such Bonds.

Section 8.08. Opinion of Counsel Regarding Supplemental Agreement . The Fiscal Agent shall be furnished, upon request, an opinion of counsel that any Supplemental Agreement entered into by the City and the Fiscal Agent complies with the provisions of this Article VIII, is enforceable against the City, does not adversely impact the tax -exempt status of the interest on the Bonds, and the Fiscal Agent may conclusively rely upon such opinion.

EXHIBIT 1
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43 ARTICLE IX

MISCELLANEOUS

Section 9.01. Benefits of Agreement Limited to Parties. Nothing in this Agreement expressed or implied, is intended to give to any person other than the City, the Fiscal Agent and the Owners, any right, remedy, claim under or by reason of this Agreement. Any covenants, stipulations, promises or agreements in this Agreement contained by and on behalf of the City shall be for the sole and exclusive benefit of the Owners and the Fiscal Agent.

Section 9.02. Successor is Deemed Included in All References to Predecessor .

Whenever in this Agreement or any Supplemental Agreement either the City or the Fiscal Agent is named or referred to, such reference shall be deemed to include the successors or assigns thereof, and all the covenants and agreements in this Agreement contained by or on behalf of the City or the Fiscal Agent shall bind and inure to the benefit of the respective successors and assigns thereof whether so expressed or not.

Section 9.03. Discharge of Agreement . 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 Sections 3.03 and 4.02, 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 Sections 3.03 and 4.02, be fully sufficient to pay and discharge the indebtedness on such Bonds (including all principal, interest and redemption premium, if any) at or before their respective maturity dates;

and if such Bonds are to be redeemed prior to the maturity thereof notice of such redemption shall have been given as in this 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 Net Taxes and other funds provided for in this Agreement and all other obligations of the City under this Agreement with respect to such Bonds Outstanding shall cease and terminate, except only the obligations of the City (i) under Section 5.15 (Maintenance of Tax -Exemption) and (ii) 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 Section 7.05; and thereafter Special Taxes shall not be payable to the Fiscal Agent. Notice of such election shall be filed with the Fiscal Agent.

EXHIBIT 1
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44 Any funds thereafter held by the Fiscal Agent upon payments of all fees and expenses of the Fiscal Agent, which are not required for said purpose, shall be paid over to the City.

Section 9.04. Execution of Documents and Proof of Ownership by Owners . Any request, declaration or other instrument which this Agreement may require or permit to be executed by Owners may be in one or more instruments of similar tenor, and shall be executed by Owners in person or by their attorneys appointed in writing.

Except as otherwise herein expressly provided, the fact and date of the execution by any Owner or his attorney of such request, consent, declaration or other instrument, or of such writing appointing such attorney, may be proved by the certificate of any notary public or other officer authorized to take acknowledgments of deeds to be recorded in the state in which he purports to act, that the person signing such request, declaration or other instrument or writing acknowledged to him the execution thereof, or by an affidavit of a witness of such execution, duly sworn to before such notary public or other officer.

Except as otherwise herein expressly provided, the ownership of registered Bonds and the amount, maturity, number and date of holding the same shall be proved by the registry books.

Any request, consent, declaration or other instrument or writing of the Owner of any Bond shall bind all future Owners of such Bond in respect of anything done or suffered to be done by the City or the Fiscal Agent in good faith and in accordance therewith.

Section 9.05. Waiver of Personal Liability . No member, officer, agent or employee of the City shall be individually or personally liable for the payment of the principal of, or interest or any premium on, the Bonds; but nothing herein contained shall relieve any such member, officer, agent or employee from the performance of any official duty provided by law.

Section 9.06. Notices to and Demands on City and Fiscal Agent. Any notice or demand which by any provision of this Agreement is required or permitted to be given or served by the Fiscal Agent to or on the City may be given or served by being deposited postage prepaid in a post office letter box, by overnight courier or by electronic means (with receipt confirmed by telephone) addressed (until another address is filed by the City with the Fiscal Agent) as follows:

City of Stockton
425 N. El Dorado Street
Stockton, California 95202
Attention: Chief Financial Officer
Tel: (209) 937-8908

Any notice or demand which by any provision of this Agreement is required or permitted to be given or served by the City to or on the Fiscal Agent may be given or served by being deposited postage prepaid in a post office letter box, by overnight courier or by electronic means (with receipt confirmed by telephone) addressed (until another address is filed by the Fiscal Agent with the City) as follows:

U.S. Bank Trust Company, National Association
One California Street, Suite 1000
San Francisco, California 94111
EXHIBIT 1
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45 Attention: Corporate Trust Department
Tel: (415) 677-3602
Fax: (415) 677-3768

Section 9.07. Partial Invalidity. If any Section, paragraph, sentence, clause or phrase of this Agreement shall for any reason be held illegal or unenforceable, such holding shall not affect the validity of the remaining portions of this Agreement. The City hereby declares that it would have adopted this Agreement and each and every other Section, paragraph, sentence, clause or phrase hereof and authorized the issue of the Bonds pursuant thereto irrespective of the fact that any one or more Sections, paragraphs, sentences, clauses, or phrases of this Agreement may be held illegal, invalid or unenforceable.

Section 9.08. Unclaimed Moneys . Anything contained herein to the contrary notwithstanding, any moneys held by the Fiscal Agent in trust for the payment and discharge of the principal of, and the interest and any premium on, the Bonds which remains unclaimed for 2 years after the date when the payments of such principal, interest and premium have become payable, if such moneys was held by the Fiscal Agent at such date, shall be repaid by the Fiscal Agent to the City as its absolute property free from any trust, and the Fiscal Agent shall thereupon be released and discharged with respect thereto and the Bond Owners shall look only to the City for the payment of the principal of, and interest and any premium on, such Bonds.

Section 9.09. Applicable Law . This Agreement shall be governed by and enforced in accordance with the laws of the State of California applicable to contracts made and performed in the State of California.

Section 9.10. Conflict with Act. In the event of a conflict between any provision of this Agreement with any provision of the Act as in effect on the Closing Date, the provision of the Act shall prevail over the conflicting provision of this Agreement.

Section 9.11. Conclusive Evidence of Regularity . Bonds issued pursuant to this Agreement shall constitute conclusive evidence of the regularity of all proceedings under the Act relative to their issuance and the levy of the Special Taxes.

Section 9.12. Payment on Business Day . In any case where the date of the maturity of interest or of principal (and premium, if any) of the Bonds or the date fixed for redemption of any Bonds or the date any action is to be taken pursuant to this Agreement is other than a Business Day, the payment of interest or principal (and premium, if any) or the action need not be made on such date but may be made on the next succeeding day which is a Business Day with the same force and effect as if made on the date required and no interest shall accrue for the period from and after such date.

Section 9.13. Counterparts. This Agreement may be executed in counterparts, each of which shall be deemed an original.

EXHIBIT 1
357

[Signature page to Fiscal Agent Agreement dated as of _______ 1, 2024]

IN WITNESS WHEREOF, THE CITY OF STOCKTON, for and on behalf of its Community Facilities District No. 2018-2 (Westlake Villages II ), has caused this Fiscal Agent Agreement to be signed by its Chief Financial Officer, and U.S. BANK TRUST COMPANY, NATIONAL ASSOCIATION, in token of its acceptance of the duties hereunder, has caused this Fiscal Agent Agreement to be signed in its corporate name by its officers identified below, all as of the day and year first above written.

CITY OF STOCKTON, for and on behalf of
its Community Facilities District No. 2018-2
(Westlake Villages II)

By:

Chief Financial Officer

U.S. BANK TRUST COMPANY, NATIONAL
ASSOCIATION, as Fiscal Agent

By:

Authorized Officer

EXHIBIT 1
358

A-1

EXHIBIT A

FORM OF BOND

UNITED STATES OF AMERICA

STATE OF CALIFORNIA

No. __________ $____________

IMPROVEMENT AREA 3 OF THE CITY OF STOCKTON
COMMUNITY FACILITIES DISTRICT NO. 2018-2 (WESTLAKE VILLAGES II) SPECIAL TAX BONDS SERIES 2024

INTEREST RATE: MATURITY DATE: BOND DATE: CUSIP:

September 1, 20__ ______, 2024

REGISTERED OWNER: CEDE & CO.

PRINCIPAL AMOUNT: DOLLARS

The City of Stockton (the “City”) for and on behalf of Improvement Area 3 of the City of Stockton Community Facilities District No. 2018-2 ( Westlake Villages II ) (“ Improvement Area 3”), for value received, hereby promises to pay solely from the Net Taxes to be collected in Improvement Area 3 or amounts in certain funds and accounts held under the Agreement (as hereinafter defined), to the Registered Owner named above, or registered assigns (the “Owner”), on the Maturity Date set forth above, unless redeemed prior thereto as hereinafter provided, the Principal Amount set forth above, and to pay interest on such principal amount from the Bond Date shown above, or from the most recent Interest Payment Date (as hereinafter defined) to which interest has been paid or duly provided for, semiannually on March 1 and September 1, commencing September 1, 2024 (the “Interest Payment Dates ”), at the Interest Rate set forth above, until the principal amount hereof is paid or made available for payment. The principal of this Bond is payable to the Owner hereof in lawful money of the United States of America upon presentation and surrender of this Bond at the principal corporate trust office of U.S. Bank Trust Company, National Association in San Francisco , California (the “Fiscal Agent”). Interest on this Bond shall be paid by check of the Fiscal Agent mailed by first class mail on each Interest Payment Date to the Owner hereof as of the close of business on the 15th day of the month preceding the month in which the Interest Payment Date occurs whether or not such day is a Business Day (the “Record Date”) at such Owner’s address as it appears on the registration books maintained by the Fiscal Agent, or by wire transfer made on such Interest Payment Date upon written instructions delivered to the Fiscal Agent by the applicable Record Date of any Owner of $1,000,000 or more in aggregate principal amount of Bonds.

This Bond is one of a duly authorized issue of bonds approved by resolution of the City Council of the City on _________, 2024 pursuant to the Mello-Roos Community Facilities Act of 1982, as amended, Sections 53311, et seq., of the California Government Code (the “Mello- EXHIBIT 1
359

A-2
Roos Act ”) for the purpose of providing moneys for the construction and acquisition of improvements for its Community Facilities District No. 2018-2 (Westlake Villages II), and is one of the bonds designated “Improvement Area 3 of the City of Stockton Community Facilities District No. 2018-2 (Westlake Villages II ) Special Tax Bonds Series 2024” (the “Bonds”). The issuance of the Bonds and the terms and conditions thereof are provided for by a Fiscal Agent Agreement, dated as of _______ 1, 2024, by and between the City and the Fiscal Agent (the “Agreement”) and this reference incorporates the Agreement herein, and by acceptance hereof the Owner of this Bond assents to said terms and conditions. The Agreement is authorized under, this Bond is issued under and both are to be construed in accordance with, the laws of the State of California.

Pursuant to the Mello-Roos Act, the Agreement and the Resolution, the principal of and interest on this Bond are payable solely from Net Taxes (as defined in the Agreement) and the amounts in certain funds held under the Agreement.

Interest on this Bond shall be payable from the Interest Payment Date next preceding the date of authentication hereof, unless (i) it is authenticated on an Interest Payment Date, in which event it shall bear interest from such Interest Payment Date, or (ii) such date of authentication is after a Record Date but on or prior to an Interest Payment Date, in which event interest will be payable from such Interest Payment Date, or (iii) such date of authentication is prior to the first Record Date, in which event interest will be payable from the Bond Date shown above; provided however, that if at the time of authentication of this Bond, interest is in default hereon, this Bond shall bear interest from the Interest Payment Date to which interest has previously been paid or made available for payment hereon.

Any tax for the payment hereof shall be limited to the Special Tax, except to the extent that provision for payment has been made by the City as may be permitted by law. The Bonds do not constitute obligations of the City for which the City is obligated to levy or pledge, or has levied or pledged, general or special taxation other than described herein above.

The Bonds are subject to optional redemption from any source of available funds other than Prepayments 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 31, _____ 103%
September 1, _____ through August 31, _____ 102%
September 1, _____ through August 31, _____ 101%
September 1, _____ and any date thereafter 100%

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A-3
The Bonds shall be subject to mandatory redemption from Prepayments of the Special Tax by property owners, in whole or in part among maturities as shall be specified by the City and by lot within a maturity, o n 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:

Redemption Dates Redemption Price
Interest Payment Dates through March 1, _____ 103%
September 1, _____ and March 1, _____ 102
September 1, _____ and March 1, _____ 101
September 1, _____ and Interest Payment Dates thereafter 100

The Bonds maturing September 1, _____, September 1, _____ and September 1, _____ (collectively, the “Term Bonds”) are subject to mandatory sinking payment redemption in part on September 1, _____, 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

(Maturity)

Term Bonds Due September 1, _____

Mandatory
Redemption Date
(September 1)

Sinking Fund
Payment

(Maturity)

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361

A-4
Term Bonds Due September 1, _____

Mandatory
Redemption Date
(September 1)

Sinking Fund
Payment

(Maturity)

The amounts in the foregoing tables shall 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 Bonds.

Notice of redemption with respect to the Bonds to be redeemed shall be given to the Owners thereof, in the manner, to the extent and subject to the provisions of the Agreement.

This Bond shall be registered in the name of the Owner hereof, as to both principal and interest. Each registration and transfer of registration of this Bond shall be entered by the Fiscal Agent in books kept by it for this purpose and authenticated by its manual signature upon the certificate of authentication endorsed hereon.

No transfer or exchange hereof shall be valid for any purpose unless made by the registered owner, by execution of the form of assignment endorsed hereon, and authenticated as herein provided, and the principal hereof, interest hereon and any redemption premium shall be payable only to the registered owner or to such Owner ’s order. The Fiscal Agent shall require the Owner requesting transfer or exchange to pay any tax or other governmental charge required to be paid with respect to such transfer or exchange. No transfer or exchange hereof shall 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 such Bond has been selected for redemption.

The transferor of any Bond shall also provide or cause to be provided to the Fiscal Agent all information necessary to allow the Fiscal Agent to comply with any applicable tax reporting obligations, including without limitation any cost basis reporting obligations under Internal Revenue Code Section 6045. The Trustee may rely on the information provided to it and shall have no responsibility to verify or ensure the accuracy of such information.

The Agreement and the rights and obligations of the City thereunder may be modified or amended as set forth therein. The principal of the Bonds is not subject to acceleration upon a default under the Agreement or any other document.

This Bond shall not become valid or obligatory for any purpose until the certificate of authentication hereon endorsed shall have been dated and manually signed by the Fiscal Agent.

It is hereby certified, recited and declared that all acts, conditions and things required by law to exist, happen and be performed precedent to and in the issuance of this Bond have existed, happened and been performed in due time, form and manner as required by law, and that the amount of this Bond, together with all other indebtedness of the City, does not exceed any debt limit prescribed by the laws or Constitution of the State of California.

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A-5

Unless this Bond is presented by an authorized representative of The Depository Trust Company to the Fiscal Agent for registration of transfer, exchange or payment, and any Bond issued is registered in the name of Cede & Co. or such other name as requested by an authorized representative of The Depository Trust Company and any payment is made to Cede & Co., ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL since the registered owner hereof, Cede & Co., has an interest herein.

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A-6

IN WITNESS WHEREOF, the City of Stockton has caused this Bond to be dated _______, 2024 and to be signed by the Mayor of the City and countersigned by the City Clerk of the City.

Mayor

City Clerk

FISCAL AGENT’S CERTIFICATE OF AUTHENTICATION

This is one of the Bonds described in the Resolution and the Agreement.

Dated: _____________, 2024

U.S. BANK TRUST COMPANY, NATIONAL
ASSOCIATION, as Fiscal Agent

By:

Authorized Signatory
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364

A-7

ASSIGNMENT

FOR VALUE RECEIVED, the undersigned do(es) hereby sell, assign and transfer unto

(Name, address and Tax identification Number of Assignee)

the within-mentioned registered Bond and hereby irrevocably constitute(s) and appoint(s) , attorney,
to transfer the same on the registration books of the Fiscal Agent with full power of substitution in the premises.

Dated: ________________

Signature Guaranteed:

NOTE: Signature(s) must be guaranteed by a
member firm of the New York Stock Exchange or a
commercial bank or trust company.

NOTE: The signature(s) on this Assignment must
correspond with the name(s) as written on the face of
the within Bond in every particular without alteration or enlargement or any change whatsoever.

EXHIBIT 1
365

B-1

EXHIBIT B

City of Stockton
Improvement Area 3
Community Facilities District No. 2018-2 (Westlake Villages II) Special Tax Bonds Series 2024

OFFICER’S CERTIFICATE REQUESTING DISBURSEMENT

FROM IMPROVEMENT FUND

REQUISITION NO. _____

The undersigned hereby states and certifies that:

(i) I am an “Authorized Officer,” as such term is defined in that certain Fiscal Agent Agreement, dated as of _______ 1, 2024 (the “Fiscal Agent Agreement”), by and between the City and U.S. Bank Trust Company, National Association, as fiscal agent (the “Fiscal Agent”) and as such, am familiar with the facts herein certified and am authorized to certify the same;

(ii) under Section 3.04(B) of the Fiscal Agent Agreement, the undersigned hereby requests and authorizes the Fiscal Agent to disburse from the Improvement Fund established under the Fiscal Agent Agreement to each payee designated on Schedule A attached hereto and by this reference incorporated herein, the amount set forth opposite such payee, for payment or reimbursement of previous payment of a cost of the Project (as that term is defined in the Fiscal Agent Agreement) as described on attached Schedule A;

(iii) no portion of the amount herein requested to be disbursed was set forth in any Officer’s Certificate previously filed requesting disbursement;

(iv) there has not been filed with or served upon the City a stop notice or any other notice of any lien, right to lien or attachment upon, or claim affecting the right to receive payment of, any of the money payable to the person named in this Officer’s Certificate, which has not been released or will not be released with the payment of such obligation, other than materialmen's or mechanics' liens accruing by mere operation of laws; and

(v) in the case of each payment made under any contract for installation or construction, insofar as such obligation was incurred for work, materials, equipment or supplies, such work was actually performed or such materials, equipment or supplies were actually installed in furtherance of the Project or delivered at the site for that purpose or delivered for storage or fabrication at a place or places approved by the City.

Dated: _______________ CITY OF STOCKTON

______________________________________
By: Authorized Officer

EXHIBIT 1
366

B-2

SCHEDULE A

Payee Name and Address Purpose of Obligation Amount

EXHIBIT 1
367
Jones Hall Draft of Mar. 5, 2024
PRELIMINARY OFFICIAL STATEMENT DATED MARCH [22], 2024
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 ce rtain qualifications described herein, under existing law, the interest on the Bonds is excluded from gross income for federal income tax purposes and such interest is not an item of tax preference for purposes of the federal alternative minimum tax. Interest on the Bonds may be subject to the corporate alternative minimum tax. In the further opinion of Bond Counsel, such interest is exempt from California personal income taxes. See “TAX MATTERS. $13,960,000*
IMPROVEMENT AREA 3 OF THE CITY OF STOCKTON
COMMUNITY FACILITIES DISTRICT NO. 2018-2
(WESTLAKE VILLAGES II)
SPECIAL TAX BONDS, SERIES 2024
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 3 of the City of Stockton Community Facilities District No. 2018 -2 (Westlake Villages II) ( “Improvement Area 3 ”) 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 April 1, 2024 (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 c apitalized interest on a portion of the Bonds through September 1, 2025, (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 3 according to the rate and method of apportionment of special tax for Improvement Area 3. The Bonds are secured by a first pledge of the Net Taxes levied and collected in Improvement Area 3 and the moneys on deposit in certain funds held by the Fiscal Agent under the Fiscal Agent Agreement.

See “SECURITY FOR THE BONDS.”
Im
provement Area 3 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 3, which is the only portion of the District that constitutes security for the Bonds, is developing into 277 single-family residential units in three villages (Villages E, G, and H). The Master Developer, which is owned by members of the Spanos family, has obtained final maps for all 277 residential lots, and sold the partially improved lots to Lennar Homes of California LLC (“Lennar Homes”). All of the required backbone and in-tract improvements are in place, including paved access and public utilities to the lots . As of March 1, 2024, with respect to the 277 lots in Improvement Area 3, 212 homes were under construction or completed, 111 homes had been sold and 88 homes had been sold and closed to individual homeowners. Homes sold may not result in closed escrow as sales contracts are subject to cancellation by the homebuyers. See “OWNERSHIP AND DEVELOPMENT OF PROPERTY WITHIN IMPROVEMENT AREA 3.” Int
erest on the Bonds is payable semiannually on each March 1 and September 1, commencing September 1, 2024. 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.”
Th
e 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 th e Bonds.

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

Th
e 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, Los Angeles , California. It is anticipated that the Bonds, in book -entry form, will be available for delivery through the facilities of DTC on or about April _____, 2024.
[Oppenheimer Logo]
The date of this Official Statement is: ________________, 2024. ___________________________
*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 pr ior to registration or qualification under the securities laws of such jurisdiction.

EXHIBIT 2
368

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

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CITY OF STOCKTON, CALIFORNIA

City Council
Kevin J. Lincoln II, Mayor
Kimberly Warmsley, Vice Mayor and Councilmember, District 6 Michele Padilla, Councilmember, District 1
Dan Wright, Councilmember, District 2
Michael Blower, Councilmember, District 3
Susan Lenz, Councilmember, District 4
Brando Villapudua, Vice Mayor and Councilmember, District 5

City Staff
Harry E. Black, City Manager
Kimberly Trammel, Chief Financial Officer
Carmen Barragan, Debt and Treasury Manager
Eliza Garza, City Clerk
Lori M. Asuncion, City Attorney

____________________________

SPECIAL SERVICES

Municipal Advisor
Del Rio Advisors, LLC
Modesto, 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

Fiscal Agent
U.S. Bank Trust Company, National Association
San Francisco, California
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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 ........................................................... 16 Levy and Collection of Special Taxes .......... 16
Special Tax Fund ......................................... 17 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 325
Formation of the District and
Improvement Area 3................................. 25
Location and Description of the District
and the Immediate Area ........................... 25
Environmental Matters ................................. 29 The Improvements ....................................... 29

OWNERSHIP AND DEVELOPMENT OF

PROPERTY WITHIN IMPROVEMENT AREA

3.................................................................... 29

Current Ownership ....................................... 30 Development Plan and Current Status ........ 30
Development Agreement and
Subdivision Agreement ............................ 32
The Master Developer .................................. 33 Master Developer’s Financing Plan ............. 33
Lennar Homes .............................................. 35

VALUE OF PROPERTY WITHIN
IMPROVEMENT AREA 3 AND SPECIAL TAX
BURDEN ...................................................... 37

The Appraisal ............................................... 37 Value to Special Tax Burden Ratios ............ 40
Overlapping Liens and Priority of Lien ......... 43
Sample Tax Bill ............................................ 45 Special Tax Collection and Delinquency
Rate ......................................................... 48 SPECIAL RISK FACTORS .............................. 48
Limited Obligation of the City to Pay
Debt Service ............................................ 48 Levy and Collection of the Special Tax ........ 48
Concentration of Ownership ........................ 49
Appraised Values ......................................... 50 Property Values and Property
Development ............................................ 50 Other Possible Claims Upon the Value
of Taxable Property ................................. 53 Bankruptcy and Foreclosure Delays ............ 54
FDIC/Federal Government Interests in
Properties................................................. 55 No Acceleration Provisions .......................... 55 Loss of Tax Exemption ................................ 55 IRS Audit of Tax-Exempt Bond Issues ........ 56
Voter Initiatives ............................................ 56 Case Law Related to Mello-Roos Act .......... 57
Pandemic Diseases ..................................... 58 TAX MATTERS ................................................ 58 LEGAL MATTERS ........................................... 60 Legal Opinion ............................................... 60 No Litigation ................................................. 60 CONTINUING DISCLOSURE .......................... 61
The City ........................................................ 61 Lennar Homes ............................................. 61 NO RATINGS ................................................... 62 UNDERWRITING ............................................. 62 MUNICIPAL ADVISOR .................................... 62 EXECUTION .................................................... 62

APPENDIX A – Rate and Method of Apportionment of Special Tax APPENDIX B – The Appraisal
APPENDIX C – Summary of Certain Provisions of the Fiscal Agent Agreement 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
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GE

NERAL INFORMATION ABOUT THIS OFFICIAL STATEMENT
Use o
f 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.

Est
imates 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.

Li
mit 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.

In
volvement 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 cha nge in the affairs of the City, the District or Improvement Area 3 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 CO

NNECTION 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.

TH
E 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.

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[REGIONAL LOCATION MAP]

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_________________________
OFF

ICIAL STATEMENT
_________________________
$13,960,
000*
IMPROVEMENT AREA 3 OF THE CITY OF STOCKTON
COMMUNITY FACILITIES DISTRICT NO. 2018-2
(WESTLAKE VILLAGES II)
SPECIAL TAX BONDS, SERIES 2024
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 3 (“Improvement Area 3”) 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 C – Summary of Certain Provisions of the Fiscal Agent Agreement.”
INT

RODUCTION
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.

Aut
hority for Issuance. The Bonds are issued pursuant to the provisions of the Mello- Roos 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 April 1, 2024 (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 March [19], 2024 by the City Council of the City (the “ City Council”), as legislative body of the District. See “THE BONDS – Authority for Issuance.”
The Ci
ty 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 Los Angeles 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 information * Preliminary; subject to change.

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2 regarding the City and the County , s ee “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 September 1, 2024. 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 the District. 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, 2025, 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 3 therein, was formed in June 2018 with a maximum bond authorization of $75,000,000, allocated $15,000,000 to Improvement Area 1 of the City of Stockton Community Facilities District No. 2018 -2 (Westlake Villages II) (“ Improvement Area 1 ”) and $60,000,000 to Improvement Area 2 of the City of Stockton Community Facilities District No. 2018 -2 (Westlake Villages II) (“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 ”) and, among other things, the maximum bond authorization for Improvement Area 3 was established at $18,500,000 . 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 3; the Bonds are only payable from net Special Taxes levied in Improvement Area 3, 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 master - planned 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 3” for additional information.

Ownership and Development of Property . Stockton Westlake Investment, LLC, a California limited liability company (“ Stockton Westlake Investment, LLC ”), previously owned EXHIBIT 2
375

3 all the land in Improvement Area 3. Eight Mile Development, Inc., a California corporation (the “Master Developer”), which is affiliated with Stockton Westlake Investment, LLC, constructed the backbone infrastructure necessary for all 277 lots within Improvement Area 3, and sold all 277 lots to Lennar Homes of California, LLC (“ Lennar Homes”). All of the required backbone and in- tract improvements to develop the lots are now in place, including paved access and public utilities to the lots, and home building and sales activity is underway by Lennar Homes.

There are a total of 377 homes developing in Improvement Area 1 (Villages C, D, and F), 292 homes developing in Improvement Area 2 (Villages L, M, and N) and 277 homes developing in Improvement Area 3 (Villages E, G, and H ). As of March 1, 2024, with respect to the 277 lots in Improvement Area 3, 212 homes were under construction or completed, 111 homes had been sold and 88 homes had been sold and closed to individual homeowners.

Homes sold may not result in closed escrow as sales contracts are subject to cancellation by the homebuyers.

More details regarding the overall project are set forth in the following table. Ho mes
within Improvement Area 1 and Improvement Area 2 do not provide security for the Bonds. The Bonds are secured solely by the Special Taxes to be levied on property in Improvement Area 3.

West
lake Village – Overall Project Status
(Improvement Areas 1, 2 and 3)
As of March 1, 2024

Improv.

Area Merchant Builder(s)
Total
Units
Completed/Under
Construction Sold
Sold and
Closed to
Homeowners
% Sold and
Closed to
Homeowners
1 Regatta Partners; Caresco Homes;
Richmond American; Lennar Homes 377 377 377 377 100%
2 Richmond American; Meritage 292 250 215 180 62%
3 Lennar Homes 277 212 111 88 32%
____________________
Sources: Master Developer; Lennar Homes.

See “OWNERSHIP AND DEVELOPMENT OF PROPERTY WITHIN IMPROVEMENT AREA 3 ” for additional details on the Master Developer, Lennar Homes, and the ongoing development in Improvement Area 3.

Security and Sources of Payment for the Bonds. The City Council annually levies special taxes on the property in Improvement Area 3 (the “Special Taxes”) in accordance with the Rate and Method of Apportionment for Improvement Area 3 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 s ecured 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 “2024 Reserve Account,” established in connection with the issuance of the Bonds in an EXHIBIT 2
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4 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 3 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.”

Unpaid Special Taxes do not constitute a personal indebtedness of the owners of any of the parcels within Improvement Area 3. 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 3.

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 3 . Taxable real property within Improvement Area 3 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 3 , the City ordered an appraisal (the “ Appraisal”), prepared by Integra Realty Resources, Sacramento, C alifornia (the “Appraiser”), with a January 15, 2024 date of value. The Appraisal is described herein under the caption “VALUE OF PROPERTY WITHIN IMPROVEMENT AREA 3 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 $ 77,324,000. See the Appraisal in APPENDIX B.

Based upon the $77,324,000 appraised value of taxable property in Improvement Area 3 and an estimated principal amount of Bonds of $13,960,000 *, as well as overlapping land- secured debt attributable to those parcels of $89,317, for a total direct and overlapping land- secured debt amount of $14,049,317*, the value-to-lien ratio for such property is approximately

5.50* to 1; provided, however, that the value -to-lien ratio of individual parcels may vary significantly. See “VALUE OF PROPERTY WITHIN IMPROVEMENT AREA 3 AND SPECIAL TAX BURDEN – Value to Special Tax Burden Ratios.”

* 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.

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 C – 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 3 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 2024 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 September 1, 2025. (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 Special Tax Administrator, and the Municipal Advisor, 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 C – 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 1 and Improvement Area 2 therein. In January 2022, certain parcels that were formerly within Improvement Area 2 were moved into newly established Improvement Area 3 and Improvement Area 4 and, among other things, the maximum bond authorization for Improvement Area 3 was established at $18,500,000. The Bonds will be the first and only “new money ” series to be issued for Improvement Area 3 . 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 September 1, 2024.

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

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8 day of the calendar month preceding the Interest Payment Date (the “Record Date”), or by wire 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 f rom 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.

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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 o utstanding 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 p rincipal 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.

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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.

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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 A greement, 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 3 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 3. Interest and principal on the Bonds are payable from the annual Special Taxes to be levied and collected on taxable property within Improvement Area 3, 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 3.

Under the Special Tax Formula, taxable parcels in Improvement Area 3 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 two - thirds 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 2
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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 3 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 3 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 3 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 3, 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 3 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) d ebt service on bonds issued for Improvement Area 3; (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.

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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 3. 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 3 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 6 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 7.

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, 2072 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 6 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 7 . Pursuant to the Special Tax Formula, the Assigned Special Tax that was authorized to be levied in Fiscal Year 2021-22 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 equaled $ 25,212 per Acre for Fiscal Year 2021- 22. On each July 1, the Assigned Special Tax A and the Backup Special Tax A shall be increased by an amount equal to

2.00% of the amount in effect for the previous Fiscal Year. The Assigned Special Taxes for Fiscal Year 2024-25 are set forth in Table 5, herein.

Furt
hermore, 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 EXHIBIT 2
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14 Property in each remaining Fiscal Year based on the then existing development is at 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 2021-22 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 $25,212 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 2.00% of the amount in effect for the previous Fiscal Year.

The c
alculation of the Maximum Special Tax for Final Mapped Property for Fiscal Year 2024-25 is shown in the following table:

Final Mapped Property Special Tax Calculation
Final Mapped Property Acres (1) 8.52
Maximum Special Tax (Per Acre) (2) $26,755
Total $228,008

(1) Based on the area/acreage identified for residential lots on the County Assessor's Roll, as of January 1, 2023. (2) Rate and Method of Apportionment for Improvement Area No. 3 of CFD No. 2018-2 (Westlake Villages II).

Source: DTA.

Annual Levy of Special Tax A. For each 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 herein is 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.

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15 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 herein is 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 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 herein is 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 herein is 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 herein is 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.

Not
withstanding 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 2071-72.

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.

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16 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.”

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 3 for a portion of the cost of Improvements not funded by proceeds of the bonds issued for Improvement Area 3. 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 3 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 3 required for the payment of principal of and interest on any outstanding Bonds of Improvement Area 3 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 3 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.

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17 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 leas t 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.

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 2024 Reserve Account, to be held by the Fiscal Agent, to the credit of which a deposit EXHIBIT 2
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18 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 2024 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 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 2024 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 the City 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 EXHIBIT 2
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19 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 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 long- term 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 EXHIBIT 2
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20 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 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 Improvement Area 3 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 a
mount 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 3 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 a
mount so collected is deficient by less
than 5% of the total amount of the Special Tax levied in Improvement Area 3 in such Fiscal Year, but that property owned by any single property owner in Improvement Area 3 is delinquent by more than $5,000 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 Chi
ef 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 EXHIBIT 2
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21 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.

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 3 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 3 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 post - EXHIBIT 2
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22 judgment 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.

Additional Bonds For Refunding Purposes Only

The City may issue one or more additional series of special tax bonds, payable from Net Taxes and secured by the Net Taxes equally and ratably with, or subordinate to, Bonds previously issued, 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-O utstanding Bonds and (b) debt service on the refunding bonds is less than debt service on the Bonds refunded.

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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 3 of the City of Stockton
Community Facilities District No. 2018-2 (Westlake Villages II) Special Tax Bonds Series 2024
Debt Service Schedule*

Period Ending
(Sept. 1)
Bonds
Principal
Bonds
Interest
Bonds
Total

* Preliminary; subject to change.
(1) Capitalized interest will be used to pay a portion of debt service on the Bonds through September 1, 2025.

Source: Underwriter.

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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 3 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
2024 Bonds
Net Debt
Service(3)*
Debt Service
Coverage*
2024 $0 $0 $0 NA
2025 821,910 (25,500) 231,144
2026 838,348 (26,010) 812,338
2027 855,115 (26,530) 828,585
2028 872,217 (27,061) 845,156
2029 889,662 (27,602) 862,060
2030 907,455 (28,154) 879,301
2031 925,604 (28,717) 896,887
2032 944,116 (29,291) 914,825
2033 962,998 (29,877) 933,121
2034 982,258 (30,475) 951,783
2035 1,001,904 (31,084) 970,819
2036 1,021,942 (31,706) 990,236
2037 1,042,380 (32,340) 1,010,040
2038 1,063,228 (32,987) 1,030,241
2039 1,084,493 (33,647) 1,050,846
2040 1,106,182 (34,320) 1,071,863
2041 1,128,306 (35,006) 1,093,300
2042 1,150,872 (35,706) 1,115,166
2043 1,173,890 (36,420) 1,137,469
2044 1,197,367 (37,149) 1,160,219
2045 1,221,315 (37,892) 1,183,423
2046 1,245,741 (38,649) 1,207,092
2047 1,270,656 (39,422) 1,231,233
2048 1,296,069 (40,211) 1,255,858
2049 1,321,990 (41,015) 1,280,975
2050 1,348,430 (41,835) 1,306,595
2051 1,375,399 (42,672) 1,332,727
2052 1,402,907 (43,526) 1,359,381
2053 1,430,965 (44,396) 1,386,569
2054 1,459,584 (45,284) 1,414,300
Total $33,343,304 ($1,034,486) $31,743,552

* Preliminary; subject to change.
(1) Assigned Special Tax for Fiscal Year 2024-25 (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 2023-24. (3) Capitalized interest will be used to pay a portion of debt service on the Bonds through September 1, 2025.

Sources: City of Stockton, Underwriter, DTA.

EXHIBIT 2
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25 THE DISTRICT AND IMPROVEMENT AREA 3

Formation of the District and Improvement Area 3

On June 19, 2018, the City Council adopted the Resolution of Formation, which formed the District, and Improvement Area 1 and Improvement Area 2 therein. In January 2022, certain parcels that were formerly within Improvement Area 2 were moved into newly established Improvement Area 3 and Improvement Area 4.

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 3.”

Maps. The maps on the following pages show the area of the District and Improvement Area 3 therein.

EXHIBIT 2
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26 [Reserved for Map #1 – Aerial Overview]

EXHIBIT 2
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27 [Reserved for Map #2 – DTA Map Overview]
EXHIBIT 2
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28 [Reserved for Map #3 – Detailed Improvement Area 3 Plan]

EXHIBIT 2
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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 06077C- 0295F (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 Improvement Area 3 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 3 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.”

OWNERSHIP AND DEVELOPMENT OF PROPERTY WITHIN IMPROVEMENT AREA 3

Unpaid Special Taxes do not constitute a personal indebtedness of the owners of the parcels within Improvement Area 3. 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 3 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 3.

The Master Developer and Lennar Homes have provided certain information set forth in this section entitled “OWNERSHIP AND DEVELOPMENT OF PROPERTY WITHIN IMPROVEMENT AREA 3.” No representation is made by the City or the Underwriter as to the accuracy or adequacy of such information so provided. There may be material adverse changes to this information after the date of this Official Statement. 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 incorporated by reference into this Official Statement.

EXHIBIT 2
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30 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 or in the configuration or to the density described herein, or that Lennar Homes or any other property owner will or will not retain ownership of its property in Improvement Area 3. Neither the Bonds nor the Special Taxes are personal obligations of the Master Developer, Lennar Homes or of any subsequent landowners; and in the event that a landowner defaults in the payment of the Special Taxes, the District may proceed with judicial foreclosure but has no recourse to the assets of any landowner. As a result, other than as provided herein, no financial statements or information is, or will be, provided about the Master Developer, Lennar Homes or any other 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 estimated Fiscal Year 2024 -25 maximum special taxes levied on owners of property in Improvement Area 3 as of the January 15, 2024 date of value of the Appraisal. The Special Tax for Fiscal Year 2024-25 will only be levied on Developed Property as defined in the Special Tax Formula. Additional information on the Master Developer and each of Lennar Homes and their planned development in Improvement Area 3 is provided below.

Table 1
Improvement Area 3 of the City of Stockton
Community Facilities District No. 2018-2 (Westlake Villages II) Estimated Top Taxpayers for Fiscal Year 2024-25

Owners of Record(1)
Number of
Lots(1) Taxable Acres(2)
Est. FY 2024-25
Maximum
Special Taxes(3)
Share of
Special Tax
Individual Owners 67 9.38 $250,857 25.01%
Lennar Homes (2) 210 28.11 752,034 74.99
Totals 277 37.48 $1,002,891 100%

(1) Source: Appraisal prepared by Integra Realty Resources, dated February 6, 2024. (2) Based on the area/acreage identified for residential lots on the County Assessor's Roll, as of January 1, 2023. (3) 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 $26,231 per acre for FY 2024-25.

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 EXHIBIT 2
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31 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 Villages Development. The Westlake Villages Development covers the land in Improvement Area 3 of the District as well as in the three other improvement areas established for the District and land outside the District . Only the special taxes levied in Improvement Area 3 are 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.

Utilities. It is expected that utility service for the taxable property in Improvement Area 3 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 277 single-family residential units have received final map approval.

Purchase of Lots by Lennar Homes . Lennar Homes purchased all 277 lots within Improvement Area 3 from the Master Developer. All of the land in Improvement Area 3 transferred in a larger transaction that consisted of Villages G, H, E, I, and J from Eight Mile Development, Inc. to Lennar Homes for $13,547,724 or $31,887 per lot. The transaction as a whole was 428 lots with a typical lot size of 5,818 square feet and the transaction was negotiated in May of 2021. The villages were taken down over time with the first transfer occurring in October of 2021 and the last village transferred in September of 2023.

Homes Under Construction. Lennar Homes is current building and selling production homes in Improvement Area 3 . As of January 15, 2024 (the date of value of the Appraisal), Lennar Homes had sold and closed 67 homes to individual homeowners.

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 277 single-family homes in Improvement Area 3 (Villages E, G, and H), including backbone roads and related improvements are in place. A listing of the key capital improvements – both backbone infrastructure and in-tracts – is set forth in Table 2 on the following page.

EXHIBIT 2
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32 Table 2
List of Key Capital Improvements and In-Tracts
Improvement Area 3
As of December 28, 2023

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 E, G, H

WATER IMPROVEMENTS
VILLAGE E IN-TRACT 3 $5,574,912 16.37% 100.00% $5,574,912 VILLAGE G IN-TRACT 3 8,122,690 23.85 100.00 8,122,690
VILLAGE H IN-TRACT 3 4,144,273 12.17 100.00 4,144,273
SUBTOTAL $17,841,875 52.38% $17,841,875

SANITARY SEWER IMPROVEMENTS
VILLAGE E IN-TRACT 3 $473,379 1.39% 100.00% $473,379
VILLAGE G IN-TRACT 3 337,550 0.99 100.00 337,550
VILLAGE H IN-TRACT 3 452,759 1.33 100.00 452,759
SUBTOTAL $1,263,689 3.71% $1,263,689

STREET/ROADWAY IMPROVEMENTS
VILLAGE E SPINE 3 $639,045 1.88% 100.00% $639,045
VILLAGE E IN-TRACT 3 620,977 1.82 100.00 620,977
VILLAGE G SPINE 3 620,321 1.82 100.00 620,321
VILLAGE G IN-TRACT 3 610,096 1.79 100.00 610,096
VILLAGE H SPINE 3 516,522 1.52 100.00 516,522
VILLAGE H IN-TRACT 3 471,366 1.38 100.00 471,366
WESTLAKE VILLAGES DRIVE 3 1,339,675 3.93 100.00 1,339,675 SCOTT CREEK SPINE ROAD 3 $984,017 2.89% 100.00% 984,017 SUBTOTAL $5,802,019 14.15% $4,818,001

STORM DRAIN IMPROVEMENTS
VILLAGE E IN-TRACT 3 $2,154,672 6.33% 100.00% $2,154,672 VILLAGE G IN-TRACT 3 3,730,887 10.95 100.00 3,730,887
VILLAGE H IN-TRACT 3 2,380,663 6.99 100.00 2,380,663
LAKE 2 IMPROVEMENTS 3 887,305 2.61 100.00 887,305
SUBTOTAL $9,153,527 26.87% $9,153,527

TOTAL ESTIMATE $34,061,109 97.11% $33,077,092

(1) Estimates, subject to change.

Source: Master Developer.

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 Lennar Homes 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 EXHIBIT 2
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33 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 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 Lennar Homes. 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 to facilitate construction of homes in Improvement Area 3, in addition to costs attributable to other Improvement Areas of EXHIBIT 2
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34 the project, which commenced in late 2018. 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 3.

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.

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 3) to merchant builders and other developers (see “– Lennar Homes” herein).

• Proceeds of special tax bonds secured by land within the District (including Improvement Area 3).

• 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 on segments of a particular Improvement 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.

EXHIBIT 2
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35 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. Pursuant to current City policy, the City contemplates utilizing this funding mechanism during the expected build- out of the District or 20 years, whichever is shorter. See “SECURITY AND SOURCES OF PAYMENT FOR THE BONDS – Special Tax Methodology” and “ – Special Tax Fund.”

Lennar Homes

Lennar Homes’ Development Plan. Lennar Homes purchased all 277 lots within Improvement Area 3 from the Master Developer. All of the land in Improvement Area 3 transferred in a larger transaction that consisted of Villages G, H, E, I, and J from Eight Mile Development, Inc. to Lennar Homes for $13,547,724 or $31,887 per lot. The transaction as a whole was 428 lots with a typical lot size of 5,818 square feet and the transaction was negotiated in May of 2021. The villages were taken down over time with the first transfer occurring in October of 2021 and the last village transferred in September of 2023.

Lennar Homes is building out the villages as three distinct communities, described as follows:

Project/Village Merchant Builder
Total
Units
Completed/Under
Construction as
of Mar. 1, 2024(1)

Sold as of
Mar. 1, 2024
Sold and Closed
to Homeowners
as of Mar. 1, 2024
Waterside (Village E) Lennar Homes 92 59 35 26
Shoreside (Village G) Lennar Homes 99 74 37 31
The Keys II (Village H) Lennar Homes 86 79 39 31
Totals 277 212 111 88
____________________
Source: Lennar Homes.

Project/Village
Total
Units
Floor
Plans
Approx. Square
Footage

Base Home Pricing(1)
Waterside (Village E) 92 4 2,309 – 2,966 $584,296 – $702,240 Shoreside (Village G) 99 4 2,127 – 2,776 $556,140 – $615,987 The Keys II (Village H) 86 4 2,433 – 3,161 $587,673 – $670,366 Totals 277

(1) Base home prices are as of March 1, 2024 and subject to change. Base home prices shown exclude lot premiums, options and extras and any incentives or price reductions, including mortgage rate buy-downs.

Source: Lennar Homes; Lennar.com website for square footage and home pricing as of March 1, 2024.

No assurance can be given that home construction and sales will be carried out on the anticipated timeline and according to the plans outlined herein, or that the home construction and sale plans or base prices set forth above will not change after the date of this Official Statement. Lennar Homes reserves the right to change its development at any time without notice. Additionally, homes sold may not result in closed escrows as sales contracts are subject to cancellation.

EXHIBIT 2
408

36 Lennar Homes. Lennar Homes is based in Irvine, California. Lennar Homes has been in the business of developing residential real estate communities in California since 1996. On February 1, 2022, Lennar Homes of California, Inc., a California corporation, was converted to a California limited liability company and is now known as Lennar Homes of California, LLC, a California limited liability company (“ Lennar Homes” or the “ Developer”). All references herein to Lennar Homes prior to February 1, 2022 shall mean Lennar Homes of California, Inc. a California corporation, and all references herein to Lennar Homes on and after February 1, 2022 shall mean Lennar Homes of California, LLC, a California limited liability company.

Lennar Homes is wholly-owned by U.S. Home, LLC, a Delaware limited liability company (“U.S. Home”). U.S. Home is wholly -owned by Lennar Corporation, which is based in Miami, Florida. Founded in 1954, Lennar Corporation completed its initial public offering in 1971 and listed its common stock on the New York Stock Exchange in 1972. Lennar Corporation’s Class A and Class B common stock are listed on the New York Stock Exchange under the symbols “LEN” and “LEN.B.” respectively. Lennar Corporation is one of the largest homebuilders in the United States based on home sales revenues and net earnings, and operates under a number of brand names, including Lennar Homes and U.S. Home. Lennar Homes primarily develops residential communities both within the Lennar family of builders and through consolidated and unconsolidated partnerships in which Lennar Homes maintains an interest.

Lennar Corporation is subject to the informational requirements of the Exchange Act and in accordance therewith files reports, proxy statements and other information with the SEC.

Such filings, particularly the Annual Report on Form 10- K and its most recent Quarterly Report on Form 10-Q, set forth, among other things, certain data relative to the consolidated results of operations and financial position of Lennar Corporation and its consolidated subsidiaries, including Lennar Homes, as of such dates.

The SEC maintains a website that contains reports, proxy and other information statements and other information regarding registrants that file electronically with the SEC, including Lennar Corporation. The address of such website is www.sec.gov . All documents filed by Lennar Corporation pursuant to the requirements of the Exchange Act after the date of this Periodic Report will be available for inspection in such manner as the SEC prescribes.

Copies of Lennar Corporation’s Annual Report and related financial statements, prepared in accordance with generally accepted accounting standards, are available from Lennar Corporation’s website at www.lennar.com . The foregoing website addresses and references to filings with the SEC are given for reference and convenience only, and the information on such websites and on file with the SEC does not form a part of this Official Statement and is not incorporated by reference herein. No representation is made in this Official Statement as to the accuracy or adequacy of the information contained on such websites.

Lennar Corporation and Lennar Homes are not obligated to advance funds for construction or development or to pay ad valorem property taxes or the Special Taxes and investors should not rely on the information and financial statements contained on such websites in evaluating whether to buy, hold or sell the Bonds. The information contained on such websites may be incomplete or inaccurate and has not been reviewed by the City or the Underwriter.

Lennar Financing Plan. Lennar Homes plans to fund its home construction costs through internally generated funds (which may include home sales revenue and funding from its parent company).

EXHIBIT 2
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37 Although Lennar Homes expects to have sufficient funds available to undertake and complete its development activities in Improvement Area 3, there can be no assurance, however, that amounts necessary to finance the remaining development and home construction costs will be available to Lennar Homes when needed. While Lennar Homes’ parent company has made such internal funding available in the past, there can be no assurance whatsoever of its willingness or ability to do so in the future. Neither Lennar Homes nor any other entity or person is under any legal obligation of any kind to expend funds for the development of and construction of homes on Lennar Homes’ property in Improvement Area 3. Lennar Homes has no legal obligation to Bondholders to make any such funds available for construction or development, or the payment of ad valorem property taxes or the Special Taxes. Any contributions Lennar or any other entity or person to fund the costs of such development are entirely voluntary.

If and to the extent that the aforementioned sources are inadequate to pay the costs to complete the planned development by Lennar Homes within Improvement Area 3 and other financing is not put into place, there could be a shortfall in the funds required to complete the proposed development by Lennar Homes or to pay ad valorem property taxes or Special Taxes related to Lennar Homes’ property in Improvement Area 3, and the remaining portions of such development may not be completed. Many factors beyond Lennar Homes’ control, or a decision by Lennar Homes to alter its current plans, may cause the actual sources and uses to differ from the projections. See “SPECIAL RISK FACTORS” herein for a discussion of risk factors.”

VALUE OF PROPERTY WITHIN IMPROVEMENT AREA 3 AND SPECIAL TAX BURDEN

The value of the land within Improvement Area 3 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 3 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 3, 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 3 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 3.

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 January 15, 2024 (the “Appraisal”). The Appraisal estimates a value for all taxable property in Improvement Area 3.

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 EXHIBIT 2
410

38 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 277 improved residential lots, with new homes under construction and completed, located within Improvement Area 3.

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 “not- less-than” market value estimate of $77,324,000 for taxable property in Improvement Area 3, representing the cumulative, or aggregate, values, in accordance with the assumptions and conditions set forth in the Appraisal. Total value represents a “not-less-than” value given that, for each single‐ family lot improved with a completed home without a complete assessed improvement value reflected on the County of San Joaquin Assessor ’s Tax Roll, the Appraiser valued the home based on the smallest floor plan within each community
with a completed home, without
consideration for upgrades and lot premiums.

Values by ownership are shown in the following table.

Table 4
Improvement Area 3 of the City of Stockton
Community Facilities District No. 2018-2 (Westlake Villages II) Appraised Value of Taxable Property in Improvement Area 3

Owner Appraised Value
Lennar Homes(1) $44,534,000
Individual Homeowners 32,790,000
Total(2) $77,324,000
_____________
(1) Ownership includes partially-improved lots, homes under construction and completed homes. For additional details, see APPENDIX B – The Appraisal.
(2) Total value represents a “not -less-than” value given that, for each single‐family lot improved with a completed home without a complete assessed improvement value reflected on the County of San Joaquin Assessor’s Tax Roll, the Appraiser valued the home based on the smallest floor plan within each community with a completed home, without consideration for upgrades and lot premiums.

Source: The Appraisal.

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

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 3 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 EXHIBIT 2
411

39 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 3; 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 value of the property within Improvement Area 3 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.

EXHIBIT 2
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40 Value to Special Tax Burden Ratios

The value of the land within Improvement Area 3 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 3 and only the respective individual parcel is responsible for its allocated Special Tax.

Based upon the $77,324,000 appraised value of taxable property in Improvement Area 3 and an estimated principal amount of Bonds of $13,960,000 *, as well as overlapping land- secured debt attributable to those parcels of $89,317, for a total direct and overlapping land- secured debt amount of $14,049,317*, the value-to-lien ratio for such property is approximately

5.50* to 1; provided, however, that the value -to-lien ratio of individual parcels may vary significantly.

In comparing the value of the real property within Improvement Area 3 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 3 cannot be foreclosed upon as a whole to pay delinquent Special Taxes of the owners of such parcels within Improvement Area 3 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.

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 3, assuming full development at build-out.

Table 5
Improvement Area 3 of the City of Stockton
Community Facilities District No. 2018-2 (Westlake Villages II) Assigned Special Tax Calculation for Fiscal Year 2024-25 – Assuming Full Development

Land
Use
Class Property Description
Assigned
Special Tax
No. of
Planned
Units(1)
Estimated Total
Assigned
Special Tax
Share of Assigned
Special Tax
1 SINGLE FAMILY DETACHED (>3,000 SF) $3,747 22 $82,437 10.03% 2 SINGLE FAMILY DETACHED (2,700 - 3,000 SF) 3,079 82 252,442 30.71 3 SINGLE FAMILY DETACHED (2,400 - 2,699 SF) 2,891 65 187,897 22.86 4 SINGLE FAMILY DETACHED (2,100 - 2,399 SF) 2,770 108 299,133 36.39 5 SINGLE FAMILY DETACHED (1,800 - 2,099 SF) 2,739 0 0 0.00 6 SINGLE FAMILY DETACHED (< 1,800 SF) 2,708 0 0 0.00
Total 277 $821,910 100.00%

(1) Provided by Lennar Homes and subject to change.

Source: DTA.

* Preliminary; subject to change.

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41 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 3, based on the status of development as of the date indicated.

Table 6
Improvement Area 3 of the City of Stockton
Community Facilities District No. 2018-2 (Westlake Villages II) Assigned and Final Mapped Property Special Tax Calculations for Fiscal Year 2024-25 – Current Development Status (As of January 15, 2024)

Developed Property Assigned Special Tax Calculation
Land
Use
Class Property Description
FY 2024-25
Assigned
Special Tax
Building Permits
Issued (1)
Total Assigned
Special Tax
Share of
Special Taxes
1 SINGLE FAMILY DETACHED (>3,000 SF) $3,747 22 $82,437 10.03% 2 SINGLE FAMILY DETACHED (2,700 - 3,000 SF) 3,079 70 215,500 26.22 3 SINGLE FAMILY DETACHED (2,400 - 2,699 SF) 2,891 53 153,209 18.64 4 SINGLE FAMILY DETACHED (2,100 - 2,399 SF) 2,770 67 185,573 22.58 5 SINGLE FAMILY DETACHED (1,800 - 2,099 SF) 2,739 0 0 0.00 6 SINGLE FAMILY DETACHED (< 1,800 SF) 2,739 0 0 0.00
Developed Property Subtotal: 212 $636,718 77.47%

Final Mapped Property Special Tax Calculation
Land Use
Class Property Description
FY 2024-25
Maximum
Special Tax
(per Acre)
Actual
Special Tax
(per Acre)(3)
Total Final
Mapped
Special Tax
Share of
Special
Taxes
Final Mapped FINAL MAPPED PROPERTY (8.52 Remaining Acres) (2) $26,755 $21,731 $185,191 22.53% Final Mapped Property Subtotal:

$185,191 22.53%
Grand Total: $821,910 100.00%

(1) Source: Lennar Homes. As of January 15, 2024.
(2) Acreage of lots for which a building permit has not been issued as of January 15, 2024. (3) Initial estimate based on building permit issuances as of January 15, 2024. Pursuant to the Rate and Method of Apportionment, the actual Special Tax for Final Mapped Property will depend the number of building permits issued as of May 1, 2024.

Source: DTA.

EXHIBIT 2
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42 Value-to-Lien Ratios by Major Property Owners. The following table summarizes the value- to-lien ratios of property in Improvement Area 3 against the Bonds and overlapping land-secured debt in Improvement Area 3, by major property owners (as of the January 15, 2024 date of value in the Appraisal) for purposes of application of the Special Tax Formula.

Table 7
Improvement Area 3 of the City of Stockton
Community Facilities District No. 2018-2 (Westlake Villages II) Value-to-Lien Ratio by Major Property Owners
Fiscal Year 2024-25
Property Owner
No. of
Lots(1)
Taxable
Acres(2)
Appraised
Value(1)
Est.

FY 2024-25
Maximum
Special Tax
Levy(3)
% of Est.

FY 2024-25
Maximum
Special Tax
Levy
Reclamation
District No. 2042
CFD No. 2001-1(4)
Series 2024
Bonds*

Total Land-
Secured
Debt*
Value to
Lien
Ratio*
Individual Owners 67 9.38 $32,790,000 $250,857 25.01% $22,341 $3,376,606 $3,398,948 9.65 Lennar Homes(2) 210 28.11 45,534,000 752,034 74.99 66,976 10,583,39 10,650,369 4.18 Totals 277 37.48 $77,324,000 $1,002,891 100.00% $89,317 $13,960,000 $14,049,317 5.50

* Preliminary; subject to change.
(1) Source: Appraisal prepared by Integra Realty Resources, dated February 28, 2024. (2) Based on the area/acreage identified for residential lots on the County Assessor's Roll, as of January 1, 2023. (3) 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 $26,231 per acre for FY 2024-25. (4) CalMuni's Overlapping Debt Report. The outstanding debt ($89,317) was allocated proportionally among the 37.48 taxable acre.

Source: DTA.

EXHIBIT 2
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43 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 3, and payment of the Special Tax is secured by a lien on certain real property within Improvement Area 3. 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 3. 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 3.

Other public agencies whose boundaries overlap those of Improvement Area 3 could, without the consent of the City and in certain cases without the consent of the owners of the land within Improvement Area 3, impose additional taxes or assessment liens on the land within Improvement Area 3. The lien created on the land within Improvement Area 3 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 3, however, will be subordinate to the lien of the Special Tax.

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 3. 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 2
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44 Table 8
City of Stockton
Improvement Area 3 of the City of Stockton
Community Facilities District No. 2018-2 (Westlake Villages II) Summary of Overlapping Bonded Debt
As of March 1, 2024

2023-24 Local Secured Assessed Valuation: $5,843,809

DIRECT AND OVERLAPPING TAX AND ASSESSMENT DEBT: % Applicable Debt Debt 3/1/24 San Joaquin Delta Community College District General Obligation Bonds 0.005% $8,105 Lodi Unified School District General Obligation Bonds 0.025 68,118 Lodi Unified School District SFID No. 1 General Obligation Bonds 0.064 23,584 Stockton Unified School District General Obligation Bonds 0.0002 742 Reclamation District No. 2042 Community Facilities District No. 2001-1 3.291 89,317 City of Stockton Community Facilities District No. 2018-2, I.A. 3 100.000 -- (1) TOTAL DIRECT AND OVERLAPPING TAX AND ASSESSMENT DEBT $189,866

OVERLAPPING GENERAL FUND DEBT:

San Joaquin County Certificates of Participation 0.005% $2,651 Lodi Unified School District Certificates of Participation 0.025 1,788 Stockton Unified School District Certificates of Participation 0.0002 35 City of Stockton Pension Obligation Bonds 0.019 10,160 TOTAL OVERLAPPING GENERAL FUND DEBT $14,634

COMBINED TOTAL DEBT $204,500 (2)

Ratios to 2023-24 Assessed Valuation:

Direct Debt ($0)..............................................................................0.00% Total Combined Total Debt.............................................................3.50% Direct and Overlapping Tax and Assessment Debt........................3.25% __________________________
(1) Excludes the 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.

EXHIBIT 2
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45 Sample Tax Bill

The following tables summarize the representative property tax bill s for Fiscal Year 2023-24 for certain land use classes of residential property in Improvement Area 3, based on the 3 villages being developed by Lennar Homes.

Table 9A
Improvement Area 3 of the City of Stockton
Community Facilities District No. 2018-2 (Westlake Villages II) Effective Tax Rate Analysis Fiscal Year 2023-24
Waterside (Village E)

VILLAGE/NAME/BUILDER

VILLAGE E - WATERSIDE
ESTIMATED HOME SIZE (1)

2,793 2,463 2,309
LAND USE CLASS (2)

2 3 4

LAND USE CLASS DESCRIPTION

(2,700 - 3,000 SF) (2,400 - 2,699 SF) (2,100 - 2,399 SF) BASE SALES PRICE (1)

$591,990 $560,990 $548,990

AD-VALOREM TAXES (3) RATE

AMOUNT AMOUNT AMOUNT
BASE PROPERTY TAX RATE 1.0000%

$5,919.90 $5,609.90 $5,489.90
LODI USD 2002 MEASURE K BOND 0.022%

$131.42 $124.54 $121.88
LODI USD 2016 MEASURE U BOND 0.045%

$264.62 $250.76 $245.40
LODI SFID1 2006 MEASURE L BOND 0.042%

$248.04 $235.05 $230.03
SJ DELTA COLL 2004 MEASURE L BOND 0.014%

$79.92 $75.73 $74.11

TOTAL GENERAL PROPERTY TAXES 1.1223%

$6,643.90 $6,295.99 $6,161.31

OVERLAPPING ASSESSMENTS (4)

WESTLAKE VILL ZONE C-6 LNDSCP

$105.40 $105.40 $105.40
WEST LAKE VILLAGE MUD ZONE 11

$4.30 $4.30 $4.30

CENTRAL DELTA WATER

$2.00 $2.00 $2.00
WATER ZONE 2

$2.00 $2.00 $2.00

SJC MOSQUITO ABATE

$1.16 $1.16 $1.16

SJC MOSQ & VCTR CONTR-BEN ASMT

$9.92 $9.92 $9.92
RECL DISTR NO 2042 (MR)

$30.70 $30.70 $30.70
RECL DISTR NO 2042

$48.40 $48.40 $48.40
CSA NO 53 - HAZ WASTE

$4.00 $4.00 $4.00

TOTAL SPECIAL ASSESSMENTS & CHARGES

$207.88 $207.88 $207.88

TOTAL EFFECTIVE TAX RATE EXCLUDING CFD

1.16% 1.16% 1.16%

IMPROVEMENT AREA NO. 3 OF CFD 2018-2 (FACILITIES) (5) $3,078.56 $2,890.73 $2,769.75 CFD 2018-2 (SERVICES) (6)

$632.17 $632.17 $632.17

PROJECTED TOTAL PROPERTY TAXES

$10,562.52 $10,026.77 $9,771.12

PROJECTED TOTAL EFFECTIVE TAX RATE

1.78% 1.79% 1.78%
__________________
(1) Source: Appraisal prepared by Integra Realty Resources, dated February 6, 2024. (2) Rate and Method of Apportionment for Improvement Area No. 3 of CFD No. 2018-2 (Westlake Villages II). (3) Source: County of San Joaquin Tax Collector. Based on tax rates for FY 2023-24. (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 2024-25. (6) Source: Rate and Method of Apportionment. Special Tax B applicable for FY 2024-25.

EXHIBIT 2
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46 Table 9B
Improvement Area 3 of the City of Stockton
Community Facilities District No. 2018-2 (Westlake Villages II) Effective Tax Rate Analysis Fiscal Year 2023-24
Shoreside (Village G)

VILLAGE/NAME/BUILDER

VILLAGE G - SHORESIDE
ESTIMATED HOME SIZE (1)

2,776 2,612 2,127
LAND USE CLASS (2)

2 3 4

LAND USE CLASS DESCRIPTION

(2,700 - 3,000 SF) (2,400 - 2,699 SF) (2,100 - 2,399 SF) BASE SALES PRICE (1)

$588,990 $567,990 $535,990

AD-VALOREM TAXES (3) RATE

AMOUNT AMOUNT AMOUNT
BASE PROPERTY TAX RATE 1.0000%

$5,889.90 $5,679.90 $5,359.90
LODI USD 2002 MEASURE K BOND 0.022%

$130.76 $126.09 $118.99
LODI USD 2016 MEASURE U BOND 0.045%

$263.28 $253.89 $239.59
LODI SFID1 2006 MEASURE L BOND 0.042%

$246.79 $237.99 $224.58
SJ DELTA COLL 2004 MEASURE L BOND 0.014%

$79.51 $76.68 $72.36

TOTAL GENERAL PROPERTY TAXES 1.1223%

$6,610.23 $6,374.55 $6,015.42

OVERLAPPING ASSESSMENTS (4)

WESTLAKE VILL ZONE C-6 LNDSCP

$105.40 $105.40 $105.40
WEST LAKE VILLAGE MUD ZONE 11

$4.30 $4.30 $4.30

CENTRAL DELTA WATER

$2.00 $2.00 $2.00
WATER ZONE 2

$2.00 $2.00 $2.00

SJC MOSQUITO ABATE

$1.16 $1.16 $1.16

SJC MOSQ & VCTR CONTR-BEN ASMT

$9.92 $9.92 $9.92
RECL DISTR NO 2042 (MR)

$30.70 $30.70 $30.70
RECL DISTR NO 2042

$48.40 $48.40 $48.40
CSA NO 53 - HAZ WASTE

$4.00 $4.00 $4.00

TOTAL SPECIAL ASSESSMENTS & CHARGES

$207.88 $207.88 $207.88

TOTAL EFFECTIVE TAX RATE EXCLUDING CFD

1.16% 1.16% 1.16%

IMPROVEMENT AREA NO. 3 OF CFD 2018-2 (FACILITIES) (5) $3,078.56 $2,890.73 $2,769.75 CFD 2018-2 (SERVICES) (6)

$632.17 $632.17 $632.17

PROJECTED TOTAL PROPERTY TAXES

$10,528.85 $10,105.34 $9,625.22

PROJECTED TOTAL EFFECTIVE TAX RATE

1.79% 1.78% 1.80%
__________________
(1) Source: Appraisal prepared by Integra Realty Resources, dated February 6, 2024. (2) Rate and Method of Apportionment for Improvement Area No. 3 of CFD No. 2018-2 (Westlake Villages II). (3) Source: County of San Joaquin Tax Collector. Based on tax rates for FY 2023-24. (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 2024-25. (6) Source: Rate and Method of Apportionment. Special Tax B applicable for FY 2024-25.

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47 Table 9C
Improvement Area 3 of the City of Stockton
Community Facilities District No. 2018-2 (Westlake Villages II) Effective Tax Rate Analysis Fiscal Year 2023-24
The Keys II (Village H)

VILLAGE/NAME/BUILDER

VILLAGE H - THE KEYS II
ESTIMATED HOME SIZE (1)

3,156 2,705 2,433 2,166
LAND USE CLASS (2)

1 2 3 4

LAND USE CLASS DESCRIPTION

(>3,000 SF) (2,700 - 3,000 SF) (2,400 - 2,699 SF) (2,100 - 2,399 SF) BASE SALES PRICE (1)

$626,990 $584,990 $552,990 $536,990

AD-VALOREM TAXES (3) RATE

AMOUNT AMOUNT AMOUNT AMOUNT
BASE PROPERTY TAX RATE 1.0000%

$6,269.90 $5,849.90 $5,529.90 $5,369.90
LODI USD 2002 MEASURE K BOND 0.022%

$139.19 $129.87 $122.76 $119.21
LODI USD 2016 MEASURE U BOND 0.045%

$280.26 $261.49 $247.19 $240.03
LODI SFID1 2006 MEASURE L BOND 0.042%

$262.71 $245.11 $231.70 $225.00
SJ DELTA COLL 2004 MEASURE L BOND 0.014%

$84.64 $78.97 $74.65 $72.49

TOTAL GENERAL PROPERTY TAXES 1.1223%

$7,036.71 $6,565.34 $6,206.21 $6,026.64

OVERLAPPING ASSESSMENTS (4)

WESTLAKE VILL ZONE C-6 LNDSCP

$105.40 $105.40 $105.40 $105.40
WEST LAKE VILLAGE MUD ZONE 11

$4.30 $4.30 $4.30 $4.30

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

$1.16 $1.16 $1.16 $1.16

SJC MOSQ & VCTR CONTR-BEN ASMT

$9.92 $9.92 $9.92 $9.92
RECL DISTR NO 2042 (MR)

$30.70 $30.70 $30.70 $30.70
RECL DISTR NO 2042

$48.40 $48.40 $48.40 $48.40
CSA NO 53 - HAZ WASTE

$4.00 $4.00 $4.00 $4.00

TOTAL SPECIAL ASSESSMENTS & CHARGES

$207.88 $207.88 $207.88 $207.88

TOTAL EFFECTIVE TAX RATE EXCLUDING CFD

1.16% 1.16% 1.16% 1.16%

IMPROVEMENT AREA NO. 3 OF CFD 2018-2 (FACILITIES) (5) $3,747.13 $3,078.56 $2,890.73 $2,769.75 CFD 2018-2 (SERVICES) (6)

$632.17 $632.17 $632.17 $632.17

PROJECTED TOTAL PROPERTY TAXES

$11,623.89 $10,483.96 $9,936.99 $9,636.45

PROJECTED TOTAL EFFECTIVE TAX RATE

1.85% 1.79% 1.80% 1.79%
__________________
(1) Source: Appraisal prepared by Integra Realty Resources, dated February 6, 2024. (2) Rate and Method of Apportionment for Improvement Area No. 3 of CFD No. 2018-2 (Westlake Villages II). (3) Source: County of San Joaquin Tax Collector. Based on tax rates for FY 2023-24. (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 2024-25. (6) Source: Rate and Method of Apportionment. Special Tax B applicable for FY 2024-25.

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48 Special Tax Collection and Delinquency Rate

The first year for levy and collection of the Special Taxes will be for Fiscal Year 2024-25; 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 3 , 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.”

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. T his 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 3 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 3.

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 3.

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 EXHIBIT 2
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49 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.

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 . Fai
lure 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 3, see “VALUE OF PROPERTY WITHIN IMPROVEMENT AREA 3 AND SPECIAL TAX BURDEN” herein.

Concent
ration of Ownership

The majority of taxable property within Improvement Area 3 is currently owned by Lennar Homes. An owner of property in Improvement Area 3 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 Lennar Homes , or any future owner of significant property subject to the Special Taxes in Improvement Area 3 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 3 may be subject to unexpected delays, disruptions and changes which may affect the willingness and ability of EXHIBIT 2
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50 landowners to pay the Special Taxes when due. Certain infrastructure improvements remain to be completed in order to complete construction within Improvement Area 3. 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 the taxable property within Improvement Area 3. This market value is merely the present opinion of the Appraiser, and is subject to the 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 3 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 3 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 3 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.

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51 Neither the Underwriter nor the City has evaluated development risks related to the development of land in Improvement Area 3. 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 3 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 3 or the value of property in Improvement Area 3.

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 3 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 3 AND SPECIAL TAX BURDEN – Value to Special Tax Burden Ratios.” No assurance can be given that the proposed development within Improvement Area 3 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 Lennar Homes nor any other person provides any assurances that the project currently envisioned for the land in Improvement Area 3 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 Lennar Homes have no obligation to the City or to owners of the Bonds to complete the project or the construction of homes within Improvement Area 3.

Risks of Real Estate Investment Generally. Continuing development of land within Improvement Area 3 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 3 may also be affected by development in surrounding areas, which may compete with Improvement Area 3. 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 3 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 3 will not be adversely affected by these risks.

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52 Natural Disasters. The value of the parcels in Improvement Area 3 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 3 and the continued habitability and enjoyment of such private improvements. For example, the areas in and surrounding Improvement Area 3, like those in much of the State , may be subject to earthquakes or other unpredictable seismic activity . See “THE DISTRICT AND IMPROVEMENT AREA 3 – 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 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 3.

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 3 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 3 would affect the marketability and the value of some or all of the property in Improvement Area 3. In that event, the owners and operators of a parcel within Improvement Area 3 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 3 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 3 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 o wner (or operator) of any of the property within Improvement Area 3 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.

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53 Further, it is possible that liabilities may arise in the future with respect to any of the parcels within Improvement Area 3 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 3 that is realizable upon a foreclosure sale.

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 3 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 3, 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 3 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 3. O ther 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 non- governmental 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.

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54 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.

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 3.

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 3 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.

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55 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.

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 3 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 3 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 EXHIBIT 2
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56 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).

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 3. 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.

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57 The Taxpayer Protection and Government Accountability Act (“Initiative 1935”) has been determined to be eligible for the November 2024 Statewide general election and, unless withdrawn by its proponent prior to June 27, 2024, will be certified as qualified for the ballot in such election. At the request of the Governor of California and the State Legislature, the California Supreme Court has agreed to consider whether Initiative 1935 should be barred from appearing on the ballot as an unlawful revision of the State Constitution, given its potential wide- ranging impact on the ability of the State and local governments to fund their operations. The Governor and the State Legislature have requested a decision by the California Supreme Court by late June 2024, prior to the ballot certification date. The City is unable to predict the outcome of such court case.

Similar to Proposition 218 and Proposition 26, Initiative 1935 would, among other things, amend the State Constitution to impose heightened barriers for State and local governments to impose taxes and fees. Initiative 1935 would provide that any tax or fee imposed after January 1, 2022 not in accordance with such provisions is void 12 months after the effective date of Initiative 1935, unless subsequently reenacted in accordance with its terms. If adopted, the scope and impact of Initiative 1935 would be subject to future judicial interpretation. The City is unable to predict how Initiative 1935, if adopted, might be interpreted by the courts, and there can be no assurance that any such interpretation would not have an adverse impact on the City’s ability to levy and collect the Special Taxes.

The Special Taxes and bonded indebtedness limit for Improvement Area 3 were authorized by not less than a two- thirds vote of the landowners who constituted the qualified electors of Improvement Area 3 at the time of such voted authorization. In connection with such election, all of the landowner electors provided waivers customarily required in connection with landowner elections, unanimously waiving, among other matters, legal requirements pertaining to the conduct of such election including the procedural requirements that Initiative 1935, if enacted, would impose. The City believes, therefore, that issuance of the Bonds and levying of the Special Tax does not require the conduct of further proceedings under the Mello- Roos Act, Proposition 218, Proposition 26 or Initiative 1935 (assuming it is adopted and becomes effective).

Like their antecedents, Proposition 218, Proposition 26 and Initiative 1935 (assuming it is adopted and becomes effective) are likely to undergo both judicial and legislative scrutiny before the impact on Improvement Area 3 can be determined. Certain provisions of Proposition 218, Proposition 26 and Initiative 1935 (assuming it is adopted and becomes effective) may be examined by the courts for their constitutionality.

Case Law Related to 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 EXHIBIT 2
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58 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 3, there were no registered voters within Improvement Area 3 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 3. 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.

Pandemic Diseases

The spread of pandemic diseases (such as COVID-19), and responses intended to slow their spread, may result in negative impacts to the homebuilding operations and sales of homes within Improvement Area 3 in the future . T here can be no assurances that the spread of pandemic diseases and related shelter in place order and/or social distancing requirements imposed by governmental authorities in response will not materially adversely impact the pace of sales of lots or homes or the willingness of owners of land in Improvement Area 3 , including the Master Developer, Lennar Homes 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 could see significant volatility attributed to pandemic disease 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.

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. Interest on the Bonds may be subject to the corporate 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 EXHIBIT 2
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59 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 straight- line 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 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 EXHIBIT 2
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60 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, Los Angeles, 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 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.

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61 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 3 (the “City Annual Report ”) by not later than March 31 following the end of the City’s fiscal year, commencing March 31, 2025, with the report for the fiscal year ending June 30, 2024, 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, including that the Fiscal Year 2017 -18 budget was filed 3 months late with respect to certain obligations. 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, including that the Fiscal Year 2020- 21 audited financial statements were filed 6 weeks late with respect to certain obligations, and failure to file notices were not filed.

Lennar Homes

The Underwriter does not consider Lennar Homes to be an “obligated person” with respect to the Bonds for purpose of the Rule. Notwithstanding the foregoing, to provide updated information with respect to their development within Improvement Area 3, Lennar Homes has agreed to execute a Developer Continuing Disclosure Certificate, the form of which is set forth in APPENDIX F (the “ Developer Continuing Disclosure Certificate ”), for the benefit of the owners of the Bonds, pursuant to which it will covenant to provide, semiannual reports 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 3 until satisfaction of certain conditions set forth in its Developer Continuing Disclosure Certificate. The complete text of the Developer Continuing Disclosure Certificate is set forth in APPENDIX F.

Lennar Homes’ obligation to provide semiannual reports and listed event disclosures will terminate upon the earliest to occur of: (a) the legal defeasance, prior redemption or payment in full of all of the Bonds; or (b) when Lennar Homes , together with its Affiliates, collectively own fewer than [___] planned residential lots in Improvement Area 3.

Lennar Homes Prior Continuing Disclosure Compliance. Lennar Homes represents that, other than as disclosed in this paragraph, to the actual knowledge of Lennar Homes, Lennar Homes has not failed in any material respect to comply with any previous undertaking by it to provide periodic continuing disclosure reports or notices of material events with respect to community facilities districts or assessment districts in California within the past five years.

However, (i) in connection with the $16,780,000 California Municipal Finance Authority Special Tax Revenue Bonds BOLD Program Series 2020B, Lennar Homes inadvertently failed to file the initial Semi-Annual Report by the due date of May 1, 2021, but filed a curative report on May 21, 2021; and (ii) in connection with the $5,795,000 City of Rancho Cordova Grantline 208 Community Facilities District No. 2018 -1 Special Tax Bonds, Series 2021B, Lennar Homes EXHIBIT 2
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62 inadvertently failed to file the initial annual report by the due date of April 1, 2022, but filed a curative report on September 21, 2022.

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 U nderwriter’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 ADVISOR

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, Del Rio Advisors, LLC takes no 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. Del Rio Advisors, LLC has assisted the City with the structure, timing and terms for the sale of the Bonds. Del Rio Advisors, LLC 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 Del Rio Advisors, LLC are contingent upon the successful closing of the Bonds.

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

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 3, 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 3 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 3, 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 3, 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 3 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.

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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, 2024.

“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 2
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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 information with respect to called bonds as the City may designate in a n Officer’s Certificate delivered to the Fiscal Agent.

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“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 3.

“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 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.

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 EXHIBIT 2
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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 Fi
scal 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.

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 EXHIBIT 2
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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 3 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 shall fix and levy the amount of Special Taxes within Improvement Area 3 required for the payment of principal of and interest on any outstanding Bonds of Improvement Area 3 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 3 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 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 leas t 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-Ex
emption. 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.

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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 consent and on any subsequent Owner (whether or not such subsequent Owner has notice EXHIBIT 2
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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;

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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.

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APPENDIX D

SAN JOAQUIN COUNTY AND CITY OF STOCKTON

DEMOGRAPHIC INFORMATION

Improvement Area 3 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 3 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 Los Angeles 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 the 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 approximately 320,000 people, Stockton is the 11th largest city in California and the 61 st 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 2019 through 2023 as of January 1

Calendar
Year
City of
Stockton
San Joaquin
County
State of
California
2019 317,356 764,373 39,605,361
2020 323,456 779,233 39,538,223
2021 323,101 780,515 39,286,510
2022 321,911 782,811 39,078,674
2023 319,731 786,145 38,940,231

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 2021-22

Employer Name
No. of
Employees
Stockton Unified School District 5,265
Amazon 4,750
St. Joseph’s Medical Center 3,200
City of Stockton 2,118
San Joaquin County Office of Education 1,955
Pacific Gas and Electric 1,550
University of the Pacific 1,329
Lincoln Unified School District 1,125
Kaiser Permanente 1,065
San Joaquin Delta College 813

Source: City of Stockton Annual Comprehensive Financial Report 2021-22.

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

COUNTY OF SAN JOAQUIN
Major Employers
(As of March 2024)

Employer Name Location Industry
Adventist Health Lodi Memorial Lodi Hospitals
Amazon Fulfillment Ctr Stockton Mail Order Fulfillment Service Ashley Lane LP Stockton Real Estate
Blue Shield of California Lodi Insurance
Dameron Hospital Stockton Hospitals
Foster Care Svc Stockton Government Offices-County
Leprino Foods Co Tracy Cheese Processors (mfrs)
Lodi Health Home Health Agency Lodi Home Health Service Medline Tracy Physicians & Surgeons Equip & Supls-Whls
NA Chaderjian Youth Stockton State Govt-Correctional Institutions O-G Packing & Cold Storage Co Stockton Fruits & Vegetables-Growers & Shippers Prima Frutta Packing Inc Linden Fruit & Produce Packers Safeway Distribution Ctr Tracy Distribution Centers (whls) San Joaquin County CA Public 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 Regional Health Stockton Health Services
Stockton Police Dept Stockton Police Departments
Stockton Unified Sch Dist Stockton Facilities Management Stockton Unified School Dist Stockton Schools
Walmart Supercenter Stockton Department Stores
Waste Management-Lodi Transfer Lodi Consultants-Business NEC

Source: California Employment Development Department, extracted from The America ’s Labor Market Information System (ALMIS) Employer Database, 2024 1st 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 San Joaquin County was 6.8 percent in December 2023, up from a revised 6.4 percent in November 2023, and above the year -ago estimate of 5.2 percent. This compares with an unadjusted unemployment rate of 5.1 percent for California and 3.5 percent for the nation during the same period.

Set forth below is data from calendar years 2018 to 2022 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. Annual Figures for 2023 are not yet available.

STOCKTON-LODI MSA
(San Joaquin County)
Annual Average Labor Force and Employment by Industry
Calendar Years 2018 through 2022
(March 2022 Benchmark)

2018 2019 2020 2021 2022
Civilian Labor Force (1) 324,100 327,100 335,400 336,900 344,400 Employment 304,300 307,700 296,900 308,000 326,400
Unemployment 19,800 19,500 38,500 28,900 18,100
Unemployment Rate 6.1% 5.9% 11.5% 8.6% 5.2%
Wage and Salary Employment: (2)
Agriculture 15,600 15,400 14,600 14,200 13,700
Mining and Logging 100 100 100 100 0
Construction 12,800 13,100 13,000 13,900 15,100
Manufacturing 20,600 20,600 20,300 21,400 22,600
Wholesale Trade 11,800 11,700 10,600 10,800 11,400
Retail Trade 26,700 26,200 24,600 26,200 26,900
Transportation, Warehousing and Utilities 28,400 31,300 38,800 43,000 48,800 Information 1,800 1,600 1,200 1,200 1,200
Financial Activities 7,800 7,900 7,800 8,000 8,200
Professional and Business Services 19,600 20,200 21,300 22,500 24,100 Educational and Health Services 38,800 39,100 37,300 38,000 39,800 Leisure and Hospitality 22,000 22,600 18,500 21,300 24,500 Other Services 7,600 7,800 6,800 7,300 8,000
Federal Government 3,100 3,200 3,300 3,100 3,100
State Government 6,700 6,800 6,800 6,000 5,500
Local Government 33,700 34,900 33,000 32,900 34,100
Total All Industries (3) 257,000 262,500 257,800 269,900 286,900

(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 2018 through 2022.

CITY OF STOCKTON
Building Permit Activity
For Calendar Years 2018 through 2022
(Dollars in Thousands)

2018 2019 2020 2021 2022
Permit Valuation
New Single-family $104,468.2 $99,207.4 $129,515.4 $104,348.4 $156,148,5 New Multi-family 0.0 32,175.0 12,061.1 27,536.4 0.0
Res. Alterations/Additions 61,592.1, 66,557.3 11,378.0 78,590.8 141,667.0 Total Residential 166,060.3 197,939.7 152,954.5 210,475.6 297,820.0

New Commercial 21,301.7 20,758.4 25,926.8 44,227.2 138,967.5 New Industrial 68,896.1 104,091.5 7,898.5 43,340.5 249,274.2 New Other 665.0 1,684.1 5,213.4 9,954.5 49,064.0
Com. Alterations/Additions 109,640.5 179,066.8 46,657.9 88,721.6 280,870,3 Total Nonresidential 200,503.3 305,600.8 85,696.6 186,243.8 718,178.7

New Dwelling Units
Single Family 324 302 481 364 497
Multiple Family 0 262 93 45 0
TOTAL 324 564 574 409 497

Source: Construction Industry Research Board, Building Permit Summary.

COUNTY OF SAN JOAQUIN
Building Permit Activity
For Calendar Years 2018 through 2022
(Dollars in Thousands)

2018 2019 2020 2021 2022
Permit Valuation
New Single-family $883,071.1 $843,700.9 $870,859.6 $1,179,358.0 $1,281,631.4 New Multi-family 99,601.4 57,271.1 38,411.8 69,775.2 88,457.7 Res. Alterations/Additions 95,073.4 98,681.9 40,144.4 108,647.1 182,338.5 Total Residential 1,077,745.9 999,653.9 949,415.8 1,357,780.3 1,552,427.6

New Commercial 498,359.0 380,383.3 255,761.2 272,617.0 641,696.7 New Industrial 240,073.7 120,003.8 534,199.5 43,401.3 249,274.2 New Other 31,904.4 61,991.7 33,112.3 58,264.9 107,863.0 Com. Alterations/Additions 249,142.4 363,841.0 135,285.4 272,064.7 450,649.8 Total Nonresidential 1,019,479.5 926,219.8 958,358.4 646,347.9 1,449,483.7

New Dwelling Units
Single Family 2,765 2,564 2,843 3,665 3,168
Multiple Family 593 461 245 178 338
TOTAL 3,358 3,025 3,088 3,843 3,506

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 2020 through 2024.

CITY OF STOCKTON, SAN JOAQUIN COUNTY AND THE STATE OF CALIFORNIA Effective Buying Income
2020 through 2024

Year

Area
Total Effective
Buying Income
(000’s Omitted)
Median
Household
Effective Buying
Income

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

2023 City of Stockton $7,468,379 $58,873
San Joaquin County 22,168,255 68,912
California 1,461,799,662 77,175
United States 11,454,846,397 65,326

2024 City of Stockton $8,181,528 $66,096
San Joaquin County 24,445,200 76,847
California 1,510,708,521 80,973
United States 11,987,185,826 67,876

Source: Claritas, LLC.

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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 through three quarters during calendar year 2023 in the City were reported to be $4,692,561,996, a 5.65 % decrease in total taxable sales through three quarters of $4,973,751,253 reported during calendar year 2022.

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
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
2022 4,812 4,610,164 7,443 6,724,541

Source: State of California, Board of Equalization.

The total taxable sales through three quarters during calendar year 2023 in the County were reported to be $16,910,383,113, a 2.73% decrease in total taxable sales through three quarters of $17,385,516,538 reported during calendar year 2022.

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
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
2022 10,884 15,342,203 18,100 23,625,470

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, Los Angeles, 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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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 3 of the City of Stockton Community Facilities District No. 2018-2 (Westlake Villages II) Spec
ial Tax Bonds Series 2024

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 3 of the City of Stockton Community Facilities District No. 2018 -2 (Westlake Villages II) Special Tax Bonds Series 2024 (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 April 1, 2024 (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.

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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.

Interest on the Bonds may be subject to the corporate alternative minimum tax. We express no opinion regarding any other tax consequences arising with respect to the ownership, sale or disposition of, or the amount, accrual or receipt of interest on, the Bonds.

The rights of the owners of the Bonds and the enforceability of the Bonds and the Indenture 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 accordance with principles of equity or otherwise 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. Moreover, our opinions are not a guarantee of a particular result, and are not binding on the Internal Revenue Service or any court; rather, our opinions represent our legal judgment based upon our review of existing law that we deem relevant to such opinions and in reliance upon the representations, opinions, and covenants referenced above.

Our engagement with respect to this matter has terminated as of the date hereof.

Respectfully submitted,

A Professional Law Corporation

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APPENDIX F

FORM OF CONTINUING DISCLOSURE UNDERTAKINGS

CONTINUING DISCLOSURE CERTIFICATE
(City)

$________
IMPROVEMENT AREA 3 OF THE CITY OF STOCKTON
COMMUNITY FACILITIES DISTRICT NO. 2018-2
(WESTLAKE VILLAGES II)
SPECIAL TAX BONDS, SERIES 2024

This CONTINUING DISCLOSURE CERTIFICATE (this “Disclosure Certificate”), dated as of April 1, 2024 is executed and delivered by the CITY OF STOCKTON (the “City”), in connection with the execution and delivery of its Improvement Area 3 of the City of Stockton Community Facilities District No. 2018-2 (Westlake Villages II) Special Tax Bonds Series 2024 (the “Bonds”). The Bonds are being executed and delivered pursuant to a Fiscal Agent Agreement, dated as of April 1, 2024 (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.

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 herein, the following capitalized terms shall have the following meanings:

“Annual
Report” means any Annual Report provided by the City pursuant to, and as described in, Sections 3 and 4 of this Disclosure Certificate.

“Dissemination Agent” means, initially, Willdan Financial Services, or any successor Dissemination Agent designated in writing by the City and which has filed with the City a written acceptance of such designation in accordance with Section 8 of this Disclosure Certificate.

“District” means the City of Stockton Community Facilities District No. 2018- 2 (Westlake Villages II).

“Improvement Area 3” means Improvement Area 3 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.

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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 3 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 2023-24 Fiscal Year due March 31, 2025, 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 to such effect.

(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

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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, 2025 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 Tax es, 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 3 for the most recent Fiscal Year.

(vi) Identification of each delinquent property owner in Improvement Area 3 representing more than 5% of the levy of Special Taxes in Improvement Area 3, 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

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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 Ev ents.

(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 2
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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 obl igations 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. Th
e 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 2
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Dissemination Agent. Any Dissemination Agent may resign by providing 30 days ’ written notice to the City.

Section 9. Amendment; Waiver. N otwithstanding 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) i
f 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. Def
ault. 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 2
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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 . Not
ices. 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. 135 Main Street, Suite 1700
San Francisco, California 94105
Attn: Municipal Capital Markets Group
Email: [email protected]

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. Thi
s 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 2
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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 3 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:

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FORM OF CONTINUING DISCLOSURE CERTIFICATE
(Lennar Homes)

$________
IMPROVEMENT AREA 3 OF THE CITY OF STOCKTON
COMMUNITY FACILITIES DISTRICT NO. 2018-2
(WESTLAKE VILLAGES II)
SPECIAL TAX BONDS, SERIES 2024

THIS CONTINUING DISCLOSURE CERTIFICATE (the “Disclosure Certificate”) dated as of April 1, 2024 , is executed by Lennar Homes of California, LLC (the “Developer”) in connection with the execution and delivery by the City of Stockton (the “City”) of its City of Stockton Improvement Area 3 of the City of Stockton Community Facilities District No. 2018- 2 (Westlake Villages II) Special Tax Bonds Series 2024 (the “Bonds”). The Bonds are being executed and delivered pursuant to a Fiscal Agent Agreement, dated as of April 1, 2024 (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. Pur
pose 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. Def
initions. 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:

“A
ffiliate” means any person presently directly (or indirectly through one or more intermediaries) under managerial control of the Developer, and about whom information could be material to potential investors in their investment decision regarding the Bonds (including without limitation information relevant to the proposed development of the Property or to the Developer’s ability to pay the Special Taxes levied on the Property prior to delinquency).

“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 3 ), 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 3 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.

“Dissemination Agent” means the Developer, or any successor Dissemination Agent designated in writing by the Developer, and which has filed with the Developer and the City a written acceptance of such designation, and which is experienced in providing dissemination agent services such as those required under this Disclosure Certificate.

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“District” means the City of Stockton Community Facilities District No. 2018- 2 (Westlake Villages II).

“Improvement Area 3” means Improvement Area 3 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 date of determination, a Person that, together with the Person’s Affiliates, owns [___] or more residential lots (or property intended to be subdivided into 58 or more residential lots) in Improvement Area 3 on an aggregate basis.

“MSRB” means the Municipal Securities Rulemaking Board, which has been designated by the Securities and Exchange Commission as the sole repository of disclosure information.

“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 (i) the property owned by the Developer or an Affiliate in Improvement Area 3 as of the date of determination, and (ii) the property in Improvement Area 3 that the Developer or an Affiliate sold to a Major Owner who has not assumed the undertakings of this Disclosure Certificate under Section 6(b) that is owned by such Major Owner as of the date of determination.

“Report Date” means March 31 and September 30 of each fiscal year.

“Special Taxes ” means the special taxes levied on taxable property within Improvement Area 3 that are pledged to repayment of the Bonds.

Section 3. P
rovision of Periodic Reports.

(a) So long as the Developer’s obligations under this Disclosure Certificate have not been terminated pursuant to Section 6 herein, the Developer shall, or, upon written direction of the Developer the Dissemination Agent shall, not later than each Report Date, commencing September 30, 2024 , file or cause to be filed with the MSRB , in an electronic format as prescribed by the MSRB, a Periodic Report which is consistent with the requirements of Section 4 of this Disclosure Certificate , with a copy to the Part icipating Underwriter and the City. Not later than 15 calendar days prior to the Report Date, the EXHIBIT 2
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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 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 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 to such effect, with a copy to the City and the Participating Underwriter.

(c) The Dissemination Agent shall: (i) determine prior to each Report Date the then-applicable rules and electronic format prescribed by the MSRB for the filing of continuing disclosure reports; and (ii) 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. Cont
ent of Periodic Reports. The Developer’s Periodic Report shall contain or incorporate by reference the information set forth in Exhibit A 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 addi
tion to any of the information expressly required to be provided in Exhibit A , the Developer’s Periodic Report shall include 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.

Section 5. R eporting of Significant Events.

(a) So long as the Developer’s obligations under this Disclosure Certificate have not been terminated pursuant to Section 6 herein, 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:

EXHIBIT 2
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(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 for which it is responsible prior to delinquency or to sell or develop the Property;

(ii) failure of the Developer 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, to the extent such failure is not promptly cured by the Developer upon discovery thereof;

(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 for which it is responsible prior to delinquency 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 that continues to exist beyond any applicable notice and cure periods 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 City and the Participating Underwriter.

Section 6. D
uration 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 Property is no longer owned by a Major Owner; or

(iii) the date on which all of the Special Taxes attributable to the Property are paid in full.

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 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 conveyed to such Major Owner may be assumed by such Major Owner, and if so EXHIBIT 2
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F-13
assumed the Developer’s obligations hereunder with respect to such portion of the Property conveyed will be terminated. In order to effect such an assumption, such Major Owner shall enter into an Assumption Agreement in form and substance equivalent to this Disclosure Certificate or as otherwise satisfactory to the City and the Participating Underwriter. However, a Major Owner shall not be required to enter into an Assumption Agreement if such Major Owner is already a party to a continuing disclosure certificate in form and substance similar to this Disclosure Certificate with respect to the Bonds, and under which the property conveyed to such Major Owner will become subject to future Periodic Reports. If not so assumed, the Developer shall use commercially reasonable efforts to obtain report the information, as applicable to the transferee, required herein so long as the transferee is a Major Owner.

Section 7. D issemination 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. Am
endment; 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) i
f 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, or change in law; 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. A
dditional 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.

Section 10. Def ault. 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 EXHIBIT 2
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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. D uties, 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, but shall be assumed by a Major Owner from and after the date of such assumption when property is sold to a Major Owner and such Major Owner enters into an assumption agreement.