Agenda — Tracy City Council, April 5, 2022 (part 3 of 4)

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coverage carried by the City, and may be maintained in whole or in part in the form of the participation by the City in a joint powers agency or other program providing pooled insurance; provided that such insurance may not be maintained by the City in the form of self-insurance. The Net Proceeds of such insurance must be applied as provided in Section 6.1.

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ECTION 5.5. Rental Interruption Insurance. The City shall procure and maintain, or cause to be procured and maintained, throughout the Term of this Lease, rental interruption or use and occupancy insurance to cover loss, total or partial, of the use of any portion of the Leased Property constituting buildings or other improvements as a result of any of the hazards covered in the insurance required by Section 5.4, in an amount at least equal to the maximum such Lease Payments coming due and payable during any consecutive two Fiscal Years. Such insurance may be maintained as part of or in conjunction with any other insurance coverage carried by the City, and may be maintained in whole or in part in the form of the participation by the City in a joint powers agency or other program providing pooled insurance; provided that such insurance may not be maintained by the City in the form of self -insurance. The Net Proceeds of suc h insurance, if any, must be paid to the Trustee and deposited in the Bond Fund, to be applied as a credit towards the payment of the Lease Payments allocable to the insured improvements as the same become due and payable.

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ECTION 5.6. Recordation Hereof; Title Insurance. On or before the Closing Date the City shall, at its expense, (a) cause the Site Lease, the Assignment Agreement and this Lease, or a memorandum hereof or thereof in form and substance approved by Bond Counsel, to be recorded in the office of the San Joaquin County Recorder, and (b) obtain a CLTA title insurance policy insuring the City’s leasehold estate hereunder in the Leased Property, subject only to Permitted Encumbrances, in an amount at least equal to the aggregate principal amount of the Bonds. All Net Proceeds received under any such title insurance policy must be deposited with the Trustee in the Bond Fund to be credited towards the prepayment of the remaining Lease Payments under Section 9.3.

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ECTION 5.7. Insurance Net Proceeds; Form of Policies . Each policy of insurance maintained under Sections 5.4, 5.5 and 5.6 must name the Trustee as loss payee so as to provide that all proceeds thereunder are payable to the Trustee. The City shall pay or cause to be paid when due the premiums for all insurance policies required by this Lease. All such policies shall provide that the Trustee is given 30 days’ notice of each expiration, any intended cancellation thereof or reduction of the coverage provided thereby. The City must file with the Trustee annually, within 90 days following the close of each Fiscal Year, a certificate of the City stating that all policies of insurance required hereunder are then in full force and effect. The Trustee has no responsibility for the sufficiency, adequacy or amount of any insurance or self -insurance herein required and is fully protected in accepting payment on account of such insurance or any adjustment, compromise or settlement of any loss.

If any insurance maintained under Section 5.3 is provided in the form of self - insurance, the City must file with the Trustee annually, within 90 days following the close of each Fiscal Year, a statement of the risk manager of the City or an independent insurance adviser engaged by the City identifying the extent of such self -insurance and stating the determination that the City maintains sufficient reserves with respect thereto.

If any such insurance is provided in the form of self -insurance by the City, the City has

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no obligation to make any payment with respect to any insured event except from those reserves.

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ECTION 5.8. Installation of City’s Personal Property . The City may at any time and from time to time, in its sole discretion and at its own expense, install or permit to be installed other items of equipment or other personal property in or upon the Leased Property. All such items shall remain the sole property of the City, in which neither the Authority nor the Trustee has any interest, and may be modified or removed by the City at any time, provided that the City must repair all damage to the Leased Property resulting from the installation, modification or removal of any such items. Nothing in this Lease prevents the City from purchasing or leasing items to be installed under this Section under a lease or conditional sale agreement, or subject to a vendor’s lien or security agreement, as security for the unpaid portion of the purchase price thereof, so long as no such lien or security interest attaches to any part of the Leased Property.

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ECTION 5.9. Liens. The City may not, directly or indirectly, create, incur, assume or suffer to exist any mortgage, pledge, lien, charge, encumbrance or claim on or with respect to the Leased Property, other than as herein contemplated and except for such encumbrances as the City certifies in writing to the Trustee do not materially and adversely affect the leasehold estate of the City in the Leased Property hereunder. If any such mortgage, pledge, lien, charge, encumbrance or claim does materially and adversely affect the leasehold estate of the City in the Leased Property hereunder, the City will promptly, at its own expense, take such action as may be necessary to duly discharge or remove any such mortgage, pledge, lien, charge, encumbrance or claim, for which it is responsible; provided that the City is not required to do so prior to the time when such mortgage, pledge, lien, charge, encumbrance or claim actually causes such material adverse effect. The City will reimburse the Authority for any expense incurred by it in order to discharge or remove any such mortgage, pledge, lien, charge, encumbrance or claim.

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ECTION 5.10. Advances. If the City fails to perform any of its obligations under this Article V, the Authority may (but is not required to) take such action as it deems necessary to cure such failure, including the advancement of money, and the City shall repay all such advances as Additional Rental Payments hereunder, with interest at the rate set forth in Section 4.3(c).

ARTICLE VI

DAMAGE, DESTRUCTION AND EMINENT DOMAIN; USE OF NET

PROCEEDS

SECTION 6.1. Application of Net Proceeds . The Trustee, as assignee of the Authority under the Assignment Agreement, has the right to receive all Net Proceeds.

As provided in the Indenture, the Trustee will deposit all Net Proceeds in the Insurance and Condemnation Fund to be applied as set forth in Section 5.07 of the Indenture.

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ECTION 6.2. Termination or Abatement Due to Eminent Domain. If the Leased Property is taken permanently under the power of eminent domain or sold to a

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government threatening to exercise the power of eminent domain, the Term of this Lease thereupon ceases as of the day possession is taken. If less than all of the Leased Property is taken permanently, or if the Leased Property is taken temporari ly, under the power of eminent domain, then:

(a) this Lease shall continue in full force and effect with respect thereto and does not terminate by virtue of such taking, and the parties waive the benefit of any law to the contrary; and

(b) the Lease Payments are subject to abatement in an amount determined by the City such that the resulting Lease Payments represent fair consideration for the use and occupancy of the remaining usable portions of the Leased Property.

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ECTION 6.3. Abatement Due to Damage or Destruction. The Lease Payments are subject to abatement during any period in which by reason of damage or destruction (other than by eminent domain which is hereinbefore provided for) there is substantial interference with the use and occupancy by the City of the Leased Property or any portion thereof. The Lease Payments are subject to abatement in an amount determined by the City such that the resulting Lease Payments represent fair consideration for the use and occupancy of the remaining usable portions of the Leased Property not damaged or destroyed. Such abatement will continue for the period commencing with such damage or destruction and ending with the substantial completion of the work of repair or reconstruction. In the event of any such damage or destruction, this Lease continues in full force and effect and the City waives any right to terminate this Lease by virtue of any such damage and destruction. Notwithstanding the foregoing, there shall be no abatement of Lease Payments under this Section 6.3 to the extent that the proceeds of hazard insurance or rental interruption insurance are available to pay Lease Payments which would otherwise be abated under this Section

6.3, it being hereby declared that such proceeds constitute a special fund for the payment of the Lease Payments.

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ECTION 6.4. Abatement Due to Non -Completion of the Project . The Lease Payments are subject to abatement during any period prior to the issuance of a certificate of occupancy for the Project, if it constitutes all or a portion of the Leased Property, if there is substantial interference with the use and occupancy by the City of the Leased Property or any portion thereof. The Lease Payments are subject to abatement in an amount determined by the City such that the resulting Lease Payments represent fair consideration for the use and occupancy of the usable portions of the Leased Property. Such abatement will continue for the period commencing with the substantial interference with the use and occupancy of the Leased Property and ending with the substantial completion of the Project. In the event of any such interference with use and occupancy during construction of the Project, this Lease continues in full force and effect and the City waives any right to terminate this Lease by virtue of any substantial interference.

[confirm] The City has determined in its Resolution No. ___, adopted by the City Council on ____, 2022, that the City will have substantial use and occupancy of the Leased Property during construction of the Project.

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ARTICLE VII

OTHER COVENANTS OF THE CITY

SECTION 7.1. Disclaimer of Warranties. THE AUTHORITY AND THE TRUSTEE

MAKE NO AGREEMENT, WARRANTY OR REPRESENTATION, EITHER EXPRESS

OR IMPLIED, AS TO THE VALUE, DESIGN, CONDITION, MERCHANTABILITY OR

FITNESS FOR ANY PARTICULAR PURPOSE OR FITNESS FOR THE USE

CONTEMPLATED BY THE CITY OF THE LEASED PROPERTY OR ANY PORTION

THEREOF, OR ANY OTHER REPRESENTATION OR WARRANTY WITH RESPECT TO THE LEASED PROPERTY OR ANY PORTION THEREOF. THE CITY

ACKNOWLEDGES THAT THE AUTHORITY IS NOT A MANUFACTURER OF ANY

PORTION OF THE LEASED PROPERTY OR A DEALER THEREIN, THAT THE CITY

LEASES THE LEASED PROPERTY AS- IS, IT BEING AGREED THAT ALL OF THE AFOREMENTIONED RISKS ARE TO BE BORNE BY THE CITY. The Authority has no liability for incidental, indirect, special or consequential damages, in connection with or arising out of this Lease for the existence, furnishing, functioning or use of the Leased Property by the City.

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ECTION 7.2. Access to the Leased Property. The City agrees that the Authority and any Authorized Representative of the Authority, and the Authority’s successors or assigns, have the right at all reasonable times to enter upon and to examine and inspect the Leased Property or any part thereof. The City further agrees that the Authority, any Authority Representative and the Authority’s successors or assigns may have such rights of access to the Leased Property or any component thereof as reasonably necessary to cause the proper maintenance of the Leased Property if the City fails to perform its obligations hereunder; provided, however, that neither the Authority nor any of its assigns has any obligation to cause such proper maintenance.

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ECTION 7.3. Release and Indemnification Covenants . The City agrees to indemnify the Authority, the Trustee and their respective officers, agents, successors and assigns, against all claims, losses and damages, including legal fees and expenses, arising out of any of the following:

(a) the use, maintenance, condition or management of, or from any work or thing done on the Leased Property by the City,

(b) any breach or default on the part of the City in the performance of any of its obligations under this Lease,

(c) any negligence or willful misconduct of the City or of any of its agents, contractors, servants, employees or licensees with respect to the Leased Property,

(d) any intentional misconduct or negligence of any sublessee of the City with respect to the Leased Property,

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(e) the acquisition, construction, improvement and equipping of the Leased Property, or the authorization of payment of the costs thereof, or

(f) the acceptance and performance of the duties of the Trustee under the Indenture, the Assignment Agreement and under this Lease.

No indemnification is made under this Section or elsewhere in this Lease for willful misconduct or negligence under this Lease by the Authority, the Trustee or their respective officers, agents, employees, successors or assigns.

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ECTION 7.4. Assignment and Subleasing by the City . The City may sublease the Leased Property, or any portion thereof, subject to all of the following conditions:

(a) this Lease and the obligation of the City to make Lease Payments hereunder must remain obligations of the City , as certified in writing by the City;

(b) the City must, within 30 days after the delivery thereof, furnish or cause to be furnished to the Authority and the Trustee a true and complete copy of such sublease;

(c) no such sublease by the City may cause the Leased Property to be used for a purpose which is not authorized under the provisions of the laws of the State of California, as certified in writing by the City ; and

(d) the City must furnish to the Authority and the Trustee a written opinion of Bond Counsel stating that such sublease does not cause the interest on the Bonds to become included in gross income for purposes of federal income taxation or to become subject to personal income taxation by the State of California.

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ECTION 7.5. Amendment Hereof. The Authority and the City may at any time amend or modify any of the provisions of this Lease, but only: (a) with the prior wr itten consents of the Owners of a majority in aggregate principal amount of the Outstanding Bonds; or (b) without the consent of the Trustee or any of the Bond Owners, but only if such amendment or modification is for any one or more of the following purposes:

(i) to add to the covenants and agreements of the City contained in this Lease, other covenants and agreements thereafter to be observed, or to limit or surrender any rights or power herein reserved to or conferred upon the City;

(ii) to make such provisions for the purpose of curing any ambiguity, or of curing, correcting or supplementing any defective provision contained herein, to conform to the original intention of the City and the Authority;

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(iii) to modify, amend or supplement this Lease in such manner as to assure that the interest on the Bonds remains excluded from gross income under the Tax Code;

(iv) to amend the description of the Leased Property to reflect accurately the property originally intended to be included therein, or in connection with any substitution or release of property under Sections 3.2 or 3.3;

(v) in the event of the issuance of Additional Bonds in order to obligate the City to pay additional amounts of Lease Payments such that the scheduled amount of Lease Payments payable after such
amendment shall be sufficient to pay the principal of and interest on the 2022 Bonds and such Additional Bonds but only if (A) the City has certified to the Trustee that the estimated value of the Leased Property is at least equal to the aggregate Outstanding principal amount of the Bonds and the fair rental value of the Leased Property is at least equal to the Lease Payments thereafter coming due and payable hereunder (for the purposes of the certification described in this clause (A), the City may, if necessary to make such certification, assume completion of construction of the project being financed by the Additional Bonds if such project is all or a portion of the Leased Property as long as either (1) capitalized interest has been deposited in accordance with Section 2.08(h) of the Indenture or (2) the City has made a finding that the fair rental value of the Leased Property prior to the completion of the project is equal to or greater than the aggregate amount of the Lease Payments and Additional Rental Payments coming due and payable during each Rental Period), and (B) the City has filed with the Trustee written evidence that the amendments made under this clause (v) will not of themselves cause a reduction or withdrawal of any rating then assigned to the then-outstanding Bonds; or

(vi) in any other respect whatsoever as the Authority and the City deem necessary or desirable, if in the opinion of Bond Counsel such modifications or amendments do not materially adversely affect the interests of the Owners of the Bonds.

No such modification or amendment may (a) extend or have the effect of extending any Lease Payment Date or reducing any Lease Payment or any premium payable upon the prepayment thereof, without the express consent of the Owners of the affected Bonds, or (b) modify any of the rights or obligations of the Trustee without its written assent thereto. If the Trustee’s consent to such modification or amendment is required, the Trustee shall be entitled to the same documents as it would be entitled to under Article IX of the Indenture for such type of modification or amendment.

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ECTION 7.6. Tax Covenants Relating to the 2022 Bonds.

(a) Private Business Use Limitation. The City shall assure that the proceeds of the 2022 Bonds are not used in a manner which would cause the 2022 Bonds to satisfy -20-
the
private business tests of Section 141(b) of the Tax Code or the private loan financing test of Section 141(c) of the Tax Code.
(b) Federal
Guarantee Prohibition. The City may not take any action or permit or suffer any action to be taken if the result of the same would be to cause the 2022 Bonds to be “federally guaranteed” within the meaning of Section 149(b) of the Tax Code.
(c) No
Arbitrage. The City may not take, or permit or suffer to be taken by the Trustee or otherwise, any action with respect to the proceeds of the 2022 Bonds or of any other obligations 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 2022 Bonds to be “arbitrage bonds” within the meaning of Section 148(a) of the Tax Code.
(d) Mai
ntenance of Tax Exemption. The City shall take all actions necessary to assure the exclusion of interest on the 2022 Bonds from the gross income of the Owners of the 2022 Bonds to the same extent as such interest is permitted to be excluded from gross income under the Tax Code as in effect on the Closing Date. (e) Rebat
e of Excess Investment Earnings to United States . The City shall calculate or cause to be calculated the Excess Investment Earnings in all respects at the times and in the manner required under the Tax Code. The City shall pay the full amount of Excess Investment Earnings to the United States of America in such amounts, at such times and in such manner as may be required under the Tax Code.

Such payments shall be made by the City from any source of legally available funds of the City, and shall constitute Additional Rental Payments hereunder.

The Cit
y shall keep or cause to be kept, and retain or cause to be retained for a period of six years following the retirement of the 2022 Bonds, records of the determinations made under this subsection (e). In order to provide for the administration of this subsection (e), the City may provide for the employment of independent attorneys, accountants and consultants compensated on such reasonable basis as the City may deem appropriate. The Trustee has no duty or obligation to monitor or enforce compliance by the City of any of the requirements under this subsection (e). (f) Rec
ord-Keeping. The City will retain its records of all accounting and monitoring it carries out with respect to the 2022 Bonds for at least 3 years after the 2022 Bonds mature or are redeemed (whichever is earlier); however, if the 2022 Bonds are redeemed and refunded, the City will retain its records of accounting and monitoring at least 3 years after the earlier of the maturity or redemption of the obligations that refunded the 2022 Bonds.
(g) Com
pliance with Tax Certificate. The City will comply with the provisions of the Certificate as to Arbitrage and the Use of Proceeds Certificate with respect to the 2022 Bonds, which are incorporated herein as if fully set forth herein. The covenants of this subsection will survive payment in full or defeasance of the 2022 Bonds.

SECTION 7.7. Continuing Disclosure. The City shall comply with and carry out all of the provisions of the Continuing Disclosure Certificate executed by the City as of the Closing Date, as originally executed and as it may be amended from time to time in

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accordance with its terms. Notwithstanding any other provision of this Lease, failure of the City to comply with such Continuing Disclosure Certificate will not constitute an Event of Default, although any Participating Underwriter (as that term is defined in such Continuing Disclosure Certificate) or any Owner or beneficial owner of the Bonds may take such actions as may be necessary and appropriate to compel performance by the City of its obligations under this Section, including seeking mandate or specific performance by court order.

ARTICLE VIII

EVENTS OF DEFAULT AND REMEDIES

SECTION 8.1. Events of Default Defined. Any one or more of the following events constitute an Event of Default hereunder:

(a) Failure by the City to pay any Lease Payment or other payment required to be paid hereunder at the time specified herein.

(b) Failure by the City to observe and perform any covenant, condition or agreement on its part to be observed or performed, other than as referred to in the preceding subsection (a), for a period of 30 days after written notice specifying such failure and requesting that it be remedied has been given to the City by the Authority or the Trus tee.

If in the reasonable opinion of the City the failure stated in the notice can be corrected, but not within such 30 -day period, the failure will not constitute an Event of Default if the City commences to cure the failure within such 30- day period and thereafter diligently and in good faith cures the failure in a reasonable period of time, such period of time not to be longer than 180 days after the delivery of such default notice.

(c) The filing by the City of a voluntary petition in bankruptcy, or failure by the City promptly to lift any execution, garnishment or attachment, or adjudication of the City as a bankrupt, or assignment by the City for the benefit of creditors, or the entry by the City into an agreement of composition with creditors, or the approval by a court of competent jurisdiction of a petition applicable to the City in any proceedings instituted under the provisions of the Federal Bankruptcy Code, as amended, or under any similar acts which may hereafter be enacted.

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ECTION 8.2. Remedies on Default . Whenever any Event of Default has happened and is continuing, the Authority may exercise any and all remedies available under law or granted under this Lease. Notwithstanding anything herein or in the Indenture to the contrary, neither the Authority nor the Trustee may accelerate the Lease Payments or otherwise declare any Lease Payments not then in default to be immediately due and payable. Each covenant hereof to be kept and performed by the City is expressly made a condition and upon the breach thereof the Authority may exercise any and all rights granted hereunder; except that no termination of this Lease

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may be effected either by operation of law or acts of the parties hereto, except only in the manner herein expressly provided. Upon the occurrence and during the continuance of any Event of Default, the Authority may exercise each and every one of the following remedies, subject in all respects to the limitations set forth in Section 8.3.

(a) Enforcement of Payments Without Termination . If the Authority does not elect to terminate this Lease in the manner hereinafter provided for in subparagraph (b) hereof, the City agrees to and shall remain liable for the payment of all Lease Payments and the performance of all conditions herein contained and shall reimburse the Authority for any deficiency arising out of the re- leasing of the Leased Property, or, if the Authority is unable to re-lease the Leased Property, then for the f ull amount of all Lease Payments to the end of the Term of this Lease, but said Lease Payments and/or deficiency shall be payable only at the same time and in the same manner as hereinabove provided for the payment of Lease Payments hereunder, notwithstanding such entry or re- entry by the Authority or any suit in unlawful detainer, or otherwise, brought by the Authority for the purpose of effecting such re- entry or obtaining possession of the Leased Property or the exercise of any other remedy by the Authority. The City hereby irrevocably appoints the Authority as the agent and attorney -in-fact of the City to enter upon and re- lease the Leased Property upon the occurrence and continuation of an Event of Default and to remove all personal property whatsoever situated upon the Leased Property, to place the Leased Property in storage or other suitable place in the County of San Joaquin for the account of and at the expense of the City, and the City hereby exempts and agrees to save harmless the Authority from any costs, loss or damage whatsoever arising or occasioned by any such entry upon and re- leasing of the Leased Property and the removal and storage of the Leased Property by the Authority or its duly authorized agents in accordance with the provisions herein contained. The City agrees that the terms of this Lease constitute full and sufficient notice of the right of the Authority to re-lease the Leased Property in the event of such re-entry without effecting a surrender of this Lease, and further agrees that no acts of the Authority in effecting such re- leasing shall constitute a surrender or termination of this Lease irrespective of the term for which such re- leasing is made or the terms and conditions of such re-leasing, or otherwise, but that, on the contrary, in the event of such default by the City the right to terminate this Lease shall vest in the Authority to be effected in the sole and exclusive manner hereinafter provided for in subparagraph (b) hereof. The City agrees to surrender and quit possession of the Leased Property upon demand of the Authority for the purpose of enabling the Leased Property to be re- let under this paragraph, and the City further waives the right to any rental obtained by the Authority in excess of the Lease Payments and her eby conveys and releases such excess to the Authority as compensation to the Authority for its services in re-leasing the Leased Property.

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(b) Termination of Lease. If an Event of Default occurs and is continuing hereunder, the Authority at its option may terminate this Lease and re-lease all or any portion of the Leased Property. If the Authority terminates this Lease at its option and in the manner hereinafter provided on account of default by the City (and notwithstanding any re -entry upon the Leased Property by the Authority in any manner whatsoever or the re -leasing of the Leased Property), the City nevertheless agrees to pay to the Authority all costs, loss or damages howsoever arising or occurring payable at the same time and in the same manner as is herein provided in the case of payment of Lease Payments and Additional Rental Payments. Any surplus received by the Authority from such re - leasing shall be deposited in the Bond Fund. Neither notice to pay rent or to deliver up possession of the premises given under law nor any proceeding in unlawful detainer taken by the Authority shall of itself operate to terminate this Lease, and no termination of this Lease on account of default by the City shall be or become effective by operation of law, or otherwise, unless and until the Authority shall have given written notice to the City of the election on the part of the Authority to terminate this Lease. The City covenants and agrees that no surrender of the Leased Property, or of the remainder of the Term hereof or any termination of this Lease shall be valid in any manner or for any purpose whatsoever unless stated or accepted by the Authority by such written notice.

(c) Proceedings at Law or In Equity . If an Event of Default occurs and continues hereunder, the Authority may take whatever action at law or in equity may appear necessary or desirable to collect the amounts then due and thereafter to become due hereunder or to enforce any other of its rights hereunder.

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ECTION 8.3. No Remedy Exclusive. No remedy herein conferred upon or reserved to the Authority is intended to be exclusive and every such remedy is cumulative and in addition to every other remedy given under this Lease or now or hereafter existing at law or in equity. No delay or omission to exercise any right or power accruing upon the occurrence of any Event of Default impairs any such right or power or operates as a waiver thereof, but any such right and power may be exercised from time to time and as often as may be deemed expedient. In order to entitle the Authority to exercise any remedy reserved to it in this Article VIII it is not necessary to give any notice, other than as expressly required in this Article VIII or by law.

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ECTION 8.4. Agreement to Pay Attorneys’ Fees and Expenses . If the Authority or the City defaults under any of the provisions of this Lease and the nondefaulting party employs attorneys or incurs other expenses for the collection of moneys or the enforcement or performance or observance of any obligation or agreement on the part of the defaulting party herein contained, the defaulting party will on demand therefor pay to the nondefaulting party the reasonable fees of such attorneys and such other expenses so incurred by the nondefaulting party ; provided, however, that the Trustee shall not be required to expend its own funds for any payment described in this Section.

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SECTION 8.5. No Additional Waiver Implied by One Waiver. If the Authority or the City breaches any agreement in this Lease and thereafter the other party waives the breach, such waiver is limited to the particular breach so waived and does not operate to waive any other breach hereunder.

SECTION 8.6. Application of Proceeds . All net proceeds received from the re - lease of the Leased Property under this Article VIII, and all other amounts derived by the Authority or the Trustee as a result of the occurrence of an Event of Default, must be paid to and applied by the Trustee in accordance with Section 7.03 of the Indenture.

SECTION 8.7. Trustee and Bond Owners to Exer cise Rights. Such rights and remedies as are given to the Authority under this Article VIII have been assigned by the Authority to the Trustee under the Assignment Agreement for the benefit of the Bond Owners, to which assignment the City hereby consents. The Trustee and the Bond Owners shall exercise such rights and remedies in accordance with the Indenture.

ARTICL
E IX

PREPAYMENT OF LEASE PAYMENTS
SECTION 9.1. Security Deposit . Notwithstanding any other provision of this Lease, the City may on any date secure the payment of the Lease Payments allocable to the Leased Property in whole or in part by depositing with the Trustee an amount of cash which, together with other available amounts on deposit in the funds and accounts established under the Indenture, is either:
(a) suf
ficient to pay such Lease Payments, including the principal and interest components thereof, in accordance with the Lease Payment schedule set forth in Appendix B, or
(b) inv
ested in whole or in part in non -callable Federal Securities in such amount as will, in the opinion of an independent certified public accountant, (which opinion must be addressed and delivered to the Trustee), together with interest to accrue thereon and together with any cash which is so deposited, be fully sufficient to pay such Lease Payments when due under Section 4.3(a), as the City instructs at the time of said deposit.

If
the City makes a security deposit under this Section with respect to all unpaid Lease Payments, and notwithstanding the provisions of Section 4.2, (a) the Term of this Lease will continue, (b) all obligations of the City under this Lease, and all security provided by this Lease for said Lease Payments, will thereupon cease and terminate, excepting only the obligation of the City to make, or cause to be made all of said Lease Payments from such security deposit, and (c) under Section 4.7, title to the Leased Property will vest in the City on the date of said deposit automatically and without further action by the City or the Authority. Said security deposit constitutes a special fund for the payment of Lease Payments in accordance with the provisions of this Lease. -25-
SECTION 9.2. Optional Prepayment . The City has the option to prepay the principal components of the Lease Payments in whole, or in part in any integral multiple of $5,000, from any source of legally available funds, on any date on or after November 1, 20__, at a prepayment price equal to the aggregate principal components of the Lease Payments to be prepaid, together with the interest component of the Lease Payment required to be paid on such Interest Payment Date, and together with a prepayment premium equal to the premium (if any) required to be paid on the resulting redemption of Bonds under Section 4.01(a) of the Indenture. Such prepayment price shall be deposited by the Trustee in the Redemption Fund to be applied to the redemption of Bonds under Section 4.01(a) of the Indenture. The City shall give 10 days’ written notice to the Trustee of its intention to prepay the Lease Payments under this Section.

SECTION 9.3. Mandatory Prepayment From Net Proceeds of Insurance or Eminent Domain . The City shall prepay the principal components of the Lease Payments allocable to the Leased Property in whole or in part on any date, from and to the extent of any Net Proceeds of insurance award or eminent domain award with respect to the Leased Property theretofore deposited in the Redemption Fund for that purpose under Article VI hereof and Section 5.07 of the Indenture. Such Net Proceeds, to the extent remaining after payment of any delinquent Lease Payments, will be credited towards the City’s obligations under this Section and applied to the corresponding redemption of Bonds under Section 4.01(b) of the Indenture.

SECTION 9.4. Credit for Amounts on Deposit . If the principal components of the Lease Payments are prepaid in full under this Article IX, such that the Indenture is discharged by its terms as a result of such prepayment, at the written election of the City filed with the Trustee any or all amounts then on deposit in the Bond Fund (and the accounts therein) will be credited towards the amounts then required to be so prepaid.

ARTICLE X

MISCELLANEOUS
SECTION 10.1. Notices. Any notice, request, complaint, demand or other communication under this Lease shall be given by first class mail or personal delivery to the party entitled thereto at its address set forth below, or by facsimile transmission or other form of telecommunication, at its number set forth below. Notice shall be effective either (a) upon transmission by facsimile transmission or other form of telecommunication, (b) 48 hours after deposit in the United States of America first class mail, postage prepaid, or (c) in the case of personal delivery to any person, upon actual receipt. The Authority, the City or the Trustee may, by written notice to the other parties, from time to time modify the address or number to which communications are to be given hereunder.

If to
the Authority City of Tracy
or the City: 333 Civic Center Plaza
Tracy, California 95376
Attention: Finance Director
Fax: ____________

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If to the Trustee: U.S. Bank Trust Company, National Association Attn.: Global Corporate Trust Services
One California Street, Suite 1000
San Francisco, CA 94111
Fax: 415-677-3768

SECTION 10.2. Binding Effect. This Lease inures to the benefit of and binds the Authority, the City and their respective successors and assigns.

SECTION 10.3. Severability. If any provision of this Lease is held invalid or unenforceable by any court of competent jurisdiction, such holding will not invalidate or render unenforceable any other provision hereof.

S
ECTION 10.4. Net-net-net Lease. This Lease is deemed and construed to be a “net-net-net lease” and the City hereby agrees that the Lease Payments are an absolute net return to the Authority, free and clear of any expenses, charges or set -offs whatsoever.

S
ECTION 10.5. Third Party Beneficiary . The City may direct the Authority as to the investment of funds under the Indenture, subject to compliance with the provisions of Article V and Section 6.07 of the Indenture.

S
ECTION 10.6. Third Party Beneficiary . The Trustee is hereby made a third party beneficiary hereunder with all rights of a third party beneficiary.

SECTION 10.7. Further Assurances and Corrective Instruments . The Authority and the City shall, from time to time, execute, acknowledge and deliver, or cause to be executed, acknowledged and delivered, such supplements hereto and such further instruments as may reasonably be required for correcting any inadequate or incorrect description of the Leased Property hereby leased or intended so to be or for carrying out the expressed intention of this Lease.

SECTION 10.8. Execution in Counterparts. This Lease may be executed in several counterparts, each of which is an original and all of which constitute but one and the same instrument.

S
ECTION 10.9. Applicable Law. This Lease is governed by and construed in accordance with the laws of the State of California.

S
ECTION 10.10. Authority and City Representatives . Whenever under the provisions of this Lease the approval of the Authority or the City is required, or the Authority or the City is required to take some action at the request of the other, such approval or such request shall be given for the Authority and for the City by an Authorized Representative thereof, and any party hereto may conclusively rely upon any such approval or request.

S
ECTION 10.11. Captions. The captions or headings in this Lease are for convenience only and in no way define, limit or describe the scope or intent of any provisions or Section of this Lease.

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IN
WITNESS WHEREOF, the Authority and the City have caused this Lease to be executed in their respective names by their duly authorized officers, all as of the date first above written.

TRACY PUBLIC FINANCING AUTHORITY, as
lessor
By
Treasurer
Attes
t:

Secretary
CITY OF TRACY, as lessee
By
Finance Director
Attes
t:

City Clerk
A-1

APPENDIX A
DESCR

B-1

APPENDIX B
SCHEDULE OF LEASE PAYMENTS*

Lease
Payment Date**
Principal
Component
Interest
Component
Aggregate
Lease Payment

Totals

* This Appendix B shall be amended in connection with the issuance of any Additional Bonds.
** Lease Payment Dates are the Business Day immediately preceding each date listed in the schedule

C-1

APPENDIX C

DESCRIPTION OF PROJECT
The Pro
ject consists of Phase 1E of the Legacy Fields Sports Complex, and such other improvements that may be identified from time to time by the City.

BE RECORDED AND WHEN RECORDED
RETURN TO:

Jones
Hall, A Professional Law Corporation
475 Sansome Street, Suite 1700
San Francisco, California 94111
Attention: Christopher K. Lynch, Esq.

THI

S TRANSACTION IS EXEMPT FROM CALIFORNIA DOCUMENTARY TRANSFER TAX UNDER SECTION 11929 OF THE REVENUE AND TAXATION CODE. THIS DOCUMENT IS EXEMPT FROM RECORDING FEES UNDER SECTION 27383 OF THE CALIFORNIA GOVERNMENT CODE.

SITE LEASE
This SITE LEASE (this “Site Lease”), dated for convenience as of May 1, 2022, is between the CITY OF TRACY, a general law city and municipal corporation duly organized and existing under the Constitution and laws of the State of California, as lessor (the “City”), and the TRACY PUBLIC FINANCING AUTHORITY, a joint powers authority duly organized and existing under the laws of the State of California, as lessee (the “Authority”).

BACK
GROUND:

1. The Ci
ty wishes to finance the acquisition and construction of public improvements (the “ Project”) of the City, consisting of Phase 1E of the Legacy Fields Sports Complex and such other improvements that may be identified from time to time by the City.

2. The Ci
ty and the Tracy Industrial Development Authority (the “ Industrial Development Authority”) are parties to a First Amended and Restated Joint Powers Agreement, dated as of October 17, 2018 (the “ Joint Powers Agreement”), pursuant to which the Authority was established as a joint exercise of powers authority under the Joint Exercise of Powers Act (Government Code §6500 et seq.) for the purpose of providing assistance to the City and the Industrial Development Authority with their financing programs, and for any other purposes authorized under the Bond Law (as defined in the Indenture referenced below).

3. To that
end, the City has proposed to lease to the Authority certain real property and improvements of the City , as more particularly described in Appendix A attached hereto and by this reference incorporated herein (the “ Leased Property ”), under this Site Lease, in consideration of the payment by the Authority of an upfront rental payment (the “ Site Lease Payment ”) which is sufficient to provide funds for the acquisition and construction of the Project .

ATTACHMENT F
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4. The Authority has authorized the issuance of its Tracy Public Financing Authority Lease Revenue Bonds, Series 2022A ( Legacy Fields ) in the aggregate principal amount of $_________ (the “2022 Bonds”) under an Indenture of Trust dated as of May 1, 2022 (the “ Indenture”), between the Authority and U.S. Bank Trust Company, National Association, as trustee (the “ Trustee”), for the purpose of providing the funds to enable the Authority to pay the Site Lease Payment to the City in accordance with this Site Lease.

5. Under S
ection 2.08 and Section 2.09 of the Indenture, the Authority is authorized to issue Additional Bonds (as defined in the Indenture) payable from the Lease Payments (as defined in the Lease) payable by the City under the Lease.

Together, the 2022 Bonds and any Additional Bonds are defined as “ Bonds” under this Site Lease and the Indenture.

6. In
order to provide revenues which are sufficient to enable the Authority to pay debt service on the Bonds, the Authority has agreed to lease the Leased Property back to the City under a Lease Agreement dated as of May 1, 2022 (the “ Lease”), a memorandum of which has been recorded concurrently herewith, under which the City has agreed to pay semiannual Lease Payments as the rental for the Leased Property thereunder.

6. The lease
payments made by the City under the Lease have been assigned by the Authority to the Trustee for the security of the Bonds under an Assignment Agreement dated as of May 1, 2022, between the Authority as assignor and the Trustee as assignee, which has been recorded concurrently herewith.

AGREEM
ENT:

In con
sideration of the above premises and of the mutual promises and covenants herein contained and for other valuable consideration, the parties hereto do hereby agree as follows:

SECTION 1. Lease of Property to Authority. The City hereby leases the Leased Property to the Authority and the Authority hereby leases the Leased Property from the City, on the terms and conditions hereinafter set forth.

SECTION 2. Term; Possession. The term of this Site Lease commences on the date of recordation of this Site Lease and ends on the date on which the Indenture is discharged in accordance with Section 10.03 thereof, but under any circumstances not later than November 1, 20__ or, if Ad ditional Bonds have been issued under the Indenture, the last day that precedes the final maturity of Additional Bonds (if later than November 1, 20__) . The provisions of this Section 2 are subject in all respects to any other provisions of this Site Lease relating to the termination hereof.

SECTION 3. Rental . The Authority shall pay to the City as and for rental of the Leased Property hereunder, the sum of $___________ (the “ Site Lease Payment ”).

The Site Lease Payment is due and payable upon the issuance of the Bonds and the execution and delivery hereof, and will be paid from the proceeds of the Bonds. The Authority and the City hereby find and determine that the total amount of the Site Lease Payment does not exceed the fair market value of the leasehold interest in the Leased -3-
Property which is conveyed hereunder by the City to the Authority. No other amount of rental is due and payable by the Authority for the use and occupancy of the Leased Property under this Site Lease.

As provided in the Inde nture, a portion of the proceeds of the Bonds will be applied to make the Site Lease Payment by depositing the Bond proceeds it receives from the Original Purchaser in the Costs of Issuance Fund and the Project Fund.

S
ECTION 4. Leaseback to City . The Authority shall lease the Leased Property back to the City under the Lease.

S
ECTION 5. Assignments and Subleases. Unless the City is in default under the Lease, the Authority may not assign its rights under this Site Lease or sublet all or any portion of the Leased Property, except as provided in the Assignment Agreement and in the Lease, without the prior written consent of the City.

S
ECTION 6. Substitution, Release or Addition of Property. If the City exercises its option under Section 3.2 of the Lease to substitute property for the Leased Property in whole or in part, such substitution shall also operate to substitute property for the Leased Property which is leased hereunder. If the City exercises its option under Section 3.3 of the Lease to release a portion of the Leased Property from the Lease, such substitution shall also operate to release such portion of the Leased Property hereunder. If the City exercises its option under Section 3.4 of the Lease to add additional property as Leased Property under the Lease, such addition shall also operate to add property as Leased Property hereunder. The description of the Leased Property which is leased under the Lease shall conform at all times to the description of the Leased Property which is leased hereunder.

S
ECTION 7. Right of Entry . The City reserves the right for any of its duly authorized representatives to enter upon the Leased Property, or any portion thereof, at any reasonable time to inspect the same or to make any repairs, improvements or changes necessary for the preservation thereof.

S
ECTION 8. Termination. The Authority agrees, upon the termination of this Site Lease, to quit and surrender the Leased Property in the same good order and condition as the Leased Property was in at the time of commencement of the term hereof, reasonable wear and tear excepted, and agrees that all buildings, improvements and structures then existing upon the Leased Property shall remain thereon and title thereto shall vest thereupon in the City for no additional consideration.

S
ECTION 9. Default. If the Authority defaults in the performance of any obligation on its part to be performed under the terms of this Site Lease, which default continues for 30 days following notice and demand for correction thereof to the Authority, the City may exercise any and all remedies granted by law, except that no merger of this Site Lease and of the Lease shall be deemed to occur as a result thereof and no such remedy may include termination hereof; provided, however, that so long as the Lease remains in effect, the Lease Payments payable by the City under the Lease shall continue to be paid to the Trustee.

S
ECTION 10. Quiet Enjoyment. The Authority at all times during the term of this Site Lease shall peaceably and quietly have, hold and enjoy all of the Leased Property, -4-
subject to the provisions of the Lease and subject only to Permitted Encumbrances (as that term is defined in the Lease).

SECTION 11. Waiver of Personal Liability . All liabilities under this Site Lease on the part of the Authority are solely corporate liabilities of the Authority as a public entity, and the City hereby releases each and every member and officer of the Authority of and from any personal or individual liability under this Site Lease. No member or officer of the Authority or its governing board shall at any time or under any circumstances be individually or personally liable under this Site Lease for anything done or omitted to be done by the Authority hereunder.

SECTION 12. Taxes. The City covenants and agrees to pay any and all assessments of any kind or character and also all taxes, including possessory interest taxes, levied or assessed upon the Leased Property and any improvements thereon.

SECTION 13. Eminent Domain. If the whole or any part of the Leased Property or any improvements thereon is taken by eminent domain proceedings, the interest of the Authority shall be recognized and is hereby determined to be the amount of the then unpaid Lease Payments payable under the Lease and the balance of the award, if any, shall be paid to the City.

SECTION 14. Partial Invalidity . If any one or more of the terms, provisions, covenants or conditions of this Site Lease shall to any extent be declared invalid, unenforceable, void or voidable for any reason whatsoever by a court of competent jurisdiction, the finding or order or decree of which becomes final, none of the remaining terms, provisions, covenants and conditions of this Site Lease shall be affected thereby, and each provision of this Site Lease shall be valid and enforceable to the fullest extent permitted by law.

SECTION 15. Notices . Any notice, request, complaint, demand or other communication under this Site Lease shall be given by first class mail or personal delivery to the party entitled thereto at its address set forth below, or by telecopy, telex or other form of telecommunication, at its number set forth below. Notice shall be effective either (a) upon transmission by telecopy, telex or other form of telecommunication, (b) 48 hours after deposit in the United States mail, postage prepaid, or (c) in the case of personal delivery to any person, upon actual receipt. The City, the Authority and the Trustee may, by written notice to the other parties, from time to time modify the address or number to which communications are to be given hereunder.

If to
the Authority City of Tracy
or the City: 333 Civic Center Plaza
Tracy, California 95376
Attention: Finance Director
Fax: ____________
If
to the Trustee: U.S. Bank Trust Company, National Association Attn.: Global Corporate Trust Services
One California Street, Suite 1000
San Francisco, CA 94111
Fax: 415-677-3768
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SECTION 16. Amendment of this Site Lease . The Authority and the City may at any time amend or modify any of the provisions of this Site Lease, but only (a) with the prior written consent of the Owners of a majority in aggregate principal amount of the Outstanding Bonds; or (b) without the consent of any of the Bond Owners, but only if such amendment or modification is for any one or more of the following purposes:
(i) to
make cure any ambiguity, or to cure, correct or supplement any defective provision contained herein, or in any other respect whatsoever as the Authority and the City may deem necessary or desirable, provided that, in the opinion of Bond Counsel, such modifications or amendments do not materially adversely affect the interests of the Owners of the Bonds;
(ii) to
amend any provision hereof relating to the Tax Code, to any extent whatsoever but only if and to the extent such amendment will not adversely affect the exclusion from gross income of interest on the Bonds under the Tax Code, in the opinion of Bond Counsel; (iii) to
conform to any amendment of the Indenture which is made thereto in accordance with Section 9.01 of the Indenture; or (iv) f
or the purpose of effectuating any substitution, release or addition of property under Section 6.

SECTION 17. Governing Law. This Site Lease shall be construed in accordance with and governed by the Constitution and laws of the State of California.

SECTION 18. Third Party Beneficiary. The Trustee is hereby made a third- party beneficiary under this Site Lease with all rights of a third party beneficiary.

SECTION 19. Binding Effect . This Site Lease inures to the benefit of and is binding upon the Authority, the City and their respective successors and assigns, subject, however, to the limitations contained herein.

SECTION 20. Section Headings . All section headings contained herein are for convenience of reference only and are not intended to define or limit the scope of any provision of this Site Lease.

SECTION 21. Execution in Counterparts . This Site Lease may be executed in any number of counterparts, each of which shall be deemed to be an original but all together shall constitute but one and the same lease. It is also agreed that separate counterparts of this Site Lease may be separately executed by the Authority and the City, all with the same force and effect as though the same counterpart had been executed by both the Authority and the City.

SECTION 22. Defined Terms. All capitalized terms used herein and not otherwise defined have the respective meanings given those terms in the Indenture. -6-
IN WITNESS WHEREOF, the City and the Authority have caused this Site Lease to be executed by their respective officers thereunto duly authorized, all as of the day and year first above written.

CITY OF TRACY, as lessor
By
Finance Director
Attes
t:

City Clerk
TRACY PUBLIC FINANCING AUTHORITY, as
lessee
By
Treasurer
Attes
t:

Secretary
A-1

APPENDIX A

DESCRIPTION OF THE LEASED PROPERTY
The Leased Property consists of that certain real property situated in the City of Tracy, County of San Joaquin, State of California, which is more particularly described as follows:
[to come]

BE RECORDED AND WHEN RECORDED
RETURN TO:

Jones Hall, A Professional Law Corporation
475 Sansome Street, Suite 1700
San Francisco, California 94111
Attention: Christopher K. Lynch
THIS
DOCUMENT IS EXEMPT FROM RECORDING FEES UNDER SECTION 27383 OF THE CALIFORNIA GOVERNMENT CODE.

ASSIGNMENT AGREEMENT
This ASSIGNMENT AGREEMENT (this “Agreement”), dated for convenience as of May 1, 2022, is between the TRACY PUBLIC FINANCING AUTHORITY, a joint powers authority duly organized and existing under the laws of the State of California (the “Authority”), and U.S. BANK TRUST COMPANY, NATIONAL ASSOCIATION, a national banking association organized and existing under the laws of the United States of America, as trustee (the “Trustee”).

BACK
GROUND:

1. The Cit
y of Tracy (the “ City”) wishes to finance the acquisition and construction of public improvements (the “Project”) of the City, consisting of Phase 1E of the Legacy Fields Sports Complex and such other improvements that may be identified from time to time by the City.

2. The Cit
y and the Tracy Industrial Development Authority (the “ Industrial Development Authority”) are parties to a First Amended and Restated Joint Powers Agreement, dated as of October 17, 2018 (the “ Joint Powers Agreement”), pursuant to which the Authority was established as a joint exercise of powers authority under the Joint Exercise of Powers Act (Government Code §6500 et seq.) for the purpose of providing assistance to the City and the Industrial Development Authority with their financing programs, and for any other purposes authorized under the Bond Law (as defined in the Indenture referenced below).

3. The Ci
ty has proposed to lease to the Authority certain real property and improvements of the City, as more particularly described in Appendix A attached hereto and by this reference incorporated herein (the “ Leased Property”), under a Site Lease, dated as of the date hereof, between the City and the Authority (the “ Site Lease”) in consideration of the payment by the Authority of an upfront rental payment (the “ Site

ATTACHMENT G
-2-
Lease Payment”) which is sufficient to provide funds for the acquisition and construction of the Project. The Site Lease is being recorded concurrently herewith.

4. The Authority has authorized the issuance of its Tracy Public Financing Authority Lease Revenue Bonds, Series 2022A ( Legacy Fields ) in the aggregate principal amount of $________ (the “2022 Bonds”) under an Indenture of Trust dated as of the date hereof (the “ Indenture”), between the Authority and the Trustee, for the purpose of providing the funds to enable the Authority to pay the Site Lease Payment to the City in accordance with the Site Lease.

5. Under Section 2.08 and Section 2.09 of the Indenture, the Authority is authorized to issue Additional Bonds (as defined in the Indenture) payable from the Lease Payments (as defined in the Lease) payable by the City under the Lease.

Together, the 2022 Bonds and any Additional Bonds are defined as “ Bonds” under this Assignment Agreement and the Indenture.

6. In order to provide revenues which are sufficient to enable the Authority to pay debt service on the Bonds, the Authority has agreed to lease the Leased Property back to the City under a Lease Agreement dated as of the date hereof (the “Lease”), a memorandum of which has been recorded concurrently herewith, under which the City has agreed to pay semiannual Lease Payments as the rental for the Leased Property thereunder.

7. The Authority has requested the Trustee to enter into this Agreement for the purpose of assigning certain of its rights under the Lease to the Trustee for the benefit of the Bond owners.

AGREEMENT:

In consideration of the material covenants contained in this Agreement, the parties hereto hereby formally covenant, agree and bind themselves as follows:

S
ECTION 1. Defined Terms . All capitalized terms not otherwise defined herein have the respective meanings given those terms in the Indenture.

SECTION 2. Assignment. The Authority hereby assigns to the Trustee, for the benefit of the Owners of all Bonds which are issued and Outstanding under the Indenture, all of the Authority’s rights under the Lease (excepting only the Authority’ s rights under Sections 4.5, 5.10, 7.3 and 8.4 of the Lease and its rights to give consents and approvals under the Lease), including but not limited to:

(a) the right to receive and collect all of the Lease Payments from the City under the Lease;

(b) the right to receive and collect any proceeds of any insurance maintained thereunder with respect to the Lea sed Property, or any eminent domain award (or proceeds of sale under threat of eminent domain) paid with respect to the Leased Property; and

-3-
(c) the right to exercise such rights and remedies conferred on the Authority under the Lease as may be necessary or convenient (i) to enforce payment of the Lease Payments and any amounts required to be deposited in the Insurance and Condemnation Fund
established under Section 5.07 of the Indenture, or (ii) otherwise to protect the interests of the Bond Owners in the event of a default by the City under the Lease.

The Trus
tee shall administer all of the rights assigned to it by the Authority under this Agreement in accordance with the provisions of the Indenture, for the benefit of the Owners of Bonds. The assignment made under this Section 2 is absolute and irrevocable, and without recourse to the Authority.

SECTION 3. Acceptance. The Trustee hereby accepts the assignments made herein for the purpose of securing the payments due under the Lease and Indenture to, and the rights under the Lease and Indenture of, the Owners of the Bonds, all subject to the provisions of the Indenture. The recitals contained herein are those of the Authority and not of the Trustee, and the Trustee assumes no responsibility for the co rrectness thereof.

SECTION 4. Conditions. This Agreement confers no rights and imposes no duties upon the Trustee beyond those expressly provided in the Indenture. The assignment hereunder to the Trustee is solely in its capacity as Trustee under the Indenture, and the Trustee shall have the same rights, protections, immunities and indemnities hereunder as afforded to it under the Indenture.

SECTION 5. Execution in Counterparts. This Agreement may be executed in any number of counterparts, each of which is an original and all together constitute one and the same agreement. Separate counterparts of this Agreement may be separately executed by the Trustee and the Authority, both with the same force and effect as though the same counterpart had been executed by the Trustee and the Authority.

SECTION 6. Binding Effect. This Agreement inures to the benefit of and binds the Authority and the Trustee, and their respective successors and assigns, subject, however, to the limitations contained herein.

SECTION 7. Governing Law. This Agreement is governed by the Constitution and laws of the State of California.
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IN WITNESS WHEREOF, the parties have executed this Agreement by their duly authorized officers as of the day and year first written above.

TRACY PUBLIC FINANCING AUTHORITY
By
Treasurer
Attest:

Secretary
U.S. BANK TRUST COMPANY, NATIONAL
ASSOCIATION, as Trustee
By
Authorized Representative
A-1

APPENDIX A
DESCR

IPTION OF THE LEASED PROPERTY
The Leased
Property consists of that certain real property situated in the City of Tracy, County of San Joaquin, which is more particularly described as follows:
[to come]
Stradling Yocca Carlson & Rauth
Draft of 3/22/22
1 4854-2938-6509v3/024667-0111
$__________

TRACY PUBLIC FINANCING AUTHORITY
LEASE REVENUE BONDS, SERIES 2022A
(Legacy Fields Phase 1E)
BOND

PURCHASE AGREEMENT
_____, 2022
Tracy Public Financing Authority
c/of City of Tracy
333 Civic Center Plaza
Tracy, California 95376
City of Tracy
333 Civic Center Plaza
Tracy, California 95376
Ladies and Gentlemen:

Pipe
r Sandler & Co., as underwriter (the “ Underwriter”), acting not as a fiduciary or agent for you, but on behalf of itself, offers to enter into this Bond Purchase Agreement (this “ Purchase Agreement”) with the Tracy Public Financing Authority (the “Authority”) and the City of Tracy, California (the “ City”), which, upon the acceptance of the Authority and the City, will be binding upon the Authority, the City and the Underwriter. This offer is made subject to acceptance by the Authority and by the City by the execution of this Purchase Agreement and delivery of the same to the Underwriter prior to 11:59 P.M., Pacific Standard Time, on the date hereof, and, if not so accepted, will be subject to withdrawal by the Underwriter upon notice delivered to the Authority and the City at any time prior to the acceptance hereof by the Authority and the City. Capitalized terms used herein and not otherwise defined shall have the meanings set forth in the Indenture of Trust, dated as of May 1, 2022 (the “Indenture”), by and between the Authority and U.S. Bank Trust Company, National Association, as trustee (the “Trustee”).

Section 1. Purchase and Sale. Upon the terms and conditions and upon the basis of the representations, warranties and agreements herein set forth, the Underwriter hereby agrees to purchase from the Authority, and the Authority hereby agrees to issue, sell and deliver to the Underwriter all (but not less than all) of the Tracy Public Financing Authority Lease Revenue Bonds, Series 2022A (Legacy Fields Phase 1E) in the aggregate principal amount of $__________ (the “Bonds”). The Bonds will be dated as of their date of delivery. Interest on the Bonds shall be payable semiannually on May 1 and November 1 in e ach year, commencing November 1, 2022 and will mature, bear interest and be subject to redemption prior to maturity as set forth in Exhibit A hereto. The purchase price for the Bonds shall be equal to $__________ (being the aggr egate principal amount thereof, [plus/less] [net] original issue [premium/discount] of $__________, less an underwriter’s discount of $__________).

Section 2. The Bonds. The Bonds shall be secured by a pledge of Revenues consisting primarily of Lease Payments (“ Lease Payments ”) to be paid by the City pursuant to a Lease Agreement, dated as of May 1, 2022, between the Authority, as lessor, and the City, as lessee (the “Lease Agreement ”), concerning the leaseback of certain real property and improvements (the

ATTACHMENT H
2 4854-2938-6509v3/024667-0111
“Leased Property ”). The Authority’s right to receive the Lease Payments due under the Lease Agreement and to exercise remedies upon default thereunder shall be assigned to the Trustee for the benefit of the owners of the Bonds pursuant to an Assignment Agreement, dated as of May 1, 2022 (the “Assignment Agreement”), by and between the Authority and the Trustee.

The Bonds shall be as described in, and shall be secured under and pursuant to the Indenture substantially in the form previously submitted to the Underwriter with only such changes therein as shall be mutually agreed upon by the Authority, the City and the Underwriter.

The proceeds of the Bonds shall be used (i) to finance the acquisition and construction of public capital improvements of the City, consisting of Phase 1E of the Legacy Fields Sports Complex and such other improvements that may be identified from time to time by the City; and (ii) to pay the costs of issuance of the Bonds.

The Bonds, this Purchase Agreement, the Indenture, the Lease Agreement, the Site Lease, dated as of May 1, 2022 (the “Site Lease”), under which the City will lease the Leased Property to the Authority, the Assignment Agreement and a resolution adopted by the Board of Directors of the Authority on _____, 2022 (the “ Authority Resolution”) authorizing the issuance of the Bonds and the execution and delivery of the Authority Documents (hereinafter defined) are collectively referred to herein as the “Authority Documents.”
This Purchase Agreement, the Continuing Disclosure Certificate, dated as of May 1, 2022 (the “ Continuing Disclosure Certificate ”), executed and delivered by the City, the Lease Agreement, the Site Lease and the resolution adopted by the City Council of the City on _____, 2022 (the “City Resolution”) authorizing the execution and delivery of the City Documents (hereinafter defined) are collectively referred to herein as the “City Documents.” Section 3. Public Offering and Establishment of Issue Price. (a) The Underwriter agrees to make an initial public offering of all of the Bonds at the public offering prices (or yields) set forth on Exhibit A attached hereto and incorporated herein by reference. Subsequent to the initial public offering, the Underwriter reserves the right to change the public offering prices (or yields) as the Underwriter deems necessary in connection with the marketing of the Bonds, provided that the Underwriter shall not change the interest rates set forth on Exhibit A. The Bonds may be offered and sold to certain dealers at prices lower than such initial public offering prices. The City and the Authority acknowledge and agree that: (i) the purchase and sale of the Bonds pursuant to this Purchase Agreement is an arm’s -length commercial transaction between the City and the Authority, on one hand, and the Underwriter, on the other; (ii) in connection therewith and with the discussions, undertakings and procedures leading up to the consummation of such transaction, the Underwriter is and has been acting solely as principal and is not acting as a Municipal Advisor (as defined in Section 15B of The Securities Exchange Act of 1934, as amended); (iii) the Underwriter has not assumed an advisory or fiduciary responsibility in favor of the City or Authority with respect to the offering contemplated hereby or the discussions, undertakings and procedures leading thereto (irrespective of whether the Underwriter has provided other services or is currently providing other services to the City or Authority on other matters); (iv) the Underwriter has financial and other interests that differ from those of the City and the Authority; and (v) the City and Authority have consulted their own legal, financial and other advisors to the extent they have deemed appropriate.
3 4854-2938-6509v3/024667-0111
(b) The Underwriter agrees to assist the Authority in establishing the issue price of the Bonds and shall execute and deliver to the Authority at Closing an “issue price” or similar certificate, together with the supporting pricing wires or equiva lent communications, substantially in the form attached hereto as Exhibit B, with such modifications as may be appropriate or necessary, in the reasonable judgment of the Underwriter, the Authority and Bond Counsel, to accurately reflect, as applicable, the sales price or prices or the initial offering price or prices to the public of the Bonds.

All actions to be taken by the Authority under this section to establish the issue price of the Bonds may be taken on behalf of the Authority by CSG Advisors Incorporated (the “ Municipal Advisor”) and any notice or report to be provided to the Authority may be provided to the Municipal Advisor. (c) Except as otherwise set forth in Exhibit A, the Authority will treat the first price at which 10% of each maturity of the Bonds (the “ 10% test”) is sold to the public as the issue price of that maturity (if different interest rates apply within a maturity, each separate CUSIP number within that maturity will be subject to the 10% test). At or promptly after the execution of t his Purchase Agreement, the Underwriter shall report to the Authority the price or prices at which it has sold to the public each maturity of the Bonds. If at that time the 10% test has not been satisfied as to any maturity of the Bonds, the Underwriter agrees to promptly report to the Authority the prices at which it sells the unsold Bonds of that maturity to the public. That reporting obligation shall continue, whether or not the Closing Date has occurred, until the 10% test has been satisfied as to the Bonds of that maturity or until all Bonds of that maturity have been sold to the public. (d) The Underwriter confirms that it has offered the Bonds to the public on or before the date of this Purchase Agreement at the offering price or prices (the “ initial of fering price”), or at the corresponding yield or yields, set forth in Exhibit A, except as otherwise set forth therein. Exhibit A also sets forth, identified under the column “Hold the Offering Price Rule Used,” as of the date of this Purchase Agreement, the maturities, if any, of the Bonds for which the 10% test has not been satisfied and for which the Authority and the Underwriter agree that the restrictions set forth in the next sentence shall apply, which will allow the Authority to treat the initial offering price to the public of each such maturity as of the sale date as the issue price of that maturity (the “ hold- the-offering-price rule ”). So long as the hold- the-offering-price rule remains applicable to any maturity of the Bonds, the Underwriter will neither offer nor sell unsold Bonds of that maturity to any person at a price that is higher than the initial offering price to the public during the period starting on the sale date and ending on the earlier of the following:
(i) the close of the fifth (5th) business day after the sale date; or (ii) the date on which the Underwriter has sold at least 10% of that maturity of the Bonds to the public at a price that is no higher than the initial offering price to the public.

The Underwriter shall promptly advise the Authority when it has sold 10% of that maturity of the Bonds to the public at a price that is no higher than the initial offering price to the public, if that occurs prior to the close of the fifth (5th) business day after the sale date. (e) The Underwriter confirms that any selling group agreement and any retail distribution agreement relating to the initial sale of the Bonds to the public, together with the related pricing wires, contains or will contain language obligating each dealer who is a member of the selling group and each broker-dealer that is a party to such retail distribution agreement, as applicable, to:
(1) report the prices at which it sells to the public the unsold Bonds of each maturity allotted to it 4 4854-2938-6509v3/024667-0111
until it is notified by the Underwriter that either the 10% test has been satisfied as to the Bonds of that maturity or all Bonds of that maturity have been sold to the public; and (2) comply with the hold- the-offering-price rule, if applicable, in each case if and for so long as directed by the Underwriter.

The Authority acknowledges that, in making the representation set forth in this subsection, the Underwriter will rely on: (A) in the event that a selling group has been created in connection with the initial sale of the Bonds to the public, the agreement of each dealer who is a member of the selling group to comply with the hold-the -offering-price rule, if applicable, as set forth in a selling group agreement and the related pricing wires; and (B) in the event that a retail di stribution agreement was employed in connection with the initial sale of the Bonds to the public, the agreement of each broker- dealer that is a party to such agreement to comply with the hold -the-offering-price rule, if applicable, as set forth in the retail distribution agreement and the related pricing wires. The Authority further acknowledges that the Underwriter shall not be liable for the failure of any dealer who is a member of a selling group, or of any broker-dealer that is a party to a retail distribution agreement, to comply with its corresponding agreement regarding the hold-the -offering-price rule as applicable to the Bonds.
(f) The Underwriter acknowledges that sales of any Bonds to any person that is a related party to the Underwriter shall not constitute sales to the public for purposes of this section.

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

Section 4. The Official Statement. By its acceptance of this proposal, the Authority and the City ratify, confirm and approve of the use and distribution by the Underwriter prior to the date hereof of the preliminary official statement relating to the Bonds dated _____, 2022 (including the cover page, all appendices and all information incorporated therein and any supplements or amendments thereto and as disseminated in its printed physical form or in electronic form in all respects materially consistent with such physical form, the “ Preliminary Official Statement”) that 5 4854-2938-6509v3/024667-0111
authorized officers of the City deemed “final” as of its date, for purposes of Rule 15c2-12 promulgated under the Securities Exchange Act of 1934, as amended (“ Rule 15c2-12”), except for certain information permitted to be omitted therefrom by Rule 15c2-12. The Authority and the City hereby agree to deliver or cause to be delivered to the Underwriter, within seven business days of the date hereof, copies of the final official statement, dated the date hereof, relating to the Bonds (including all information previously permitted to have been omitted by Rule 15c2-12), including the cover page, all appendices, all information incorporated therein and any amendments or supplements as have been approved by the Authority, the City and the Underwriter (the “ Official Statement”) in such quantity as the Underwriter shall reasonably request to comply with Section (b)(4) of Rule 15c2-12 and the rules of the Municipal Securities Rulemaking Board (the “MSRB”).

The Underwriter hereby agrees that it will not request that payment be made by any purchaser of the Bonds prior to delivery by the Underwriter to the purchaser of a copy of the Official Statement. The Underwriter agrees: (i) to provide the Authority and the City with final pricing information on the Bonds on a timely basis; and (ii) to promptly file a copy of the Official Statement, including any supplements prepared by the Authority or the City with the MSRB at http://emma.msrb.org. The Authority and the City hereby approve of the use and distribution by the Underwriter of the Preliminary Official Statement in connection with the offer and sale of the Bonds.

The Authority and the City will cooperate with the Underwriter in the filing by the Underwriter of the Official Statement with the MSRB.

Section 5. Closing. At 8:30 a.m., Pacific Standard Time, on May __, 2022, or at such other time or date as the Authority and the Underwriter agree upon (the “ Closing Date ”), the Authority shall deliver or cause to be delivered to the Trustee, the Bonds, in definitive form, registered in the name of Cede & Co., as the nominee of The Depository Trust Company (“DTC”), so that the Bonds may be authenticated by the Trustee and credited to the account specified by the Underwriter under DTC’s FAST procedures. Concurrently with the delivery of the Bonds, the Authority and the City will deliver the documents hereinafter mentioned at the offices of Jones Hall, A Professional Law Corporation, San Francisco, California (“Bond Counsel”), or another place to be mutually agreed upon by the Authority, the City and the Underwriter. The Underwriter will accept such delivery and pay the purchase price of the Bonds as set forth in Section 1 hereof by wire transfer in immediately available funds. This payment for and delivery of the Bonds, together with the delivery of the aforementioned documents, is herein called the “Closing.” The Bonds shall be registered in the name of Cede & Co., as nominee of DTC in denominations of five thousand dollars ($5,000) or any integral multiple thereof. The Authority and the City acknowledge that the services of DTC will be used initiall y by the Underwriter in order to permit the issuance of the Bonds in book-entry form, and agree to cooperate fully with the Underwriter in employing such services.

Section 6. Representations, Warranties and Covenants of the Authority. The Authority represents, warrants and covenants to the Underwriter and the City that:
(a) The Authority is a public body, duly organized and existing under the Constitution and laws of the State of California (the “ State”), including Articles 1, 2 and 4 of Chapter 5 of Division 7 of Title 1 of the Government Code of the State of California (the “JPA Act”) and the First Amended and Restated Joint Powers Agreement, dated as of October 17, 2018 (the “JPA Agreement”), between the City and the Tracy Industrial Development Authority. 6 4854-2938-6509v3/024667-0111
(b) The Authority has full legal right, power and authority to adopt or enter into, as the case may be, and to carry out and consummate the transactions on its part contemplated by the Authority Documents.
(c) By all necessary official action, the Authority has duly authorized and approved the Authority Documents, has duly authorized and approved the Preliminary Official Statement, will, by execution thereof, duly authorize and approve the Official Statement, and has duly authorized and approved the execution and delivery of, and the performance by the Authority of the obligations on its part contained in, the Authority Documents and the consummation by it of all other transactions contemplated by the Authority Documents in connection with the issuance of the Bonds. As of the date hereof, such authorizations and approvals are in full force and effect and have not been amended, modified or rescinded. When executed and delivered, and assuming due execution and delivery by the other parties thereto, if applicable, the Authority D ocuments will constitute the legally valid and binding obligations of the Authority enforceable in accordance with their respective terms, except as enforcement may be limited by bankruptcy, insolvency, reorganization, moratorium or similar laws or equitable principles relating to or affecting creditors’ rights generally, or by the exercise of judicial discretion and the limitations on legal remedies against joint powers authorities in the State. The Authority has complied, and will at the Closing be in compliance in all material respects, with the terms of the Authority Documents. (d) The Authority is not in any material respect in breach of or default under any applicable constitutional provision, law or administrative regulation of any state or of the United States, or any agency or instrumentality of either, or any applicable judgment or decree, or any loan agreement, indenture, bond, note, resolution, agreement or other instrument to which the Authority is a party which breach or default has or may have a m aterially adverse effect on the ability of the Authority to perform its obligations under the Authority Documents, and no event has occurred and is continuing which with the passage of time or the giving of notice, or both, would constitute such a default or event of default under any such instrument; and the adoption, execution and delivery of the Authority Documents, if applicable, and compliance with the provisions on the Authority’s part contained therein, will not conflict in any material way with or constitute a material breach of or a material default under any constitutional provision, law, administrative regulation, judgment, decree, loan agreement, indenture, bond, note, resolution, agreement or other instrument to which the Authority is a party, nor will any such execution, delivery, adoption or compliance result in the creation or imposition of any lien, charge or other security interest or encumbrance of any nature whatsoever upon any of the property or assets of the Authority or under the terms of any such law, regulation or instrument, except as may be provided by the Authority Documents. (e) All material authorizations, approvals, licenses, permits, consents and orders of any governmental authority, legislative body, board, agency or commission hav ing jurisdiction of the matter which are required for the due authorization by, or which would constitute a condition precedent to or the absence of which would materially adversely affect the due performance by the Authority of its obligations in connection with the Authority Documents have been duly obtained or, when required for future performance, are expected to be obtained, other than such approvals, consents and orders as may be required under the Blue Sky or securities laws of any state in connection with the offering and sale of the Bonds; except as described in or contemplated by the Preliminary Official Statement and the Official Statement, all authorizations, approvals, licenses, permits, consents and orders of any governmental authority, board, agency or commission having jurisdiction of the matter which are required for the due authorization by, or which would constitute a condition precedent to or the absence of which would materially adversely affect the due 7 4854-2938-6509v3/024667-0111
performance by, the Authority of its obligations under the Authority Documents have been duly obtained.
(f) The Authority hereby agrees that it will notify the other parties hereto if, within the period from the date of this Purchase Agreement to and including the date twenty-five (25) days following the end of the underwriting period (as defined herein), the Authority discovers any pre-existing or subsequent fact or becomes aware of the occurrence of any event, in any such case, which might cause the Official Statement (as the same may have the n been supplemented or amended) to contain any untrue statement of a material fact or to omit to state a material fact necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading.
(g) As of the time of acceptance hereof and the Closing, except as disclosed in the Official Statement, there is no action, suit, proceeding, inquiry or investigation, at law or in equity, before or by any court, governmental authority, public board or body, pending, with ser vice of process upon the Authority having been accomplished, or threatened in writing to the Authority:
(i) in any way questioning the corporate existence of the Authority or the titles of the officers of the Authority to their respective offices; (ii) affecting, contesting or seeking to prohibit, restrain or enjoin the issuance or delivery of any of the Bonds, or the payment or collection of Lease Payments with respect to the Lease Agreement or any amounts pledged or to be pledged to pay the principal of a nd interest on the Bonds, or in any way contesting or affecting the validity of the Bonds or the other Authority Documents or the consummation of the transactions contemplated thereby or hereby, or contesting the exclusion of the interest on the Bonds from taxation or contesting the powers of the Authority or its authority to issue the Bonds; (iii) which would be likely to result in any material adverse change relating to the business, operations or financial condition of the Authority; or (iv) contesting the completeness or accuracy of the Preliminary Official Statement or the Official Statement or any supplement or amendment thereto or asserting that the Preliminary Official Statement or the Official Statement contained any untrue statement of a material f act or omitted to state any material fact necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading.
(h) To the Authority’s knowledge, there is no basis for any action, suit, proceeding, inquiry or investigation of the nature described in clauses (i) through (iv) of paragraph 6(g).
(i) The information in the Official Statem ent set forth under the caption “INTRODUCTION—The Authority” does not contain any untrue statement of a material fact or omit to sta te a material fact necessary to make the statements therein, in light of the circumstances under which they were made, not misleading.
(j) The Authority will refrain from taking any action, or permitting any action to be taken, with regard to which the Authority may exercise control, that results in the loss of the tax-exempt status of the interest on the Bonds.
(k) The Authority will refrain from taking any action, or permitting any action to be taken, to reduce the amount of the Lease Payments while the Bonds are Outstanding, and the Authority will collect the Lease Payments in accordance with the Lease Agreement. 8 4854-2938-6509v3/024667-0111
(l) Any certificate signed by any officer of the Authority authorized to execute such certificate in connection with the execution, sale and delivery of the Bonds and delivered to the Underwriter shall be deemed a representation and warranty of the Authority to the Underwriter and the City as to the statements made therein but not of the person signing such certificate.

Section 7. Representations, Warranties and Covenants of the City. The City represents, warrants and covenants to the Underwriter and the Authority that:
(a) The City is duly organized and validly existing as a municipal corporation under the Constitution and laws of the State.
(b) The City has full legal right, power and authority to adopt or enter into, as the case may be, and to carry out and consummate the transactions on its part contemplated by the City Documents.
(c) By all necessary official action, the City has duly authorized and approved the City Documents, has duly authorized and approved the Preliminary Official Statement and the Official Statement, and has duly authorized and approved the execution and delivery of, and the performance by the City of the obligations on its part contained in, the Cit y Documents and the consummation by it of all other transactions contemplated by the City Documents in connection with the issuance of the Bonds. As of the date hereof, such authorizations and approvals are in full force and effect and have not been amend ed, modified or rescinded. When executed and delivered, and assuming due execution and delivery by the other parties thereto, if applicable, the City Documents will constitute the legally valid and binding obligations of the City enforceable in accordance with their respective terms, except as enforcement may be limited by bankruptcy, insolvency, reorganization, moratorium or similar laws or equitable principles relating to or affecting creditors’ rights generally, or by the exercise of judicial discretion and the limitations on legal remedies against municipal corporations in the State. The City has complied, and will at the Closing be in compliance in all material respects, with the terms of the City Documents. (d) The City is not in any material respect in breach of or default under any applicable constitutional provision, law or administrative regulation of any state or of the United States, or any agency or instrumentality of either, or any applicable judgment or decree, or any loan agreement, indenture, bond, note, resolution, agreement or other instrument to which the City is a party which breach or default has or may have a materially adverse effect on the ability of the City to perform its obligations under the City Documents, and no event has occurred and is continuing which with the passage of time or the giving of notice, or both, would constitute such a default or event of default under any such instrument; and the adoption, execution and delivery of the City Documents, if applicable, and compliance with the provisions on the City’s part contained therein, will not conflict in any material way with or constitute a material breach of or a material default under any constitutional provision, law, administrative regulation, judgment, decree, loan agreeme nt, indenture, bond, note, resolution, agreement or other instrument to which the City is a party nor will any such execution, delivery, adoption or compliance result in the creation or imposition of any lien, charge or other security interest or encumbrance of any nature whatsoever upon any of the property or assets of the City or under the terms of any such law, regulation or instrument, except as may be provided by the City Documents.
(e) All material authorizations, approvals, licenses, permits, consents and orders of any governmental authority, legislative body, board, agency or commission having jurisdiction of 9 4854-2938-6509v3/024667-0111
the matter which are required for the due authorization by, or which would constitute a condition precedent to or the absence of which would materially adversely affect the due performance by the City of its obligations in connection with the City Documents have been duly obtained or, when required for future performance, are expected to be obtained, other than such approvals, consents and orders as may be required under the Blue Sky or securities laws of any state in connection with the offering and sale of the Bonds; except as described in or contemplated by the Preliminary Official Statement, all authorizations, approvals, licenses, permits, consents and orders of any governmental authority, board, agency or commission having jurisdiction of the matter which are required for the due authorization by, or which would constitute a condition precedent to or the absence of which would materially adversely affect the due performance by, the City of its obligations under the City Documents have been duly obtained.
(f) The Preliminary Official Statement was as of its date, and the Official Statement is, and at all times subsequent to the date of the Official Sta tement up to and including the Closing will be, true and correct in all material respects, and the Preliminary Official Statement and the Official Statement do not and will not contain and up to and including the Closing will not contain any untrue stateme nt of a material fact or omit to state a material fact necessary to make the statements contained therein, in the light of the circumstances under which they were made, not misleading (except that this representation does not include statements in the Offi cial Statement under the caption “UNDERWRITING” and information regarding DTC and its book- entry only system, as to which no view is expressed).
(g) The City will advise the Underwriter promptly of any proposal to amend or supplement the Official Statement. The City will advise the Underwriter promptly of the institution of any proceedings known to it by any governmental authority prohibiting or otherwise affecting the use of the Official Statement in connection with the offering, sale or distribution of the Bonds. (h) As of the time of acceptance hereof and the Closing, except as disclosed in the Official Statement, there is no action, suit, proceeding, inquiry or investigation, at law or in equity, before or by any court, governmental authority, public board or body, pending, with service of process upon the City having been accomplished, or threatened in writing to the City: (i) in any way questioning the corporate existence of the City or the titles of the officers of the City to their respective offices; (ii) affecting, contesting or seeking to prohibit, restrain or enjoin the issuance or delivery of any of the Bonds, or the payment or collection of Lease Payments with respect to the Lease Agreement or of any amounts pledged or to be pledged to pay the principal of and interest on the Bonds, or in any way contesting or affecting the validity of the Bonds, or the City Documents or the consummation of the transactions contemplated thereby or hereby, or contesting the exclusion of the interest on the Bonds from taxation, or contesting the powers of the Authority to issue the Bonds; (iii) which would be likely to result in any material adverse change relating to the business, operations or financial condition of the City; and (iv) contesting the completeness or accuracy of the Preliminary Official Statement or the Official Statement or any supplement or amendment thereto or asserting that the Preliminary Official Statement or the Official Statement contained any untrue statement of a material fact or omitted to state a ny material fact necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading. (i) To the City’s knowledge, there is no basis for any action, suit, proceeding, inquiry or investigation of the nature described in clauses (i) through (iv) of paragraph 7(h). 10 4854-2938-6509v3/024667-0111
(j) Until the date which is twenty -five (25) days after the “end of the underwriting period” (as hereinafter defined), if any event shall occur of which the City is aware that would cause the Official Statement to contain any untrue statement of a material fact or omit to state a material fact necessary in order to make the statements in the Official Statement, in light of the circumstances under which they were made, not misleading (except that this representation does not include information regarding DTC and its book entry only system, as to which no view is expressed), the City shall forthwith notify the Underwriter of any such event of which it has knowledge and shall cooperate fully in furnishing any information available to it for any supplement to the Official Statement necessary, in the Underwriter’s reasonable opinion, so that the statements therein as so supplemented will not be misleading in light of the circumstances existing at such time and the City shall promptly furnish to the Underwriter a reasonable number of copies of such supplement. As used herein, the term “ end of the underwriting period” means the later of such time as: (i) the Authority delivers the Bonds to the Underwriter; or (ii) t he Underwriter does not retain, directly or as a member of an underwriting syndicate, an unsold balance of the Bonds for sale to the public. Unless the Underwriter gives notice to the contrary, the “end of the underwriting period” shall be deemed to be the Closing Date. Any notice delivered pursuant to this provision shall be written notice delivered to the Underwriter at or prior to the Closing Date of the Bonds and shall specify a date (other than the Closing Date) to be deemed the “end of the underwriting period.” (k) Except as disclosed in the Preliminary Official Statement and the Official Statement, the City has not within the last five years failed to comply in any material respect with any continuing disclosure undertakings with regard to Rule 15c2-12, to provide annual reports or notices of material events specified in such rule.
(l) The City will refrain from taking any action, or permitting any action to be taken, with regard to which the City may exercise control, that results in the loss of the tax-exe mpt status of the interest on the Bonds.
(m) The financial statements relating to the receipts, expenditures and cash balances of the City as of June 30, 2021 attached as Appendix C to the Official Statement fairly represent the receipts, expenditures and cash balances of the City. Except as disclosed in the Official Statement or otherwise disclosed in writing to the Underwriter, there has not been any materially adverse change in the financial condition of the City or in its operations since June 30, 2021 and there has been no occurrence, circumstance or combination thereof which is reasonably expected to result in any such materially adverse change.
(n) To the extent required by law, the City will undertake, pursuant to the Continuing Disclosure Certificate and the other City Documents, to provide annual reports and notices of certain events, if material. A description of this undertaking is set forth in Appendix E to the Preliminary Official Statement and will also be set forth in the Official Statement. (o) Except in connection with the issuance of refunding bonds pursuant to the terms of the Indenture or as permitted under the Lease Agreement due to damage, destruction, or substantial interference with the use and occupancy by the City of the Leased Property or any portion thereof, the City will refrain from taking any action, or permitting any action to be taken, to reduce the amount of the Lease Payments while the Bonds are Outstanding, and the City will pay the Lease Payments in accordance with the Lease Agreement.
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(p) Any certificate signed by any officer of the City authorized to execute such certificate in connection with the execution, sale and delivery of the Bonds and delivered to the Underwriter shall be deemed a representation and warranty of the City to the U nderwriter and the Authority as to the statements made therein but not of the person signing such certificate.

Section 8. Conditions to the Obligations of the Underwriter. The Underwriter has entered into this Purchase Agreement in reliance upon the representations and warranties of the Authority and the City contained herein. The obligations of the Underwriter to accept delivery of and pay for the Bonds on the Closing Date shall be subject, at the option of the Underwriter, to the accuracy in all material respects of the statements of the officers and other officials of the Authority and of the City, as well as authorized representatives of Bond Counsel and the Trustee made in any Bonds or other documents furnished pursuant to the provisions hereof; to the performance by the Authority and the City of their obligations to be performed hereunder at or prior to the Closing Date; and to the following additional conditions:
(a) The representations, warranties and covenants of the City and the Authority contained herein shall be true and correct at the date hereof and at the time of the Closing, as if made on the Closing Date.
(b) At the time of Closing, the City Documents and the Authority Documents shall be in full force and effect as valid and binding agreements between or among the various parties thereto, and the City Documents, the Authority Documents and the Official Statement shall not have been amended, modified or supplemented except as may have been agreed to in writing by the Underwriter.
(c) At the time of the Closing, no m aterial default shall have occurred or be existing under the City Documents, Authority Documents, or any other agreement or document pursuant to which any of the City’s financial obligations were executed and delivered, and the City shall not be in default in the payment of principal or interest with respect to any of its financial obligations, which default would materially adversely impact the ability of the City to pay the Lease Payments.
(d) In recognition of the desire of the Authority, the City and the Underwriter to effect a successful public offering of the Bonds, and in view of the potential adverse impact of any of the following events on such a public offering, this Purchase Agreement shall be subject to termination in the discretion of the Underwriter by notification, in writing, to the Authority and the City prior to delivery of and payment for the Bonds, if at any time prior to such time, regardless of whether any of the following statements of fact were in existence or known of on the date of this Purchase Agreement:
(i) any event shall occur which makes untrue any material statement or results in an omission to state a material fact necessary to make the statements in the Official Statement, in the light of the circumstances under which they were made, not misleading, which event, in the reasonable opinion of the Underwriter would materially or adversely affect the ability of the Underwriter to market the Bonds; or
(ii) the marketability of the Bonds or the market price thereof, in the opinion of the Underwriter, has been materially adversely affected by an amendment to the Constitution of the United States or by any legislation in or by the Congress of the United States or 12 4854-2938-6509v3/024667-0111
by the State, or the amendment of legislation pending as of the date of this Purchase Agreement in the Congress of the United States, or the recommendation to Congress or endorsement for passage (by press release, other form of notice or otherwise) of legislation by the President of the United States, the Treasury Department of the United S tates, the Internal Revenue Service or the Chairman or ranking minority member of the Committee on Finance of the United States Senate or the Committee on Ways and Means of the United States House of Representatives, or the proposal for consideration of legislation by either such Committee or by any member thereof, or the presentment of legislation for consideration as an option by either such Committee, or by the staff of the Joint Committee on Taxation of the Congress of the United States, or the favorable reporting for passage of legislation to either House of the Congress of the United States by a Committee of such House to which such legislation has been referred for consideration, or any decision of any federal or state court or any ruling or regulation (final, temporary or proposed) or official statement on behalf of the United States Treasury Department, the Internal Revenue Service or other federal or State authority affecting the federal or State tax status of the Authority or the City, or the interest on or with respect to bonds or notes (including the Bonds); or
(iii) any legislation, ordinance, rule or regulation shall be enacted by any governmental body, department or authority of the State, or a decision by any court of competent jurisdiction within the State shall be rendered which materially adversely affects the market price of the Bonds; or
(iv) an order, decree or injunction issued by any court of competent jurisdiction, or order, ruling, regulation (final, temporary or proposed), official statement or other form of notice or communication issued or made by or on behalf of the Securities and Exchange Commission, or any other governmental authority having jurisdiction of the subject matter, to the effect that: (i) obligations of the general character of the Bonds, or the Bonds, including any or all underlying arrangements, are not exempt from registration under the Securities Act of 1933, as amended, or that the Indenture is not exempt from qualification under the Trust Indenture Act of 1939, as amended; or (ii) the issuance, offering or sale of obligations of the general character of the Bonds, or the issuance, offering or sale of the Bonds, including any or all underlying obligations, as contemplated hereby or by the Official Statement, is or would be in violation of the federal securities laws as amended and then in effect; or
(v) legislation shall be enacted by the Congress of the United States, or a decision by a court of the United States shall be rendered, to the effect that obligations of the general character of the Bonds, or the Bonds are not exempt from registration under or other requirements of the Securities Act of 1933, as amended and as then in effect, or the Securities Exchange Act of 1934, as amended and as then in effect, or that the Indenture is not exempt from qualification under or other requirements of the Trust Indenture Act of 1939, as amended and as then in effect; or (vi) additional material restrictions not in force as of the date hereof shall have been imposed upon trading in securities ge nerally by any domestic governmental authority or by any domestic national securities exchange, which are material to the marketability of the Bonds; or
(vii) a general banking moratorium shall have been declared by federal, State or New York authorities, or the general suspension of trading on any national securities exchange; or
13 4854-2938-6509v3/024667-0111
(viii) there shall have occurred any outbreak or escalation of hostilities, declaration by the United States of a national emergency or war or other calamity or crisis the effect of which on financial markets is materially adverse such as to make it, in the sole judgment of the Underwriter, impractical or inadvisable to proceed with the purchase or delivery of the Bonds as contemplated by the Official Statement (exclusive of any amendment or supplement thereto); or (ix) any rating of the Bonds or the rating of any obligations of the City secured by the City’s general fund shall have been downgraded or withdrawn by a national rating service, which, in the opinion of the Underwriter, materially adversely affects the market price of the Bonds; or
(x) the commencement of any action, suit or proceeding described in Section 6(g) or Section 7(h).
(e) at or prior to the Closing, the Underwriter shall receive the following documents, in each case to the reasonable satisfaction in form and substance of the Underwriter:
(i) The Authority Resolution relating to the Bonds and authorizing the execution and delivery of the Bonds and the Authority Documents and the Official Statement signed by an authorized official of the Authority;
(ii) The City Resolution relating to the Bonds and authorizing the execution and delivery of the City Documents and the delivery of the Bonds and th e Official Statement signed by an authorized official of the City; (iii) The City Documents and the Authority Documents duly executed and delivered by the respective parties thereto, with only such amendments, modifications or supplements as may have been agreed to in writing by the Underwriter; (iv) The approving opinion of Bond Counsel dated the Closing Date and addressed to the Authority and the City, in substantially the form attached as Appendix D to the Official Statement, and a reliance letter thereon addressed to the Underwriter; (v) A supplemental opinion of Bond Counsel dated the Closing Date and addressed to the Underwriter, to the effect that:
(A) the statements on the cover of the Official Statement and in the Official Statement under the captions “INTRODUCTION,” THE LEASED PROPERTY,” “ THE 2022 BONDS,” “SECURITY FOR THE 2022 BONDS,” and “TAX MATTERS,” and in Appendix B— “SUMMARY OF PRINCIPAL LEGAL DOCUMENTS” and Appendix D—“ PROPOSED FORM OF OPINION OF BOND COUNSEL,” excluding any material that may be treated as included under such captions and appendices by any cross -reference, insofar as such statements expressly summarize provisions of the City Documents, the Authority Documents and Bond Counsel’s final opinion concerning certain federal tax matters relating to th e Bonds, are accurate in all material respects as of the Closing Date, provided that Bond Counsel need not express any opinion with respect to any financial or statistical data contained therein or with respect to the book-entry system in which the Bonds are initially delivered; 14 4854-2938-6509v3/024667-0111
(B) The Purchase Agreement and the Continuing Disclosure Certificate have been duly authorized, executed and delivered by the City and the Authority, as applicable, and are the valid, legal and binding agreements of the City and the Authority, as applicable, enforceable in accordance with their respective terms, except that the rights and obligations under the Purchase Agreement and the Continuing Disclosure Certificate are subject to bankruptcy, insolvency, reorganization, moratorium, fraudulent conveyance and other similar laws affecting creditors’ rights, to the application of equitable principles if equitable remedies are sought, to the exercise of judicial discretion in appropriate cases and to limitations on legal remedies against public agencies in the State, and provided that no opinion is expressed with respect to any indemnification or contribution provisions contained therein; (C) The Bonds are not subject to the registration requirements of the Securities Act of 1933, as amended, a nd the Indenture is exempt from qualification under the Trust Indenture Act of 1939, as amended; and
(vi) The Official Statement, executed on behalf of the Authority and the City, and the Preliminary Official Statement;
(vii) Evidence that the ratings on the Bonds are as described in the Official Statement;
(viii) A certificate, dated the Closing Date, signed by a duly authorized officer of the Authority satisfactory in form and substance to the Underwriter to the effect that:
(i) the representations, warranties and covenants of the Authority contained in this Purchase Agreement are true and correct in all material respects on and as of the Closing Date with the same effect as if made on the Closing Date by the Authority, and the Authority has complied with, in all material respects, all of the terms and conditions of this Purchase Agreement required to be complied with by the Authority at or prior to the Closing Date; (ii) no event affecting the Authority has occurred since the date of the Official Statement which should be disclosed in the Official Statement for the purposes for which it is to be used or which is necessary to disclose therein in order to make the statements and information therein not misleading in any material respect; and (iii) the Authority is not, in any material respect, in breach of or default under any applicable law or administrative regulation of the State or the United States or any applicable judgment or decree or any loan agreement, indenture, bond, note, resolution, agreement or other instrument to which the Authority is a party or is otherwise subject, which would have a material adverse impact on the Authority’s ability to perform its obligations under the Authority Documents, and no event has occurred and is continuing which, with the passage of time or the giving of notice, or both, would constitute a default or event of default under any such instrument;
(ix) A certificate, dated the Closing Date, signed by a duly authorized officer of the City satisfactory in form and substance to the Underwriter to the effect that: (i) the representations, warranties and covenants of the City contained in this Purchase Agreement are true and correct in all material respects on and as of the Closing Date with the same effect as if made on the Closing Date by the City, and the City has complied with, in all material respects, all of the terms and conditions of the Purchase Agreement required to be complied with by the City at or prior to the Closing Date; (ii) no event affecting the City has occurred since the date of the Official Statement which should be disclosed in the Official Statement for the purposes for which it is to be used or which is necessary to disclose therein in order to make the statements and information therein not misleading in any material respect; (iii) the information and statements contained in the Official 15 4854-2938-6509v3/024667-0111
Statement (other than information in the Official Statement under the caption “UNDERWRITING” and information regarding DTC and its book entry only system) did not as of its date and do not as of the Closing contain an untrue statement of a material fact or omit to state any material fact necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading in any material respect; and (iv) t he City is not, in any material respect, in breach of or default under any applicable law or administrative regulation of the State or the United States or any applicable judgment or decree or any loan agreement, indenture, bond, note, resolution, agreement (including but not limited to the Lease) or other instrument to which the City is a party or is otherwise subject, which would have a material adverse impact on the City’s ability to perform its obligations under the City Documents, and no event has occurred and is continuing which, with the passage of time or the giving of notice, or both, would constitute such a default or event of default under any such instrument;
(x) An opinion dated the Closing Date and addressed to the Underwriter, of the City Attorney of the City, as Counsel to the Authority, to the effect that:
(A) The Authority is a public body, organized and existing under the Constitution and laws of the State, including the JPA Act and the JPA Agreement; (B) The Authority Resolution has been duly adopted by the Authority at a regular meeting , is in full force and effect and has not been modified, amended, rescinded or repealed since its date of adoption;
(C) Except as otherwise disclosed in the Official Statement, there is no litigation, proceeding, action, suit, or investigation at law or in equity before or by any court, governmental authority or body, pending, with service of process upon the Authority having been accomplished, or threatened in writing against the Authority, challenging the creation, organizati on or existence of the Authority, or the validity of the Authority Documents or seeking to restrain or enjoin the collection of Lease Payments with respect to the Lease Agreement or the repayment of the Bonds or in any way contesting or affecting the validity of the Authority Documents or contesting the authority of the Authority to enter into or perform its obligations under any of the Authority Documents;
(D) The execution and delivery of the Authority Documents and the issuance of the Bonds and compliance with the provisions thereof, do not and will not in any material respect conflict with or constitute on the part of the Authority a breach of or default under any agreement or other instrument to which the Authority is a party or by which it is bound or any existing law, regulation, court order or consent decree to which the Authority is subject, which breach or default has or may have a material adverse effect on the ability of the Authority to perform its obligations under the Authority Documents; and
(xi) an opinion dated the Closing Date and addressed to the Underwriter, of the City Attorney of the City, to the effect that:
(A) The City is a municipal corporation, corporate and politic, duly organized and existing under the Constitution and laws of the State; 16 4854-2938-6509v3/024667-0111
(B) The City Resolution has been duly adopted by the City Council, is in full force and effect and has not been modified, amended, rescinded or repealed since its date of adoption;
(C) Except as otherwise disclosed in the Official Statement, there is no litigation, proceeding, action, suit, or investigation at law or in equity before or by any court, governmental authority or body, pending, with service of process upon the City having be en accomplished, or threatened in writing against the City, challenging the creation, organization or existence of the City, or the validity of the City Documents or seeking to restrain or enjoin the payment of the Lease Payments or the repayment of the Bonds or in any way contesting or affecting the validity of the City Documents or contesting the authority of the City to enter into or perform its obligations under any of the City Documents, or which, in any manner, questions the right of the City to pay the Lease Payments under the Lease Agreement;
(D) The execution and delivery of the City Documents and compliance with the provisions thereof, do not and will not in any material respect conflict with or constitute on the part of the City a breach of or default under any agreement or other instrument to which the City is a party or by which it is bound or any existing law, regulation, court order or consent decree to which the City is subject, which breach or default has or may have a material adverse effect on the ability of the City to perform its obligations under the City Documents; and (xii) An opinion of Jones Hall, A Professional Law Corporation, San Francisco, California, in its capacity as Disclosure Counsel, dated the Closing Date and addressed to the Authority, the City and the Underwriter, to the effect that, no facts have come to attention of Disclosure Counsel that have caused such counsel to believe that the Preliminary Official Statement, as of its date, or the Official Statement, as of its date and as of the Closing Date (except for the following items, which are expressly excluded from the scope of this sentence: any financial, statistical and demographic data or forecasts, numbers, charts, estimates, projections, assumptions or expressions of opinion, and information regarding DTC and its book-entry only system, that is contained or incorporated by reference in the Preliminary Official Statement or the Official Statement and the appendices to the Preliminary Official Statement or the Official Statement ) contained or contains any untrue statement of a material fact or omitted or omits to state any material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading;
(xiii) An opinion of Stradling Yocca Carlson & Rauth, a Professional Corporation, counsel to the Underwriter, in form and substance satisfactory to the Underwriter; (xiv) An opinion of counsel to the Trustee, addressed to the Underwriter and dated the Closing Date, in form and substance satisfactory to the Underwriter and to Bond Counsel;
(xv) A certificate, dated the Closing Date, signed by a duly authorized official of the Trustee in form and substance satisfactory to the Underwriter; (xvi) The preliminary and final Statement of Sale required to be delivered to the California Debt and Investment Advisory Commission pursuant to Section 53583 of the Government Code and Section 8855(g) of the Government Code; 17 4854-2938-6509v3/024667-0111
(xvii) A copy of the executed Blanket Issuer Letter of Representations by and between the Authority and DTC relating to the book-entry system; (xviii) The tax and nonarbitrage certificate of the Authority and the City in form and substance to the reasonable satisfaction of Bond Counsel and the Underwriter; (xix) A certificate, dated the date of the Preliminary Official Statement, of the City, as required under Rule 15c2-12;
(xx) A certificate, dated the date of the Preliminary Official Statement, of the Authority, as required under Rule 15c2-12;
(xxi) Certified copies of the JPA Agreement and all amendments thereto and related certificates issued by the Secretary of State of the State; (xxii) A certified copy of the general resolution of the Trustee authorizing the execution and delivery of certain documents by certain officers of the Trustee, which resolution authorizes the executio n and delivery of the Indenture and the authentication and delivery of the Bonds by the Trustee;
(xxiii) A copy of an ALTA or CLTA title insurance policy in an amount equal to the principal amount of the Bonds, insuring the City’s leasehold interest in the Leased Property, subject only to permitted encumbrances or such other encumbrances approved in writing by the Underwriter; and
(xxiv) Such additional legal opinions, certificates, proceedings, instruments or other documents as Bond Counsel or the Underwriter may reasonably request.

Section 9. Changes in Official Statement. After the Closing, neither the Authority nor the City will adopt any amendment of or supplement to the Official Statement to which the Underwriter shall reasonably object in writing. Within 90 days after the Closing or within 25 days following the “end of the underwriting period, ” whichever occurs first, if any event relating to or affecting the Bonds, the Trustee, the City or the Authority shall occur as a result of which it is necessary, in the opinion of the Underwriter, to amend or supplement the Official Statement in order to make the Official Statement not misleading in any material respect in the light of the circumstances existing at the time it is delivered to a purchaser, the Authority will forthwith pr epare and furnish to the Underwriter an amendment or supplement that will amend or supplement the Official Statement so that it will not contain an untrue statement of a material fact or omit to state a material fact necessary in order to make the statemen ts therein, in the light of the circumstances existing at the time the Official Statement is delivered to purchaser, not misleading. The City and the Authority shall cooperate with the Underwriter in the filing by the Underwriter of such amendment or supplement to the Official Statement with the MSRB. The Underwriter acknowledges that the “end of the underwriting period” will be the Closing Date.

Section 10. Expenses. The Authority or the City will pay or cause to be paid the approved expenses incident to the performance of its obligations hereunder and certain expenses relating to the sale of the Bonds, including, but not limited to (a) the cost of the preparation and printing or other reproduction of the Authority Documents and the City Documents (other than this Purchase Agreement); (b) the fees and disbursements of Bond Counsel, Disclosure Counsel, the 18 4854-2938-6509v3/024667-0111
Municipal Advisor and any other experts or other consultants retained by the Authority or the City; (c) the costs and fees of the credit rating agencies; (d) the cost of preparing and delivering the definitive Bonds; (e) the cost of providing immediately available funds on the Closing Date; (f) the cost of the printing or other reproduction of the Preliminary Official Statement and Official Statement and any amendmen t or supplement thereto, including a reasonable number of certified or conformed copies thereof; (g) the Underwriter’s out -of-pocket expenses (included in the expense component of the Underwriter’s discount) incurred by the Underwriter on behalf of the Cit y’s employees which are incidental to implementing this Purchase Agreement ; and (h) the fees for counsel to the Underwriter. The Underwriter will pay the expenses of the preparation of this Purchase Agreement, including CDIAC fees , CUSIP Services Bureau charges, regulatory fees imposed on new securities issuers and any and all other expenses incurred by the Underwriter in connection with the public offering and distribution of the Bonds.

Section 11. Notices. Any notice or other communication to be given to the Underw riter under this Purchase Agreement may be given by delivering the same in writing to Piper Sandler & Co., 3626 Fair Oaks Blvd., Suite 100, Sacramento, CA 95864, Attention: Dennis McGuire. All notices or communications hereunder by any party shall be given and served upon each other party.

Any notice or communication to be given the Authority under this Purchase Agreement may be given by delivering the same in writing to the Tracy Public Financing Authority, c/o City of Tracy, 333 Civic Center Plaza, Tracy, California 95376, Attention: Finance Director . Any notice or communication to be given the City under this Purchase Agreement may be given by delivering the same in writing to the City of Tracy, 333 Civic Center Plaza, Tracy, California 95376, Attention:

Finance Director.

Section 12. Parties in Interest. This Purchase Agreement is made solely for the benefit of the Authority, the City and the Underwriter (including the successors or assigns thereof) and no other person shall acquire or have any right hereunder or by virtue hereof. All representations, warranties and agreements of the Authority and the City in this Purchase Agreement shall remain operative and in full force and effect regardless of any investigation made by or on behalf of the Underwriter and shall survive the delivery of and payment for the Bonds.

Section 13. Severability. In case any one or more of the provisions contained herein shall for any reason be held to be invalid, illegal or unenforce able in any respect, such invalidity, illegality or unenforceability shall not affect any other provision hereof.

Section 14. Counterparts. This Purchase Agreement may be executed by the parties hereto in separate counterparts, each of which when so executed and deli vered shall be an original, but all such counterparts shall together constitute but one and the same instrument.

S-1
4854-2938-6509v3/024667-0111
Section 15. Governing Law. This Purchase Agreement shall be governed by and construed in accordance with the laws of the State.

PIPER SANDLER & CO.

By:

Title: Authorized Officer
Accepted as of the date first stated above:

CITY OF TRACY
By:

Its: Finance Director
Time of Execution: _____ a.m./p.m. Pacific Time

TRACY PUBLIC FINANCING AUTHORITY
By:

Its: Treasurer

Time of Execution: _____ a.m./p.m. Pacific Time

A-1
4854-2938-6509v3/024667-0111

EXHIBIT A
$18,190,000

TRACY PUBLIC FINANCING AUTHORITY
LEASE REVENUE BONDS, SERIES 2022A
(Legacy Fields Phase 1E)

MATURITY SCHEDULE
Maturity
Date
(November 1)
Principal
Amount Interest Rate Yield
Initial
Offering
Price
10% Test
Used
Hold the
Offering
Price Rule
Used

C Priced to first optional redemption date of _____ 1, 20__ at _____.

T Term Bond.

B-1
4854-2938-6509v3/024667-0111

EXHIBIT B
$__________

TRACY PUBLIC FINANCING AUTHORITY
LEASE REVENUE BONDS, SERIES 2022A
(Legacy Fields Phase 1E)

FORM OF ISSUE PRICE CERTIFICATE
The undersigned, on behalf of Piper Sandler & Co. (the “PJC”), hereby certifies as set forth below with respect to the sale and issuance of the above-captioned bonds (the “Bonds”).

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

2. Initial Offering Price of the Hold-the-Offering-Price Maturities. (a) PJC offered the Hold-the-Offering-Price Maturities to the Public for purchase at the respective initial offering prices listed in Schedule A (the “Initial Offering Prices”) on or before the Sale Date. A copy of the pricing wire or equivalent communication for the Bonds is attached to this certificate as Schedule B.
(b) As set forth in the Bond Purchase Agreement, dated _____, 2022, by and among PJC, the Issuer and the City of Tracy, PJC has agreed in writing that: (i) for each Maturity of the Hold-the- Offering-Price Maturities, it would neither offer nor sell any of the Bonds of such Maturity to any person at a price that is higher than the Initial Offering Price for such Maturity during the Holding Period for such Maturity (the “ hold-the-offering-price rule”); and (ii) any selling group agreement shall contain the agreem ent of each dealer who is a member of the selling group, and any retail distribution agreement shall contain the agreement of each broker-dealer who is a party to the retail distribution agreement, to comply with the hold -the-offering-price rule. Pursuant to such agreement, no Underwriter (as defined below) has offered or sold any Maturity of the Hold-the-Offering-Price Maturities at a price that is higher than the respective Initial Offering Price for that Maturity of the Bonds during the Holding Period.

3. Defined Terms.
(a) General Rule Maturities means those Maturities of the Bonds listed in Schedule A hereto as the “General Rule Maturities.”
(b) Hold-the-Offering-Price Maturities means those Maturities of the Bonds listed in Schedule A hereto as the “Hold-the-Offering-Price Maturities.” (c) Holding Period means, with respect to a Hold-the-Offering-Price Maturity, the period starting on the Sale Date and ending on the earlier of (i) the close of the fifth business day after the _____, 2022 (the Sale Date), or (ii) the date on which the Underwriter has sold at least 10% of such Hold-the-Offering-Price Maturity to the Public at prices that are no higher than the Initial Offering Price for such Hold-the-Offering-Price Maturity.

B-2
4854-2938-6509v3/024667-0111
(d) Issuer means the Tracy Public Financing Authority.
(e) Maturity means Bonds with the same credit and payment terms. Bonds with different maturity dates, or Bonds with the same maturity date but different stated interest rates, are treated as separate maturities.
(f) Public means any person (including an individual, t rust, estate, partnership, association, company, or corporation) other than an Underwriter or a related party to an Underwriter.

The term “related party ” for purposes of this certificate generally means any two or more persons who have greater than 50 percent common ownership, directly or indirectly. (g) Sale Date means the first day on which there is a binding contract in writing for the sale of a Maturity of the Bonds. The Sale Date of the Bonds is _____, 2022. (h) Underwriter means: (i) any person that agrees pursuant to a written contract with the Issuer (or with the lead underwriter to form an underwriting syndicate) to participate in the initial sale of the Bonds to the Public; and (ii) any person that agrees pursuant to a written contract directly or indirectly with a person described in clause (i) of this paragraph to participate in the initial sale of the Bonds to the Public (including a member of a selling group or a party to a retail distribution agreement participating in the initial sale of the Bonds to the Public).

The representations set forth in this certificate are limited to factual matters only. Nothing in this certificate represents PJC’s interpretation of any laws, including specifically Sections 103 and 148 of the Internal Revenue Code of 1986, as amended, and the Treasury Regulations thereunder.

The undersigned understands that the foregoing information will be relied upon by the Issuer with respect to certain of the representations set forth in the Tax Certificate and with respect to compliance with the federal income tax rules affecting the Bonds, and by Jones Hall, a Professional Law Corporation, in connection with rendering its opinion that the interest on the Bonds is excluded from gross income for federal income tax purposes, the preparation of the Internal Revenue Service Form 8038-G, and other federal income tax advice that it may give to the Issuer from time to time relating to the Bonds.

PIPER SANDLER & CO.

By:

Name:

Dated: May __, 2022

B-3
4854-2938-6509v3/024667-0111

SCHEDULE A

SALE PRICES OF THE GENERAL RULE MATURITIES AND INITIAL OFFERING

PRICES OF THE HOLD-THE-OFFERING-PRICE MATURITIES
(Attached)

B-4
4854-2938-6509v3/024667-0111

SCHEDULE B

PRICING WIRE OR EQUIVALENT COMMUNICATION

(Attached)

CITY OF TRACY

NOTICE OF PUBLIC HEARING

REGARDING FINANCING FOR THE ACQUISITION AND CONSTRUCTION OF

CERTAIN PUBLIC CAPITAL IMPROVEMENTS

NOTICE IS HEREBY GIVEN THAT, at its regular meeting commencing at 7:00 p.m., or as soon thereafter as the matter can be heard, on April 5, 2022, in the Council Chambers at City Hall, 333 Civic Center Plaza, Tracy, California, the City Council of the City of Tracy (the “City”) will hold a public hearing at which it will hear and consider information concerning the appro val by the City of (i) a lease financing by the City and the Tracy Public Financing Authority (the “Authority”) for certain public capital improvements to be used by the City and the substantial public benefits of such financing by the Authority in accordance with the criteria specified in Section 6586 of the California Government Code and (ii) the adoption of a resolution by the City Council of the City approving the execution and delivery of a property lease to be entered into with the Authority in connection with such lease financing.

The proposed lease financing will, among other things, provide funds for Phase 1E of the Legacy Fields Sports Complex. In connect ion with the lease financing, the City will lease certain real prope rty and improvements to t he Authority, and the Authority will lease such property back to the City.

Those wishing to comment on the proposed lease financing may either appear in person at the public hearing or submit written comments which m ust by received by the City Council prior to the public hearing. Written comments should be sent to the City Clerk, City of Tracy, 333 Civic Center Plaza, Tracy, California 95376.

City Clerk
City of Tracy

PROOF OF PUBLICATION
Stamp
(2015.5 C.C.P.)

STATE OF CALIFORNIA
County of San Joaquin
I am a citizen of the United States and a resident of
the County aforesaid: I am over the age of eighteen
years, and not a part to or interested in the above
entitled matter; I am the principal clerk of the
printer of the Tracy Press, a newspaper of general
circulation, printed and published one time a week on
Friday in the City of Tracy, California, County of San
Joaquin, and which of newspaper has been adjudged
a newspaper of general circulation by the Superior
Court, Department 4, of the County of San Joaquin,
State of California, under the date of June 30, 1952,
Case Number 53686; that the notice, of which the
annexed is a printed copy (set in type not smaller
than nonpareil), has been published in each regular
and entire issue of said newspaper and not in any
supplement thereof on the following dates, to-wit;
all in the year,
I certify (or declare) under penalty of perjury
that the foregoing is true and correct.

Dated at Tracy, California, this
day of

PROOF OF PUBLICATION

PROOF OF PUBLICATION
Signature
March 18
2022
22nd
March 2022
#0132

CITY OF TRACY

NOTICE OF PUBLIC HEARING

REGARDING FINANCING FOR THE ACQUISITION AND CONSTRUCTION OF

CERTAIN PUBLIC CAPITAL IMPROVEMENTS
NOTICE IS HEREBY GIVEN THAT, at its regular meeting commencing at 7:00 p.m., or as soon thereafter as the matter can be heard, on April 5, 2022, in the Council Chambers at City Hall, 333 Civic Center Plaza, Tracy, California, the City Council of the City of Tracy (the “City”) will hold a public hearing at which it will hear and consider information concerning the approval by the City of (i) a lease financing by the City and the Tracy Public Financing Authority (the “Authority”) for certain public capital improvements to be used by the City and the substantial public benefits of such financing by the Authority in accordance with the criteria specified in Section 6586 of the California Government Code and (ii) the adoption of a resolution by the City Council of the City approving the execution and delivery of a property lease to be entered into with the Authority in connection with such lease financing.

The proposed lease financing will, among other things, provide funds for Phase 1E of the Legacy Fields Sports Complex. In connection with the lease financing, the City will lease certain real property and improvements to the Authority, and the Authority will lease such property back to the City.

Those wishing to comment on the proposed lease financing may either appear in per- son at the public hearing or submit written comments which must by received by the City Council prior to the public hearing. Written comments should be sent to the City Clerk, City of Tracy, 333 Civic Center Plaza, Tracy, California 95376.

City Clerk
City of Tracy
Tracy Press: March 18, 2022
Public Notice #0132
City of Tracy
Tracy Legacy LRBs
Notice of Public Hearing
April 5, 2022
AGENDA ITEM 3.F

REQUEST
ADO

PT RESOLUTION AUTHORIZING THE ISSUANCE AND SALE OF SPECIAL TAX

BONDS FOR THE PURPOSE OF FINANCING AUTHORIZED FACILITIES, AND

APPROVING AND AUTHORIZING RELATED DOCUMENTS AND ACTIONS

EXECUTIVE SUMMARY
For the
purpose of financing public facilities and public services for development in the Ellis Specific Plan, the City Council previously acted under the Mello-Roos Community Facilities Act of 1982 (the “Mello-Roos Act”) to establish City of Tracy Community Facilities District No. 2021-1 (Hillview) (the “CFD”).

Staf
f recommends that the City Council adopt the referenced resolution (the “2022 Bond Resolution”) for the purpose of authorizing the issuance of bonds (the “2022 Bonds”) on behalf of the CFD and approving related documents.

DISCUSSION

LOCAL GOALS AND POLICIES
Sect
ion 53312.7(a) of the Mello-Roos Act requires the City to consider and adopt local goals and policies concerning the use of the Mello-Roos Act prior to the initiation of proceedings on or after January 1, 1994 to establish a new community facilities district.

The Cit
y adopted “Amended Local Goals and Policies for Community Facilities Districts (CFDs)” on February 4, 2014, by Resolution No. 2014-019 (“Goals and Policies”).

The Goals
and Policies provide guidance and conditions for the conduct by the City of proceedings for, and the issuance of bonds secured by special taxes levied in, a community facilities district established under the Mello-Roos Act.

CFD FORMATION PROCESS AND APPROVAL OF BONDS
Under the Mello-Roos Act, and pursuant to Resolution No. 2021-159, adopted by the City Council on November 2, 2021 (the “Resolution of Formation”), the City previously took action to establish the CFD; approve the public facilities and public services that may be financed by the CFD; approve an Acquisition Agreement, which details the terms under which the City will use special tax revenues and bond proceeds generated by the CFD to acquire public facilities constructed by the master developer of property in the CFD; and approve the rate and method of apportionment of the special tax for the CFD and an appropriations limit for the CFD.

Purs
uant to Resolution No. 2021-160, adopted by the Council on November 2, 2021, the Council declared the necessity to incur bonded indebtedness in the amount of $12,000,000 and other debt for the CFD.

Agenda Item 3.F
April 5, 2022

Page 2 ends

PROPOSED 2022 BONDS
Staff recommends that the City Council adopt the 2022 Bond Resolution for the following purposes:
(i) approve
the issuance of the 2022 Bonds in a principal amount not to exceed $10,700,000,
(ii) approv
e the sale of the 2022 Bonds to Piper Sandler & Co. (the “Underwriter”) (iii) approv
e the documents related to the 2022 Bonds, and
(iv) authorize staff to take all actions necessary related to issuance of the 2022 Bonds.

TERMS OF THE 2022 BONDS
Pursuant to the Resolution, the true interest cost of the 2022 Bonds cannot exceed

6.00% and the principal amount of the 2022 Bonds cannot exceed $10,700,000.

Government Code Section 5852.1 requires the City to obtain and disclose a good faith estimate of certain information about the 2022 Bonds, including the true interest cost, the financing costs, the use of proceeds and the total payment amount. This information is included in Appendix A of the 2022 Bond Resolution. Based upon current market conditions, the 2022 Bonds are estimated to be issued in the amount of $7,790,000 (excluding net original issue premium of an additional $278,000) and carry a true interest cost of approximately 3.84%.

The Goals
and Policies require a minimum value-to-lien ratio for special tax financings of 3:1 (the value-to-lien calculation compares the value of the property to the proposed principal amount of the 2022 Bonds and bonds issued by overlapping community facilities districts and assessment districts).

The curr
ent draft of the appraisal (the “Appraisal”) prepared by Integra Realty Resources (the “Appraiser”) was prepared consistent with the Goals and Policies.

The Apprai
sal reports that the taxable property in the CFD has a total value of $32,100,000, resulting in an estimated value to lien ratio of approximately 4.12:1 based on the preliminary estimate of the principal amount of the 2022 Bonds of $7,790,000 (there are no overlapping special tax or assessment bonds).

The 2022
Bonds are a limited obligation of the City, payable only from special taxes levied in the CFD and moneys in the funds and accounts established under the Fiscal Agent Agreement described below.

DOCUMENTS RELATED TO THE 2022 BONDS
The City Council is being asked to approve each of the following:

Agenda Item 3.F
April 5, 2022

Page 3 ends

• Preliminary Official Statement. The Official Statement is the primary disclosure document for investors in the 2022 Bonds. A Preliminary Official Statement will be circulated to potential investors prior to the pricing of the 2022 Bonds. After the 2022 Bonds have been priced, a Final Official Statement will be circulated to investors; the Final Official Statement should be identical to the Preliminary Official Statement except for the addition of pricing information (principal amount, interest rates, redemption terms).

The Prel
iminary Official Statement describes the special taxes to be levied in the CFD, each of the parcels to be taxed, and, based on information provided by the developers of property in the CFD, the development plans for the parcels within the CFD. The Preliminary Official Statement will also include the Appraisal of the taxable parcels in the CFD.

The Prel
iminary Official Statement is prepared by Jones Hall, serving the City as Bond Counsel and Disclosure Counsel for this transaction, with the assistance of the remainder of the financing team, including City staff; the property owners in the CFD; CSG Advisors Incorporated, the City’s municipal advisor (“Municipal Advisor”); the Underwriter; and Goodwin Consulting, the City’s special tax consultant (“Special Tax Consultant”).

The Prel
iminary Official Statement has been reviewed and approved for transmittal to the City Council by the City’s financing team. The distribution of the Preliminary Official Statement by the City is subject to federal securities laws, including the Securities Act of 1933 and the Securities Exchange Act of 1934.

These laws require the Preliminary Official Statement to include all facts that would be material to an investor in the 2022 Bonds. Material information is information that there is a substantial likelihood would have actual significance in the deliberations of the reasonable investor when deciding whether to buy or sell the bonds. If the City Council concludes that the Preliminary Official Statement includes all facts that would be material to an investor in the 2022 Bonds, it must adopt a resolution that authorizes staff to execute a certificate to the effect that the Preliminary Official Statement has been “deemed final.” The Secur
ities and Exchange Commission (the “SEC”), the agency with regulatory authority over the City’s compliance with the federal securities laws, has issued guidance as to the duties of the City Council with respect to its approval of the Preliminary Official Statement. In its “Report of Investigation in the Matter of County of Orange, California as it Relates to the Conduct of the Members of the Board of Supervisors” (Release No. 36761 / January 24, 1996) (the “Release”), the SEC stated that, if a member of the City Council has knowledge of any facts or circumstances that an investor would want to know about prior to investing in the 2022 Bonds, whether relating to their repayment, tax-exempt status, undisclosed conflicts of interest with interested parties, or otherwise, he or she should endeavor to discover whether such facts are adequately disclosed in the Preliminary Official Statement. In the Release, the SEC stated that the steps that a member of the City Council could take include becoming familiar with the Preliminary Official Statement and questioning staff and consultants about the disclosure of such facts.

Agenda Item 3.F
April 5, 2022

Page 4 ends

The key sections of the Preliminary Official Statement are summarized below:
 “THE
2022 BONDS”: This section summarizes the key terms of the 2022 Bonds, including payment dates and redemption provisions.  “SECURITY FOR THE 2022 BONDS”: This section summarizes key security terms, including the City’s pledge of special tax revenues, its covenant to levy special taxes according to the CFD Rate and Method, and its covenant to foreclose on parcels that are delinquent in the payment of special taxes. As described above, the 2022 Bonds are a limited obligation of the City, payable only from special taxes levied in the CFD and moneys in the funds and accounts established under the Fiscal Agent Agreement.
 “THE DISTRICT”: This section summarizes certain features of the CFD, including the appraised value of taxable property, overlapping taxes, assessments and debt and anticipated debt service coverage provided by maximum special taxes that may be levied under the RMA.  “OWNERSHIP AND DEVELOPMENT OF THE DISTRICT”: This section includes information provided by the property owners in the CFD, and describes the proposed development in the CFD and its current status.  “BOND OWNERS’ RISKS”: This section highlights the primary risks associated with the 2022 Bonds, including failure to complete the proposed development, natural disasters and failure of property owners to pay their special taxes.
 “LEGAL MATTERS - Tax Exemption”: This section describes the tax- exempt nature of interest on the 2022 Bonds.

As
described in the Preliminary Official Statement, Lennar Homes of California, LLC, a California limited liability company (“Lennar Homes”) is the developer of approximately 45.1 acres of property that is being subdivided and developed as 214 single-family detached homes in a project known as “Hillview”. The CFD is located in the Tracy Hills Specific Plan Area, east of Corral Hollow Road in the vicinity of Tracy Hills Drive.

Lennar Ho
mes is utilizing a land bank, which owns most of the land in the CFD and Lennar Homes has an option to acquire the lots within the Project over time pursuant to a takedown schedule.
• Continuing Disclosure Certificate. Under SEC Rule 15c2-12, the underwriter of the 2022 Bonds may only purchase the 2022 Bonds if it has determined that the City is obligated to provide continuing disclosure, including annual updates of the financial and operating data included in the Official Statement and notices of certain specified events.
• Fiscal Agent Agreement. This document governs the 2022 Bonds and the use of special taxes from the CFD to pay debt service on the 2022 Bonds. The special taxes will be levied on the regular County tax roll and collected by the County from each taxable parcel in the CFD. The County will remit these special taxes to the City. The City will remit them to the fiscal agent specified therein (“Fiscal Agent”) as provided for in the Fiscal Agent Agreement. The Fiscal Agent will use Agenda Item 3.F
April 5, 2022

Page 5 ends

the revenues to (1) pay administrative costs of the CFD and (2) pay principal of and interest on the 2022 Bonds to the bond owners.
• Bond Purchase Agreement. At the time the 2022 Bonds are sold, the City will enter into a Bond Purchase Agreement with the Underwriter, who will agree to underwrite the 2022 Bonds subject to satisfaction of the conditions described in the Bond Purchase Agreement. The resolution provides the Underwriter’s Discount on the purchase of the 2022 Bonds may not exceed 1.50% of the par amount of the 2022 Bonds.

STRATEGIC PLAN
This agenda item supports Governance Strategic Goal 2: Ensure Short and Long-term fiscal health and Goal 3: Increase Public Awareness around City finances and other civic matters.

FISCAL IMPACT
The fees and expenses of the financing team, including Bond Counsel, Disclosure Counsel, Underwriter, Municipal Advisor, Special Tax Consultant and Appraiser are paid from proceeds of the 2022 Bonds or paid through an existing Cost Recovery Agreement with the developer.

RECOMMENDATION
That Counc
il adopt the 2022 Bond Resolution.

Prepared by: Karin Schnaider, Finance Director
Christopher Lynch, Jones Hall
Scott Smith, CSG Advisors Incorporated
Reviewed by: Midori Lichtwardt, Assistant City Manager Approv
ed by: Michael Rogers, City Manager

ATTACHMENTS
A: Prel
iminary Official Statement (including Continuing Disclosure Certificate) B: Fiscal Agent Agreement
C: Bond Purchase Agreement
PRELIMINARY OFFICIAL STATEMENT DATED ______________, 2022 NEW ISSUE – BOOK-ENTRY ONLY NOT RATED
In the opinion of Jones Hall, A Professional Law Corporation, San Francisco, California, Bond Counsel, subject, however to certain qualifications described herein, under existing law, the interest on the 2022 Bonds is excluded from gross income for federal income tax purposes and such interest is not an item of tax preference for purposes of the federal alternative minimum tax. In the further opinion of Bond Counsel, such interest is exempt from California personal income taxes. See “LEGAL MATTERS – Tax Exemption.” $____________
__*

CITY OF TRACY
COMMUNITY FACILITIES DISTRICT NO. 2021-1 (HILLVIEW)
SPECIAL TAX BONDS, SERIES 2022
Dated:

Date of Delivery Due: September 1, as shown on inside cover.

Auth
ority for Issuance. The bonds captioned above (the “2022 Bonds”) are being issued by the City of Tracy (the “City”) for and on behalf of the City of Tracy Community Facilities District No. 2021-1 (Hillview) (the “District”) under the Mello-Roos Community Facilities Act of 1982, as amended (the “Act”), the Resolution of Issuance (as defined herein), and a Fiscal Agent Agreement dated as of ____________ 1, 2022 (the “Fiscal Agent Agreement”), by and between the City and U.S. Bank Trust Company, National Association, as fiscal agent (the “Fiscal Agent”).

See “THE 2022 BONDS – Authority for Issuance.”
Security and Sources of Payment. The 2022 Bonds are payable from proceeds of Special Tax Revenues (as defined herein) levied on property within the District according to the rate and method of apportionment of special tax approved by the City Council of the City (the “City Council”), acting as legislative body of the District, and the eligible landowner voters in the District. The 2022 Bonds are secured by a first pledge of the Special Tax Revenues (as defined in the Fiscal Agent Agreement) and the moneys on deposit in certain funds held by the Fiscal Agent under the Fiscal Agent Agreement, on a parity with bonds that may be issued in the future, subject to the conditions set forth in the Fiscal Agent Agreement. See “SECURITY FOR THE 2022 BONDS.” The 2022 Bonds and any Parity Bonds (as defined herein) are referred to herein as the “Bonds.”
Use of Proceeds. The 2022 Bonds are being issued to (i) finance the acquisition and construction of certain authorized improvements, (ii) fund a debt service reserve fund for the 2022 Bonds, (iii) fund capitalized interest through September 1, 2022, and (iv) pay the costs of issuing the 2022 Bonds. See “FINANCING PLAN.”
Bond Ter
ms. Interest on the 2022 Bonds is payable on September 1, 2022 , and semiannually thereafter on each March 1 and September 1. The 2022 Bonds will be issued in denominations of $5,000 or integral multiples of $5,000. The 2022 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 2022 Bonds. See “THE 2022 BONDS – General Bond Terms” and “APPENDIX D – DTC and the Book-Entry Only System.” Redem
ption*. The 2022 Bonds are subject to optional redemption, mandatory sinking fund redemption and special redemption from prepaid Special Taxes. See “THE 2022 BONDS – Redemption.” The 2022 Bon
ds are not general obligations of the City, but are limited obligations, payable solely from the Special Tax Revenues and the funds pledged therefor under the Fiscal Agent Agreement. Neither the faith and credit nor the taxing power of the City (except to the limited extent set forth in the Fiscal Agent Agreement) or of the State of California (the “State”) or any political subdivision thereof is pledged to the payment of the 2022 Bonds.

MATURITY SCHEDULE
(see inside cover)
This cover page contains certain information for quick reference only. It is not a summary of the issue. Potential investors must read the entire Official Statement to obtain information essential to the making of an informed investment decision. Investment in the 2022 Bonds involves risks which may not be appropriate for some investors. See “BOND OWNERS' RISKS” for a discussion of special risk factors that should be considered in evaluating the investment quality of the 2022 Bonds.

The 2022 Bond
s are offered when, as and if issued 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, has served as disclosure counsel to the City. Stradling Yocca Carlson & Rauth, A Professional Corporation, Newport Beach, California, is serving as counsel to the Underwriter and Holland & Knight LLP, San Francisco, California, is serving as counsel to the Developer.

It is anticipated that the 2022 Bonds, in book -entry form, will be available for delivery through the facilities of DTC on or about __________, 2022.
[Piper Sandler Logo]
The date of this Official Statement is: ________________, 2022. * Preliminary; subject to change.

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

ATTACHMENT A
MATUR
ITY SCHEDULE*
$ _______________ Ser
ial 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. __
* Preliminary; subject to change.
† CUSIP® is a registered trademark of the American Bankers Association. CUSIP Global Services (CGS) is managed on behalf of the American Bankers Association by FactSet Research Systems Inc. Copyright(c) 2022 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. Neither the City nor the Underwriter or their agents or counsel assume responsibility for the accuracy of such numbers.

CITY

OF TRACY
CITY

COUNCIL
Nancy
Young, Mayor
Veronica Vargas, Mayor Pro Tem
Dan Arriola, Council Member
Mateo Bedolla, Council Member
Eleassia Davis, Council Member
CIT

Y STAFF
Micha
el Rogers, City Manager
Karin Schnaider, Finance Director
Adrianne Richardson, City Clerk
Nancy Ashjian, City Attorney
___________________________________
PROF

ESSIONAL SERVICES

BOND COUN
SEL and DISCLOSURE COUNSEL
Jones
Hall, A Professional Law Corporation
San Francisco, California
MUNICI

PAL ADVISOR
CSG
Advisors Incorporated
San Francisco, California
SPE

CIAL TAX CONSULTANT
Goodwi
n Consulting Group, Inc.

Sacramento, California
APPRAI
SER
Integr
a Realty Resources
San Francisco, California
MARKE

T ABSORPTION CONSULTANT
Empi
re Economics, Inc.

San Juan Capistrano, California
FIS

CAL AGENT
U.S.

Bank Trust Company, National Association
San Francisco, California
[INS
ERT REGIONAL MAP]
[INS
ERT LOCATION MAP]

GENERAL INFORMATION ABOUT THIS OFFICIAL STATEMENT
No O
ffering May Be Made Except by this Official Statement. No dealer, broker, salesperson or other person has been authorized to give any information or to make any representations with respect to the 2022 Bonds other than as contained in this Official Statement, and if given or made, such other information or representation must not be relied upon as having been authorized.

No U
nlawful Offers or Solicitations. This Official Statement does not constitute an offer to sell or the solicitation of an offer to buy in any state in which such offer or solicitation is not authorized or in which the person making such offer or solicitation is not qualified to do so or to any person to whom it is unlawful to make such offer or solicitation.

Eff
ective Date. This Official Statement speaks only as of its date, and the information and expressions of opinion contained in this Official Statement are subject to change without notice. Neither the delivery of this Official Statement nor any sale of the 2022 Bonds will, under any circumstances, create any implication that there has been no change in the affairs of the City, the District, any other parties described in this Official Statement, or in the condition of property within the District since the date of this Official Statement.

Use
of this Official Statement. This Official Statement is submitted in connection with the sale of the 2022 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 a contract with the purchasers of the 2022 Bonds.

Prep
aration of this Official Statement. The information contained in this Official Statement has been obtained from sources that are believed to be reliable, but this information is not guaranteed as to accuracy or completeness.

The U
nderwriter has provided the following sentence for inclusion in this Official Statement: The Underwriter has reviewed the information in this Official Statement in accordance with, and as 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.

Docu
ment References and Summaries. All references to and summaries of the Fiscal Agent Agreement or other documents contained in this Official Statement are subject to the provisions of those documents and do not purport to be complete statements of those documents.

Sta
bilization of and Changes to Offering Prices. The Underwriter may overallot or take other steps that stabilize or maintain the market price s of the 2022 Bonds at level s above those that might otherwise prevail in the open market. If commenced, the Underwriter may discontinue such market stabilization at any time. The Underwriter may offer and sell the 2022 Bonds to certain securities dealers, dealer banks and banks acting as agent at prices lower than the public offering prices stated on the inside cover page of this Official Statement, and those public offering prices may be changed from time to time by the Underwriter.

Bon
ds are Exempt from Securities Laws Registration. The issuance and sale of the 2022 Bonds have not been registered under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended, in reliance upon exemptions for the issuance and sale of municipal securities provided under Section 3(a)(2) of the Securities Act of 1933 and Section 3(a)(12) of the Securities Exchange Act of 1934.

Esti
mates and Projections. Certain statements included or incorporated by reference in this Official Statement constitute “forward-looking statements” within the meaning of the United States Private Securities Litigation Reform Act of 1995, Section 21E of the United States Securities Exchange Act of 1934, as amended, and Section 27A of the United States Securities Act of 1933, as amended. Such statements are generally identifiable by the terminology used such as “plan,” “expect,” “estimate,” “budget” or other similar words.

The
achievement of certain results or other expectations contained in such forward-looking statements involve known and unknown risks , uncertainties and other factors which may cause actual results, performance or achievements described to be materially different from any future results, performance or achievements expressed or implied by such forward -looking statements. The District does not plan to issue any updates or revisions to those forward-looking statements if or when its expectations, or events, conditions or circumstances on which such statements are based occur.

The Cit
y maintains an Internet website, but the information on the website is not incorporated in this Official Statement. i

TABLE OF CONTENTS
Page Pa ge
INTRODUCTION ............................................... 1 FINANCING PLAN ............................................. 4 Authorized Facilities ....................................... 4 Sources and Uses of Funds .......................... 4
THE 2022 BONDS ............................................. 5 Authority for Issuance .................................... 5 General Bond Terms ..................................... 5 Redemption* .................................................. 6 Registration, Transfer and Exchange ............ 8
DEBT SERVICE SCHEDULE .......................... 10
Special Tax Revenues and Projected Debt
Service Coverage .................................... 10 SECURITY FOR THE 2022 BONDS ............... 11
General ........................................................ 11 Limited Obligation ........................................ 11 Special Taxes .............................................. 12 Rate and Method ......................................... 12 Covenant to Foreclose ................................. 16 Special Tax Fund ......................................... 18 Bond Fund ................................................... 19 2022 Reserve Fund ..................................... 20 Investment of Moneys in Funds ................... 22
Issuance of Future Parity Bonds for
Refunding Only ........................................ 22 Subordinate Bonds ...................................... 22 THE DISTRICT ................................................ 22 Formation and Background ......................... 22
Description and Location ............................. 23 Authorized Facilities ..................................... 25 Market Absorption Study ............................. 25 Environmental Matters ................................. 26 Value of Property in the District ................... 27 Value-to-Lien Ratios .................................... 29 Direct and Overlapping Governmental
Obligations ............................................... 30 Estimated Tax Burden on Single-Family
Homes ..................................................... 32 Special Tax Collection and Delinquency
Rates ....................................................... 33 Potential Consequences of Special Tax
Delinquencies .......................................... 33

OWNERSHIP AND DEVELOPMENT OF THE
DISTRICT .................................................... 33 Lennar Homes ............................................. 34 Property Ownership in the District ............... 35
Status of Infrastructure for the District ......... 39
Growth Management Ordinance .................. 40
The Financing Plan in the District ................ 41
COVID-19 Impact ......................................... 42 BOND OWNERS' RISKS ................................. 42 Limited Obligation of the City to Pay Debt
Service ..................................................... 42 Levy and Collection of the Special Tax ........ 42
Concentration of Ownership ........................ 44
Potential Early Redemption of Bonds from
Prepayments ............................................ 44 Property Tax Delinquencies ......................... 44 Risks Related to Homeowners with High
Loan to Value Ratios ............................... 45 Payment of Special Tax is Not a Personal
Obligation of the Property Owners .......... 45
Appraised Values ......................................... 45 Property Values ........................................... 46 Other Possible Claims Upon the Value of
Taxable Property ..................................... 47 Exempt Properties ....................................... 48 FDIC/Federal Government Interests in
Properties................................................. 48 Depletion of 2022 Reserve Fund ................. 50
Bankruptcy Delays ....................................... 50 Cyber Security ............................................. 51 Disclosure to Future Purchasers ................. 51
No Acceleration Provisions .......................... 51 Loss of Tax Exemption ................................ 51 IRS Audit of Tax-Exempt Bond Issues ........ 52
Impact of Legislative Proposals,
Clarifications of the Tax Code and Court
Decisions on Tax Exemption ................... 52
Voter Initiatives ............................................ 52 Public Health Emergencies .......................... 53 Secondary Market for Bonds ....................... 53
LEGAL MATTERS ........................................... 54 Legal Opinions ............................................. 54 Tax Exemption ............................................. 54 Litigation ....................................................... 55 CONTINUING DISCLOSURE .......................... 56
NO RATING ..................................................... 57 UNDERWRITING ............................................. 57 MUNICIPAL ADVISOR .................................... 57 PROFESSIONAL FEES .................................. 58 EXECUTION .................................................... 59 ii
APPENDIX A – General Information About the City of Tracy and San Joaquin County APPENDIX B – Rate and Method of Apportionment for City of Tracy Community Facilities District No. 2021-1 (Hillview)
APPENDIX C – Summary of Certain Provisions of the Fiscal Agent Agreement APPENDIX D – DTC and the Book-Entry Only System
APPENDIX E – Form of Issuer Continuing Disclosure Certificate APPENDIX F – Form of Lennar Homes Continuing Disclosure Certificate APPENDIX G – Form of Opinion of Bond Counsel
APPENDIX H – Appraisal Report
APPENDIX I – Market Absorption Study

-1-

_____________________

OFFICIAL STATEMENT
_____________________

$______________*

CITY OF TRACY
COMMUNITY FACILITIES DISTRICT NO. 2021-1 (HILLVIEW)
SPECIAL TAX BONDS, SERIES 2022

INTRODUCTION

This Official Statement, including the cover page, inside cover and attached appendices, is provided to furnish information regarding the bonds captioned above (the “2022 Bonds”) to be issued by the City of Tracy (the “City”) on behalf of the City of Tracy Community Facilities District No. 2021-1 (Hillview) (the “District”).

This introduction is not a summary of this Official Statement. It is only a brief description of and guide to, and is qualified by, more complete and detailed information contained in the entire Official Statement, including the cover page, the inside cover and attached appendices, and the documents summarized or described in this Official Statement. A full review should be made of the entire Official Statement. The offering of the 2022 Bonds to potential investors is made only by means of the entire Official Statement. Capitalized terms used but not defined in this Official Statement have the definitions given in the Fiscal Agent Agreement (as defined below).

The District. The District is located in the southwestern part of the City. The District was formed and established by the City Council of the City (the “ City Council”), as legislative body of the District, under the Mello-Roos Community Facilities Act of 1982, as amended (the “Act”), pursuant to a resolution adopted by the City Council following a public hearing, and the landowners of the property included in the District, by unanimous approval, approved the formation of the District, authorized the City to incur bonded indebtedness with res pect to the District, and approved the levy of special taxes within the District. See “THE DISTRICT – Formation and Background.”

Authority for Issuance of the 2022 Bonds. The 2022 Bonds are issued under the Act, a resolution adopted by the City Council on ___________, 2022 (the “Resolution of Issuance”), and a Fiscal Agent Agreement, dated as of ____________ 1, 2022 (the “Fiscal Agent Agreement”), by and between the City and U.S. Bank Trust Company, National Association, as fiscal agent (the “ Fiscal Agent”). The City Council, as legislative body of the District, has authorized the issuance of the 2022 Bonds in an aggregate principal amount not to exceed $10,700,000. See “THE 2022 BONDS – Authority for Issuance.”

Purpose of the 2022 Bonds. Proceeds of the 2022 Bonds will be used primarily to finance the acquisition and construction of certain authorized improvements. Proceeds of the 2022 Bonds will also fund a debt service reserve fund for the 2022 Bonds, to fund capitalized interest on the 2022 Bonds through September 1, 2022, and to pay the costs of issuing the 2022 Bonds. See “FINANCING PLAN.”

* Preliminary; subject to change.

-2-
Redemption of Bonds before Maturity.* The 2022 Bonds are subject to optional redemption, mandatory sinking fund redemption and special redemption from prepaid Special Taxes (as defined below). See “THE 2022 BONDS – Redemption.”

Security and Sources of Payment for the 2022 Bonds. The City Council annually levies special taxes on the property in the District (the “Special Taxes”) in accordance with the Rate and Method of Apportionment for the District (the “Rate and Method”). As used in this Official Statement, Special Taxes refers only to the Facilities Special Tax levied under the Rate and Method. See “SECURITY FOR THE 2022 BONDS – Rate and Method.” The 2022 Bonds are secured by and payable from a first pledge of the net proceeds of the Special Taxes (as more particularly defined in the Fiscal Agent Agreement, the “Special Tax Revenues”), on a parity with any bonds that may be issued in the future, subject to the conditions set forth in the Fiscal Agent Agreement. The 2022 Bonds will be additionally secured by certain funds and accounts established and held under the Fiscal Agent Agreement. See “SECURITY FOR THE 2022 BONDS.”

Debt Service Reserve Fund. In order to further secure the payment of principal of and interest on the 2022 Bonds (and any series of Related Parity Bonds), certain proceeds of the 2022 Bonds will be deposited into the 2022 Reserve Fund in an amount equal to the 2022 Reserve Requirement (as defined herein). See “FINANCING PLAN” and “SECURITY FOR THE 2022 BONDS – 2022 Reserve Fund.”

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 2022 BONDS – Covenant to Foreclose.”

Property Ownership and Development Status. The property in the District (herein, the “Property”) consists of approximately 45.34 acres being developed into 214 single family homes. The Developer has pulled all 214 building permits and home construction is underway. For additional information about the current development status and proposed development plans for the Property in the District, see “OWNERSHIP AND DEVELOPMENT OF THE DISTRICT.”

The land in the District is part of the larger Tracy Hills Specific Plan, which encompasses approximately 2,732 gross acres, with 1,811 developable acres, and various land uses, including residential estates, low density residential, medium density residential , high density residential, mixed- use business park, general highway commercial, light industrial and conservation corridors. Phase 1A of Tracy Hills, of which the District is not a part, includes 1,203 residential units, of which 973 had been sold and 808 sales closed to homeowners as of February 27, 2022.

Appraised Value of Property in the District. An appraisal of certain property within the District, dated March 9 , 2022 (the “ Appraisal”), was prepared by Integra Realty Resources , San Francisco, California (the “Appraiser”) in connection with issuance of the 2022 Bonds. The Appraisal has a date of value of February 1, 2022 and appraised property as of that date consisted of lots under construction.

The purpose of the Appraisal was to estimate the market value of the fee simple estate, subject to lien of the Special Taxes and overlapping liens, for all the taxable property within the District as of a February 1, 2022 date of value. Subject to the assumptions contained in the Appraisal, the Appraiser estimated that the taxable property within the District, subject to the lien of the Special Taxes and overlapping liens, had an estimated appraised value of $ 32,100,000. See “THE DIS TRICT – Value of Property in the District” for further information on the Appraisal. A complete copy of the Appraisal is included in this Official Statement as APPENDIX H.

* Preliminary; subject to change.

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Estimated Value-to-Lien Ratios in the District . Based on the appraised value of the taxable property within the District of $32,100,000 and an estimated par amount of 2022 Bonds of $7,790,000*, the overall value-to-lien ratio of the taxable property within the District is approximately 4.12* to 1, not including overlapping general obligation bond indebtedness . See “THE DISTRICT – Direct and Overlapping Governmental Obligations.” This is an overall estimate, however, and the value-to-lien ratios of individual parcels varies widely from this ratio.

Risk Factors Associated with Purchasing the 2022 Bonds. Investment in the 2022 Bonds involves risks that may not be appropriate for some investors. See “BOND OWNERS' RISKS” 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 2022 Bonds.

* Preliminary; subject to change.

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FINANCING PLAN

Authorized Facilities

The net proceeds of the 2022 Bonds will be used to construct and/or acquire various facilities authorized to be financed by the District. For a complete list of the authorized facili ties, see “THE DISTRICT – Authorized Facilities.”

Sources and Uses of Funds

The estimated proceeds from the sale of the 2022 Bonds will be used as follows:

SOURCES
Principal Amount of 2022 Bonds $
Plus/Less: Net Original Issue Premium/Discount
Total Sources $

USES
Deposit into Improvement Fund $
Deposit into 2022 Reserve Fund(1)
Deposit into 2022 Capitalized Interest Account(2)
Costs of Issuance(3)
Total Uses $

(1) Equal to the 2022 Reserve Requirement with respect to the 2022 Bonds as of their date of delivery.
(2) Represents capitalized interest on the 2022 Bonds through September 1, 2022. (3) Includes, among other things, the fees and expenses of Bond Counsel and Disclosure Counsel, printing the Preliminary and Final Official Statements, the Fiscal Agent, the Municipal Advisor, and the Special Tax Consultant, and Underwriter’s discount.

-5-
THE 2022 BONDS

This section generally describes the terms of the 2022 Bonds contained in the Fiscal Agent Agreement, which is summarized in more detail in APPENDIX C. Capitalized terms used but not defined in this section are defined in APPENDIX C.

Authority for Issuance

The 2022 Bonds are issued under the Act, the Resolution of Issuance and the Fiscal Agent Agreement. Under the Resolution of Issuance, the 2022 Bonds may be issued in a maximum principal amount of $10,700,000.

General Bond Terms

Dated Date, Maturity and Authorized Denominations. The 2022 Bonds will be dated their date of delivery (the “Closing Date”) and will mature in the amounts and on the dates set forth on the inside cover page of this Official Statement. The 2022 Bonds will be issued in fully registered form in denominations of $5,000 each or any integral multiple of $5,000 in excess thereof.

Calculation of Interest. Interest will be calculated on the basis of a 360-day year composed of twelve 30-day months. The 2022 Bonds will bear interest at the annual rates set forth on the inside cover page of this Official Statement, payable semiannually on each March 1 and September 1, commencing September 1, 2022 (each, an “Interest Payment Date”).

Each 2022 Bond will bear interest from the Interest Payment Date next preceding its date of authentication 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 (as defined below) 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 Closing Date;

provided, however, that if at the time of authentication of a 2022 Bond, interest is in default thereon, such 2022 Bond will bear interest from the Interest Payment Date to which interest has previously been paid or made available for payment thereon.

“Record Date” means the 15th day of the calendar month next preceding the applicable Interest Payment Date, whether or not such day is a Business Day.

DTC and Book-Entry Only System. DTC will act as securities depository for the 2022 Bonds .

The 2022 Bonds will be issued as fully-registered securities registered initially in the name of Cede & Co. (DTC’s partnership nominee). See APPENDIX D – “DTC AND THE BOOK-ENTRY ONLY SYSTEM.”

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Payments of Interest and Principal. For so long as DTC is used as depository for the 2022 Bonds, principal of, premium, if any, and interest payments on the 2022 Bonds will be made solely to DTC or its nominee, Cede & Co., as registered owner of the 2022 Bonds, for distribution to the beneficial owners of the 2022 Bonds in accordance with the procedures adopted by DTC.

Interest on the 2022 Bonds (including the final interest payment upon maturity or earlier redemption), is payable on the applicable Interest Payment Date by check of the Fiscal Agent mailed 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 of any Owner of $1,000,000 or more in aggregate principal amount of 2022 Bonds delivered to the Fiscal Agent prior to the applicable Record Date, which will continue in effect until revoked in writing, or until such 2022 Bonds are transferred to a new Owner.

The principal of the 2022 Bonds and any premium on the 2022 Bonds are payable in lawful money of the United States of America upon surrender of the 2022 Bonds at the Principal Office of the Fiscal Agent.

Redemption*

Optional Redemption from any Source other than Prepayments. The 2022 Bonds maturing on or after September 1, 20___, are subject to optional redemption as directed by the City, from sources of funds other than prepayments of Special Taxes, prior to their stated maturity on any date on or after September 1, 20___, as a whole or in part, at a redemption price (expressed as a percentage of the principal amount of the 2022 Bonds to be redeemed), as set forth below, together with accrued interest thereon to the date fixed for redemption:

Redemption Dates
Redemption
Price
September 1, ____ through August 31, ____ ___%
September 1, ____ through August 31, ____ ___
September 1, ____ through August 31, ____ ___
September 1, ____ and any date thereafter ___

Mandatory Sinking Fund Redemption. The 2022 Bonds maturing on September 1, 20__ (the “20__ Term Bonds”), are subject to mandatory redemption in part by lot, from sinking fund payments made by the City from the Bond Fund, at a redemption price equal to the principal amount thereof to be redeemed, without premium, in the aggregate respective principal amounts all as set forth in the following table:

Sinking Fund
Redemption Date
(September 1)

Sinking Payments
$

(maturity)

The 2022 Bonds maturing on September 1, 20__ (the “20__ Term Bonds” and, together with the 20__ Term Bonds, the “Term Bonds”), are subject to mandatory redemption in part by lot, from sinking fund payments made by the City from the Bond Fund, at a redemption price equal to the principal amount thereof to be redeemed, without premium, in the aggregate respective principal amounts all as set forth in the following table:

* Preliminary; subject to change.

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Sinking Fund
Redemption Date
(September 1)

Sinking Payments
$

(maturity)

However, if some but not all of the Term Bonds of a given maturity have been redeemed through optional redemption or mandatory prepayment redemption, the total amount of all future Sinking Fund Payments relating to such maturity will be reduced by the aggregate principal amount of Term Bonds of such maturity so redeemed, to be allocated among such Sinking Fund Payments on a pro rata basis in integral multiples of $5,000 as determined by the City, notice of which will be given by the City to the Fiscal Agent.

Redemption from Special Tax Prepayments. Special Tax Prepayments and any corresponding transfers from the 2022 Reserve Fund under the Fiscal Agent Agreement will be used to redeem 2022 Bonds on the next Interest Payment Date for which notice of redemption can timely be given under the Fiscal Agent Agreement, among maturities of outstanding bonds so as to maintain substantially the same debt service profile for the Bonds as in effect prior to such redemption and by lot within a maturity, at a redemption price (expressed as a percentage of the principal amount of the 2022 Bonds to be redeemed), as set forth below, together with accrued interest to the date fixed for redemption:

Redemption Dates Redemption Price
Any Interest Payment Date on or before March 1, ____ ___% September 1, ____ and March 1, ____ ___%
September 1, ____ and March 1, ____ ___%
September 1, ____ and any Interest Payment Date thereafter ___%

See “BOND OWNERS’ RISKS – Potential Early Redemption of Bonds from Prepayments” for a discussion of the potential for the 2022 Bonds to be priced with original issue premium and then be redeemed from Special Tax prepayments prior to maturity or the optional redemption date.

Purchase in Lieu of Redemption. In lieu of redemption, moneys in the Bond Fund may be used and withdrawn by the Fiscal Agent for purchase of Outstanding 2022 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 2022 Bonds be purchased at a price in excess of the principal amount thereof, plus interest accrued to the date of purchase and any premium which would otherwise be due if such 2022 Bonds were to be redeemed in accordance with the Fiscal Agent Agreement.

Notice of Redemption. 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 Original Purchaser, the Securities Depositories, and to the respective registered Owners of any 2022 Bonds designated for redemption, at their addresses appearing on the 2022 Bond registration books in the Principal Office of the Fiscal Agent; but such mailing will not be 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 2022 Bonds. In addition, the Fiscal Agent will file each notice of redemption with the MSRB through its EMMA system.

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However, while the 2022 Bonds are subject to DTC’s book-entry system, the Fiscal Agent will be required to give notice of redemption only to DTC as provided in the letter of representations executed by the City and received and accepted by DTC. DTC and the Participants will have sole responsibility for providing any such notice of redemption to the Beneficial Owners of the 2022 Bonds to be redeemed.

Any failure of DTC to notify any Participant, or any failure of Participants to notify the Beneficial Owner of any 2022 Bonds to be redeemed, of a notice of redemption or its content or effect will not affect the validity of the notice of redemption, or alter the effect of redemption set forth in the Fiscal Agent Agreement.

Conditional Redemption Notice and Rescission of Redemption. The City will have the right to send a conditional optional redemption notice and to rescind any notice of the optional redemption of 2022 Bonds by written notice to the Fiscal Agent on or prior to the date fixed for redemption. Any notice of redemption will 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 2022 Bonds then called for redemption, and such cancellation will not constitute a default under the Fiscal Agent Agreement.

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 will mail notice of such rescission of redemption in the same manner as the original notice of redemption was sent under the Fiscal Agent Agreement.

Selection of 2022 Bonds for Redemption. Whenever provision is made in the Fiscal Agent Agreement for the redemption of less than all the 2022 Bonds of any maturity or any given portion thereof, the Fiscal Agent will select the 2022 Bonds to be redeemed from all 2022 Bonds or such given portion thereof not previously called for redemption as directed by the City or, in the absence of direction by the City, on a pro rata basis among maturities, and, within a maturity, by lot in any manner which the Fiscal Agent in its sole discretion deems appropriate.

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 2022 Bonds called for redemption have been deposited in the Bond Fund, those 2022 Bonds 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 the notice of redemption.

Registration, Transfer and Exchange

The following provisions regarding the exchange and transfer of the 2022 Bonds apply only during any period in which the 2022 Bonds are not subject to DTC’s book-entry system. While the 2022 Bonds are subject to DTC’s book -entry system, their exchange and transfer will be effected through DTC and the Participants and will be subject to the procedures, rules and requirements established by DTC. See “APPENDIX D – DTC and the Book-Entry Only System.”

Registration. The Fiscal Agent will keep, or cause to be kept, at its Principal Office sufficient books for the registration and transfer of the 2022 Bonds (the “Bond Register”), which will show the series number, date, amount, rate of interest and last known owner of each 2022 Bond and will 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 will, under such reasonable regulations as it may prescribe, register or transfer or cause to be registered or transferred, on the Bond Register , the ownership of the 2022 Bonds as provided in the Fiscal Agent Agreement.

The City and the Fiscal Agent will treat the Owner of any 2022 Bond whose name appears on the Bond Register as the absolute Owner of such 2022 Bond for any and all purposes, and the City and the

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Fiscal Agent will not be affected by any notice to the contrary. The City and the Fiscal Agent may rely on the address of the Bondowner as it appears in the Bond register for any and all purposes.

Registration of Exchange or Transfer. Any 2022 Bond may, in accordance with its terms, be transferred, upon the Bond register by the person in whose name it is registered, in person or by such person’s duly authorized attorney, upon surrender of such 2022 Bond for cancellation, accompanied by delivery of a duly written instrument of transfer in a form acceptable to the Fiscal Agent.

2022 Bonds may be exchanged at the Principal Office of the Fiscal Agent solely for a like aggregate principal amount of 2022 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 transfer or exchange will be paid by the City. The Fiscal Agent will collect from the Owner requesting such transfer or exchange any tax or other governmental charge required to be paid with respect to such transfer or exchange. Whenever any 2022 Bond or 2022 Bonds are surrendered for transfer or exchange, the City will execute and the Fiscal Agent will authenticate and deliver a new 2022 Bond or 2022 Bonds, for a like aggregate principal amount.

No transfers or exchanges of 2022 Bonds will be required to be made (i) 15 days prior to the date established by the Fiscal Agent for selection of 2022 Bonds for redemption or (ii) with respect to a 2022 Bond after such 2022 Bond has been selected for redemption; or (iii) between a Record Date and the succeeding Interest Payment Date.

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DEBT SERVICE SCHEDULE

Debt Service Schedule. The following table presents the annual debt service on the 2022 Bonds (including mandatory sinking fund redemptions), assuming there are no optional redemptions or special redemptions from Special Tax Prepayments.

Year Ending
September 1
2022 Bonds
Principal
2022 Bonds
Interest
2022 Bonds
Total
2022 $ $ $
2023
2024
2025
2026
2027
2028
2029
2030
2031
2032
2033
2034
2035
2036
2037
2038
2039
2040
2041
2042
2043
2044
2045
2046
2047
2048
2049
2050
2051
2052
Total: $ $ $

Special Tax Revenues and Projected Debt Service Coverage

Debt service on the 2022 Bonds is structured so that annual Special Tax Revenues, if levied at the Maximum Special Tax rates in the Rate and Method, assuming all properties are classified as Developed Property, net of Administrative Expenses, will result in an annual debt service coverage ratio of at least 110%.

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SECURITY FOR THE 2022 BONDS
This
section generally describes the security for the 2022 Bonds set forth in the Fiscal Agent Agreement, which is summarized in more detail in APPENDIX C. Capitalized terms used but not defined in the section are defined in APPENDIX C.

Genera
l
The 2022 Bonds and
any Parity Bonds (collectively, the “ Bonds”) are secured by a first pledge (which will be effected in the manner and to the extent provided in the Fiscal Agent Agreement) of all of the Special Tax Revenues and all moneys deposited in the Bond Fund (including the Special Tax Prepayments Account but excluding the 2022 Capitalized Interest Account ), and, until disbursed as provided therein, in the Special Tax Fund.

The Spec
ial Tax Revenues and all moneys deposited into such funds (except as otherwise provided in the Fiscal Agent Agreement) are dedicated 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 of the Bonds have been paid and retired or until moneys or Federal Securities have been set aside irrevocably for that purpose under the Fiscal Agent Agreement.

The 2022 Bonds and
all Related Parity Bonds (as defined herein) will be secured by a first pledge (which will be effected in the manner and to the extent provided in the Fiscal Agent Agreement ) of all moneys deposited in the 2022 R eserve Fund. The moneys in the 2022 R eserve Fund (except as otherwise provided in the Fiscal Agent Agreement) are dedicated to the payment of the principal of, and interest and any premium on, the 2022 Bonds and all Related Parity Bonds as provided in the Fiscal Agent Agreement and in the Act until all of the 2022 Bonds and all Related Parity Bonds have been paid and retired or until moneys or Federal Securities have been set aside irrevocably for that purpose under the Fiscal Agent Agreement.

The 2022 Bonds wi
ll be secured by a first pledge (which pledge shall be effected in the manner and to the extent provided in the Fiscal Agent Agreement) of all moneys deposited in the 2022 Capitalized Interest Account.

Amount
s in the Improvement Fund (and the accounts therein), the Administrative Expense Fund and the Costs of Issuance Fund are not pledged to the repayment of the Bonds. The Project is not pledged to the repayment of the Bonds, nor are the proceeds of any condemnation or insurance award received by the City with respect to the Project.
“Special Tax Revenues ” are defined in the Fiscal Agent Agreement as the p roceeds of the Special Taxes received by the City, including any scheduled payments thereof and any Special Tax Prepayments, 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. However, Special Tax Revenues do not include any interest in excess of the interest due on the Bonds, or any penalties collected in connection with any such foreclosure.

Limit
ed Obligation
The 2022 Bonds ar
e not general obligations of the City, but are limited obligations, payable solely from the Special Tax Revenues and the funds pledged therefor under the Fiscal Agent Agreement. Neither the faith and credit nor the taxing power of the City (except to the limited extent set forth in the Fiscal Agent Agreement) or of the State or any political subdivision thereof is pledged to the payment of the 2022 Bonds.

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Special Taxes

Covenant to Levy Special Taxes. The Finance Director will fix and levy the amount of Special Taxes within the District required to pay the following amounts, taking into account the balances in the applicable funds established under the Fiscal Agent Agreement:

(i) the principal of and interest on any outstanding Bonds of the District becoming due and payable during the ensuing calendar year,

(ii) any necessary replenishment or expenditure of the 2022 Reserve Fund and any other reserve account for Parity Bonds that are not Related Parity Bonds to the extent such replenishment has not been included in the computation of the Special Taxes in a previous Fiscal Year,

(iii) the Administrative Expenses, including amounts necessary to discharge any rebate obligation, during such year,

(iv) an amount to cure delinquencies in the payment of principal or interest on Bonds that occurred in the previous Fiscal Year, and

(v) any Project costs to be paid from Special Taxes to the extent that paying for such costs does not increase the Special Taxes levied on Undeveloped Property.

During the Remainder Taxes Period (as defined herein), the Finance Director will fix and levy the Special Taxes at the Maximum Special Tax rate on Developed Property before considering any Capitalized Interest (as those terms are defined in the Rate and Method). The Special Taxes so levied may not exceed the authorized amounts as provided in the proceedings under the Resolution of Formation. Fiscal Year 2022-23 is the first fiscal year in which the Special Tax will be levied.

Manner of Collection. Except as set forth in the Ordinance, the Fiscal Agent Agreement provides that the Special Taxes will 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 time and in the same proportionate amounts and bear the same proportionate penalties and interest after delinquency as do the ad valorem taxes on real property.

Because the Special Tax levy is limited to the maximum Special Tax rates set forth in the Rate and Method, no assurance can be given that, in the event of Special Tax delinquencies, the receipts of Special Taxes will, in fact, be collected in sufficient amounts in any given year to pay debt service on the Bonds. In addition, under the Fiscal Agent Agreement, the first use of Special Tax Revenues is the payment of Administrative Expenses in an amount not to exceed the amount included in the Special Tax levy for such Fiscal Year for Administrative Expenses. Further, under no circumstances will the Special Tax levied against any parcel of residential property for which an occupancy permit for private residential use has been issued be increased by more than 10% as a consequence of delinquency or default by the owner of any other parcel within the District. Finally, in no event shall Special Taxes be levied after fiscal year 2061-62. See “BOND OWNERS’ RISKS – Property Tax Delinquencies.”

Rate and Method

General. The Special Taxes will be levied and collected according to the Rate and Method, which provides the means by which the City Council may annually levy the Special Taxes within the District, up to the maximum Special Tax rates, and to determine the amount of the Special Taxes that will need to be collected each fiscal year from the “ Taxable Property” within the District . As used in this Official Statement, Special Tax refers only to the Facilities Special Tax levied under the Rate and Method; although a Services Special Tax is also authorized to be levied under the Rate and Method, the Services

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Special Tax is not pledged to repay the 2022 Bonds and will not be levied in the District until after the Facilities Special Tax is no longer levied.

The following is a summary of the provisions of the Rate and Method, which should be read in conjunction with the complete text of the Rate and Method, including its attachments, which is attached as APPENDIX B. Capitalized terms used but not defined in this section have the meanings as set forth in APPENDIX B. This section provides only a summary of the Rate and Method, and is qualified by more complete and detailed information contained in the entire Rate and Method attached as APPENDIX B.

Facilities Special Tax Requirement. Annually, at the time of levying the Special Tax, the District administrator (the “Administrator”) will determine the Facilities Special Tax Requirement (the “Facilities Special Tax Requirement”), which is the amount required in any Fiscal Year for the following purposes:

(i) to pay principal and interest on Bonds when due in the calendar year which begins in such Fiscal Year,

(ii) to create or replenish reserve funds to the extent such replenishment has not been included in the computation of the Facilities Special Tax Requirement in a previous Fiscal Year,

(iii) to cure any delinquencies in the payment of principal or interest on Bonds which have occurred in the prior Fiscal Year,

(iv) to pay Administrative Expenses, and

(v) to pay the costs of Authorized Facilities, to the extent that paying directly for such costs does not increase the Special Taxes levied on Undeveloped Property.

Annual Determination of Property Categories for Administration of Special Tax. Each Fiscal Year, the Administrator will: (i) assign each parcel of Taxable Property to the appropriate Development Class, (ii) for Developed Property, categorize each Parcel as Single Family Residential Property or Other Property, (iii) determine if a Transition Event occurred in the prior Fiscal Year , (iv) for Other Property, determine the Acreage of each Parcel, and (v) prior to the Transition Year, determine the Facilities Special Tax Requirement. In addition, the Administrator shall, on an ongoing basis, monitor Final Maps and condominium plans to determine if there are any proposed changes to the Expected Land Uses that would change the Expected Maximum Facilities Special Tax Revenues. If the Expected Maximum Facilities Special Tax Revenues will be revised pursuant to a proposed Land Use Change, the Administrator shall apply the steps set forth in the Rate and Method, as described further below.

In any Fiscal Year, if it is determined that:

(i) a parcel map for a portion of property in the District was recorded after January 1 of the prior Fiscal Year (or any other date after which the Assessor will not incorporate the newly-created Parcels into the then-current tax roll),

(ii) because of the date the parcel map was recorded, the Assessor does not yet recognize the new Parcels created by the parcel map, and

(iii) one or more of the newly -created Parcels is in a different Development Class than other parcels created by the subdivision,

the Administrator will calculate the Special Tax for the property affected by recordation of the parcel map by determining the Special Tax that applies separately to the property within each Development Class ,

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then applying the sum of the individual Special Taxes to the Parcel that was subdivided by recordation of the parcel map.

"Transition Event" means, in any Fiscal Year, that, on or before June 30 of the prior Fiscal Year, the Administrator made a finding that (i) all Bonds secured by the levy and collection of Facilities Special Taxes in the District 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 Facilities Special Taxes.

"Transition Year" means the first Fiscal Year in which the Administrator determines that the Transition Event occurred in the prior Fiscal Year.

Maximum Special Tax. The Maximum Special Tax for Fiscal Year 2022-23 for Taxable Property is set forth in Table 1 below, subject to potential adjustments that may occur pursuant to Section D of the Rate and Method. For additional information, see APPENDIX B.

Table 1
City of Tracy
Community Facilities District No. 2021-1 (Hillview)
Fiscal Year 2022-23 Maximum Facilities Special Tax Rates

Maximum Facilities Special Tax
Before Transition Year Maximum Facilities Special Tax
Special Tax Category (in Fiscal Year 2022-23 $)(1) In and After Transition Year

Single-Family Residential Property $2,008.38 per Residential Unit $0 per Residential Unit

Other Property, Taxable Public Property,
Taxable HOA Property, Taxable Welfare
Exemption Property, and Undeveloped
Property
$33,748.74 per Acre $0 per Acre

(1) On each July 1, the facilities special taxes shown in this table shall be increased by an amount equal to 2.0% of the amount in effect for the prior fiscal year.

Source: Goodwin Consulting Group, Inc.

Method of Special Tax Levy. Under the Rate and Method, each Fiscal Year until the Transition Year, the Administrator will determine the Facilities Special Tax Requirement and levy the Special Tax as follows:

Step 1: In the first 15 Fiscal Years in which a Special Tax is levied within the District, the Maximum Special Tax shall be levied on all Parcels of Developed Property. Any Facilities Special Tax proceeds collected that are determined by the Administrator to be Remainder Taxes shall be deposited into the Improvement Fund to pay any costs associated with the acquisition of Authorized Facilities that were not paid with Bond proceeds or Facilities Special Taxes levied in prior Fiscal Years.

Beginning in the 16th Fiscal Year in which a Special Tax is levied within the District and continuing until the Transition Year , the Facilities Special Tax shall be levied Proportionately on each Parcel of Developed Property up to 100% of the Maximum Special Tax for each Parcel of Developed Property until the amount levied is equal to the Facilities Special Tax Requirement.

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Step 2: If additional revenue is needed after Step 1 and after applying Capitalized Interest to the Facilities Special Tax Requirement, the Special Tax shall be levied Proportionately on each Parcel of Undeveloped Property up to 100% of the Maximum Facilities Special Tax for each Parcel of Undeveloped Property.

Step 3: If additional revenue is needed after Step 2, the Facilities Special Tax shall be levied Proportionately on each Parcel of Taxable Welfare Exemption Property, up to 100% of the Maximum Facilities Special Tax for each Parcel of Taxable Welfare Exemption Property.

Step 4: If additional revenue is needed after Step 3, the Facilities Special Tax shall be levied Proportionately on each Parcel of Taxable HOA Property, up to 100% of the Maximum Facilities Special Tax for each Parcel of Taxable HOA Property.

Step 5: If additional revenue is needed after Step 4, the Facilities Special Tax shall be levied Proportionately on each Parcel of Taxable Public Property, up to 100% of the Maximum Facilities Special Tax for each Parcel of Taxable Public Property.

Exemptions. Any Parcel that is or is expected to be Public Property, HOA Property, or Welfare Exemption Property prior to the First Bond Sale shall be exempt from both the Services Special Tax and the Facilities Special Tax. The Administrator will reduce the Expected Maximum Facilities Special Tax Revenues to reflect any such exemptions that were not expected at the time of formation of the District, and the First Bond Sale shall be sized based on the reduced Expected Maximum Facilities Special Tax Revenues. Any Parcel that becomes Public Property, HOA Property, or Welfare Exemption Property after the First Bond Sale shall be exempt from: (i) the Services Special Tax, and (ii) the Facilities Special Tax provided such Parcel is not Taxable Public Property, Taxable HOA Property, or Taxable Welfare Exemption Property.

Partial Prepayment of Special Tax. A property owner may prepay up to 80% of the Special Tax obligation applicable to a Parcel in the District, subject to certain conditions. The Prepayment Amount is calculated based on the Bond Redemption Amount plus Redemption Premium and other costs, all as specified in “APPENDIX B – Rate and Method of Apportionment of Special Tax – Section H.”

Services Special Tax. In addition to the Special Tax, taxable property in the District is subject to a special tax for services (the “ Services Special Tax”) , pursuant to the Rate and Method. The Maximum Services Special Tax for Fiscal Year 2022-23 is set forth in Table 2. Table 2 is included for information only. The Services Special Tax does not secure, and is not pledged to the payment of, the 2022 Bonds.

Table 2
City of Tracy
Community Facilities District No. 2021-1 (Hillview)
Fiscal Year 2022-23 Maximum Services Special Tax Rates

Maximum Services Special Tax Maximum Services Special Tax Before Transition Year In and After Transition Year
Special Tax Category (in Fiscal Year 2022-23 $) (in Fiscal Year 2022-23 $)(1)

Single Family Residential Property $0 per Residential Unit $401.88 per Residential Unit

Other Property $0 per Acre $1,149.54 per Acre

Undeveloped Property $0 per Acre $1,149.54 per Acre

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(1) On each July 1, until the Transition Year, the service special taxes shown in Table 2 above shall be increased by an amount equal to 2.0% of the amount in effect for the prior fiscal year. On July 1 of the Transition Year and each July 1 thereafter, the services special taxes and the maximum services special tax assigned to each parcel shall be adjusted by the Escalation Factor.

Source: Goodwin Consulting Group, Inc.

Covenant to Foreclose

Sale of Property for Nonpayment of Taxes . The Fiscal Agent Agreement provides that the Special Taxes are 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 below and in the Act, is to be subject to the same penalties and the same procedure, sale and lien priority in case of delinquency as is provided for ad valorem property taxes. Under these procedures, if taxes are unpaid for a period of five years or more, the property is subject to sale by the County.

Foreclosure Under the Act. Under Section 53356.1 of the Act, if any delinquency occurs in the payment of the Special Tax, the City may order the institution of a Superior Court action to foreclose the lien therefor within specified time limits. In such an action, the real property subject to the unpaid amount may be sold at judicial foreclosure sale.

While judicial foreclosure is not mandatory under the Act, the City will agree in the Fiscal Agent Agreement that on or about June 30 of each Fiscal Year, the Finance Director will compare the amount of Special Taxes previously levied in the District to the amount of Special Tax Revenues received by the City, and if delinquencies have occurred, proceed as follows:

Individual Delinquencies. If
the Finance Director determines that any single parcel subject to the Special Tax in the District is delinquent in the payment of Special Taxes in the aggregate amount of $5 ,000 or more, then the Finance Director will send or cause to be sent a notice of delinquency (and a demand for immediate payment thereof) to the property owner within 45 days of such determination, and (if the delinquency remains uncured) foreclosure proceedings will be commenced by the City within 90 days of such determination.

Not
withstanding the foregoing, the Finance Director may defer any such actions with respect to a delinquent parcel if (1) the District is then participating in the “Teeter Plan” (as defined and described below), or an equivalent procedure, (2) the amount in the 2022 Reserve Fund is at least equal to the 2022 Reserve Requirement, and (3) the amount in the reserve account for any Parity Bonds that are not Related Parity Bonds is at least equal to the required amount . For additional details on the Teeter Plan, see “– Special Tax Delinquencies; Teeter Plan” below.

Aggregate Delinquencies. I f the Finance Director determines that (i) the total amount of delinquent Special Tax for the prior Fiscal Year for the entire District (including the total of delinquencies described in the above two paragraphs), exceeds 5% of the total Special Tax due and payable for the prior Fiscal Year, determined by reference to the latest available secured property tax roll of the County, the Finance Director shall notify or cause to be notified property owners who are then delinquent in the payment of Special Taxes (and demand immediate payment of the delinquency) within 45 days of such determination, and shall commence foreclosure proceedings within 90 days of such determination against each parcel of land in the District with a Special Tax delinquency.

Individual Owner Delinquencies . As
to any owner of more than one parcel within the
District, if the Finance Director determines that the aggregate amount of delinquent Special Taxes for all preceding tax years on all parcels owned by such owner (whether such parcels are owned solely by such owner or jointly by such owner and one or more others) exceeds $10,000, then the Finance Director shall send or cause to be sent a notice of delinquency (and a demand for immediate payment thereof) to the property owner within 45 days of such determination, and (if

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the delinquency remains uncured) shall commence foreclosure proceedings within 90 days of such determination, regardless of when such delinquencies occurred.

Sufficiency of Foreclosure Sale Proceeds; Foreclosure Limitations and Delays. 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-judgment interest and authorized costs, unless the consent of the owners of 75% of the outstanding Bonds is obtained.

However, under Section 53356.5 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 Taxes. 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.

Foreclosure by court action is subject to normal litigation delays, the nature and extent of which are largely dependent on the nature of the defense, if any, put forth by the debtor and the Superior Court calendar. In addition, the ability of the City to foreclose the lien of delinquent unpaid Special Taxes may be limited in certain instances and may require prior consent of the property owner if the property is owned by or in receivership of the Federal Deposit Insurance Corporation (the “ FDIC”). See “BOND OWNERS' RISKS – Bankruptcy Delays.”

Special Tax Delinquencies; Teeter Plan. In 1949, the California Legislature enacted an alternative method for the distribution of property taxes to local agencies. This method, known as the “Teeter Plan,” is found in Sections 4701- 4717 of the California Revenue and Taxation Code. Upon adoption and implementation of this method by a county board of supervisors, local agencies for which the county collects property taxes and certain other public agencies and taxing areas located in the county receive annually the full amount of their shares of property taxes and other levies collected on the secured roll, including delinquent property taxes which have yet to be collected. While the county bears the risk of loss on unpaid delinquent taxes, it retains the penalties associated with delinquent taxes when they are paid. In turn, the Teeter Plan provides participating local agencies with stable cash flow and the elimination of collection risk.

Once adopted, a county’s Teeter Plan will remain in effect in perpetuity unless the board of supervisors orders its discontinuance or unless, prior to the commencement of a fiscal year, a petition for discontinuance is received and joined in by resolutions of the governing bodies of not less than two-thirds of the participating districts in the county. An electing county may, however, decide to discontinue the Teeter Plan with respect to any levying agency in the county if the board of supervisors, by action taken not later than July 15 of a fiscal year, elects to discontinue the procedure with respect to such levying agency and the rate of secured tax delinquencies in that agency in any year exceeds 3% of the total of all taxes and assessments levied on the secured roll by that agency.

The Board of Supervisors of San Joaquin County adopted the Teeter Plan in Fiscal Year 1994 -

95. The County has elected to apply its Teeter Plan to the collection of the Special Taxes in the District.

To the extent that the County’s Teeter Plan continues in existence and is carried out as adopted, and to the extent the County does not discontinue the Teeter Plan with respect to the District, the County’s Teeter Plan may help protect owners of the 2022 Bonds from the risk of delinquencies in the payment of Special Tax. There can be no assurance that the County will not modify or eliminate its Teeter Plan, or choose to remove the District from its Teeter Plan, while the 2022 Bonds are outstanding.

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Special Tax Fund

Deposits. Under the Fiscal Agent Agreement, the Special Tax Fund is established as a separate fund to be held by the Fiscal Agent. The City will promptly deposit any Special Tax Revenues received by it in the Special Tax Fund. Within the Special Tax Fund there is established a separate account to be held by the City, designated the “Administrative Expense Account,” to the credit of which deposits shall be made as required by the Fiscal Agent Agreement.

Notwithstanding the foregoing,

(i) Special Tax Revenues in an amount not to exceed the amount included in the Special Tax levy for such Fiscal Year for Administrative Expenses will be separately identified by the Finance Director and shall be deposited by the Finance Director in the Administrative Expense Account;

(ii) any Special Tax Revenues constituting the collection of delinquencies in payment of Special Taxes shall be separately identified by the Finance Director and will be disposed of by the Finance Director first, for transfer to the Fiscal Agent for deposit in the Bond Fund to pay any past due debt service on the Bonds; second, without preference or priority, for transfer to the Fiscal Agent for deposit in the 2022 Reserve Fund to the extent needed to increase the amount then on deposit in the 2022 Reserve Fund up to the then 2022 Reserve Requirement and for deposit in the reserve account for any Parity Bonds that are not Related Parity Bonds to the extent needed to increase the amount then on deposit therein to the required level ; and third, to be held in the Special Tax Fund for use as described in “–Disbursements” below; and

(iii) any proceeds of Special Tax Prepayments will be separately identified by the Finance Director and will be disposed of by the Finance Director as follows (with written instructions to the Fiscal Agent): (a) that portion of any Special Tax Prepayment constituting a prepayment of construction costs (which otherwise could have been included in the proceeds of Parity Bonds) will be transferred by the Finance Director to the Fiscal Agent for deposit in the Bond Proceeds Account of the Improvement Fund and (b) the remaining Special Tax Prepayment will be transferred by the City to the Fiscal Agent for deposit in the Special Tax Prepayments Account established pursuant to the Fiscal Agent Agreement.

Disbursements. At least 7 Business Day s prior to each Interest Payment Date, the Finance Director will withdraw from the Special Tax Fund and transfer the following amounts in the following order of priority:

(i) for deposit in the Bond Fund, an amount, taking into account any amounts then on deposit in the Bond Fund and any expected transfers from the Improvement Fund, the 2022 Reserve Fund, any reserve account for Parity Bonds that are not Related Parity Bonds, the 2022 Capitalized Interest Account, a capitalized interest account established for any series of Parity Bonds and the Special Tax Prepayments Account to the Bond Fund such that the amount in the Bond Fund equals the principal (including any sinking payment), premium, if any, and interest due on the Bonds on such Interest Payment Date and any past due principal or interest on the Bonds not theretofore paid from a transfer described in the Fiscal Agent Agreement,

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(ii) without preference or priority, (a) for deposit in the 2022 Reserve Fund an amount, taking into account amounts then on deposit in the 2022 Reserve Fund, such that the amount in the 2022 Reserve Fund is equal to the 2022 Reserve Requirement, and (b) for deposit in the reserve account for any Parity Bonds that are not Related Parity Bonds, taking into account amounts then on deposit in the such reserve account, such that the amount in such reserve account is equal to the amount required to be on deposit therein (and in the event that amounts in the Special Tax Fund are not sufficient for the purposes of this paragraph, such amounts will be applied to the 2022 Reserve Fund and any other reserve accounts ratably based on the then Outstanding principal amount of the Bonds), and

(iii) (A) on each October 1 , beginning on October 1 , 2022 and continuing through the Remainder Taxes Period, all of the moneys remaining in the Special Tax Fund will be transferred to the Remainder Taxes Account and (B) on each subsequent October 1 after the end of the Remainder Tax es Period, all or a portion of the moneys remaining in the Special Tax Fund will be transferred to the Remainder Taxes Account as directed by the Finance Director.

“Remainder Taxes Period” is defined in the Fiscal Agent Agreement as the period through and including the earlier of (i) the end of the 15th Fiscal Year during which Special Taxes have been levied on the property in the District or (ii) the date the City has fully satisfied its reimbursement obligations under the Acquisition Agreement.

Fiscal Year 2022-23 is the first fiscal year in which the Special Tax will be levied.

Within 15 days after the end of each Bond Year after the Remainder Taxes Account is closed pursuant to the Fiscal Agent Agreement, and after the foregoing transfers have been made, the City will transfer all amounts remaining on deposit in the Special Tax Fund to (x) the Administrative Expense Account, to be used as set forth in the Fiscal Agent Agreement, (y) the Special Tax Fund, or (z) the City for any lawful purpose.

Bond Fund

Deposits. The Fiscal Agent will hold the moneys in the Bond Fund for the benefit of the City and the Owners of the Bonds, and will disburse those funds for the payment of the principal of, and interest and any premium on, the Bonds as described below.

There is also created in the Bond Fund separate account s to be held by the Fiscal Agent, designated the “Special Tax Prepayments Account” and the “2022 Capitalized Interest Account” to the credit of which deposits will be made as provided in the Fiscal Agent Agreement.

Deposits and Disbursements. At least 10 Business Days before each Interest Payment Date, the Fiscal Agent will notify the Finance Director in writing in the form of an invoice of the following: (i) the principal and premium, if any, and interest due on the Bonds on the next Interest Payment Date (whether as a result of scheduled principal of and interest on the Bonds, optional redemption of the Bonds or a mandatory sinking fund redemption), (ii) the amount in the Bond Fund (and any accounts therein) that is available to pay the amounts due on such Interest Payment Date, (iii) the amount needed to be transferred by the City to the Fiscal Agent in order for the Fiscal Agent to pay the amount due on such Interest Payment Date and (iv) the amount needed (a) to be deposited in the 2022 Reserve Fund, taking into account amounts then on deposit in the 2022 Reserve Fund, such that the amount in the 2022 Reserve Fund is equal to the 2022 Reserve Requirement, and (b) to be deposited in the reserve account for any Parity Bonds that are not Related Parity Bonds, taking into account amounts then on deposit in

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the such reserve account, such that the amount in such reserve account is equal to the amount required to be on deposit therein.

At least 7 Business Days prior to each Interest Payment Date, the City will transfer to the Fiscal Agent from the Special Tax Fund for deposit in the Bond Fund an amount equal to the lesser of (i) the amount in the Special Tax Fund and (ii) the amount described in clause (iii) of the previous paragraph.

On the fourth Business Day prior to each Interest Payment Date, the Fiscal Agent will determine if the amounts then on deposit in the Bond Fund are sufficient to pay the Debt Service due on the Bonds on the next Interest Payment Date. In the event that amounts in the Bond Fund are insufficient for such purpose, the Fiscal Agent promptly shall notify the Finance Director by telephone (and confirm in writing) of the amount of the insufficiency then do the following:

(i) W ithdraw from the 202 2 Reserve Fund, in accordance with the provisions of the Fiscal Agent Agreement, to the extent of any funds or Permitted Investments therein, amounts to cover the amount of such Bond Fund insufficiency related to the 2022 Bonds and any Related Parity Bonds. Amounts so withdrawn from the 2022 Reserve Fund will be deposited in the Bond Fund.

(ii) Withdraw from the reserve funds, if any, established under a Supplemental Agreement related to Parity Bonds that are not Related Parity Bonds, to the extent of any funds or Permitted Investments therein, amounts to cover the amount of such Bond Fund insufficiency related to such Parity Bonds.

Amounts so withdrawn from any such reserve fund shall be deposited in the Bond Fund.

On each Interest Payment Date, the Fiscal Agent will withdraw from the Bond Fund and pay to the Owners of the Bonds the principal of, and interest and any premium, due and payable on such Interest Payment Date on the Bonds. If, after the foregoing transfers, there are insufficient funds in the Bond Fund to make the payments due and payable on such Interest Payment Date, the Fiscal Agent will apply the available funds first to the payment of interest on the Bonds, then to the payment of principal due on the Bonds other than by reason of sinking payments, if any, and then to payment of principal due on the bonds by reason of sinking payments.

Disbursements from the 2022 Capitalized Interest Account. Amounts on deposit in the 2022 Capitalized Interest Account will be used and withdrawn by the Fiscal Agent solely for the payment of interest on the 2022 Bonds. When the amount in the 2022 Capitalized Interest Account is fully expended for the payment of interest, the account will be closed.

Disbursements from the Special Tax Prepayments Account. Moneys in the Special Tax Prepayments Account will be transferred by the Fiscal Agent to the Bond Fund on the next date for which notice of redemption of Bonds can timely be given under the Fiscal Agent Agreement, and notice to the Fiscal Agent can timely be given under the Fiscal Agent Agreement, and will be used (together with any amounts transferred pursuant to the Fiscal Agent Agreement) to redeem Bonds on the redemption date selected in accordance the Fiscal Agent Agreement.

2022 Reserve Fund

General. In order to further secure the payment of principal of and interest on the 2022 Bonds and any Related Parity Bonds, certain proceeds of the 2022 Bonds will be deposited into the 2022 Reserve Fund in an amount equal to the “2022 Reserve Requirement” for the 2022 Bonds (as defined below). See “FINANCING PLAN.”

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2022 Reserve Requirement. The “2022 Reserve Requirement” is defined in the Fiscal Agent Agreement to mean the amount as of any date of calculation equal to the least of (a) Maximum Annual Debt Service on the 2022 Bonds and Related Parity Bonds, if any, (b) 125% of average Annual Debt Service on the 2022 Bonds and Related Parity Bonds, if any and (c) 10% of the original principal of the 2022 Bonds and Related Parity Bonds, if any; provided, however:

(A) that with respect to the calculation of clause (c) above, the issue price of the 2022 Bonds or any Related Parity Bonds excluding accrued interest shall be used rather than the outstanding principal amount, if (i) the net original issue discount or premium of the 2022 Bonds or any Related Parity Bonds was less than 98% or more than 102% of the original principal amount of t he 2022 Bonds or any Related Parity Bonds and (ii) using the issue price would produce a lower result than using the outstanding principal amount;

(B) that in no event shall the amount calculated under the definition of 2022 Reserve Requirement exceed the amount on deposit in the 2022 Reserve Fund on the date of issuance of the 2022 Bonds (if they are the only Bonds covered by the 2022 Reserve Fund) or the most recently issued series of Related Parity Bonds (if any Related Parity Bonds are covered by the 2022 Reserve Fund) except in connection with any increase associated with the issuance of Related Parity Bonds; and

(C) that in no event shall the amount required to be deposited into the 2022 Reserve Fund in connection with the issuance of a series of Related Parity Bonds exceed the maximum amount under the Tax Code that can be financed with tax -exempt bonds and invested at an unrestricted yield.

Disbursements. Except as otherwise provided in the Fiscal Agent Agreement, all amounts deposited in the 2022 Reserve Fund will be used and withdrawn by the Fiscal Agent solely for the purpose of making transfers to the Bond Fund in the event of any deficiency at any time in the Bond Fund of the amount then required for payment of the principal of, and interest and any premium on, the 2022 Bonds and any Related Parity Bonds or, in accordance with the provisions of the Fiscal Agent Agreement , for the purpose of redeeming 2022 Bonds and any Related Parity Bonds from the Bond Fund. Whenever a transfer is made from the 2022 Reserve Fund to the Bond Fund due to a deficiency in the Bond Fund for payment of the principal of, and interest and any premium on, the 2022 Bonds and any Related Parity Bonds, the Fiscal Agent will provide written notice thereof to the Finance Director, specifying the amount withdrawn.

Qualified Reserve Fund Credit Instruments. The City has the right at any time to direct the Fiscal Agent to release funds from the 2022 Reserve Fund, in whole or in part, by tendering to the Fiscal Agent: (i) a Qualified Reserve Account Credit Instrument (as defined in the Fiscal Agent Agreement), and (ii) an opinion of Bond Counsel stating that neither the release of such funds nor the acceptance of such Qualified Reserve Account Credit Instrument will cause interest on the 2022 Bonds or any Related Parity Bonds the interest on which is excluded from gross income of the owners thereof for federal income tax purposes to become includable in gross income for purposes of federal income taxation.

The City will have no obligation to replace a Qualified Reserve Account Credit Instrument or to fund the 2022 Reserve Fund with cash if, at any time that the 2022 Bonds are Outstanding, the Qualified Reserve Account Credit Instrument (or its provider) is downgraded or the provider becomes insolvent, if there is an unscheduled termination of the Qualified Reserve Account or if for any reason insufficient amounts are available to be drawn upon under the Qualified Reserve Account Credit Instrument; provided, however, that the City will reimburse the provider, in accordance with the terms of the Qualified Reserve Account Credit Instrument, for any draws made thereon.

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The City and the Fiscal Agent will comply with the terms of the Qualified Reserve Account Credit Instrument as will be required to receive payments thereunder in the event and to the extent required under the Fiscal Agent Agreement.

See APPENDIX C for a complete description of the timing, purpose and manner of disbursements from the 2022 Reserve Fund.

Investment of Moneys in Funds

Moneys in any fund or account created or established by the Fiscal Agent Agreement and held by the Fiscal Agent will be invested by the Fiscal Agent in Permitted Investments, which in any event by their terms mature prior to the date on which such moneys a re required to be paid out under the Fiscal Agent Agreement. See APPENDIX C for a definition of “Permitted Investments.”

Issuance of Future Parity Bonds for Refunding Only

In addition to the 2022 Bonds, the City may issue one or more additional series of Bonds payable from the Special Tax Revenues on a parity with the 2022 Bonds (collectively, “Parity Bonds”), in such principal amount as may be determined by the City, under a Supplemental Agreement entered into by the City and the Fiscal Agent. Any such Parity Bonds will constitute Bonds under the Fiscal Agent Agreement and will be secured by a lien on the Special Tax Revenues and funds pledged for the payment of the Bonds under the Fiscal Agent Agreement on a parity with all other Bonds Outstanding thereunder.

The City may only issue Parity Bonds if they are Refunding Bonds.

“Refunding Bonds” is defined in the Fiscal Agent Agreement as bonds issued by the City for the District, the net proceeds of which are used to refund all or a portion of the then- Outstanding Bonds; provided that the principal and interest on the Refunding Bonds to their final maturity date is less than the principal and interest on the Bonds being refunded to their final maturity date, and the final maturity of the Refunding Bonds is not later than the final maturity of the Bonds being refunded.

See APPENDIX C for additional details regarding the conditions for issuing Parity Bonds.

Subordinate Bonds

Nothing in the Fiscal Agent Agreement prohibits the City from issuing any other bonds or otherwise incurring debt secured by a pledge of the Special Tax Revenues subordinate to the pledge thereof under the Fiscal Agent Agreement.

THE DISTRICT

Formation and Background

Formation Proceedings. The District was established by the City Council under the Act on November 2, 2021, following a noticed public hearing. On the same date, an election was held in which the qualified electors within the District approved a ballot proposition authorizing the District to incur bonded indebtedness for the District of up to $12,000,000 to finance the acquisition and construction of the authorized facilities, to levy the Special Taxes within the District, and to establish an appropriations limit for the District. The District is authorized to finance the construction of authorized facilities. See “– Authorized Facilities.”

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Description and Location

General. The District is located in the southern part of the City, south of the California Aqueduct and north of Interstate 580, near the existing highway interchange at Corral Hollow Road. See APPENDIX A for demographic and other information regarding the City and the County.

Boundary Map. The map showing the boundaries of the District is set forth on the following page.

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[Insert CFD Boundary Map]

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Authorized Facilities

General. Under the Resolution of Formation adopted by the City Council, as the legislative body of the District, on November 2, 2021, the District is authorized to finance all or a portion of the costs of acquisition, construction and improvement of facilities permitted under the Act and that are required as conditions of development of property in the District (collectively, the “Facilities”). The Facilities include but are not limited to the following:

• Roadway Improvements;

• Wastewater Facilities;

• Water Facilities;

• Reclaimed Water Facilities;

• Drainage Improvements;

• Landscaping;

• Open Space Improvements; and

• Parks and Park Equipment.

Any Facility authorized to be financed by the District may be financed through the construction and acquisition of the Facility or through the payment of fees for such Facility. The Facilities authorized to be financed may be located within or outside the boundaries of the District.

The Facilities to be financed shall include all hard and soft costs associated with the Facilities , including the costs of the acquisition of land and rights -of-way, the costs of design engineering and planning, the costs of any environmental or traffic studies , surveys, or other reports , costs related to landscaping and irrigation, soils testing, permits, plan check, and inspection fees, insurance, legal, and related overhead costs, coordination and supervision, and any other costs or appurtenances related to any of the foregoing, as further defined in one or more acquisition agreements with the developer of the property in the District.

Status of Construction of Facilities. As of March 15, 2022, in-tract improvements remaining to be completed within the District consist primarily of finishing of streets, curbs, gutters, and landscaping.

Certain other facilities required as conditions of development within the District are also pending. S ee “OWNERSHIP AND DEVELOPMENT OF THE DISTRICT – Status of Infrastructure for the District.”

Market Absorption Study

In connection with the issuance of the 2022 Bonds, the City hired the Market Absorption Consultant, Empire Economics, Inc., to prepare the Absorption Study for the homes planned for the District. The Absorption Study sets forth various factors that may impact the development and sale of homes within the District. The Absorption Study also sets forth the forecast of absorption, which are shown in the tables below.

Est
imated Absorption Schedule

Year 2022 2023 2024 2025

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Estimated Escrow Closings 30 64 64 56
Cumulative 30 94 158 214
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Source: Empire Economics, Inc.

Assumptions used in the Absorption Study include the following:

• Floor plan #1 is expected to have 54 homes that have 1,717 square feet of living area, with base prices of $682,000, for a value ratio of $397/square foot, on the average.

• Floor plan #2 is expected to have 54 homes that have 1,906 square feet of living area, with base prices of $710,000, for a value ratio of $373/square foot, on the average.

• Floor plan #3 is expected to have 53 homes that have 2,136 square feet of living area, with base prices of $730,000, for a value ratio of $342/square foot, on the average.

• Floor plan #4 is expected to have 53 homes that have 2,237 square feet of living area, with base prices of $737,000, for a value ratio of $329/square foot, on the average.

The City is not obligated to make, and has not undertaken to make, an independent verification of the information contained in the Absorption Study and assumes no responsibility for the accuracy or completeness of the Absorption Study.

A copy of the Absorption Study is set forth in its entirety as APPENDIX I – Market Absorption Study.

Envi
ronmental Matters

Flood Hazard Map Information. According to the Federal Emergency Management Agency’s flood insurance rate maps (Map Panel Number 06077C-0740F, dated October 16, 2009), the developable portions of the property in the District are located within Flood Zone X, described as areas of minimal flooding (outside of the 100 and 500-year floodplains). Property in the District is not subject to the Central Valley Flood Protection Plan.

Seismic Conditions. According to the Seismic Safety Commission, the District is 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 District is not located within a Fault -Rupture Hazard Zone (formerly referred to as an Alquist-Priolo Special Study Zone), as defined by Special Publication 42 of the California Department of Conservation, Division of Mines and Geology.

Wetlands. No wetland mitigation was required for development within the District.

Explosives Testing. The Lawrence Livermore National Laboratory (“LLNL”) Experimental Test Site (“ Site 300 ”) is a restricted -access facility operated for the U.S. Department of Energy National Nuclear Security Administration (“DOE/NNSA”) by Lawrence Livermore National Security, LLC. Site 300 is located approximately 1.33 miles to the west/southwest of the Hillview project. The Site 300 facility is used in the research, development, and testing of non -radioactive explosive materials to support DOE/NNSA stockpile stewardship, counterterrorism and counterproliferation programs. Site 300 has been in operation as an explosive testing and research facility since 1955.

Site 300 conducts explosive testing in both indoor and outdoor facilities. Explosive testing conducted at Site 300 is regulated by the San Joaquin Valley Air Pollution Control District (“SJVAPCD”).

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Currently, Site 300 operates under a SJVAPCD air permit that allows detonations of explosives up to 100 pounds per day and 1,000 pounds per year. To minimize noise impacts to surrounding land uses, adjacent neighbors and other sensitive receptors, Site 300 constructed the Contained Firing Facility in 2000. The concrete, 28,000 square foot facility allows Site 300 to conduct explosive tests indoors.

Intermittent outdoor explosive tests (otherwise known as open detonations) are also conducted.

In the Fall of 2017, DOE/NNSA submitted a new SJVAPCD permit application and released a Draft Environmental Assessment proposing to increase the weight of explosives from the current limit of 100 lbs./day to 1,000 lbs./day, and from 1,000 lbs./year to 7,500 lbs./year. The proposed increase would allow larger single detonations and would result in more open detonations. The City and the County submitted comment letters expressing concern and questions regarding potential increase in noise impacts. To date, the SJVAPCD has not taken any action on the permit application.

Value of Property in the District

Appraisal. The City ordered preparation of an appraisal report dated March 9 , 20 22 (the “Appraisal”), of the estimated value of the taxable land within the District as of a February 1, 2022 date of value. The Appraisal was prepared by Integra Realty Resources, San Francisco, California (the “Appraiser”). The Appraisal is set forth in APPENDIX H hereto. The description herein of the Appraisal is intended for limited purposes only; the Appraisal should be read in its entirety. The conclusions reached in the Appraisal are subject to certain assumptions, conditions and qualifications which are set forth in the Appraisal.

Parcels Appraised. The properties appraised represent various parcels within the District. As of the date of value of the Appraisal, of the 214 assessor’s parcels representing the taxable parcels within the District, no parcels had completed homes. As such, a “not -less than” estimate of market value for each of the applicable floor plans determined appraised and assigned to each respective assessor’s parcel, based on its floor plan.

Value Estimate. The
Appraisal provides a market value of the appraised properties , as well as a cumulative, or aggregate, value of properties as of the February 1, 2022 date of value. The aggregate value is not the market value of the appraised properties in bulk.

The appraised valuation excludes the value of all portions of the property in the District designated for public and quasi -public purposes, assumes the proceeds of the 2022 Bonds have been used to reimburse the completion of certain improvements associated with the District, and accounts for the impact of the lien of the Special Tax. The following estimate represents the hypothetical market value of the property to be subject to the Special Tax. The value estimate for the property as of the February 1, 2022 date of value, using the methodologies described in the Appraisal and subject to the limiting conditions and special assumptions set forth in the Appraisal, is $32,100,000.

Value Method. Appraisers usually consider three approaches to estimating the market value of real property. These are the cost approach, sales comparison approach, and the income capitalization approach. Reconciliation of the various indications into a conclusion of value is based on an evaluation of the quantity and quality of available data in each approach and the applicability of each approach to the property type. The methodology employed in the Appraisal is the sales comparison approach.

Hypothetical Condition. The market value estimated in the Appraisal is based on a hypothetical condition that proceeds of the 2022 Bonds are available to reimburse the completion of certain improvements associated with the District.

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Assumptions and Limiting Conditions . In addition to the hypothetical condition described above, the market value of the appraised parcels is subject to a number of other assumptions and conditions which affect the estimates as to value, including, among others, the following:

• The value estimate assumes that the transfer would reflect a cash transaction or terms considered to be equivalent to cash. The estimate is also premised on an assumed sale after reasonable exposure in a competitive market under all conditions requisite to a fair sale, with buyer and seller each acting prudently, knowledgeably, for their own self -interest, and assuming that neither is under undue stress. Additionally, the estimate assumes that the appraised properties within the boundaries of the District are not marketed concurrently, which would suggest a market under duress.

• The valuation analysis did not include review of a current title report of all properties to determine any possible conditions of title affecting the properties appraised. The Appraiser accepts no responsibility for matters pertaining to title.

• The Appraiser has also assumed that there is no hazardous material on or in the property that would cause a loss in value. Should future conditions and events involving hazardous material reduce the level of permitted development or delay the completion of any projected development, the value of the undeveloped land would likely be reduced from that estimated by the Appraiser. See “BOND OWNERS’ RISKS – Property Values” and “– Hazardous Substances” below.

See “APPENDIX H – Appraisal Report” hereto for a description of certain assumptions made by the Appraiser. Accordingly, 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, that 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.

Limitations of Appraisal Valuation. Property values may not be evenly distributed throughout the District; 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 2022 Bonds are outstanding in that the City has no control over the market value of the property within the District 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 “BOND OWNERS’ RISKS – Other Possible Claims Upon the Value of Taxable Property” below.

For a description of certain risks that might affect the assumptions made in the Appraisal, see “BOND OWNERS’ RISKS” herein. Neither the City nor the Underwriter makes any representation as to the accuracy or completeness of the Appraisal. See APPENDIX H for the Appraisal Report.

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Value-to-Lien Ratios

The table below shows the approximate value-to-lien ratio for the parcels in the District, based on the appraised values set forth in the Appraisal. The table below is based on the proposed par amount of the 2022 Bonds only. When including the general obligation bond indebtedness shown on the overlapping debt statement, the value-to-lien ratio is 4.06:1*.

No assurance can be given that the amounts shown in these tables will conform to those ultimately realized in the event of a foreclosure action following delinquency in the payment of the Special Taxes.

Table 3
City of Tracy Community Facilities District No. 2021-1 (Hillview) Maximum Special Tax Revenue and Summary of Value-to-Lien Ratios (Development Status as of February 1, 2022)

Development Status and
Property Ownership (1)
Residential
Units
FY 2022-23
Maximum Special
Tax Rate
FY 2022-23
Maximum
Special Tax
Revenue Appraised Value
Allocated 2022
Bond Debt*(2)
Average
Value-to-Lien
Ratio*

Developed Property
Lennar Homes of California 16 $2,008 $32,134 $2,400,000 $582,430 4.12 AG Essential Housing CA 4, LP 198 2,008 397,659 29,700,000 7,207,570 4.12

Total 214 $429,793 $32,100,000 $7,790,000 4.12

* Preliminary; subject to change.
(1) Based on building permits issued as of February 1, 2022. Ownership information per the Appraisal Report. (2) Allocated based on the Fiscal Year 2022-23 maximum special tax revenue.

Source: Integra Realty Resources; Goodwin Consulting Group, Inc

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Direct and Overlapping Governmental Obligations

Overlapping Debt Statement. Contained within the boundaries of the District are certain overlapping local agencies providing public services. Many of these local agencies have outstanding debt. The direct and overlapping debt affecting the District as of March 1, 2022 is shown in the table below, a direct and overlapping debt report (the " Debt Report ") prepared by California Municipal Statistics, Inc. The Debt Report is included for general information purposes only. Neither the City nor the Underwriter has reviewed the Debt Report for completeness or accuracy and neither makes any representation in connection therewith.

The Debt Report generally includes long term obligations sold in the public credit markets by public agencies whose boundaries overlap the boundaries of the District in whole or in part. These long- term obligations are not payable from revenues of the District (except as indicated) nor are they necessarily obligations secured by land within the District. In many cases long term obligations issued by a public agency are payable only from the general fund or other revenues of such public agency.

The contents of the Debt Report are as follows: (1) the first column indicates the public agencies that have outstanding debt as of the date of the Debt Report and whose territory overlaps the District; (2) the second column shows the percentage of the assessed valuation of the overlapping public agency identified in column 1 which is represented by property located within the District; and (3) the third column is an apportionment of the dollar amount of each public agency's outstanding debt (which amount is not shown in the table) to property in the District, as determined by multiplying the total outstanding debt of each agency by the percentage of the public agency's assessed valuation represented in column 2.

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Table 4
City of Tracy Community Facilities District No. 2021-1 (Hillview) Direct and Overlapping Governmental Obligations
As of March 1, 2022

2021-22 A ssessed Valuation: $ 6,634,200 (Land & Improvements)

DIRECT AND OVERLAPPING TAX AND ASSESSMENT DEBT: %
Applicable Debt 3/1/22
San Joaquin Delta Community College District General Obligation Bonds 0.007% $13,136 Tracy Unified School District General Obligation Bonds 0.029 8,991 Jefferson School District General Obligation Bonds 0.206 92,135 City of Tracy Community Facilities District No. 2021-1 (1) 100.000 0 (1) TOTAL DIRECT AND OVERLAPPING TAX AND ASSESSMENT DEBT $114,262

OVERLAPPING GENERAL FUND DEBT:

San Joaquin County General Fund Obligations 0.007% $4,411 City of Tracy General Fund Obligations 0.04 8 8,224 TOTAL OVERLAPPING GENERAL FUND DEBT $12,635

COMBINED TOTAL DEBT $126,897 (2)
Ratios to 2021-22 As sessed Valuation:

Direct Debt ($0) ..................................................................................... 0.00% Total Direct and Overlapping Tax and Assessment Debt ...................... 1.72% Combined Total Debt .............................................................................. 1.91%

(1) Excludes the 2022 Bonds.
(2) Excludes tax and revenue anticipation notes, enterprise revenue, mortgage revenue and non-bonded capital lease obligations.

Source: California Municipal Statistics, Inc.

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Estimated Tax Burden on Single-Family Homes

The following table sets forth the estimated total tax burden on a developed single- family unit in the District, based on special tax rates for Fiscal Year 2022-23.

Table 5
City of Tracy Community Facilities District No. 2021-1 (Hillview) Fiscal Year 2022-23 Illustrative Tax Bill

Assumptions
Base Price (1) $715,000
Less: Homeowner's Exemption ($7,000)
Net Expected Assessed Value $708,000

Ad Valorem Tax Rate(2)

County General 1.000000% $7,080
Jefferson Elem 2010 Meas J 2011A Bond 0.011600 82
Jefferson Elem 2010 Meas J 2013B Bond 0.009600 68
Jefferson Elem 2010 Meas J 2014C Bond 0.003800 27
SJ Delta College 2004 Meas 2015R Bond 0.008800 62
SJ Delta College 2004 Meas 2018D Bond 0.002800 20
SJ Delta College 2004 Meas 2020R Bond 0.001900 13
SJ Delta College 2004 Meas 2021R Bond 0.002800 20
Tracy-Lammersville USD 2006 2014R Bond 0.006400 45
Tracy-Lammersville USD 2006 2015R Bond 0.005900 42
Tracy-Lammersville USD 2006 2020R Bond 0.001400 10
Total Ad Valorem Taxes 1.055000% $7,469

Direct Charges(3)
Tracy Rural Fire $134
Water Zone 2 3
SJC Mosquito Abate 2
SJC Mosq & VCTR Contr 9
CSA No 53 Haz Was 4
CFD No. 2021-1 (Hillview) Special Tax(4) 2,008
CFD No. 2021-2 (Citywide Services) 506
Total Direct Charges $2,667

Total Taxes and Direct Charges $10,136
Percentage of Base Price 1.42%

(1) Based on the appraisal report.
(2) Based on the Fiscal Year 2021 -22 ad valorem tax rates for the tax rate area within the District.

Ad valorem tax rates are subject to change in future years. (3) Based on the Fiscal Year 2021 -22 charges identified on the San Joaquin County -issued property tax bills. Charges subject to change in future years. Does not reflect any amounts for PACE liens.

Property owners in the District may elect to have PACE assessment liens placed on their property. (4) Equal to the maximum facilities special tax for Fiscal Year 2022-23.

Source: Integra Realty Resources; San Joaquin County Tax Collector’s Office; Goodwin Consulting Group, Inc.

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Special Tax Collection and Delinquency Rates

Fiscal Year 2022- 23 is the first fiscal year in which the Special Tax will be levied. Accordingly, collection and delinquency information is not yet available.

Potential Consequences of Special Tax Delinquencies

General. Delinquencies in the payment of property taxes (including the Special Taxes) with respect to property in the District could result in draws on the 2022 Reserve Fund established for the 2022 Bonds, and perhaps, ultimately, a default in the payment on the 2022 Bonds. See “BOND OWNERS’ RISKS.”

The Board of Supervisors of San Joaquin County adopted the Teeter Plan in Fiscal Year 1994 -

95. The County has elected to apply its Teeter Plan to the collection of the Special Taxes in the District.

Special Tax Enforcement and Collection Procedures. The City could receive additional funds for the payment of debt service through foreclosures sales of delinquent property, but no assurance can be given as to the amount of foreclosure sale proceeds or when foreclosure sale proceeds would be received. The City has covenanted in the Fiscal Agent Agreement to take certain enforcement actions and commence and pursue foreclosure proceedings against delinquent parcels under the terms and conditions described herein. See “SECURITY FOR THE 2022 BONDS — Covenant to Foreclose.”

Foreclosure actions would include, among other steps, formal City Council action to authorize commencement of foreclosure proceedings, mailing multiple demand letters to the record owners of the delinquent parcels advising them of the consequences of failing to pay the applicable Special Taxes and contacting secured lenders to obtain payment. If these efforts were unsuccessful, they would be followed (as needed) by the filing of an action to foreclose in superior court against each parcel that remained delinquent.

Limitations on Increases in Special Tax Levy. If owners are delinquent in the payment of Special Taxes, the City may not increase Special Tax levies to make up for delinquencies for prior Fiscal Years above the Maximum Special Tax rates specified for each category of property within the District.

See “SECURITY FOR THE 2022 BONDS – Rate and Method.” In addition, Section 53321(d) of the Act provides that the special tax levied against any parcel for which an occupancy permit for private residential use has been issued may not be increased as a consequence of delinquency or default by the owner of any other parcel within a community facilities district by more than 10% above the amount that would have been levied in such Fiscal Year had there never been any such delinquencies or defaults.

In cases of significant delinquency, these factors may result in defaults in the payment of principal of and interest on the 2022 Bonds. See “BOND OWNERS’ RISKS.”

OWNERSHIP AND DEVELOPMENT OF THE DISTRICT
The information regarding the development and ownership of the Property contained under this caption, “OWNERSHIP AND DEVELOPMENT OF THE DISTRICT ,” has been provided by representatives of Lennar Homes of California, LLC , a California limited lia bility company (“ Lennar

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Homes”), and has not been independently confirmed or verified by the Underwriter, the City, or the District. The Underwriter, the City, and the District make no representation as to the accuracy or adequacy of the information contained under this caption. There may be material adverse changes in this information after the date of this Official Statement. Neither the 2022 Bonds nor the Special Taxes securing the 2022 Bonds are personal obligations of Lennar Homes, or any affiliate thereof, or any other property owner and, in the event that any property owner defaults in the payment of its Special Taxes, the District may proceed with judicial foreclosure but has no direct recourse to the assets of any property owner or any affiliate thereof. See “BOND OWNERS’ RISKS” herein.

Lennar Homes

General. 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”). All references in this Official Statement to Lennar Homes prior to February 1, 2022 shall mean Lennar Homes of California, Inc. a California corporation, and all references in this Official Statement to Lennar Homes on and after February 1, 2022 shall mean Lennar Homes of California, LLC, a California limited liability company.

Lennar Homes is based in Irvine, California and has been in the business of developing residential real estate communities in California since 1996. Lennar Homes is wholly-owned by U.S. Home, LLC, a Delaware limited liability company (“U.S. Home”). U.S. Home is wholly -owned by Lennar Corporation, which is based in Miami, Florida (“ Lennar Corporation”). Founded in 1954, Lennar Corporation completed its initial public offering in 1971 and listed its common stock on the New York Stock Exchange in 1972. Lennar Corporation’s Class A and Class B common stock are listed on the New York Stock Exchange under the symbols “LEN” and “LEN.B.” respectively. Lennar Corporation is one of the largest homebuilders in the United States based on home sales revenues and net earnings, and operates under a number of brand names, including Lennar Homes and U.S. Home. Lennar Homes primarily develops residential communities both within the Lennar Corporation 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 Securities Exchange Act of 1934, as amended, and, in accordance therewith, files reports, proxy statements, and other information, including financial statements, with the Securities and Exchange Commission (the “ SEC”).

Such filings, particularly 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 Official Statement 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

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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 2022 Bonds.

Property Ownership in the District

The Project. Lennar Homes is the developer of approximately 45. 34 acres of property that is being subdivided and developed as 214 single -family detached homes in a project known as “Hillview” (herein, the “Project”). The Project is located in the Tracy Hills Specific Plan Area, east of Corral Hollow Road in the vicinity of Tracy Hills Drive. The Project is also located immediately to the west of the Tracy Hills Project. Phase 1A of Tracy Hills is being developed as 1,203 single- family units, 808 of which have closed escrow to homeowners as of February 27, 2022, with an additional 165 in escrow. See the location map below (on which the Project is referred to as Tracy Hills KT Property) :

The Project is subject to Tentative Map 4037 (as discussed further below), which includes 214 single-family residential lots, two commercial parcels, a linear park parcel, a homeowners’ association recreation area parcel, retention basin parcel and numerous other parcels to be owned by the homeowners’ association.

Lennar Homes is utilizing a land bank as discussed below. The Landbank Owner owns most of the land in the Project and Lennar Homes has an option to acquire the lots within the Project over time pursuant to a takedown schedule. A summary of the current ownership of the Project as of March 15, 2022, is set forth below:

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CITY OF TRACY
COMMUNITY FACILITIES DISTRICT NO. 2021-1 (HILLVIEW)
LENNAR HOMES – STATUS OF OWNERSHIP
(As of March 15, 2022)
Category Number(1)
Completed Homes – Conveyed to Homeowners 0
Model Homes Owned by Lennar Homes 2
Production Homes under Construction – owned by Lennar Homes 26 Production Homes under Construction - owned by the Landbank Owner 0 Vacant lots – Owned by the Landbank Owner 186
Total 214
____________________
(1) Of the homes under construction owned by Lennar Homes and the Landbank Owner, none are yet in escrow. Of the vacant lots owned by the Landbank Owner, none are yet in escrow. Homes in escrow may not result in closed escrows as sales contracts are subject to cancellation.

The Landbank Structure. Lennar Homes, as buyer, and The KT Project Owner, LLC, as seller, entered into a Purchase and Sale Agreement and Joint Escrow Instructions, dated ________ (“ Lennar PSA”), for the purchase and sale of the 214 lots located in the District (the “ District Lots ”). Prior to the close of escrow under the Lennar PSA, Lennar Homes assigned the Lennar PSA to AG Essential Housing CA 4, L.P., a Delaware limited partnership (“ AG4”), pursuant to an Agreement to Assign Purchase and Sale Agreements, dated December 21, 2020, so that AG4 could acquire the District Lots in order to set up a land banking structure.

To facilitate the land banking structure for the District Lots, as well as for an additional 497 lots in several other projects (the “ Non-District Lots”), Lennar Homes and AG4 entered into that certain Option Agreement, dated February 26, 2021 (the “ Lennar Option Agreement ”) whereby Lennar Homes has the option, but not the obligation, to purchase the 214 District Lots (as well as the 497 Non- District Lots) from AG4 pursuant to a takedown schedule agreed upon between Lennar Homes and AG4.

Lennar Homes and AG4 further memorialized their rights and obligations under the Lennar Option Agreement by recording that certain Memorandum of Option Agreement in the Official Records of San Joaquin County on February 25, 2021 as Instrument No. 2021-036899 (the “Original Memo of Lennar Option”).

In addition to the Option Agreement, Lennar Homes and AG4 entered into a Construction Agreement (“ Lennar Construction Agreement ”) granting Lennar Homes the right to enter upon the District Lots (and the Non- District Lots) for the purpose of, among other things, constructing model homes, dwelling units and related subdivision improvements on the District Lots (and Non-District Lots) before Lennar Homes acquires the District Lots (and Non -District Lots) from AG4.

On September 23, 2021, AG4 conveyed the Distr ict Lots and the Non- District Lots to AG Essential Housing CA 1, L.P., a Delaware limited partnership (the “ Landbank Owner”). Further, AG4 assigned, and the Landbank Owner assumed, all of AG4’s obligations under the Lennar Option Agreement and the Lennar C onstruction Agreement. In connection therewith, Lennar Homes and the Landbank Owner memorialized their rights and obligations under the Lennar Option Agreement by recording that certain Amended and Restated Memorandum of Option Agreement in the Official Records of San Joaquin County on September 24 , 2021 , as Instrument No. 2021-160747 (the “Amended Memo of Lennar Option ”).

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Lennar Homes’ planned development of the District Lots includes the construction of 214 single- family residential homes and the sale of such homes to individual homebuyers. Pursuant to the terms and conditions of the Lennar Option Agreement, Lennar Homes is required to, among other things, cause the completion and satisfaction of the certain on- site and offsite improvements to the Distric t Lots. During the term of the Lennar Option Agreement, Lennar Homes is obligated to pay all taxes on the District Lots (and Non -District Lots), including special taxes.

Under the terms of the Lennar Option Agreement, the Landbank Owner agreed to provide Lennar Homes the exclusive right and option to purchase the District Lots and the Non- District Lots in consideration for (a) an initial option payment, which payment has been made to the Landbank Owner; (b) the covenants of Lennar Homes to timely pay the option payments under the Lennar Option Agreement on a monthly basis in arrears; and (c) upon exercise of the option, the payment of the purchase price for each set of lots acquired.

The District Lots and the Non-District Lots must be purchased in certain groups and in a specified order, although Lennar Homes may acquire more lots than scheduled and at earlier times so long as the identified lots are acquired by the applicable takedown date. In addition, pursuant to the Lennar Option Agreement and the Lennar Construction Agreement and with some limitations, the Landbank Owner has granted Lennar Homes a license to enter upon the property to construct homes before it acquires the lots from the Landbank Owner. It is Lennar Homes’ intention to substantially complete all horizontal and vertical development on the lots it acquires prior to the applicable takedown.

The failure to acquire the lots in the specified order will result in the payment of a premium in addition to the purchase price. Under the Lennar Option Agreement, the District Lots must be acquired pursuant to the following schedule, although the Lennar Option Agreement contains provision allowing for one month extensions on acquisition of lots subject to the payment of an extension fee and other conditions:

Takedown Schedule
Under Lennar Option Agreement
(District Lots Only)

Acquisition
Date
Number
of Lots
Cumulative
Number of
Lots Acquired Status as of March 15, 2022
11/10/21 4 4 Acquired
12/10/21 6 10 Acquired
1/10/22 6 16 Acquired
2/10/22 6 22 Acquired
3/10/22 6 28 Acquired
4/10/22 6 34
5/10/22 6 40
6/10/22 6 46
7/10/22 6 52
8/10/22 6 58
9/10/22 6 64
10/10/22 6 70
11/10/22 6 76
12/10/22 6 82
1/10/23 6 88
2/10/23 6 94
3/10/23 6 100
4/10/23 6 106

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5/10/23 6 112
6/10/23 6 118
7/10/23 6 124
8/10/23 6 130
9/10/23 6 136
10/10/23 6 142
11/10/23 6 148
12/10/23 6 154
1/10/24 6 160
2/10/24 6 166
3/10/24 6 172
4/10/24 6 178
5/10/24 6 184
6/10/24 30 214
214

The option under the Lennar Option Agreement expires on the earlier of (i) the last date permitted for the final takedown specified on the takedown schedule (for both the District Lots and the non-District Lots) and the expiration of any applicable cure period, or (ii) the date Lennar Homes has acquired all of the District Lots and Non -District Lots in accordance with the Lennar Option Agreement. The failure to timely acquire lots could result in the termination of the option and Lennar Homes will no longer have a right to purchase any of the remaining units under the Lennar Option Agreement.

The Lennar Option Agreement covers both the District Lots and the Non- District Lots, and the failure by Lennar Homes to acquire the Non-District Lots in a timely manner could result in a termination of the entirety of the Option Agreement, including the right to acquire the District Lots. In the event that Lennar Homes does not exercise its option on the District Lots or the right to purchase the District Lots expires or is terminated, the Landbank Owner being an investor only and not a homebuilder, would likely attempt to sell such District Lots to another merchant builder.

Under the Lennar Construction Agreement, Lennar Homes has agreed to use commercially reasonable efforts to construct all of the on -site and off -site improvements and obtain the requisite governmental permits and approvals necessary to create finished lots on the District Lots and the Non - District Lots. The Lennar Construction Agreement contains various dates for completion of work in phases.

During the term of the Lennar Option Agreement and the Lennar Construction Agreement, Lennar Homes is obligated to pay all taxes on the District Lots and the Non-District Lots.

Development of the Project. Lennar Homes expects to acquire and develop all 214 of the District Lots and to complete construction by the second quarter of 2024 and convey all such homes to individual homeowners shortly thereafter.

Lennar Homes has pulled all 214 building permits for the District Lots.

The following table sets forth the estimated number of lots, home sizes, and base sales prices for the Project planned within the District (assuming that Lennar Homes exercises its options to acquire all of the District Lots from the Landbank Owner).

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Table 6
City of Tracy
Community Facilities District No. 2021-1 (Hillview)
Lennar Homes – Status of Ownership
(As of March 15, 2022)

Floor Plan
Approx.

Square
Footage
Total
Number
of
Planned
Units(1)
Units
Closed to
Homeowners
Units
Completed
but Not
Closed(2)(3)
Finished
Lots(3)
Units Under
Construction(3)
Est. Base
Price(4)
1 1,723 49 0 0 42 7 $526,880
2 1,878 57 0 0 48 9 $554,880
3 2,075 51 0 0 44 7 $574,880
4 2,209 57 0 0 52 5 $581,880
Totals 214 0 0 186 28

(1) The number of units in each plan is an estimate and is subject to change as the market dictates. (2) Includes 2 model units under construction owned by Lennar Homes. (3) Of the 28 lots owned by Lennar Homes as of March 15, 2022, none were yet under contract to be sold to homeowners; of the 186 lots owned by the Landbank Owner, none were yet under contract to be sold to homeowners. (4) Base sale prices are estimated as of March 15, 2022. Base sales prices are subject to change and exclude any lot premiums, options, upgrades, incentives and any selling concessions or price reductions which may be offered.

No assurance can be given that Lennar Homes will exercise its option under the Lennar Option Agreement to acquire all 214 District Lots or, if acquired, that home construction and sales will be carried out on the schedule 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 statement. Additionally, homes sold may not result in closed escrows as sales contracts are subject to cancellation.

Tract Map Status. On November 30, 2020, a large lot Final Map No. 4013 for the Project was recorded in the recorder’s office of San Joaquin County, creating the legal lots that comprise the Project.

On November 17, 2021, Final Map No. 4037 for the Project was recorded in the recorder’s office of San Joaquin County, creating 214 single family lots within the District.

Status of Infrastructure for the District

Infrastructure. All approvals and permits required for Lennar Homes’ development of the Project have been secured for residential construction except for approvals required in the normal course of development. As of March 15, 2022, in-tract improvements remaining to be completed within the Project consist primarily of finishing of streets, curbs, gutters, and landscaping. Lennar Homes expects to complete construction of the remaining in-tract improvements associated with the lots that it owns within the District as home construction on such lots is completed.

Conditions of Approval. Certain facilities required as conditions of developing the Project are further described below:

Services District.

Before final inspection of occupancy of the first dwelling unit (except for up to 10 model homes), the Project must be annexed into a services and maintenance community facilities district that covers various things, including maintenance of streets and landscaping, and police and fire services. On November 2, 2021, the City of Tracy Community Facilities District No. 2021-2 (Maintenance and Public Services) was formed, which included the Project, and the Notice of Special Tax Lien was recorded against the property in the Project on December 10, 2021, thus satisfying this condition.

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Parks. Before the approval of the first Final Map, an agreement must be recorded against the property that requires the completion by Lennar Homes and acceptance by the City of a linear park in the Project. The agreement was recorded on _________, 202__. Improvement plans for the linear park are currently being prepared.

Sanitary Sewer Pump Station. Before the final inspection of any residential building or certificate of occupancy for commercial building will be issued (except for model homes), Lennar Homes must design and construct the Sanitary Sewer Pump Station and such facility must be completed and functional as determined by the City Engineer. The Sanitary Sewer Pump Station is under construction.

Corral Hollow Road Improvements. Prior to issuance of final inspection or occupancy of Model Homes and residential units, Lennar Homes shall complete the following Corral Hollow Road Improvements to provide adequate and safe traffic conditions on Corral Hollow Road to the satisfaction of the City Engineer:
• Corral Hollow Road/Tracy Hills Drive/Street D. Status: U nder construction.
• Corral Hollow Road/Street A (RIRO Driveway). Status: Under construction.

SIA. Prior to approval of the first Final Map, Lennar Homes and the City must enter into and record a subdivision improvement agreement (SIA). This has been completed.

Gro
wth Management Ordinance

On June 16, 1987, the City Council of the City adopted by ordinance a Residential Growth Management Plan, as subsequently amended (the “ Growth Management Ordinance”). It provides for eligibility requirements and procedures for residential building permits for projects in the City. Under the Growth Management Ordinance, builders must obtain a residential growth allotment (“RGA”) in order to secure a residential building permit.

Currently, the Growth Management Ordinance allows RGAs to be issued for 600 to 750 building permits per year. The number of RGAs allowed in each year is based on the average of units absorbed since the year 2000. The allocation of the RGAs is governed by the Council -approved Growth Management Ordinance guidelines (the “GMO Guidelines”), which were last modified in 2014.

RGAs can ordinarily be perfected through either a full building permit or a foundation-only permit.

The Project received (i) an allocation of 80 RGAs for 2020, all of which were perfected by obtaining 80 building permits, and (ii) an allocation of 134 RGAs for 2021, all of which were perfected in 2021 by the obtaining the remaining 134 building permits for the Project.

Pursuant to the KT Property II (Tract 4037) Impact Fee Payment and RGA Agreement, dated December 22, 2021, as amended by the Supplemental KT Property II (Tract 4037) Impact Fee Payment and RGA Agreement, dated December 29, 2021, Lennar Homes and the City agreed that the City would issue building permits and confirm Lennar Homes’ entitlement to RGAs under the Growth Management Ordinance and the GMO Guidelines prior to Lennar Homes’ payment of the development impact fee obligations (“DIF Obligations”) so long as Lennar Homes (i) paid the DIF Obligations not later than August 1, 2022, (ii) provided to City security for such payment in the form of a letter of credit equal in value to the amount of the DIF Obligations by January 7, 2022, and (iii) paid all fees due at building permit other than the DIF Obligations. Lennar Homes has posted the letter of credit prior to the January 7, 2022 deadline and paid the other fees to the City. Consequently, Lennar Homes must pay the DIF Obligations prior to August 1, 2022. Lennar Homes anticipates paying the DIF Obligations no later than August 1, 2022 per the Impact Fee Payment and RGA Agreement.

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The Financing Plan in the District

Lennar Homes has provided the following table showing the estimated sources and uses for Lennar Homes related to the development and sale of the 214 homes planned for the District.

Table 7
City of Tracy
Community Facilities District No. 2021-1 (Hillview)
Lennar Homes – Sources and Uses of Funds
(As of March 15, 2022)(1)

Total Budget % Complete
Through
March 15, 2022
Remainder to be
Completed
Sources of Funds
Sales of Homes $119,931,320 -- $0 $119,931,320
CFD - Estimated Proceeds(2) 6,900,000 -- 0 6,900,000
Credits/Reimbursements 15,619,104 -- 15,619,104 15,619,104 Equity $142,450,424 -- $15,619,104 $142,450,424
Total Sources of Funds

Uses of Funds
Land $42,305,874 9.82% $4,157,507 $38,148,367
On-site Construction (In-tracts) 17,575,007 60.00 10,546,081 7,028,926 Direct Construction 48,105,138 1.81 871,705 47,233,433
Selling & Marketing 5,867,022 0.74 43,811 5,823,211
Total Uses of Funds $113,853,041 $15,619,104 $98,233,937

NET CASH FLOW

(1) Estimated as of March 15, 2022; actual amounts may differ. (2) Estimate for proceeds of 2022 Bonds.

Source: Lennar Homes.

To date, Lennar Homes has financed its land acquisition and various site development and homebuilding costs related to its property in the District through internally generated funds. As of March 15, 2022, Lennar Homes has expended approximately $15.6 million on land acquisition and development and homebuilding costs in the District. Lennar Homes expects to incur approximately $98.2 million on remaining land acquisition, development, homebuilding, marketing, and sales costs for the Project in the District. Lennar Homes expects to use home sales revenues and internal funding to complete its development within the District, and believes that it will have sufficient funds available to complete its planned development as described in this Official Statement.

Although Lennar Homes expects to have sufficient funds available to complete its development in the District as described in this Official Statement, there can be no assurance that amounts necessary to finance the development costs will be available from Lennar Homes, Lennar Corporation or any other source when needed. Neither Lennar Corporation, nor any of its subsidiaries or related entities are under any legal obligation of any kind to expend funds for the development of and construction of homes on its property in the District. Any contributions by Lennar Homes or Lennar Corporation to fund the costs of such development are entirely voluntary.

If and to the extent that internal funding, including but not limited to home sales revenues, are inadequate to pay the costs to complete the planned development by Lennar Homes within the District and other financing is not put into place, there could be a shortfall in the funds required to complete the planned development by Lennar Homes in the District.

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Except as described in this Official Statement and except for those consents, permits, authorizations, certifications and approvals of governmental entities required in the ordinary course of development, Lennar Homes has no actual knowledge of any impediment to construction or obtaining land use entitlements which could be reasonably expected to have a material adverse effect on its ability to complete the planned development of its property within the District as described in the Official Statement. Although the information in this Official Statement reflects the current development expectations of Lennar Homes, no assurance can be given that home construction and sales will be carried out on the schedule and according to the plans described herein, or that the home construction and sale plans or base prices set forth herein 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 under contract to be sold may not result in closed escrows as sales contracts are subject to cancellation. See “BOND OWNERS’ RISKS – Concentration of Property Ownership.”

COVID-19 Impact

Lennar Homes has not experienced any material increases in costs, or any development or home sale delays resulting from decisions to reduce financing for the projects in the District, inability to obtain financing, work stoppages, reduced attendance of workers, lack of or delays in the delivery of building materials or the ability to obtain necessary inspections and approvals, which Lennar Homes attributes to the COVID-19 pandemic. To date, Lennar Homes has continued to fund and implement its projects as described in this Official Statement and intends to do so to complete such projects. However, the development of Lennar Homes’ projects within the District is subject to delays caused by the COVID-19 pandemic. As the impacts caused by the outbreak evolve, there could be an adverse impact on the timing and costs of Lennar Homes’ development within the District. Lennar Homes cannot predict the ultimate effects of the COVID -19 outbreak or whether any such effects would have a material adverse effect on the ability to develop its projects as planned.

See the caption “BOND OWNERS’ RISKS
– Public Health Emergencies ” for certain risks
associated with the outbreak of the COVID-19 Pandemic.

BOND OWNERS' RISKS

The purchase of the 2022 Bonds described in this Official Statement involves a degree of risk that may not be appropriate for some investors. The following includes a discussion of some of the risks which should be considered before making an investment decision. This discussion does not purport to be comprehensive or definitive and does not purport to be a complete statement of all factors which may be considered as risks in evaluating the credit quality of the 2022 Bonds.

Limited Obligation of the City to Pay Debt Service

The City has no obligation to pay principal of and interest on the 2022 Bonds if Special Tax collections are delinquent or insufficient, other than from amounts, if any, on deposit in the 2022 Reserve Fund or funds derived from the tax sale or foreclosure and sale of parcels for Special Tax delinquencies.

The City is not obligated to advance funds to pay debt service on the 2022 Bonds.

Levy and Collection of the Special Tax

General. The principal source of payment of principal of and interest on the 2022 Bonds is the proceeds of the annual levy and collection of the Special Tax against property within the District.

Limitation on Maximum Special Tax Rate. The annual levy of the Special Tax is subject to the maximum annual Special Tax rate authorized in the Rate and Method. The levy cannot be made at a

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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 2022 Bonds.

No Relationship Between Property Value and Special Tax Levy. Because the Special Tax formula set forth in the Rate and Method 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 parcels of Taxable Property 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 parcels of Taxable Property and their proportionate share of debt service on the 2022 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 parcel of Taxable Property to vary from the Special Tax that might otherwise be expected:

Transfers to Governmental Entities. The number of parcels of Taxable Property could be reduced through the acquisition of Taxable Property 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. See “– Exempt Properties” below.

Property Tax Delinquencies. Failure of the owners of Taxable Property 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 Special Tax revenues. See “– Property Tax Delinquencies” below.

Delays Following Special Tax Delinquencies and Foreclosure Sales. 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 2022 BONDS – Covenant to Foreclose” 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 2022 Bonds pending such sales or the prosecution of foreclosure proceedings and receipt by the City of the proceeds of sale if the 2022 Reserve Fund is depleted. See “SECURITY FOR THE 2022 BONDS – Covenant to Foreclose.”

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 a federal governmental agency has or obtains an interest. See “ – FDIC/Federal Government Interests in Properties” below.

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 such 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.

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Concentration of Ownership

All of the taxable property within the District is currently owned by Lennar Homes or the Landbank Owner. As of February 1, 2022, and assuming no further home closings after such date, the property owned by Lennar Homes or the Landbank Owner is estimated to be responsible for approximately 100% of the Fiscal Year 202 2-23 Special Tax levy. See “THE DISTRICT – Value-to-Lien Ratios” and “OWNERSHIP AND DEVELOPMENT OF The District.”

The owners of property in the District are not personally obligated to pay the Special Tax attributable to their 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 2022 Bonds have no recourse against the owner, such as filing a lawsuit to collect money.

Failure of Lennar Homes, the Landbank Owner, or any future merchant builder or future owner of significant property subject to the Special Taxes in the District to pay installments of Special Taxes when due could cause the depletion of the 2022 Reserve Funds 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 for the City to pay debt service with respect to the 2022 Bonds.

Potential Early Redemption of Bonds from Prepayments

Property owners within the District, including Lennar Homes and the Landbank Owner , are permitted to prepay up to 80% of the Facilities Special Tax obligation applicable to their parcel, subject to certain notice and other provisions of the Rate and Method. Such prepayments will result in a redemption of the 2022 Bonds on the interest payment date for which timely notice may be given under the Fiscal Agent Agreement following the receipt of the prepayment. The resulting redemption of 2022 Bonds that were purchased at a price greater than par could reduce the otherwise expected yield on such 2022 Bonds.

Property Tax Delinquencies

General. Delinquencies in the payment of property taxes and, consequently, the Special Taxes, can occur because the owners of delinquent parcels may not have received property tax bills from the County in a timely manner, including situations in which the County initially sent property tax bills to the property developer or merchant builder at a time when the parcels in question had already been sold to individual homeowners. Delinquencies can also reflect economic difficulties and duress by the property owner.

Numerous future delinquencies by the owners of Taxable Property in the District in the payment of property taxes (and, consequently, the Special Taxes, which are collected on the ordinary property tax bills) when due could result in a deficiency in Special Tax revenues necessary to pay debt service on the 2022 Bonds, which could in turn result in the depletion of the 2022 Reserve Fund, prior to reimbursement from the resale of foreclosed property or payment of the delinquent Special Tax. In that event, there could be a delay or failure in payments of the principal of and interest on the 2022 Bonds . See “SECURITY FOR THE 2022 BONDS – 2022 Reserve Fund,” and “THE DISTRICT – Potential Consequences of Special Tax Delinquencies.”

Measures to Mitigate Consequences of Continuing Delinquencies. The City intends to take certain actions designed to mitigate the impact of future delinquencies, including: enforcing the lien of the Special Taxes through collection procedures that will include foreclosure actions under certain

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circumstances (see “SECURITY FOR THE 2022 BONDS – Covenant to Foreclose”); and increasing the levy of Special Taxes against non-delinquent property owners in the District to the extent permitted under the Rate and Method and the Act, and to the extent the Special Taxes are not already being levied at the maximum Special Tax rate. See “THE DISTRICT – Potential Consequences of Special Tax Delinquencies.”

Limitations on Increases in Special Tax Levy. If property owners are delinquent in the payment of the Special Tax, the City may not increase Special Tax levies to make up for delinquencies for prior fiscal years above the maximum annual Special Tax rates specified in the Rate and Method.

In addition, the City’s ability to increase Special Tax levies on residential property to make up for delinquencies for prior Fiscal Years is limited by Section 53321(d) of the Act, which 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 by more than 10% above the amount that would have been levied in such Fiscal Year had there never been any such delinquencies or defaults.

In cases of significant delinquency, these factors may result in defaults in the payment of principal of and interest on the 2022 Bonds.

Risks Related to Homeowners with High Loan to Value Ratios

Any future decline in home values in the District could result in property owner unwillingness or inability to pay mortgage payments, as well as ad valorem property taxes and Special Taxes, when due.

Under such circumstances, bankruptcies are likely to increase. Bankruptcy by homeowners with delinquent Special Taxes would delay the commencement and completion of foreclosure proceedings to collect delinquent Special Taxes.

It is possible that laws could be enacted in the future to assist homeowners in default in the payment of mortgages and property taxes. It is further possible that federal laws could be enacted that would adversely impact the ability of the City to foreclose on parcels with delinquent Special Taxes. No assurance can be given that any such laws will be enacted, or if enacted will be effective in assisting affected homeowners.

Payment of Special Tax is Not a Personal Obligation of the Property Owners

An owner of Taxable Property is not personally obligated to pay the Special Taxes. Rather, the Special Taxes are an obligation running only against the parcels of Taxable Property. If, after a default in the payment of the Special Tax and a foreclosure sale by the City, the resulting proceeds are insufficient, taking into account other obligations also constituting a lien against the affected parcels of Taxable Property, the City has no recourse against the owner.

Appraised Values

The Appraisal summarized in APPENDIX H estimates the market value of the property that is currently Taxable Property within the District. This market value is merely the opinion of the Appraiser as of the date of value set forth in the Appraisal, and is subject to the assumptions and limiting conditions stated in the Appraisal. The City has not sought an updated opinion of value by the Appraiser subsequent to the date of value of the Appraisal, or an opinion of the value of the Taxable Property by any other appraiser. A different opinion of value might be rendered by a different appraiser.

The opinion of value assumes a sale by a willing seller to a willing buyer, each having similar information and neither being forced by other circumstances to sell or to buy. Consequently, the opinion

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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 addition, the opinion of value is made as of the date of value set forth in the Appraisal, based upon facts and circumstances existing as of the date of value. Differing facts and circumstances may lead to differing opinions of value. The appraised value is not evidence of future value because future facts and circumstances may differ significantly from the facts and circumstances at the time the Appraisal was prepared.

No assurance can be given that any of the Taxable Property in the District could be sold for the estimated market value contained in the Appraisal if that property should become delinquent in the payment of Special Taxes and be foreclosed upon.

Property Values

The value of Taxable Property within the District is a critical factor in determining the investment quality of the 2022 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 econom ic downturn, relocation of employers out of the area, shortages of water, electricity, natural gas or other utilities, destruction of property caused by earthquake, flood, landslides, wildfires, or other natural disasters, environmental pollution or contamination, or unfavorable economic conditions.

The following is a discussion of specific risk factors that could affect the value of property in the District.

Natural Disasters. The value of the Taxable Property 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 Taxable Property and the continued habitability and enjoyment of such private improvements.

The areas in and surrounding the District, like those in much of California, may be subject to unpredictable seismic activity, including earthquakes and landslides. Other natural disasters could include, without limitation, floods, wildfires, 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 Taxable Property may well depreciate or disappear. See “THE DISTRICT – Environmental Matters” for additional details on certain environmental matters.

Drought. Wi
th respect to droughts specifically, California has a history of suffering drought conditions periodically . On October 19, 2021, the Governor declared a Statewide drought state of emergency and requested that all water users voluntarily reduce water use by 15%. The declaration encouraged water agencies to draw upon supplies other than groundwater and to implement their water shortage contingency plans and authorized the State Water Resources Control Board to adopt regulations that prohibit wasteful water use (such as the use of potable water to wash paved surfaces or to irrigate landscaping during the two days following rainfall). On January 4, 2022, the State Water Resources Control Board adopted regulations that prohibit overwatering yards, washing cars without a shutoff nozzle, and watering grass within 48 hours after rainfall. There can be no assurance that drought conditions will not continue in 2022 and future years or, subside only to return in the future, or that

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subsequent State declarations will not impose stricter water use restrictions , potentially impacting the development of property in the District, the value of Taxable Property within the District, or economic activity within the District.

Wildfire. In recent years, drought conditions in the State (see “ – Drought above”) have led to increased risk of wildfire. In particular, certain electrical operators in the State have seen their distribution/transmission lines cause billions of dollars in property damage and the loss of lives. Although the land in the District is not in a high- risk area (or a special fire hazard severity zone) for wildfires, landslides, floods, or tornadoes, natural disasters such as these are unpredictable and may occur anywhere t hroughout the State, with devastating consequences, including resulting in significant delinquencies in the payment of Special Taxes, and reduction in the value of the parcels. No assurance can be given that wildfires will not erupt in the developments being undertaken in the District and negatively impact development of property in the District in the future.

Legal R
equirements. Other events that may affect the value of Taxable Property 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.

Hazardous Substances. One of the most serious risks in terms of the potential reduction in the value of Taxable Property is a claim with regard to a hazardous substance. In general, the owners and operators of Taxable Property 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, s ometimes referred to as “CERCLA” or the “Superfund Act,” is the most well -known and widely applicable of these laws, but California laws with regard to hazardous substances are also stringent and similar. Under many of these laws, the owner or operator is obligated to remedy a hazardous substance condition of property whether or not the owner or operator has anything to do with creating or handling the hazardous substance. The effect, therefore, should any of the Taxable Property be affected by a hazardous substance, is to reduce the marketability and value of the parcel by the costs of remedying the condition, because the purchaser, upon becoming owner, will become obligated to remedy the condition just as is the seller.

The property values set forth in this Official Statement do not take into account the possible reduction in marketability and value of any of the Taxable Property by reason of the possible liability of the owner or operator for the remedy of a hazardous substance condition of the parcel. Although the City is not aware that the owner or operator of any of the Taxable Property has such a current liability with respect to any of the Taxable Property, it is possible that such liabilities do currently exist and that the City is not aware of them.

Further, it is possible that liabilities may arise in the future with respect to any of the Taxable Property resulting from the existence, currently, on the parcel of a substance presently classified as hazardous but that 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 that 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 Taxable Property that is realizable upon a delinquency.

Other Possible Claims Upon the Value of Taxable Property

While the Special Taxes are secured by the Taxable Property, the security only extends to the value of such Taxable Property that is not subject to priority and parity liens and similar claims.

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The tables in the section s entitled “ THE DISTRICT – Direct and Overlapping Governmental Obligations” and “– Estimated Tax Burden on Single Family Homes ,” show the presently outstanding amount of governmental obligations, the tax or assessment for which is or may become an obligation of one or more of the parcels of Taxable Property. The tables do not specifically identify which of the governmental obligations are secured by liens on one or more of the parcels of Taxable Property.

In addition, other governmental obligations may be authorized and undertaken or issued in the future, the tax, assessment or charge for which may become an obligation of one or more of the parcels of Taxable Property and may be secured by a lien on a parity with the lien of the Special Tax securing the 2022 Bonds. Property owners can also voluntarily add Property Assessed Clean Energy (PACE) assessment liens on their property to finance energy efficiency improvements.

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 2022 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 prio rity over non -governmental liens on a parcel of Taxable Property, 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 Delays” below.

Exempt Properties

Certain properties are exempt from the Special Tax in accordance with the Rate and Method and the Act, which provides that properties or entities of the state, federal or local government are exempt from the Special Tax; provided, however, that property within the District acquired by a public entity through a negotiated transaction or by gift or devise, which is not otherwise exempt from the Special Tax, will continue to be subject to the Special Tax. See “SECURITY FOR THE 2022 BONDS – Rate and Method.”

In addition, although the Act provides that if property subject to the Special Tax is acquired by a public entity through eminent domain proceedings, the obligation to pay the Special Tax with respect to that property is to be treated as if it were a special assessment, the constitutionality and operation of these provisions of the Act have not been tested, meaning that such property could become exempt from the Special Tax. The Act further provides that no other properties or entities are exempt from the Special Tax unless the properties or entities are expressly exempted in a resolution of consideration to levy a new special tax or to alter the rate or method of apportionment of an existing special tax.

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 FDIC, the Federal National Mortgage Association, the Drug Enforcement Agency, the Internal Revenue Service, or other federal agency has or obtains an interest.

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

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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 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 the City 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 a parity with the Special Taxes and pre serve 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.

The City has not undertaken to determine whether any federal governmental entity currently has, or is likely to acquire, any interest (including a mortgage interest) in any of the parcels subject to the Special Taxes, and therefore expresses no view concerning the likelihood that the risks described above will materialize while the 2022 Bonds are outstanding.

FDIC. In the event that any financial institution making any loan which is secured by real property within the District is taken over by the FDIC, and prior thereto or thereafter the loan or loans go into default, resulting in ownership of the property by the FDIC, then the ability of the City to collect interest and penalties specified by State law and to foreclose the lien of delinquent unpaid Special Taxes may be limited.

The FDIC’s policy statement regarding the payment of state and local real property taxes (the “Policy Statement”) provides that property owned by the FDIC is subject to state and local real property taxes only if those taxes are assessed according to the property’s value, and that the FDIC is immune from real property taxes assessed on any basis other than property value. According to the Policy Statement, the FDIC will pay its property tax obligations when they become due and payable and will pay claims for delinquent property taxes as promptly as is consistent with sound business practice and the orderly administration of the institution’s affairs, unless abandonment of the FDIC’s interest in the property is appropriate. The FDIC will pay claims for interest on delinquent property taxes owed at the rate provided under state law, to the extent the interest payment obligation is secured by a valid lien. The FDIC will not pay any amounts in the nature of fines or penalties and will not pay nor recognize liens for such amounts. If any property taxes (including interest) on FDIC-owned property are secured by a valid lien (in effect before the property became owned by the FDIC), the FDIC will pay those claims. The Policy Statement further provides that no property of the FDIC is subject to levy, attachment, garnishment, foreclosure or sale without the FDIC’s consent. In addition, the FDIC will not permit a lien or security interest held by the FDIC to be eliminated by foreclosure without the FDIC’s consent.

The Policy Statement states that the FDIC generally will not pay non-ad valorem taxes, including special assessments, on property in which it has a fee interest unless the amount of tax is fixed at the time that the FDIC acquires its fee interest in the property, nor will it recognize the validity of any lien to the extent it purports to secure the payment of any such amounts. Special taxes imposed under the Act and a special tax formula which determines the special tax due each year are specifically identified in the

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Policy Statement as being imposed each year and therefore covered by the FDIC’s federal immunity.

The Ninth Circuit has issued a ruling on August 28, 2001 in which it determined that the FDIC, as a federal agency, is exempt from Mello-Roos special taxes.

The City is unable to predict what effect the application of the Policy Statement would have in the event of a delinquency in the payment of Special Taxes on a parcel within the District in which the FDIC has or obtains an interest, although prohibiting the lien of the Special Taxes to be foreclosed out at a judicial foreclosure sale could reduce or eliminate the number of persons willing to purchase a parcel at a foreclosure sale. Such an outcome could cause a draw on the 2022 Reserve Fund and perhaps, ultimately, if enough property were to become owned by the FDIC, a default in payment on the 2022 Bonds.

Depletion of 2022 Reserve Fund

The 2022 Reserve Fund is to be maintained at an amount equal to the Reserve Requirement for the 2022 Bonds. See “SECURITY FOR THE 2022 BONDS – 2022 Reserve Fund.” The 2022 Reserve Fund will be used to pay principal of and interest on the 2022 Bonds (and any Related Parity Bonds) if insufficient funds are available from the proceeds of the levy and collection of the Special Tax against property within the District. If the 2022 Reserve Fund is depleted, it can be replenished from the proceeds of the levy and collection of the Special Taxes that exceed the amounts to be paid to the owners of the 2022 Bonds (and any Related Parity Bonds) under the Fiscal Agent Agreement. However, because the Special Tax levy is limited to the maximum annual Special Tax rates, it is possible that no replenishment would be possible if the Special Tax proceeds, together with other available funds, remain insufficient to pay all such amounts. Thus , it is possible that the 2022 Reserve Fund will be depleted and not be replenished by the levy and collection of the Special Taxes.

Bankruptcy Delays

The payment of the Special Tax and the ability of the City to foreclose the lien of a delinquent unpaid Special Tax, as discussed in “SECURITY FOR THE 2022 BONDS,” may 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 2022 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.

Although bankruptcy proceedings would not cause the Special Taxes to become extinguished, bankruptcy of a property owner or any other person claiming an interest in the property could result in a delay in superior court foreclosure proceedings and could result in the possibility of Special Tax installments not being paid in part or in full. Such a delay would increase the likelihood of a delay or default in payment of the principal of and interest on the 2022 Bonds.

In addition, the amount of any lien on property securing the payment of delinquent Special Taxes could be reduced if the value of the property were determined by the bankruptcy court to have become less than the amount of the lien, and the amount of the delinquent Special Taxes in excess of the reduced lien could then be treated as an unsecured claim by the court. Any such stay of the enforcement of the lien for the Special Tax, or any such delay or non-payment, would increase the likelihood of a delay or default in payment of the principal of and interest on the 2022 Bonds and the possibility of delinquent Special Taxes not being paid in full.

The chances are increased that the 2022 Reserve Fund established for the 2022 Bonds could be fully depleted during any such delay in obtaining payment of delinquent Special Taxes. As a result,

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sufficient moneys would not be available in the 2022 Reserve Fund to make up shortfalls resulting from delinquent payments of the Special Tax and thereby to pay principal of and interest on the 2022 Bonds on a timely basis.

Cyber Security

The City, like many other public and private entities, relies on computer and other digital networks and systems to conduct its operations. As a recipient and provider of personal, private or other sensitive electronic information, the City is potentially subject to multiple cyber threats, including without limitation hacking, viruses, ransomware, malware and other attacks. No assurance can be given that the City’s efforts to manage cyber threats and attacks will be successful in all cases, or that any such attack will not materially impact the operations or finances of the City or the District, or the administration of the 2022 Bonds . The City is also reliant on other entities and service providers in connection with the administration of the 2022 Bonds, including without limitation the County tax collector for the levy and collection of Special Taxes, the Fiscal Agent, and the Dissemination Agent. No assurance can be given that the City, the District and these other entities will not be affected by cyber threats and attacks in a manner that may affect the Bond owners.

Disclosure to Future Purchasers

The City has recorded a notice of the Special Tax lien in the Office of the County Recorder. While title companies normally refer to such notices in title reports, there can be no guarantee that such reference will be made or, if made, that a prospective purchaser or lender will consider such special tax obligation in the purchase of a parcel of land or a home in the District or the lending of money secured by property in the District. The Act requires the subdivider of a subdivision (or its agent or representative) to notify a prospective purchaser or long- term lessor of any lot, parcel, or unit subject to a Mello- Roos special tax of the existence and maximum amount of such special tax using a statutorily prescribed form.

California Civil Code Section 1102.6b requires that in the case of transfers other than those covered by the above requirement, the seller must at least make a good faith effort to notify the prospective purchaser of the special tax lien in a format prescribed by statute. Failure by an owner of the property to comply with these requirements, or failure by a purchaser or lessor to consider or understand the nature and existence of the Special Tax, could adversely affect the willingness and ability of the purchaser or lessor to pay the Special Tax when due.

No Acceleration Provisions

The 2022 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 2022 Bonds or the Fiscal Agent Agreement.

Under the Fiscal Agent Agreement, a Bondholder is given the right for the equal benefit and protection of all Bondowners similarly situated to pursue certain remedies. See “APPENDIX C – Summary of Certain Provisions of the Fiscal Agent Agreement.” So long as the 2022 Bonds are in book-entry form, DTC will be the sole Bondholder and will be entitled to exercise all rights and remedies of Bond holders.

Loss of Tax Exemption

As discussed under the caption “LEGAL MATTERS – Tax Exemption,” interest on the 2022 Bonds might become includable in gross income for purposes of federal income taxation retroactive to the date the 2022 Bonds were issued as a result of future acts or omissions of the City in violation of its covenants in the Fiscal Agent Agreement. The Fiscal Agent Agreement does not contain a special redemption feature triggered by the occurrence of an event of taxability. As a result, if interest on the 2022 Bonds were to become includable in gross income for purposes of federal income taxation, the 2022 Bonds would continue to remain outstanding until maturity unless earlier redeemed pursuant to optional or

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mandatory redemption or redemption upon prepayment of the Special Taxes. See “THE 2022 BONDS – Redemption.”

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 2022 Bonds will be selected for audit by the IRS. It is also possible that the market value of such 2022 Bonds might be affected as a result of such an audit of such 2022 Bonds (or by an audit of similar bonds or securities).

Impact of Legislative Proposals, Clarifications of the Tax Code and Court Decisions on Tax Exemption

Future legislative proposals, if enacted into law, clarification of the Tax Code (defined herein) or court decisions may cause interest on the 2022 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 Bondowners from realizing the full current benefit of the tax status of such interest.

Voter Initiatives

Under the California 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 2022 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 California 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, California voters approved Proposition 26, entitled the “Supermajority Vote to Pass New Taxes and Fees Act”. Section 1 of Proposition 26 declares that Proposition 26 is intended to limit the ability of the State Legislature and local government to circumvent existing restrictions on increasing taxes by defining the new or expanded taxes as “fees.” Proposition 26 amended Articles XIIIA and XIIIC of the State Constitution. The amendments to Article XIIIA limit the ability of the State Legislature to impose higher taxes (as defined in Proposition 26) without a two- thirds vote of the Legislature. Article XIIIC requires that all new local taxes be submitted to the electorate before they become effective. Taxes for general governmental purposes require a majority vote and taxes for specific purposes (“special taxes”) require a two-thirds vote.

The Special Taxes and the 2022 Bonds were each authorized by not less than a two-thirds vote of the landowners within the District who constituted the qualified electors at the time of such voted authorization. The City believes, therefore, that issuance of the 2022 Bonds does not require the conduct of further proceedings under the Act, Proposition 218 or Proposition 26.

Like their antecedents, Proposition 218 and Proposition 26 are likely to undergo both judicial and legislative scrutiny before the impact on the City and its obligations can be determined. Certain provisions

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

For example, in August 2014, in City of San Diego. v. Melvin Shapiro, an Appellate Court invalidated an election held by the City of San Diego to authorize the levying of special taxes on hotels city-wide pursuant to a city charter ordinance creating a convention center facilities district which specifically defined the electorate to consist solely of (1) the owners of real property in the city on which a hotel is located, and (2) the lessees of real property owned by a governmental entity on which a hotel is located. The court held that such landowners and lessees are neither “qualified electors” of the city for purposes of Articles XIII A, Section 4 of the California Constitution, nor a proper “electorate” under Article XIIIC, Section 2(d) of the California Constitution. The court specifically noted that the decision did not require the Court to consider the distinct question of whether landowner voting to impose special taxes under Section 53326(b) of the Act (which was the nature of the voter approval through which the District was formed) violates the California Constitution in districts that lack sufficient registered voters to conduct an election among registered voters. Accordingly, this case should have no effect on the levy of the Special Taxes by the City

The City cannot predict the ultimate outcome or effect of any such judicial scrutiny, legislative actions, or future initiatives. These initiatives, and any future initiatives, 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 2022 Bonds.

Public Health Emergencies

In recent years, public health authorities have warned of threats posed by outbreaks of disease and other public health threats. On February 11, 2020, the WHO announced the official name for the outbreak of COVID-19, an upper respiratory tract illness. COVID-19 has since spread across the globe.

The spread of COVID-19 is having significant adverse health and financial impacts throughout the world, including the City. The WHO has declared the COVID -19 outbreak to be a pandemic, and states of emergency have been declared by the Governor of the State and the President of the United States.

The spread of the COVID-19 coronavirus pandemic, and responses intended to slow its spread, may result in negative impacts to the homebuilding operations and sales of homes within the District. 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 Special Taxes.

The COVID -19 outbreak is ongoing, and its duration and severity and economic effects are uncertain in many respects. Uncertain too are the additional actions that may be taken by federal, State and local governmental authorities to contain or mitigate the effects of the outbreak. Such actions may affect the ability of Lennar Homes to complete its planned developments in the time periods and within the cost estimates described in this Official Statement. Negative impacts on the collection of Special Taxes could occur because Special Tax payments are deferred, or some taxpayers may be unable to make their property and special tax payments. See “OWNERSHIP AND DEVELOPMENT OF THE DISTRICT – COVID-19 Impact.”

Secondary Market for Bonds

There can be no guarantee that there will be a secondary market for the 2022 Bonds or, if a secondary market exists, that any 2022 Bonds can be sold for any particular price. Prices of bond issues

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for which a market is being made will depend upon then-prevailing circumstances. Such prices could be substantially different from the original purchase price.

No assurance can be given that the market price for the 2022 Bonds will not be affected by the introduction or enactment of any future legislation (including without limitation amendments to the Internal Revenue Code), or changes in interpretation of the Internal Revenue Code, or any action of the Internal Revenue Service, including but not limited to the publication of proposed or final regulations, the issuance of rulings, the selection of the 2022 Bonds for audit examination, or the course or result of any Internal Revenue Service audit or examination of the 2022 Bonds or obligations that present similar tax issues as the 2022 Bonds.

LEGAL MATTERS

Legal Opinions

The legal opinion of Jones Hall, A Professional Law Corporation, San Francisco, California, Bond Counsel, approving the validity of the 2022 Bonds will be made available to purchasers at the time of original delivery and is attached in substantially final form as APPENDIX G.

Jones Hall, A Professional Law Corporation, San Francisco, California, has served as Disclosure Counsel to the District. Stradling Yocca Carlson & Rauth, P.C., Newport Beach, California, is serving as counsel to the Underwriter.

Tax Exemption

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 2022 Bonds is excluded from gross income for federal income tax purposes and such interest is not an item of tax preference for purposes of the federal alternative minimum tax.

The opinions set forth in the preceding paragraph are subject to the condition that the City comply with all requirements of the Internal Revenue Code of 1986, as amended (the "Tax Code") that must be satisfied subsequent to the issuance of the 2022 Bonds in order that the interest thereon be, and continue to be, excludable from gross income for federal income tax purposes. The City has made certain representations and covenants in order to comply with each such requirement. Inaccuracy of those representations, or failure to comply with certain of those covenants, may cause the inclusion of such interest in gross income for federal income tax purposes, which may be retroactive to the date of issuance of the 2022 Bonds.

Tax Treatment of Original Issue Discount and Premium. If the initial offering price to the public at which a 2022 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 2022 Bond is sold is greater than the amount payable at maturity thereof, then such difference constitutes “bond premium” for purposes of federal income taxes and State of California personal income taxes.

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 2022 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

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adjusted basis of such 2022 Bonds to determine taxable gain upon disposition (including sale, redemption, or payment on maturity) of such 2022 Bond. The Tax Code contains certain provisions relating to the accrual of original issue discount in the case of purchasers of the 2022 Bonds who purchase the 2022 Bonds after the initial offering of a substantial amount of such maturity. Owners of such 2022 Bonds should consult their own tax advisors wit h respect to the tax consequences of ownership of 2022 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 2022 Bonds is sold to the public.

Under the Tax Code, bond premium is amortized on an annual basis over the term of the 2022 Bond (said term being the shorter of the 2022 Bond’s maturity date or its call date). The amount of bond premium amortized each year reduces the adjusted basis of the owner of the 2022 Bond for purposes of determining taxable gain or loss upon disposition. The amount of bond premium on a 2022 Bond is amortized each year over the term to maturity of the 2022 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 2022 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 2022 Bonds.

California Tax Status. In the further opinion of Bond Counsel, interest on the 2022 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 2022 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 2022 Bonds. It cannot be predicted whether or in what form any such proposal might be enacted or whether, if enacted, such legislation would apply to bonds issued prior to enactment.

The opinions expressed by Bond Counsel are based upon existing legislation and regulations as interpreted by relevant judicial and regulatory authorities as of the date of such opinion, and Bond Counsel has expressed no opinion with respect to any proposed legislation or as to the tax treatment of interest on the 2022 Bonds, or as to the consequences of owning or receiving interest on the 2022 Bonds, as of any future date. Prospective purchasers of the 2022 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 2022 Bonds should also be aware that the ownership or disposition of, or the accrual or receipt of interest on, the 2022 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 2022 Bonds, the ownership, sale or disposition of the 2022 Bonds, or the amount, accrual or receipt of interest on the 2022 Bonds.

Litigation

At the time of delivery of the 2022 Bonds , the City will certify that there is no action, suit, proceeding, inquiry or investigation, at law or in equity, before or by any court, public board or body, pending with respect to which the City has been served with process or threatened, which:

• in any way questions the powers of the City Council, City or District, or

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• in any way questions the validity of any proceeding taken by the City Council in connection with the issuance of the 2022 Bonds, or

• wherein an unfavorable decision, ruling or finding could materially adversely affect the transactions contemplated by the purchase contract with respect to the 2022 Bonds, or

• which, in any way, could adversely affect the validity or enforceability of the resolutions of the City Council adopted in connection with the formation of the District or the issuance of the 2022 Bonds, the Fiscal Agent Agreement, the Continuing Disclosure Certificate or the purchase contract with respect to the 2022 Bonds, or

• to the knowledge of the City, which in any way questions the exclusion from gross income of the recipients thereof of the interest on the 2022 Bonds for federal income tax purposes, or

• in any other way questions the status of the 2022 Bonds under State tax laws or regulations.

CONTINUING DISCLOSURE

City Continuing Disclosure. The City will covenant for the benefit of owners of the 2022 Bonds to provide certain financial information and operating data relating to the District and the 2022 Bonds by not later than nine months after the end of the City’s fiscal year (currently March 31 based on the City’s fiscal year end of June 30) (the “ Annual Report”) and to provide notices of the occurrence of certain listed events.

These covenants have been made in order to assist the Underwriter in complying with Securities Exchange Commission Rule 15c2-12(b)(5) (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 E.

The City, on its own behalf and on behalf of related entities, has entered into a number of prior continuing disclosure undertakings under the Rule in connection with the issuance of long -term obligations, and has provided annual financial information and event notices in accordance with those undertakings. During the past five years, the City or its related entities have failed to comply with prior undertakings as follows:

• The audited financial statements for Fiscal Year 2015 -16 were filed approximately 15 months late;

• Certain operating and financial data for Fiscal Years 2016-17, 2017-18, and 2018-19 were filed up to 80 days late; and

• Certain information was omitted from the operating and financial data filed for Fiscal Years 2016-17 and 2017-18 because it was unavailable at the time the filing was due, but that information was subsequently filed when it became available.

The City has engaged Goodwin Consulting Group to serve as its dissemination agent and assist the City in complying with its continuing disclosure undertakings. To further ensure such compliance, the City has adopted policies and procedures related thereto.

Lennar Homes Continuing Disclosure . Lennar Homes will also covenant in a Continuing Disclosure Certificate, the form of which is set forth in APPENDIX F (the “Lennar Homes Continuing

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Disclosure Certificate”), for the benefit of the holders and beneficial owners of the 2022 Bonds, to provide semi-annual reports containing updates of certain development information within the Official Statement regarding its property in the District and notices of certain significant events. The specific nature of the information to be contained in the semi -annual reports or notices of significant events and certain other terms of the continuing disclosure obligations of Lennar Homes is contained in APPENDIX F. The obligations of Lennar Homes under the Lennar Homes Continuing Disclosure Certificate will terminate when Lennar Homes owns, or has the option to purchase, less than 45 residential lots (or property that will be subdivided into less than 45 residential lots) in the District.

To the actual knowledge of Lennar Homes, other than as disclosed in this Official Statement, in the last five years, Lennar Homes has not failed to comply in any material respects with its previous continuing disclosure undertakings, specifically regarding its requirement to provide developer periodic reports or to provide notice of occurrence of enumerated events. However, (i) in connection with a continuing disclosure obligation entered into with respect to the $12,850,000 County of El Dorado District No. 2014-1 (Carson Creek) Special Tax Bonds Series 2016, Lennar Homes was late in filing the periodic reports due on April 1, 2017 and October 1, 2017; the oversight was discovered in late January, 2018, and Lennar Homes promptly filed a curative report on February 1, 2018; and (ii) 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.

NO RATING

The City has not obtained a credit rating on the 2022 Bonds. Nothing should be assumed from any credit rating that the City may obtain for other purposes. Prospective purchasers of the 2022 Bonds are required to make independent determinations as to the credit quality of the 2022 Bonds and their appropriateness as an investment.

UNDERWRITING

The 2022 Bonds are being purchased by Piper Sandler & Co. (the “Underwriter”), at a purchase price of $________ (which represents the aggregate principal amount of the 2022 Bonds ($________), plus an original issue premium /less an original issue discount of $_________, less an Underwriter's discount of $________).

The purchase agreement relating to the 2022 Bonds provides that the Underwriter will purchase all of the 2022 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 2022 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

The City has retained CSG Advisors Incorporated, San Francisco, California, as Municipal Advisor for the sale of the 2022 Bonds. The Municipal Advisor is not obligated to undertake, and has not undertaken to make, an independent verification or to assume any responsibility for the accuracy, completeness or fairness of the information contained in this Official Statement.

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CSG Advisors Incorporated, is an independent advisory firm and is not engaged in the business of underwriting, trading or distributing municipal or other public securities.

PROFESSIONAL FEES

In connection with the issuance of the 2022 Bonds , fees or compensation payable to certain professionals are contingent upon the issuance and delivery of the 2022 Bonds. Those professionals include:

• the Underwriter;
• Jones Hall, A Professional Law Corporation, as Bond Counsel and Disclosure Counsel; • Stradling Yocca Carlson & Rauth, A Professional Corporation, as Underwriter’s Counsel; • A portion of the fees of CSG Advisors Incorporated, as municipal advisor; • A portion of the fees of Goodwin Consulting Group, Inc., as special tax consultant; and • U.S. Bank Trust Company, National Association, as Fiscal Agent.

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EXECUTION

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

CITY OF TRACY

By:

Finance Director

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APPENDIX A

GENERAL INFORMATION ABOUT THE CITY OF TRACY

AND SAN JOAQUIN COUNTY

The following information concerning the City of Tracy (the "City") and San Joaquin County (the “County”) are included only for the purpose of supplying general information regarding the community.

The 2022 Bonds are not a debt of the City, the County, the State of California (the “State”) or any of its political subdivisions, and neither the City, the County, the State nor any of its political subdivisions is liable therefor.

Population

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

CITY OF TRACY, SAN JOAQUIN COUNTY AND THE STATE OF CALIFORNIA Population Estimates
Calendar Years 2017 through 2021 as of January 1

Calendar
Year
City of
Tracy
San Joaquin
County
State of
California
2017 90,488 744,843 39,352,398
2018 92,395 752,958 39,519,535
2019 94,326 752,958 39,605,361
2020 95,861 773,505 39,648,938
2021 98,601 773,505 39,466,855

Source: State Department of Finance estimates.

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Employment and Industry

The City is included in the Stockton Metropolitan Statistical Area (“ MSA”), which includes all of San Joaquin County. The unemployment rate in the County was 6.6% in November 2021, down from a revised 7.3% in October 2021, and below the year -ago estimate of 8.7%. This compares with an unadjusted unemployment rate of 5.4% for the State and 3.9% for the nation during the same period.

Set forth below is data from calendar years 2016 to 2020 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 City.

STOCKTON-LODI MSA
(San Joaquin County)
Annual Average Labor Force and Employment by Industry
Calendar Years 2016 through 2020
(March 2020 Benchmark)

2016 2017 2018 2019 2020
Civilian Labor Force (1) 318,300 323,200 324,200 326,500 331,800 Employment 292,400 300,400 304,300 306,900 294,500
Unemployment 25,900 22,800 19,900 19,600 37,400
Unemployment Rate 8.2% 7.0% 6.1% 6.0% 11.3%
Wage and Salary Employment: (2)
Agriculture 16,700 16,400 15,600 15,400 14,300
Mining and Logging 100 100 100 100 100
Construction 11,100 11,700 12,800 13,100 12,900
Manufacturing 19,800 20,300 20,600 20,600 20,500
Wholesale Trade 10,700 11,100 11,700 11,600 10,500
Retail Trade 26,500 26,800 26,700 26,200 24,600
Transportation, Warehousing and Utilities 23,000 26,200 28,400 31,300 38,300 Information 2,000 1,800 1,800 1,600 1,200
Financial Activities 7,500 7,800 7,800 7,900 7,800
Professional and Business Services 19,600 19,200 19,600 20,200 21,100 Educational and Health Services 36,400 38,200 38,800 39,100 37,100 Leisure and Hospitality 20,400 21,500 22,000 22,600 18,400 Other Services 7,500 7,600 7,600 7,800 6,700
Federal Government 3,000 3,100 3,100 3,200 3,300
State Government 6,400 6,600 6,700 6,800 6,800
Local Government 31,400 32,800 33,700 34,900 33,100
Total All Industries (3) 242,000 251,100 256,900 262,400 256,600

(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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Largest Employers

The following table lists the major employers within the County, listed in alphabetical order without regard to the number of employees, as of January 2022.

SAN JOAQUIN COUNTY
Major Employers
As of January 2022

Employer Name Location Industry
A Sambado & Sons Inc Linden Nuts-Edible
Amazon Fulfillment Ctr Stockton Mail Order Fulfillment Service Ashley Lane LP Stockton Real Estate
Blue Shield of California Lodi Insurance
Dameron Hospital Stockton Hospitals
Deuel Vocational Instn Fire Tracy Fire Departments
Foster Care Svc Stockton Government Offices-County
Leprino Foods Co Tracy Cheese Processors (mfrs)
Lodi Health Home Health Agency Lodi Home Health Service Lodi Memorial Hospital Lodi Hospitals
NA Chaderjian Youth Stockton State Govt-Correctional Institutions Pacific Coast Producers Lodi Canning (mfrs)
Prima Frutta Packing Inc Linden Fruit & Produce Packers Safeway Distribution Ctr Tracy Distribution Centers (whls) San Joaquin County CA Pubc Stockton Government Offices-County San Joaquin County Human Svc Stockton Government Offices-County San Joaquin County Sch Stockton School Districts
San Joaquin General Hospital French Camp Hospitals
San Joaquin Sheriff's Office French Camp Government Offices-County Sjgov Stockton Government Offices-County
St Joseph's Cancer Ctr Stockton Cancer Treatment Centers St Joseph's Regional Health Stockton Hospitals
Stockton Police Dept Stockton Police Departments
Stockton Unified School Dist Stockton School Districts
Walmart Supercenter Stockton Department Stores

Source: State of California Employment Development Department, extracted from The America’s Labor Market Information System ( ALMIS) Employer Database, 2022 1st Edition.

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The following table lists the twenty principal employers within the City, by number of employees, as of June 30, 2021.

CITY OF TRACY
Principal Employers
As of June 30, 2021

Employer Name Number of Employees
Amazon.com Services LLC 7,325
FedEx Ground Package System, Inc. 925
Taylor Farms Pacific Inc 795
Medline Industries Inc 651
Randstad Inhouse Services LLC 632
DHL Supply Chain 463
Walmart #2025 402
Leprino Foods 349
Costco Wholesale #658 240
Randstad Inhouse Services LP 234
Crate & Barrel 233
Pacific Medical Inc. 214
The Home Depot #5641 211
The Home Depot #1020 211
Ingram Micro Inc. 200
Randstad Inhouse Service LP 194
International Paper 185
Macy’s 179
Glassfab Tempering 177
Target Stores T738 173

Source: City of Tracy Comprehensive Financial Report for fiscal year ended June 30, 2021.

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Commercial Activity

Summaries of historic taxable sales within the City and the County during the past five years in which data is available are shown in the following tables.

Total taxable sales during the first three quarters of calendar year 2021 in the City were $4,265,018,759, a 108.98% increase over the total taxable sales of $2,040,914,977 reported during the first three quarters of calendar year 2020.

CITY OF TRACY
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

2016 1,088 $1,280,961 1,715 $1,536,172
2017 1,150 1,371,679 1,803 2,042,411
2018 1,192 1,489,764 1,921 2,319,543
2019 1,224 1,472,148 2,000 2,692,497
2020 1,395 1,459,813 2,284 2,815,807

Source: State Department of Tax and Fee Administration.

Total taxable sales during the first three quarters of calendar year 2021 in the County were $16,201,722,121, a 44.88% increase over the total taxable sales of $11,182,961,549 reported during the first three quarters of calendar year 2020.

SAN JOAQUIN COUNTY
Taxable Retail Sales
Number of Permits and Valuation of Taxable Transactions (Dollars in Thousands)

Retail Stores Total All Outlets

Number
of Permits
Taxable
Transactions
Number
of Permits
Taxable
Transactions

2016 9,480 $7,380,226 14,682 $10,922,271
2017 9,506 7,994,473 14,758 12,153,268
2018 9,660 8,855,169 15,457 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

Source: State Department of Tax and Fee Administration.

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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 median household effective buying income for the City, the County, the State and the United States for the period 2018 through 2022.

CITY OF TRACY AND SAN JOAQUIN COUNTY
Median Household Effective Buying Income
2018 through 2022

2018 2019 2020 2021 2022

City of Tracy $68,295 $73,172 $76,142 $78,492 $89,938
San Joaquin County 49,883 55,534 58,141 59,914 68,971
California 59,646 62,637 65,870 67,956 77,058
United States 50,735 52,841 55,303 56,790 64,448

Source: The Nielsen Company (US), Inc for 2018; Claritas, LLC for 2019 through 2022.

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Building Activity

The tables below summarize building activity in the City and the County for the past five available years.

CITY OF TRACY
Building Permit Activity
For Calendar Years 2016 through 2020
(Dollars in Thousands)

2016 2017 2018 2019 2020
Permit Valuation
New Single-family $87,820.2 $98,767.2 $214,928.9 $223,795.2 $239,658.3 New Multi-family 34,038.7 9,686.4 84,832.3 0.0 0.0
Res. Alterations/Additions 2,281.9 2,982.3 6,058.5 9,178.8 4,504.7 Total Residential $124,140.8 $111,435.9 $305,819.7 $232,974.0 $244,163.0

New Commercial $92,124.7 $184,438.3 $331,633.7 189,205.1 168,307.4 New Industrial 57,441.7 38,978.1 74,814.4 13,881.6 526,301.0 New Other 11,375.8 4,769.2 8,265.5 7,006.5 4,828.5
Com. Alterations/Additions 138,604.1 93,059.7 60,479.7 60,676.8 62,904.6 Total Nonresidential $299,546.3 $321,245.3 $475,193.3 $270,770.0 $762,341.5

New Dwelling Units
Single Family 216 236 534 551 692
Multiple Family 432 65 507 0 0
TOTAL 648 301 1,041 551 692

Source: Construction Industry Research Board, Building Permit Summary.

SAN JOAQUIN COUNTY
Building Permit Activity
For Calendar Years 2016 through 2020
(Dollars in Thousands)

2016 2017 2018 2019 2020
Permit Valuation
New Single-family $467,494.7 $652,308.1 $883,071.1 $843,700.9 $870,859.6 New Multi-family 66,794.5 62,635.8 99,601.4 57,271.1 38,411.8 Res. Alterations/Additions 99,049.9 86,516.1 95,073.4 98,681.9 40,144.4 Total Residential $633,339.1 $801,460.0 $1,077,745.9 $999,653.9 $949,415.8

New Commercial $205,510.1 $357,856.9 $498,359.0 $380,383.3 $255,761.2 New Industrial 61,687.0 179,728.4 240,073.7 120,003.8 534,199.5 New Other 42,074.7 27,794.7 31,904.4 61,991.7 33,112.3
Com. Alterations/Additions 298,721.9 269,172.8 249,142.4 363,840.9 135,285.4 Total Nonresidential $607,993.7 $834,552.8 $1,019,479.5 $926,219.7 $958,358.4

New Dwelling Units
Single Family 1,754 2,078 2,765 2,564 2,843
Multiple Family 550 516 293 461 245
TOTAL 2,304 2,594 3,358 3,025 3,088

Source: Construction Industry Research Board, Building Permit Summary.

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APPENDIX B

RATE AND METHOD OF APPORTIONMENT FOR
CITY OF TRACY COMMUNITY FACILITIES DISTRICT NO. 2021-1 (HILLVIEW)

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APPENDIX C

SUMMARY OF CERTAIN PROVISIONS OF THE FISCAL AGENT AGREEMENT

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APPENDIX D

DTC AND THE BOOK-ENTRY ONLY SYSTEM

The following description of the Depository Trust Company (“DTC”), the procedures and record keeping with respect to beneficial ownership interests in the Bonds, payment of principal, interest and other payments on the 2022 Bonds (herein, the “Securities”) to DTC Participants or Beneficial Owners, confirmation and transfer of beneficial ownership interest in the Securities and other related transactions by and between DTC, the DTC Participants and the Beneficial Owners is based solely on information provided by DTC. Accordingly, no representations can be made concerning these matters and neither the DTC Participants nor the Beneficial Owners should rely on the foregoing information with respect to such matters, but should instead confirm the same with DTC or the DTC Participants, as the case may be.

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

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

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

If, however, the aggregate principal amount of any issue exceeds $500 million, one certificate will be issued with respect to each $500 million of principal amount, and an additional certificate will be issued with respect to any remaining principal amount of such issue.

2. DTC, the world’s largest securities depository, is a limited -purpose trust company organized under the New York Banking Law, a “banking organization” within the meaning of the New York Banking Law, a member of the Federal Reserve System, a “clearing corporation” within the meaning of the New York Uniform Commercial Code, and a “clearing agency” registered pursuant to the provisions of Section 17A of the Securities Exchange Act of 1934. DTC holds and provides asset servicing for over 3.5 million issues of U.S. and non- U.S. equity issues, corporate and municipal debt issues, and money market instruments (from over 100 countries) that DTC’s participants (“Direct Participants”) deposit with DTC.

DTC also facilitates the post -trade settlement among Direct Participants of sales and other securities transactions in deposited securities, through electronic computerized book -entry transfers and pledges between Direct Participants’ accounts. This eliminates the need for physical movement of securities certificates. Direct Participants include both U.S. and non- U.S. securities brokers and dealers, banks, trust companies, clearing corporations, and certain other organizations. DTC is a wholly -owned subsidiary of The Depository Trust & Clearing Corporation (“DTCC”). DTCC is the holding company for DTC, National Securities Clearing Corporation and Fixed Income Clearing Corporation, all of which are registered clearing agencies. DTCC is owned by the users of its regulated subsidiaries. Access to the

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DTC system is also available to others such as both U.S. and non -U.S. securities brokers and dealers, banks, trust companies, and clearing corporations that clear through or maintain a custodial relationship with a Direct Participant, either directly or indirectly (“Indirect Participants”). DTC has a Standard & Poor’s rating of AA+. The DTC Rules applicable to its Participants are on file with the Securities and Exchange Commission. More information about DTC can be found at www.dtcc.com. The information contained on this Internet site is not incorporated herein by reference.

3. Purchases of Securities under the DTC system must be made by or through Direct Participants, which will receive a credit for the Securities on DTC’s records. The ownership interest of each actual purchaser of each Security (“Beneficial Owner”) is in turn to be recorded on the Direct and Indirect Participants’ records. Beneficial Owners will not receive written confirmation from DTC of their purchase.

Beneficial Owners are, however, expected to receive written confirmations providing details of the transaction, as well as periodic statements of their holdings, from the Direct or Indirect Participant through which the Beneficial Owner entered into the transaction. Transfers of ownership interests in the Securities are to be accomplished by entries made on the books of Direct and Indirect Participants acting on behalf of Beneficial Owners. Beneficial Owners will not receive certificates representing their ownership interests in Securities, except in the event that use of the book-entry system for the Securities is discontinued.

4. To facilitate subsequent transfers, all Securities deposited by Direct Participants with DTC are registered in the name of DTC’s partnership nominee, Cede & Co., or such other name as may be requested by an authorized representative of DTC. The deposit of Securities with DTC and their registration in the name of Cede & Co. or such other DTC nominee do not effect any change in beneficial ownership. DTC has no knowledge of the actual Beneficial Owners of the Securities; DTC’s records reflect only the identity of the Direct Participants to whose accounts such Securities are credited, which may or may not be the Beneficial Owners. The Direct and Indirect Participants will remain responsible for keeping account of their holdings on behalf of their customers.

5. Conveyance of notices and other communications by DTC to Direct Participants, by Direct Participants to Indirect Participants, and by Direct Participants and Indirect Participants to Beneficial Owners will be governed by arrangements among them, subject to any statutory or regulatory requirements as may be in effect from time to time. Beneficial O wners of Securities may wish to take certain steps to augment the transmission to them of notices of significant events with respect to the Securities, such as redemptions, tenders, defaults, and proposed amendments to the Security documents. For example, Beneficial Owners of Securities may wish to ascertain that the nominee holding the Securities for their benefit has agreed to obtain and transmit notices to Beneficial Owners. In the alternative, Beneficial Owners may wish to provide their names and addr esses to the registrar and request that copies of notices be provided directly to them.

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

7. Neither DTC nor Cede & Co. (nor any other DTC nominee) will consent or vote with respect to Securities unless authorized by a Direct Participant in accordance with DTC’s MMI Procedures. Under its usual procedures, DTC mails an Omnibus Proxy to Issuer as soon as possible after the record date.

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

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8. Redemption proceeds, distributions, and dividend payments on the Securities will be made to Cede & Co., or such other nominee as may be requested by an authorized representative of DTC. DTC’s practice is to credit Direct Participants’ accounts upon DTC’s receipt of funds and corresponding detail information from Issuer or Agent, on payable date in accordance with their respective holdings shown on DTC’s records. Payments by Participants to Beneficial Owners will be governed by standing instructions and customary practices, as is the case with securities held for the accounts of customers in bearer form or registered in “street name,” and will be the responsibility of such Participant and not of DTC, Agent, or Issuer, subject to any statutory or regulatory requirements as may be in effect from time to time. Payment of redemption proceeds, distributions, and dividend payments to Cede & Co. (or such other nominee as may be requested by an authorized representative of DTC) is the responsibility of Issuer or Agent, disbursement of such payments to Direct Participants will be the responsibility of DTC, and disbursement of such payments to the Beneficial Owners will be the responsibility of Direct and Indirect Participants.

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

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

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

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APPENDIX E

FORM OF CONTINUING DISCLOSURE CERTIFICATE

CONTINUING DISCLOSURE CERTIFICATE

$________

CITY OF TRACY
COMMUNITY FACILITIES DISTRICT NO. 2021-1 (HILLVIEW)
SPECIAL TAX BONDS, SERIES 2022

This Continuing Disclosure Certificate (this “Disclosure Certificate”) is executed and delivered by the City of Tracy (the “City”) in connection with the issuance of the bonds captioned above (the “ 2022 Bonds”). The 2022 Bonds are being issued pursuant to a Fiscal Agent Agreement dated as of ____________ 1, 2022 (the “Fiscal Agent Agreement”), by and between the City and U.S. Bank Trust Company, National Association, as fiscal agent (the “Fiscal Agent”). The City hereby covenants and agrees as follows:

Section 1. Pur pose 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 2022 Bonds and in order to assist the Participating Underwriter in complying with S.E.C. Rule 15c2-12(b)(5).

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:

“Annual
Report” means any Annual Report provided by the City pursuant to, and as described in, Sections 3 and 4 of this Disclosure Certificate.

“Annual Report Date” means the date that is nine months after the end of the City's fiscal year (currently March 31 based on the City’s fiscal year end of June 30).

“Dissemination Agent” means Goodwin Consulting Group, Inc., or any successor Disseminat ion Agent designated in writing by the District and which has filed with the District a written acceptance of such designation.

“District” means the City of Tracy Community Facilities District No. 2021-1 (Hillview).

“Listed Events” means any of the events listed in Section 5(a) of this Disclosure Certificate.

“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.

“Official Statement” means the final official statement dated ______________, 2022, executed by the District in connection with the issuance of the 2022 Bonds.

“Participating Underwriter” means Piper Sandler & Co., the original underwriter of the 2022 Bonds required to comply with the Rule in connection with offering of the 2022 Bonds.

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“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.

Section 3. Provision of Annual Reports.
(a) The Cit
y shall, or shall cause the Dissemination Agent to, not later than the Annual Report Date, commencing March 31, 2023, with the report for the 2021-22 fiscal year, provide to the MSRB, in an electronic format as prescribed by the MSRB, an Annual Report that is consist ent with the requirements of Section 4 of this Disclosure Certificate; provided, however, the report for Fiscal Year 2021-22 shall consist solely of the Official Statement related to the 2022 Bonds . 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 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 under Section 5(c). (b) If
the City does not provide, or cause the Dissemination Agent to provide, an Annual Report by the Annual Report Date as required in subsection (a) above, the Dissemination Agent shall provide a notice to the MSRB, in a timely manner, in an electronic format as prescribed by the MSRB. (c) The Di
ssemination Agent shall:
(i) deter
mine each year prior to the Annual Report Date the then-applicable rules and electronic format prescribed by the MSRB for the filing of annual continuing disclosure reports; and
(ii) if
the Dissemination Agent is other than the City, file a report with the City and the Participating Underwriter 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 documents and information:
(a) The Cit
y's audited financial statements for the most recently completed fiscal year, 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, together with the following statement:

THE

CITY'S ANNUAL FINANCIAL STATEMENT IS PROVIDED SOLELY TO COMPLY WITH THE SECURITIES EXCHANGE COMMISSION STAFF’S INTERPRETATIO N OF RULE 15c2-12. NO FUNDS OR ASSETS OF THE CITY, OTHER THAN SPECIAL TAX REVENUES, ARE REQUIRED TO BE USED TO PAY DEBT SERVICE ON THE 2022 BONDS, AND THE CITY IS NOT OBLIGATED TO ADVANCE AVAILABLE FUNDS TO COVER ANY DELINQUENCIES.

INVESTORS SHOULD NOT RELY ON THE FINANCIAL CONDITION OF THE CITY IN EVALUATING WHETHER TO BUY, HOLD OR SELL THE 2022 BONDS.

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If the City’s audited financial statements are not available by the time the Annual Report is required to be filed, the audited financial statements shall be filed in the same manner as the Annual Report when they become available.

(b) To the extent not included in the audited financial statements, the following information:

(i) Total assessed value (per the San Joaquin County Assessor’s records) of al l parcels currently subject to the Special Tax within the District, showing the total secured assessed valuation for all property subject to the Special Tax.

(ii) Tables showing the owners of property in the District and value-to-lien ratios based on the San Joaquin County Assessor's last equalized tax roll available to the City based on the most recent special tax levy, substantially in the form of the Table 3 in the Official State ment, excluding information regarding maximum special taxes at buildout.

(iii) The amount of prepayments of the Special Tax for the prior Fiscal Year.

(iv) A table showing a history of special tax collections and delinquencies within the District for the prior Fiscal Year.

(v) Any change to the County’s Teeter Plan affecting the District.

(vi) The principal amount of the 2022 Bonds outstanding and the balance in the 2022 Reserve Fund (along with a statement of the 2022 Reserve Requirement) as of the September 30 next preceding the Annual Report Date, including the issuance date and principal amount of any additional bonds or obligations issued under the Fiscal Agent Agreement on a parity with the 2022 Bonds.

(vii) Any changes to the Rate and Method of Apportionment of Special Tax for the District.

(c) In addition to any of the information expressly required to be provided under paragraph (b) above, the City shall provide such further information, if any, as may be necessary to make the specifically required statements, in the light of the circumstances under which they are made, not misleading.

(d) 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 District shall clearly identify each such other document so included by reference.

Section 5. Reporting of Listed Events.

(a) The City shall give, or cause to be given, notice of the occurrence of any of the following Listed Events with respect to the 2022 Bonds:

(1) Principal and interest payment delinquencies.

(2) Non-payment related defaults, if material.

(3) Unscheduled draws on debt service reserves reflecting financial difficulties.

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(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 2022 Bonds, or other material events affecting the tax status of the 2022 Bonds.

(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.

(13) The consummation of a merger, consolidation, or acquisition involving the City, or the sale of all or substantially all of the assets of the City (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 obligated person, if material, or agreement to covenants, events of default, remedies, priority rights, or other similar terms of a financial obligation of the obligated person, any of which affect security holders, if material.

(16) Default, event of acceleration, termination event, modification of terms, or other similar events under the terms of a financial obligation of the obligated person, any of which reflect financial difficulties.

(b) Upon 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. Notwithstanding the foregoing, notice of Listed Events described in subsection (a)(8) above need not be given under this subsection any earlier than the notice (if any) of the underlying event is given to holders of affected Bonds under the Fiscal Agent Agreement.

(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”

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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 2022 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. Upon 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 Municipal Securities Rulemaking Board consistent with the Rule.

Section 6. Identifying Information for Filings with the MSRB.

All documents provided to the MSRB
under the Disclosure Certificate shall be accompanied by identifying information as prescribed by the MSRB.

Section 7. Term ination of Reporting Obligation. The City 's obligations under this Disclosure Certificate shall terminate upon the legal defeasance, prior redemption or payment in full of all of the 2022 Bonds. If such termination occurs prior to the final maturity of the 2022 Bonds , the City shall give notice of such termination in the same manner as for a Listed Event under Section 5(c).

Section 8. Dissemination Agent. The City may
, from time to time, appoint or engage a
Dissemination Agent to assist it in carrying out its obligations under this Disclosure Certificate, and may discharge any such Agent, with or without appointing a successor Dissemination Agent. The initial Dissemination Agent will be Goodwin Consulting Group, Inc.

Section 9. Am
endment; Waiver. Notwithstanding any other provision of this Disclosure Certificate, the City may amend this Disclosure Certificate, and any provision of this Disclosure Certificate may be waived, provided that the following conditions are satisfied:

(a) 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 2022 Bonds, or type of business conducted;

(b) the undertakings herein, as proposed to be amended or waived, would, in the opinion of nationally recognized bond counsel, have complied with the requirements of the Rule at the time of the primary offering of the 2022 Bonds, after taking into account any amendments or interpretations of the Rule, as well as any change in circumstances; and
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(c) the pr
oposed amendment or waiver either (i) is approved by holders of the 2022 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 the Fiscal Agent or nationally recognized bond counsel, materially impair the interests of the holders or beneficial owners of the 2022 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 financial information 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 the undertaking specifying the accounting principles to be followed in preparing financial statements, the annual financial information 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 shal l be quantitative. A notice of the change in the accounting principles shall be filed in the same manner as for a Listed Event under Section 5(c).

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

Section 11. Default. In the event of a failure of the City to comply with any provision of this Disclosure Certificate, the Participating Underwriter or any holder or beneficial owner of the 2022 Bonds may take such actions as may be necessary and appropriate, including seeking mandate or specific performance by court order, to cause the City to comply with its obligations under this 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.

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Section 13. Beneficiaries. This Disclosure Certificate shall inure solely to the benefit of the City, the Fiscal Agent, the Dissemination Agent, the Participating Underwriter and holders and beneficial owners from time to time of the 2022 Bonds, and shall create no rights in any other person or entity.

Section 14. Count
erparts. 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.

Dat
e: __________, 2022

CITY OF TRACY

By:

Karin Schnaider,
Finance Director

AGREED AND ACCEPTED:

Goodwin Consulting Group, Inc.,
as Dissemination Agent

By:

Name:

Title:

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APPENDIX F

FORM OF LENNAR HOMES CONTINUING DISCLOSURE CERTIFICATE

CONTINUING DISCLOSURE CERTIFICATE
(Lennar Homes)

$________

CITY OF TRACY
COMMUNITY FACILITIES DISTRICT NO. 2021-1 (HILLVIEW)
SPECIAL TAX BONDS, SERIES 2022

Dated: ___________, 2022

This Continuing Disclosure Certificate (Lennar Homes) (this “Disclosure Certificate”) is executed and delivered by Lennar Homes of California, LLC , a California limited liability company (“Property Developer”), in connection with the issuance by the City of Tracy (the “City”) of the bonds captioned above (the “2022 Bonds”). The 2022 Bonds are being issued under a Fiscal Agent Agreement dated as of ____________ 1, 2022 (the “Fiscal Agent Agreement”), by and between the City and U.S. Bank Trust Company, National Association, as fiscal agent (the “Fiscal Agent”). The Property Developer covenants and agrees as follows:

Section 1. P urpose of the Disclosure Certificate. This Disclosure Certificate is being executed and delivered by the Property Developer for the benefit of the holders and beneficial owners of the 2022 Bonds.

Section 2. De
finitions. In addition to the definitions set forth herein 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:

“Af
filiate” means any person presently directly (or indirectly through one or more intermediaries) under managerial control of the Property Developer, and about whom information could be material to potential investors in their investment decision regarding the 2022 Bonds (including without limitation information relevant to the proposed development of the Property or to the Property Developer ’s ability to pay the Special Taxes levied on the Property prior to delinquency).

“Assumption Agreement” means an undertaking of a Major Owner, for the benefit of the holders and beneficial owners of the 2022 Bonds, containing terms substantially similar to this Disclosure Certificate (as modified for such Major Owner’s development and financing plans with respect to the District), whereby such Major Owner agrees to provide semi -annual 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 the District owned by such Major Owner and agrees to indemnify the Dissemination Agent (if any) pursuant to a provision substantially in the form of Section 12 hereof.

“Dissemination Agent” means a Person designated in writing by the Property Developer, with the written consent of the City, and which has filed with the Property 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. The initial Dissemination Agent is the Property Developer.

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“District” means the City of Tracy Community Facilities District No. 2021-1 (Hillview).

“Landbank Owner” means AG Essential Housing CA 1, L.P., a Delaware limited partnership, the landbank for the Property Developer pursuant to the Option Agreement.

“Listed Events” means any of the events listed in Section 5(a) of this Disclosure Certificate.

“Major Owner” means, as of any Report Date, a Person that, together with the Person’s Affiliates, owns or has the option to purchase ___ or more residential lots (or property intended to be subdivided into ___ or more residential lots) in the District.

“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 dated _____________, 2022, executed by the City in connection with the issuance of the 2022 Bonds.

“Option Agreement ” means the Option Agreement dated February 26, 2021, between the Property Developer and the Landbank Owner (as the assignee of the original party).

“Participating Underwriter” means Piper Sandler & Co., the original underwriter of the 2022 Bonds.

“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 Property Developer in the District as of the date for which information is provided in the Semi-Annual Report, (ii) during the term of the Option Agreement, the property owned by the Landbank Owner in the District as of the date for which information is provided in the Semi-Annual Report, and (iii) the property in the District that the Property Developer sold to a Major Owner who has not assumed the undertakings of this Disclosure Certificate under Section 7(b) that is owned by such Major Owner.

“Report Date” means (a) September 30 of each year, and (b) March 31 of each year.

“Semi-Annual Report ” means any Semi -Annual Report provided by the Property Devel oper pursuant to, and as described in, Sections 3 and 4 of this Disclosure Certificate.

“Special Taxes” means the special taxes for facilities levied by the City on the Property.

Section 3. P
rovision of Semi-Annual Reports.

(a) The Property Developer shall, or upon written direction of the Property Developer the Dissemination Agent shall, not later than the Report Date, commencing March 31, 2023, provide to the MSRB, in an electronic format as prescribed by the MSRB, a Semi-Annual Report which is consi stent with the requirements of Section 4 of this Disclosure Certificate with a copy to the Participating Underwriter and the City. Not later than 15 calendar days prior to the Report Date, the Property Developer shall provide the Semi-Annual Report to the Dissemination Agent (if different from the Property Developer). The Property Developer shall provide a written certification with (or included as a part of) each Semi-Annual Report furnished to the Dissemination Agent (if different from the Property Developer),

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Participating Underwriter and the City to the effect that such Semi -Annual Report constitutes the Semi- Annual 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 Property Developer and shall have no duty or obligation to review the Semi -Annual Report. The Semi- Annual 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 Semi -Annual Report by 15 calendar days prior to the Report Date, the Dissemination Agent shall send a reminder notice to the Property Developer that the Semi-Annual Report has not been provided as required under Section 3(a) above. The reminder notice shall instruct the Property Developer to determine whether its obligations under this Disclosure Certificate have terminated (pursuant to Section 7 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 Property Developer does not provide, or cause the Dissemination Agent to provide, a Semi-Annual Report to the MSRB by the Repor t Date as required in subsection (a) above, the Dissemination Agent shall provide a notice to the MSRB, in an electronic format as prescribed by the MSRB.

(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 Semi-Annual Report has been furnished to it, file a report with the Property Developer (if the Dissemination Agent is other than the Property Developer), the City and the Participating Underwriter certifying that the Semi -Annual Report has been provided pursuant to this Disclosure Certificate, and stating the date it was provided.

Section 4. C
ontent of Semi -Annual Reports . Each Semi-Annual Report shall contain or incorporate by reference the information set forth in Exhibit A, any or all of which may be included by specific reference to other documents, including official statements of debt issues of the Property Developer 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 Property Developer shall clearly identify each such other document so included by reference.

In
addition to any of the information expressly required to be provided in Exhibit A, each Semi - Annual 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 Property Developer’s obligations under this Disclosure Certificate have not been terminated pursuant to Section 7 herein, the Property Developer shall give, or cause to be given, notice of the occurrence of any of the following Listed Events with respect to itself or the Property, if material:

(i) bankruptcy or insolvency proceedings commenced by or against the Property Developer and, if known, any bankruptcy or insolvency proceedings commenced by or against any Affiliate of the Property Developer;

F-4
(ii) failure to pay any taxes, special taxes (including the Special Taxes) or assessments due with respect to the Property prior to the delinquency date, to the extent such failure is not promptly cured by the Property Developer upon discovery thereof;

(iii) filing of a lawsuit against the Property Developer or, if known, an Affiliate of the Property Developer, seeking damages which, if successful, could have a material and adverse impact on the Property Developer’s ability to pay Special Taxes prior to delinquency or to sell or develop the Property;

(iv) material damage to or destruction of any of the improvements on the Property;

(v) material default by the Property Developer under the Option Agreement to which the Property Developer has been provided a notice of default; and

(vi) any payment default or other material default by the Property 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 Property Developer obtains knowledge of the occurrence of a Listed Event, the Property Developer shall as soon as possible determine if such event would be material under applicable Federal securities law.

(c) If the Property Developer determines that knowledge of the occurrence of a Listed Event would be material under applicable Federal securities law, the Property Developer shall, or shall cause the Dissemination Agent to, promptly file a notice of such occurrence with the MSRB, in an electronic format as prescribed by the MSRB, with a copy to the City and the Participating Underwriter.

Section 6. Identifying Information for Filings with the MSRB.

All documents provided to the MSRB
under the Disclosure Certificate shall be accompanied by identifying information as prescribed by the MSRB.

Section 7. D
uration of Reporting Obligation.

(a) All of the Property Developer’s obligations hereunder shall commence on the date hereof and shall terminate (except as provided in Section 12) on the earliest to occur of the following:

(i) upon the legal defeasance, prior redemption or payment in full of all the 2022 Bonds, or

(ii) when the sum of Property owned by the Property Developer and Property that the Property Developer has an option to purchase, is fewer than 45 residential lots (or property that will be subdivided into fewer than 45 residential lots), or

(iii) the date on which the Property Developer prepays in full all of the Special Taxes attributable to the Property.

The Property 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.

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(b) If a portion of the Property is conveyed to a person or entity that, upon such conveyance, will be a Major Owner, the obligations of the Property Developer hereunder with respect to the property conveyed to such Major Owner may be assumed by such Major Owner and the Property Developer’s obligations hereunder with respect to the property conveyed will be terminated. In order to effect such 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 2022 Bonds, and under which the property conveyed to such Major Owner will become subject to future Semi-Annual Reports.

Section 8. D
issemination Agent. The Property Developer may, from time to time, with the written consent of the City, appoint or engage a Dissemination Agent to assist the Property Developer in carrying out its obligations under this Disclosure Certificate, and may discharge any such Dissemination Agent, with the written consent of the City, with or without appointing a successor Dissemination Agent. The Dissemination Agent may resign by providing 30 days’ written notice to the City and the Property Developer.

Section 9. A
mendment; Waiver. Notwithstanding any other provision of this Disclosure Certificate, the Property 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;

(b) the proposed amendment or waiver either (i) is approved by holders of the 2022 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 2022 Bonds.

Section 10. Addi
tional Information. Nothing in this Disclosure Certificate shall be deemed to prevent the Property Developer from d isseminating 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 Semi-Annual Report or notice of occurrence of a Listed Event, in addition to that which is required by this Disclosure Certificate. If the Property Developer chooses to include any information in any Semi-Annual Report or notice of occurrence of a Listed Event in addition to that which is specifically required by this Dis closure Certificate, the Property Developer shall have no obligation under this Disclosure Certificate to update such information or include it in any future Semi-Annual Report or notice of occurrence of a Listed Event.

Section 11. Def
ault. In the event of a failure of the Property Developer to comply with any provision of this Disclosure Certificate, the Participating Underwriter and any holder or beneficial owner of the 2022 Bonds may, take such actions as may be necessary and appropriate, including seeking mandate or specific performance by court order, to cause the Property Developer to comply with its obligations under this Disclosure Certificate. A default under this Disclosure Certificate shall not be deemed an Event of Default under the Fiscal Agent Agreement, and the sole remedy under this

F-6
Disclosure Certificate in the event of any failure of the Property Developer to comply with this Disclosure Certificate shall be an action to compel performance.

Section 12. Dut ies, 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 Property Developer agrees to indemnify and save the Dissemination Agent, its officers, directors, employees and agents, harmless against any loss, expense and liabilities which it may incur arising out of or in the exercise or performance of its powers and duties hereunder, including the reasonable costs and expenses (including attorneys’ fees) of defending against any claim of liability, but excluding (i) losses, expenses and liabilities due to the Dissemination Agent’s, and its officers, directors, employees, and agents’ negligence or willful misconduct, or failure to perform its duties hereunder, and (ii) losses, expenses and liabilities due to the failure of the City to pay the fees and expenses of the Dissemination Agent. The Dissemination Agent (other than the Developer) shall be paid compensation for its services provided hereunder from the Administrative Expense Fund established under the Fiscal Agent Agreement in accordance with the Dissemination Agent’s 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 Property Developer, the Fiscal Agent, the 2022 Bond owners, or any other party. The obligations of the Property Developer under this Section shall survive resignation or removal of the Dissemination Agent and payment of the 2022 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 assumpti on agreement.

Section 13. Not
ices. Any notice or communications to be among any of the parties to this Disclosure Certificate may be given by electronic, overnight, or regular mail as follows:

To the
Issuer: City of Tracy
333 Civic Plaza
Tracy, CA 95376
Email: [email protected]

To the Participating Underwriter: Piper Sandler & Co.
3626 Fair Oaks Boulevard
Sacramento, California 95864
Email: [email protected]

To the Property Developer: Lennar Homes of California, LLC 2603 Camino Ramon, Suite 525
San Ramon, California 94583
Attn: Bridgit Koller
Email: [email protected]

Any person may, by written notice to the other persons listed above, designate a different address or telephone number(s) to which subsequent notices or communications should be sent.

Section 14. B
eneficiaries. This Disclosure Certificate shall inure solely to the benefit of the City, the Property Developer (its successors and assigns), the Dissemination Agent, the Participating Underwriter and holders and beneficial owners from time to time of the 2022 Bonds, and shall create no rights in any other person or entity. All obligations of the Property Developer hereunder shall be assumed

F-7
by any legal successor to the obligations of the Property Developer as a result of a sale, merger, consolidation or other reorganization.

Section 15. Count erparts. 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.

NNAR HOMES OF CALIFORNIA, LLC,
A California limited liability company

By:

Name: _____________________

Title:

F-8

EXHIBIT A

SEMI-ANNUAL REPORT

[MARCH 31, ____ / SEPTEMBER 30, _____]

$________

CITY OF TRACY
COMMUNITY FACILITIES DISTRICT NO. 2021-1 (HILLVIEW)
SPECIAL TAX BONDS, SERIES 2022

This Semi -Annual Report is hereby submitted under Section 4 of the Continuing Disclosure Certificate (Lennar Homes) (the “Disclosure Certificate”) dated as of ___________, 2022, executed by the undersigned (the “Property Developer”) in connection with the issuance by the City of Tracy (the “City”) of the bonds captioned above (the “2022 Bonds”) for the City of Tracy Community Facilities District No. 2021-1 (Hillview) (the “District”).

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

I. Property Ownership and Development

The information in this section is provided as of ____________________ (this date must be not more than 60 days before the date of this Semi-Annual Report).

A. Description of the Property currently owned by the Property Developer, or for which the Property Developer has an option to purchase u nder the Option Agreement, in the District (the “Property”), in substance and form similar to such information in the Official Statement for the 2022 Bonds:

________________________________________________________________________ ________________________________________________________________________

B. Updated information regarding land development and home construction activities with respect to the Property described in the Official Statement for the 2022 Bonds or the Semi-Annual Report last filed in accordance with the Disclosure Certificate:

________________________________________________________________________ ________________________________________________________________________

C. Status of building permits and any material changes to the description of land use or development entitlements for the Property described in the Official Statement for the 2022 Bonds or the Semi-Annual Report last filed in accordance with the Disclosure Certificate:

________________________________________________________________________ ________________________________________________________________________

F-9
D. Status of any land purchase contracts with regard to the Property, whether acquisition of land in the District by the Property Developer under the Option Agreement or sales of land to other property owners (other than individual homeowners).
________________________________________________________________________ ________________________________________________________________________

II. Legal and Financial Status of Property Developer

Unless such information has previously been included or incorporated by reference in a Semi- Annual Report, describe any material change in the legal structure of the Property Developer or the financial condition and financing plan of the Property Developer that would materially and adversely interfere with its ability to complete the development plan with respect to the Property described in the Official Statement. To the extent that the ownership of the Property Developer has changed, describe all material terms of the new ownership structure.

________________________________________________________________________ ________________________________________________________________________

III. Change in Development or Financing Plans

Unless such information has previously been included or incorporated by reference in a Semi - Annual Report, describe any development plans or financing plans relating to the Property that are materially different from the proposed development and financing plan for the Property described in the Official Statement or in a previous Semi-Annual Report. ________________________________________________________________________ ________________________________________________________________________

IV. Official Statement Updates

Unless such information has previously been included or incorporated by reference in a Semi - Annual Report, describe any other significant changes in the information relating to the Property Developer or the Property contained in the Official Statement under the heading “ OWNERSHIP AND DEVELOPMENT OF THE DISTRICT” that would materially and adversely interfere with the Property Developer’s ability to acquire, develop, and sell the Property as described in the Official Statement. ________________________________________________________________________ ________________________________________________________________________

F-10
V. Status of Tax Payments

Describe status of payment of taxes, special taxes (including the Special Taxes) or assessments due with respect to the Property owned by the Property Developer and its Affiliates.

________________________________________________________________________ ________________________________________________________________________

VI. Other Material Information

In addition to any of the information expressly required above, provide such further information, if any, with respect to the Property and the Property Developer as may be necessary to make the specifically required statements, in the light of the circumstances under which they are made, not misleading.

________________________________________________________________________ ________________________________________________________________________

Certification

The undersigned, on behalf of the Property Developer , based on actual knowledge after reasonable inquiry of employees of Property Developer and its affiliates, hereby certifies that this Semi- Annual Report constitutes the Semi -Annual Report required to be furnished by the Property Developer under the Disclosure Certificate.

ANY OTHER STATEMENTS REGARDING THE PROPERTY DEVELOPER , THE DEVELOPMENT OF THE PROPERTY, THE PROPERTY DEVELOPER’S FINANCING PLAN OR FINANCIAL CONDITION, OR THE 2022 BONDS, OTHER THAN STATEMENTS MADE BY THE

PROPERTY DEVELOPER IN AN OFFICIAL RELEASE, OR FILED WITH THE MUNICIPAL SECURITIES RULEMAKING BOARD, ARE NOT AUTHORIZED BY THE PROPERTY DEVELOPER.

THE PROPERTY DEVELOPER IS NOT RESPONSIBLE FOR THE ACCURACY, COMPLETENESS OR FAIRNESS OF ANY SUCH UNAUTHORIZED STATEMENTS.

THE PROPERTY DEVELOPER HAS NO OBLIGATION TO UPDATE THIS SEMI -ANNUAL REPORT OTHER THAN AS EXPRESSLY PROVIDED IN THE DISCLOSURE CERTIFICATE.

Dated:

LENNAR HOMES OF CALIFORNIA, LLC,
A California limited liability company

By:

Name:

Title:

G-1

APPENDIX G
[INS
ERT FORM OF OPINION OF BOND COUNSEL]

H-1

APPENDIX H

APPRAISAL REPORT

I-1

APPENDIX I

MARKET ABSORPTION STUDY

FISCAL AGENT AGREEMENT
by and be
tween the
CITY

OF TRACY
and
U.S.

BANK TRUST COMPANY, NATIONAL ASSOCIATION,
as Fiscal Agent
Dated
as of ________, 2022
Rel
ating to:
$___________
City of Tracy
Community Facilities District No. 2021-1
(Hillview)
Special Tax Bonds, Series 2022

ATTACHMENT B
i

TABLE OF CONTENTS
ARTI
CLE I

AUTHORITY AND DEFINITIONS
Section 1.01. Authority for this Agreement ............................................................................................ 2 Section 1.02. Agreement for Benefit of Owners of the Bonds ............................................................... 2 Section 1.03. Definitions ........................................................................................................................ 2

ARTICLE II

THE BONDS
Section 2.01. Principal Amount; Designation ....................................................................................... 12 Section 2.02. Terms of Bonds .............................................................................................................. 12 Section 2.03. Redemption .................................................................................................................... 14 Section 2.04. Form of Bonds................................................................................................................ 16 Section 2.05. Execution and Authentication of Bonds ......................................................................... 17 Section 2.06. Transfer or Exchange of Bonds ..................................................................................... 17 Section 2.07. Bond Register ................................................................................................................ 17 Section 2.08. Temporary Bonds .......................................................................................................... 17 Section 2.09. Bonds Mutilated, Lost, Destroyed or Stolen .................................................................. 18 Section 2.10. Book-Entry Only System ................................................................................................ 18

ARTICLE III

ISSUANCE OF BONDS
Section 3.01. Issuance and Delivery of 2022 Bonds ........................................................................... 20 Section 3.02. Pledge of Special Tax Revenues ................................................................................... 20 Section 3.03. Limited Obligation .......................................................................................................... 20 Section 3.04. No Acceleration .............................................................................................................. 21 Section 3.05. Validity of Bonds ............................................................................................................ 21 Section 3.06. Parity Bonds ................................................................................................................... 21

ARTICLE IV

PROCEEDS, FUNDS AND ACCOUNTS
=Section 4.01. Application of 2022 Bond Proceeds ............................................................................. 22 Section 4.02. Costs of Issuance Fund ................................................................................................. 22 Section 4.03. 2022 Reserve Fund ....................................................................................................... 23 Section 4.04. Bond Fund...................................................................................................................... 25 Section 4.05. Special Tax Fund ........................................................................................................... 27 Section 4.07. Improvement Fund ......................................................................................................... 29

ARTICLE V

COVENANTS
Section 5.01. Collection of Special Tax Revenues .............................................................................. 32 Section 5.02. Covenant to Foreclose ................................................................................................... 33 Section 5.03. Punctual Payment .......................................................................................................... 34 Section 5.04. Extension of Time for Payment ...................................................................................... 34 Section 5.05. Against Encumbrances .................................................................................................. 34 Section 5.06. Books and Records ........................................................................................................ 34 Section 5.07. Protection of Security and Rights of Owners ................................................................. 35 Section 5.08. Further Assurances ........................................................................................................ 35 Section 5.09. Private Activity Bond Limitations .................................................................................... 35 Section 5.10. Federal Guarantee Prohibition ....................................................................................... 35 Section 5.11. Rebate Requirement ...................................................................................................... 35 Section 5.12. No Arbitrage ................................................................................................................... 36 Section 5.13. Yield of the 2022 Bonds ................................................................................................. 36 Section 5.14. Maintenance of Tax-Exemption; Record Retention; Compliance with Tax Certificates .................................................................................................................. 36 Section 5.15. Continuing Disclosure .................................................................................................... 36 Section 5.16. Limits on Special Tax Waivers and Bond Tenders ........................................................ 36 Section 5.17. City Bid at Foreclosure Sale .......................................................................................... 37 ii
Section 5.18. Amendment of Rate and Method .................................................................................... 37

ARTICLE VI
INVESTMENTS; LIABILITY OF THE CITY
Section 6.01. Deposit and Investment of Moneys in Funds ................................................................. 38 Section 6.02. Liability of City ................................................................................................................ 39 Section 6.03. Employment of Agents by City ....................................................................................... 40

ARTICLE VII

THE FISCAL AGENT
Section 7.01. The Fiscal Agent ............................................................................................................ 41 Section 7.02. Liability of Fiscal Agent .................................................................................................. 42 Section 7.03. Reserved ........................................................................................................................ 43 Section 7.04. Notice to Fiscal Agent .................................................................................................... 43 Section 7.05. Compensation, Indemnification...................................................................................... 44

ARTICLE VIII

MODIFICATION OR AMENDMENT
Section 8.01. Amendments Permitted ................................................................................................. 45 Section 8.02. Owners’ Meetings .......................................................................................................... 46 Section 8.03. Procedure for Amendment with Written Consent of Owners ......................................... 46 Section 8.04. Disqualified Bonds ......................................................................................................... 46 Section 8.05. Effect of Supplemental Agreement ................................................................................ 47 Section 8.06. Endorsement or Replacement of Bonds Issued After Amendments ............................. 47 Section 8.07. Amendatory Endorsement of Bonds .............................................................................. 47

ARTICLE IX

MISCELLANEOUS
Section 9.01. Benefits of Agreement Limited to Parties ...................................................................... 48 Section 9.02. Successor and Predecessor .......................................................................................... 48 Section 9.03. Discharge of Agreement ................................................................................................ 48 Section 9.04. Execution of Documents and Proof of Ownership by Owners ....................................... 49 Section 9.05. Waiver of Personal Liability ............................................................................................ 49 Section 9.06. Notices to and Demands on the City and Fiscal Agent ................................................. 50 Section 9.07. Partial Invalidity .............................................................................................................. 50 Section 9.08. Unclaimed Moneys ........................................................................................................ 50 Section 9.09. Applicable Law ............................................................................................................... 50 Section 9.10. Conflict with Act.............................................................................................................. 50 Section 9.11. Conclusive Evidence of Regularity ................................................................................ 50 Section 9.12. Payment on Business Day ............................................................................................. 51 Section 9.13. State Reporting Requirements....................................................................................... 51 Section 9.14. Counterparts .................................................................................................................. 52 EXHIBI
T A: FORM OF 2022 BOND
EXHIBIT B: OFFICER’S CERTIFICATE REQUESTING DISBURSEMENT FROM

IMPROVEMENT FUND
EXHIBIT C: OFFICER’S CERTIFICATE REQUESTING DISBURSEMENT FROM

COSTS OF ISSUANCE FUND
1 FISCAL AGENT AGREEMENT
THIS FISCAL AGENT AGREEMENT (the “Agreement”) is made, entered into and dated as of _______, 2022, by and between the CITY OF TRACY, a municipal corporation and general law city organized and existing under the laws of the State of California (the “City”) for and on behalf of the "City of Tracy Community Facilities District No. 2021-1 (Hillview)" (the “CFD”), and U.S. Bank Trust Company, National Association, a national banking association duly organized and existing under the laws of the United States of America with a corporate trust office located in San Francisco, as fiscal agent (the “Fiscal Agent”).

WIT
NESSETH:

WHERE
AS, the City Council of the City has formed the CFD, under the provisions of the Mello-Roos Community Facilities Act of 1982, as amended (section 53311 et seq. of the California Government Code) (the “Act”); and
WHERE
AS, the City Council, as the legislative body with respect to the CFD, is authorized under the Act to levy special taxes to pay for the costs of facilities and to authorize the issuance of bonds secured by said special taxes under the Act; and WHERE
AS, on __________, 2022, the City Council adopted Resolution No. ________ (the “Resolution”) authorizing the issuance of special tax bonds (the “2022 Bonds”) on behalf of the CFD; and
WHERE
AS, it is in the public interest and for the benefit of the City, the CFD and the persons responsible for the payment of special taxes that the City enter into this Agreement to provide for the issuance of the Bonds (as defined below) hereunder to finance the acquisition and construction of facilities for the City and to provide for the disbursement of proceeds of the Bonds, the disposition of the special taxes securing the Bonds and the administration and payment of the Bonds; and
WHERE
AS, the City has determined that all things necessary to cause the 2022 Bonds, when authenticated by the Fiscal Agent and issued as provided in the Act, the Resolution and this Agreement, to be legal, valid, binding and limited obligations 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 2022 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 is hereby acknowledged, the parties hereto do hereby agree as follows:
2 ARTICLE I

AUTHORITY AND DEFINITIONS

Section 1.01. Authority for this Agreement . This Agreement is entered into pursuant to the Act (as herein defined) and the Resolution.

Section 1.02. Agreement for Benefit of Owners of the Bonds. 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 of the Bonds. 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.

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.

“Acquisition Agreement”
means that certain Acquisition Agreement Relating to: City of Tracy Community Facilities District No. 2021 ( Hillview), dated as of ______, 2022, by and between the City and Lennar Homes of California, LLC.

“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 costs directly related to the administration of the CFD consisting of: the actual costs of computing the Special Taxes and preparing the annual Special Tax collection schedules (whether by a City employee or consultant or both) and the actual costs of collecting the Special Taxes (whether by the County or otherwise); the actual costs of remitting the Special Taxes to the Fiscal Agent; actual costs of the Fiscal Agent (including its legal counsel) in the discharge of its duties under this Agreement; the actual costs of the City or its designee of complying with the disclosure provisions of the Act and this Agreement, including those related to public inquiries regarding the Special Tax and disclosures to Owners of the Bonds and the Original Purchaser; costs of the dissemination agent, whether for the City or another party that has undertaken to provide continuing disclosure; the actual costs of the City or its designee related to an appeal of the Special Tax; the actual costs incurred by the City to comply with arbitrage rebate requirements; any amounts required to be rebated to the federal government; the actual costs incurred by the City in connection with a Qualified Reserve Account Credit Instrument; an allocable share of the salaries of the City staff directly related to the foregoing and a proportionate amount of City general administrative overhead related thereto. Administrative Expenses shall also include amounts advanced by the City for any administrative purpose of the CFD, 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. 3 “Administrative Expense Ac count” means the account of that name in the Special Tax Fund established and administered under Section 4.05.

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

“Annual Debt Service” means, for each Bond Year, the sum of (i) the interest due on the Outstanding Bonds in such Bond Year, assuming that the Outstanding Bonds are retired as scheduled, and (ii) the principal amount of the Outstanding Bonds due in such Bond Year (including any mandatory sinking payment due in such Bond Year).

“Auditor”
means the auditor/controller of the County, or such other official at the County who is responsible for preparing property tax bills.

“Authorized Officer” means the M ayor, City Manager, Assistant City Manager, Finance Director, City Clerk 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" o
r "Bonds” means the 2022 Bonds and, if the context requires, any Parity Bonds, at any time Outstanding under this Agreement or any Supplemental Agreement.

“Bond Counsel” means Jones Hall, A Professional Law Corporation or any other 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 Fund” means the fund designated the “ C
ity of Tracy Community Facilities District
No. 2 021-1 ( Hillview) Special Tax Bonds , Bond Fund” established and administered under Section 4.04.

“Bond Proceeds Account” means the account of that name within the Improvement Fund to be established and administered by the Fiscal Agent under Section 4.07.

“Bond Year” means the one- y
ear period beginning on September 2 in each year and
ending on September 1 in the following year, except that the first Bond Year shall begin on th e Closing Date and shall end on September 1, 2022.

“Business Day” means any day other than (i) a Saturday or a Sunday or (ii) a day on which banking institutions in the state in which the Fiscal Agent has its principal corporate trust office 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, or any successor agency, board or commission.

“CFD” means the "Cit
y of Tracy Community Facilities District No. 2021-1 (Hillview)" formed under the Resolution of Formation.

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

4 “City Attorney ” means any attorney or firm of attorneys employed by the City in the capacity of general counsel.

“City Council” means the City Council of the City, in its capacity as the legislative body of the CFD.

“Closing Date”
means the date upon which there is a physical delivery of the 2022 Bonds in exchange for the amount representing the purchase price of the 2022 Bonds by the Original Purchaser.

“Continuing Disclosure Certificate” means that certain Continuing Disclosure Certificate executed by the City and dated the date of issuance and delivery of the 2022 Bonds, as originally executed and as it may be amended from time to time in accordance with the terms thereof.

“Costs of Issuance” means items of expense payable or reimbursable directly or indirectly by the City and related to the authorization, sale, delivery 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, appraisal costs, filing and recording fees, fees and expenses of counsel to the City, initial fees and charges of the Fiscal Agent including its first annual administration fees and its legal fees and charges, including the allocated costs of in- house attorneys, expenses incurred by the City in connection with the issuance of the Bonds, Bond (underwriter’s) discount, legal fees and charges, including bond counsel, and counsel to any financial consultant, financial consultant’s fees, charges for execution, authentication, transportation and safekeeping of the Bonds and other costs, charges and fees in connection with the foregoing.

“Costs of Issuance Fund” means the fund designated the “ Cit y of Tracy Community
Facilities District No. 2021 (Hillview) Special Tax Bonds, Costs of Issuance Fund” established and administered under Section 4.02.

“County” means the County of San Joaquin, California.

“Dated Date ”
means _______, 2022, the dated date of the 2022 Bonds, which is the Closing Date.

“Debt Service ”
means the scheduled amount of interest and amortization of principal payable on the 2022 Bonds under Sections 2.02 and 2.03 and the scheduled amount of interest and amortization of principal payable on any Parity Bonds during the period of computation, i n each case 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 for book-entry under Section 2.10.

“Developers” means Lennar Homes of California, LLC , a California limited liability company, and its successors and assigns.

“DTC” means The Depository Trust Company, New York, New York, and its successors and assigns.

“Fair Mark et Value” means with respect to the Bonds the price at which a willing buyer would purchase the investment from a willing seller in a bona fide, arm’s length transaction 5 (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 Tax 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 Tax 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 Tax 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) any commingled investment fund in which the City and related parties do not own more than a 10% beneficial interest if the return paid by such fund is without regard to the source of the investment.

“Federal Securities” means: (a) any direct general obligations of the United States of America (including obligations issued or held in book entry form on the books of the Department of the Treasury of the United States of America), the payment of principal of and interest on which are unconditionally and fully guaranteed by the United States of America; and (b) any obligations the principal of and interest on which are unconditionally guaranteed by the United States of America.

“Finance Director” means the official of t
he City, or such official's designee, who acts in
the capacity as the chief financial officer of the City, including the controller or other fi nancial officer.

“Fiscal Agent” means U.S. Bank Trust Company, National Association, 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.

“Improvement Fund” means the fund designated “ Cit
y of Tracy Community Facilities
District No. 2021-1 (Hillview), Special Tax Bonds, Improvement Fund,” established under Section

4.07. “Independent Financial Consultant ”
means any consultant or firm of such c onsultants
appointed by the City or the Finance Director, and who, or each of whom:

(i
) is judged by the Finance Director to have experience in matters relating to the issuance and/or administration of bonds under the Act;

(ii) is in fact independent and not under the domination of the City;

(iii) does not have any substantial interest, direct or indirect, with or in the City, or any owner of real property in the CFD, or any real property in the CFD; and

(iv) is not connected with the City as an officer or employee of the City, but who may be regularly retained to make reports to the City.

6 “Interest Payment Date” means each March 1 and September 1 of every calendar year, commencing with September 1, 2022.

“Maximum Annual Debt Service” means the largest Annual Debt Service for any Bond Year after the calculation is made through the final maturity date of any Outstanding Bonds.

“Moody’s”
means Moody’s Investors Service, Inc., and its successors.

“MSRB”
m eans the Municipal Securities Rulemaking Board, through its EMMA system, and, in accordance with then current guidelines of the Securities and Exchange Commission, such other addresses and/or such services providing information with respect to called bonds as the City may designate in an Officer’s Certificate delivered to the Fiscal Agent.

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

“Ordinance” means any ordinance of the Cit y Council of the City levying the Special Taxes, including but not limited to Ordinance No. 1320 introduced by the City Council on November 2, 2021, and adopted by the City Council on November 16, 2021.

“Original Purchaser” means Piper Sandler & Co. , the first purchaser of the 2022 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 under this Agreement or any Supplemental Agreement.

“Owner”
or “Bondowner ” means any person who shall be the registered owner of any Outstanding Bond.

“Parity Bonds” means additional bonds i
ssued and payable on a parity with the Bonds
under Section 3.06.

“Participating Underwriter” shall have the meaning ascribed thereto in the Continuing Disclosure Certificate.

“Permitted Investments”
means the following, but only to the extent that the same are acquired at Fair Market Value:

(a) Feder
al Securities.

(b) any of the following direct or indirect 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 pass -through obligations issued and guaranteed by the Government National Mortgage A ssociation, the Federal National Mortgage Association, the Federal Home Loan Mortgage Corporation or 7 the Federal Housing Administration; (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;

(c) interest-bearing demand or time deposits (including certificates of deposit), including those placed by a third party pursuant to a separate agreement between the City and the Fiscal Agent, banking deposit products, trust funds, trust accounts, overnight bank deposits, interest bearing deposits, interest bearing money market accounts or deposit accounts in federal or state chartered savings and loan associations or in federal or State of California banks (including the Fiscal Agent, its parent, if any, and affiliates), provided that (i) the unsecured short -term obligations of such commercial bank or savings and loan association shall be rated in the highest short-term rating category by any Rating Agency, or (ii) such demand or time deposits shall be fully insured by the Federal Deposit Insurance Corporation;

(d) commercial paper rated at the time of purchase in the highest short - term rating category by any Rating Agency, issued by corporations which are organized and operating within the United States of America, and which matures not more than 180 days following the date of investment therein;

(e) bankers acceptances, consisting of bills of exchange or time drafts drawn on and accepted by a commercial bank, including its parent (if any), affiliates and subsidiaries, whose short-term obligations are rated in the highest short-term rating category by any Rating Agency, or whose long-term obligations are rated A or better by any Rating Agency, which mature not more than 270 days following the date of investment therein;

(f) obligations the interest on which is excludable from gross income pursuant to Section 103 of the Tax Code and which are either (a) rated A or better by any Rating Agency, or (b) fully secured as to the payment of principal and interest by Federal Securities;

(g) obligations issued by any corporation organized and operating within the United States of America having assets in excess of $500,000,000, which obligations are rated A or better by any Rating Agency;

(h) money market mutual funds (including money market funds for which the Fiscal Agent, its affiliates or subsidiaries provide investment advisory, transfer agency, custodial or other management services for which it receives and retains a fee for such services to the fund) which invest in Federal Securities or which are rated in the highest short -term rating category by any Rating Agency including those funds for which the Fiscal Agent or an affiliate receives and retains a fee for services provided to the fund, whether as a custodian, transfer agent, investment advisor or otherwise; and

(i) any investment agreement representing general unsecured obligations of a financial institution rated A or better by any Rating Agency, by the terms of which the Fiscal Agent is permitted to withdraw all amounts invested therein in the event any such rating falls below A.

8 (j) 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.

(k) the California Asset Management Program.

“Principal Office ”
means such corporate trust office of the Fiscal Agent as may be designated from time to time by written notice from the Fiscal Agent to the City, initially being at the address set forth in Section 9.06, or such other office designated by the Fiscal Agent from time to time.

“Proceeds”
when used with reference to the Bonds, means the face amount of the Bonds, plus any accrued interest and premium, less any original issue and/or underwriter’s discount.

“Project” means those items described as the “Facilities” in the Resolution of Formation.

"Qualified Reserve A ccount Credit Instrument" means an irrevocable standby or direct- pay letter of credit, insurance policy, or surety bond issued by a commercial bank or insurance company and deposited with the Fiscal Agent, provided that all of the following requirements are met at the time of acceptance thereof by the Fiscal Agent: (a) in the case of a commercial bank, the long-term credit rating of such bank at the time of delivery of the irrevocable standby or direct- pay letter of credit is at least "A" from S&P or "A" from Moody’s and, in the case of an insurance company, the claims paying ability of such insurance company at the time of delivery of the insurance policy or surety bond is at least "A" from S&P, or "A" from Moody’s or, if not rated by S&P or Moody’s but is rated by A.M. Best & Company, is rated at the time of delivery in the highest rating category by A.M. Best & Company; (b) such letter of credit, insurance policy 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 2022 Reserve Requirement with respect to which funds are proposed to be released; and (d) the Fiscal Agent is authorized pursuant to the terms of such letter of credit, insurance policy or surety bond to draw thereunder an amount equal to any deficiencies which may exist from time to time in the Bond Fund for the purpose of making payments with respect to the 2022 Bonds and any Related Parity Bonds.

“Rate and Method” means the Rate and Method of Apportionment of Special Tax for t he
CFD set forth in the Resolution of Formation.

“Record Date” means the fifteenth day of the calendar month next preceding the applicable Interest Payment Date, whether or not such day is a Business Day.

“Refunding Bonds” means bonds issued by t he City for the CFD, the net proceeds of which are used to refund all or a portion of the then-Outstanding Bonds; provided that the principal and interest on the Refunding Bonds to their final maturity date is less than the principal and interest on the Bonds being refunded to their final maturity date, and the final maturity of the Refunding Bonds is not later than the final maturity of the Bonds being refunded.

“Regulations”
means temporary and per manent regulations promulgated under the Tax Code.

9 “Related Parity Bonds” means any series of Parity Bonds for which (i) the Proceeds are deposited into the 2022 Reserve Fund so that the balance therein is equal to the 2022 Reserve Requirement following issuance of such Parity Bonds and (ii) the related Supplemental Agreement specifies that the 2022 Reserve Fund shall act as a reserve for the payment of the principal of, and interest and any premium on, such series of Parity Bonds.

“Remainder Taxes” means t he Special Taxes available for disbursement pursuant to Section 4.05(B)(iii).

“Remainder Taxes Account” means the account of that name within the Improvement Fund to be established and administered by the Fiscal Agent under Section 4.07.

“Remainder Taxes Period” means the period through and including the date that is the earlier of (i) the end of the 15th Fiscal Year during which Special Taxes have been levied on the property in the CFD or (ii) the date the City has fully satisfied its reimbursement obligations under the Acquisition Agreement.

“Resolution” or “R
esolution of Issuance” has the meaning given that term in the recitals hereof.

“Resolution of Formation” means Resolution No. 2021 -159, adopted by the City Council on November 2, 2021, forming the CFD.

“S&P”
means S&P Global, a division of McGraw-Hill, and its successors and assigns.

“Securities Depositories” means DTC and, in accordance with then current guidelines of the Securities and Exchange Commission, such other securities depositories as the City may designate in an Officer’s Certificate delivered to the Fiscal Agent.

“Special Tax Fund” means the special fund designated C ity of Tracy Community Facilities District No. 2 021-1 (Hillview), Special Tax Fund” established and administered under Section

4.05. “Special Tax Prepayments” means the proceeds of any Special Tax prepayments received by the City , as calculated pursuant to the Rate and Method, less any administrative fees or penalties collected as part of any such prepayment.

“Special Tax Prepayments Account” means the account by that name established within the Bond Fund under Section 4.04(A).

“Special Tax Revenues” means the proceeds of the Special Taxes received by t he City,
including any scheduled payments thereof and any Special Tax Prepayments, 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, but shall not include any interest in excess of the interest due on the Bonds, or any penalties collected in connection with any such foreclosure.

“Special Taxes”
means the Facilities Special Tax levied by the City Council within the CFD under the Act, the Rate and Method, the Ordinance and this Agreement.

“State”
means the State of California.
10 “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.

“Tax 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 Tax Code.

“Tax Consultant”
means an independent financial or tax consultant retained by the City for the purpose of computing the Special Taxes.

“Term Bonds” means the (i) 2022 B onds maturing on September 1, 20__, (ii) the 2022 Bonds maturing on September 1, 20__ and (iii) such other Bonds designated as term bonds in a Supplemental Agreement.

“2022 B onds ” means the Bonds so designated and authorized to be issued under Section

2.01 hereof.

“2022 Capitalized Interest Account” means the account by that name held by the Fiscal Agent and established and administered under section 4.04(A).

“2022 R
eserve Fund” means the fund designated the “ City of Tracy Community Facilities District No. 2021-1 (Hillview), Special Tax Bonds, Reserve Fund” established and administered under Section 4.03.

“2022 Reserve Requirement” means the amount as of any date of calculation equal to the least of (a) Maximum Annual Debt Service on the 2022 Bonds and Related Parity Bonds, if any, (b) 125% of average Annual Debt Service on the 2022 Bonds and Related Parity Bonds, if any and (c) 10% of the outstanding principal of the 2022 Bonds and Related Parity Bonds, if any ; provided, however:

(A)
that with respect to the calculation of clause (c), the issue price of the 2022 Bonds or any Related Parity Bonds excluding accrued interest shall be used rather than the outstanding principal amount, if (i) the net original issue discount or premium of the 2022 Bonds or any Related Parity Bonds was less than 98% or more than 102% of the original principal amount of the 2022 Bonds or any Related Parity Bonds and (ii) using the issue price would produce a lower result than using the outstanding principal amount;

(B) that in no event shall the amount calculated hereunder exceed the amount on deposit in the 2022 Reserve Fund on the date of issuance of the 2022 Bonds (if they are the only Bonds covered by the 2022 Reserve Fund) or the most recently issued series of Related Parity Bonds (if any Related Parity Bonds are covered by the 2022 Reserve Fund) except in connection with any increase associated with the issuance of Related Parity Bonds; and

(C) that in no event shall the amount required to be deposited into the 2022 Reserve Fund in connection with the issuance of a series of Related Parity Bonds exceed 11 the maximum amount under the Tax Code that can be financed with tax -exempt bonds and invested an unrestricted yield.

12 ARTICLE II

THE BONDS

Section 2.01. Principal Amount; Designation. Bonds in the aggregate principal amount of $_________ are hereby authorized to be issued by the City for the CFD under and subject to the terms of the Act, the Resolution, this Agreement and other applicable laws of the State of California. This paragraph shall not limit the principal amount of any Refunding Bonds.

The 2022 Bonds shall be designated as the “ City of Tracy Community Facilities District No. 2021-1 (Hillview) Special Tax Bonds, Series 2022,” and shall be in the initial principal amount of $_________.

Section 2.02. Terms of the 2022 Bonds.

(A) Form; Denominations. The 2022 Bonds shall be issued as fully registered Bonds without coupons. The 2022 Bonds shall be lettered and numbered in a customary manner as determined by the City. The 2022 Bonds shall be issued in the denominations of $5,000 or any integral multiple of $5,000 in excess thereof.

(B) Date of 2022 Bonds. The 2022 Bonds shall be dated the Closing Date.

(C) CUSIP Identification Numbers. “CUSIP” identification numbers may, at the election of the Original Purchaser of the Bonds, be imprinted on the Bonds, but such numbers shall not constitute a part of the contract evidenced by the 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 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 viol ation of the City’s contract with such Owners and shall not impair the effectiveness of any such notice.

(D) Maturities; Interest Rates. The 2022 Bonds shall mature and become payable on each September 1, and shall bear interest at the rates per annum indicated in the below table.

Maturity
(September 1)
Principal
Amount
Interest
Rate
$ %

13 * Term Bond

(E) Interest. The 2022 Bonds shall bear interest at the rates set forth above payable on the Interest Payment Dates in each year. Interest on all Bonds shall be calculated on the basis of a 360-day year composed of twelve 30- day months. Each Bond shall 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 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 on or before the Record Date preceding the first Interest Payment Date, in which event it shall 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 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 Bonds (including the final interest payment upon maturity or earlier redemption), is payable on the applicable Interest Payment Date by check of the Fiscal Agent mailed 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 to an account located in the United States made on such Interest Payment Date upon written instructions of any Owner of $1,000,000 or more in aggregate principal amount of Bonds delivered to the Fiscal Agent prior to the applicable Record Date, which shall continue in effect until revoked in writing, or until such Bonds are transferred to a new Owner.

The principal of the Bonds and any premium on the Bonds are payable in lawful money of the United States of America upon surrender of the Bonds at the Principal Office of the Fiscal Agent. So long as the registered Owner of the Bonds are Cede & Co., payment of principal and redemption shall be made without presentment. All Bonds paid by the Fiscal Agent pursuant to this Section shall be canceled by the Fiscal Agent. The Fiscal Agent shall destroy the canceled Bonds and, upon request of the City, issue a certificate of destruction of such Bonds to the City.

14 Section 2.03. Redemption.

(A) Redemption Provisions.

(i) Optional Redemption. The 2022 Bonds maturing on or after September 1, 20__ are subject to optional redemption as directed by the City, from sources of funds other than prepayments of Special Taxes, prior to their stated maturity on any date on or after September 1, 20__ , as a whole or in part, at a redemption price (expressed as a percentage of the principal amount of the 2022 Bonds to be redeemed), as set forth below, together with accrued interest thereon to the date fixed for redemption:

Redemption Dates
Redemption
Price
September 1, 20__ through August 31, 20__ 10_%
September 1, 20__ through August 31, 202__ 10_
September 1, 20__ through August 31, 20__ 10_
September 1, 20__ and any date thereafter 100

(ii) Mandatory Sinking Fund Redemption. The Term Bond maturing on September 1, 20__, is subject to mandatory redemption in part by lot, from sinking fund payments made by the City from the Bond Fund, at a redemption price equal to the principal amount thereof to be redeemed, plus interest accrued on the Term Bond to the redemption date, without premium, in the aggregate respective principal amounts all as set forth in the following table:

Sinking Fund
Redemption Date
(September 1)

Sinking Fund
Payments
20__ $_______
20__ _______
20__ _______
20__ _______
20__ (maturity) _______

The Term Bond maturing on September 1, 20__, is subject to mandatory redemption in part by lot, from sinking fund payments made by the City from the Bond Fund, at a redemption price equal to the principal amount thereof to be redeemed, plus interest accrued on the Term Bond to the redemption date without premium, in the aggregate respective principal amounts all as set forth in the following table:

Sinking Fund
Redemption Date
(September 1)

Sinking Fund
Payments
20__ $_______
20__ _______
20__ _______
20__ _______
20__ (maturity) _______

Provided, however, if some but not all of the Term Bonds of a given maturity have been redeemed under subsection (i) above or subsection (iii) below, the total amount of 15 all future Sinking Fund Payments relating to such maturity shall be reduced by the aggregate principal amount of Term Bonds of such maturity so redeemed, to be allocated among such Sinking Fund Payments on a pro rata basis in integral multiples of $5,000 as determined by the City, notice of which shall be given by the City to the Fiscal Agent, and the notice shall include a revised sinking fund schedule.

(iii) Redemption from Special Tax Prepayments. Special Tax Prepayments and any corresponding transfers from the 2022 Reserve Fund pursuant to Section 4.03(F) shall be used to redeem 2022 Bonds on the next Interest Payment Date for which notice of redemption can timely be given under Section 2.03(D), among maturities of outstanding bonds so as to maintain substantially the same debt service profile for the Bonds as in effect prior t o such redemption and by lot within a maturity, at a redemption price (expressed as a percentage of the principal amount of the 2022 Bonds to be redeemed), as set forth below, together with accrued interest to the date fixed for redemption:

Redemption Dates
Redemption
Price
Any Interest Payment Date on or before March 1, 20__ 10_% September 1, 20__ and March 1, 20__ 10_
September 1, 20__ and March 1, 20__ 10_
September 1, 20__ and any Interest Payment Date thereafter 100

(B) Notice to Fiscal Agent. The City shall give the Fiscal Agent written notice of its intention to redeem Bonds under subsection (A)(i) and (A)(iii) not less than 45 days prior to the applicable redemption date or such lesser number of days as shall be acceptable to the Fiscal Agent.

2.03(A), moneys in the Bond Fund may be used and withdrawn by the Fiscal Agent for purchase of Outstanding 2022 Bonds upon the filing with the Fisc al 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 2022 Bonds be purchased at a price in excess of the principal amount thereof, plus interest accrued to the date of purchase and any premium which would otherwise be due if such 2022 Bonds were to be redeemed in accordance with this Agreement.

(D) Redemption Procedure by Fiscal Agent.

(i) Notices. The Fiscal Agent shall cause notice of any redemption to be mailed by first class mail, postage prepaid, or posted, at least twenty (20) days but not more than sixty (60) days prior to the date fixed for redemption, to the Securities Depositories and to the respective registered Owners of any Bonds designated for redemption, at their addresses appearing on the Bond registration books in the Principal Office of the Fiscal Agent; but such mailing shall not be a condition precedent to suc h 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 Bonds. In addition, the Fiscal Agent shall file each notice of redemption with the MSRB through its EMMA system.

(ii) Contents of Notices. Such notice shall state the redemption date and the redemption price and, if less than all of the then Outstanding Bonds are to be called for redemption shall state as to any Bond called in part the principal amount thereof to be 16 redeemed, and shall require that such 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 Bonds will not accrue from and after the redemption date. The cost of mailing any such redemption notice and any expenses incurred by the Fiscal Agent in connection therewith shall be paid by the City.

The City has the right to send a conditional optional redemption notice and to rescind any notice of the optional redemption of Bonds by written notice to the Fiscal Agent on or prior to 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 Bonds then called for redemption, and such cancellation shall not constitute a default under this Agreement. 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.

(iii) Selection of Bonds for Redemption. Whenever provision is made in this Agreement for the redemption of less than all of the Bonds of any maturity or any given portion thereof, the Fiscal Agent shall select the Bonds to be redeemed, from all Bonds or such given portion thereof not previously called for redemption as directed by the City or, in the absence of direction by the City, on a pro rata basis among maturities, and, within a maturity, by lot in any manner which the Fiscal Agent in its sole discretion deems appropriate.

(iv) New Bonds. Upon surrender of 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 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 of such registered Owner.

(E) 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 shall have been deposited in the Bond Fund, such 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 the notice of redemption. All Bonds redeemed and purchased by the Fiscal Agent under this Section 2.03 shall be canceled by the Fiscal Agent. The Fiscal Agent shall destroy the canceled Bonds in accordance with the Fiscal Agent’s retention policy then in effect.

Section 2.04. Form of Bonds . The 2022 Bonds, the Fiscal Agent’s certificate of authentication and the 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.

17 Section 2.05. Execution and Authentication of Bonds.

(A) Execution. The Bonds shall be executed on behalf of the City by the manual or facsimile signatures of its Finance Director and its City Clerk who are in office on the date of execution of this Agreement or at any time thereafter. 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 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.

(B) Authentication. 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 or Exchange of Bonds. Any Bond may, in accordance with its terms, be transferred, upon the Bond Register required to be kept under the provisions of Section

2.07 by the person in whose name it is registered, in person or by such person’s 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. Bonds may be exchanged at the Principal Office of the Fiscal Agent solely 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 transfer or exchange shall be paid by the City . The Fiscal Agent shall collect from the Owner requesting such transfer or exchange any tax or other governmental charge required to be paid with respect to such transfer or exchange. Whenever any Bond or Bonds shall be surrendered for transfer or exchange, the City shall execute and the Fiscal Agent shall authenticate and deliver a new Bond or Bonds, for a like aggregate principal amount. No transfers or exchanges of Bonds shall be required to be made (i) fifteen 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; or (iii) between a Record Date and the succeeding Interest Payment Date.

Section 2.07. 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 shall show the series number, date, amount, rate of interest and last known 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 the Bond Register, the ownership of the Bonds as hereinbefore provided. The City and the Fiscal Agent will treat the Owner of any Bond whose name appears on the Bond Register as the absolute Owner of such Bond for any and all purposes, and the City and the Fiscal Agent shall not be affected by any notice to the contrary. The City and the Fiscal Agent may rely on the address of the Owner as it appears in the Bond Register for any and all purposes.

Section 2.08. 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 authorized denominations as may be determined by 18 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 2.09. Bonds Mutilated, Lost, Destroyed or Stolen.

(A) Mutilated. If any Bond shall become mutilated, at the expense of the Owner of such Bond, the City shall execute and the Fiscal Agent shall authenticate and deliver a replacement 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 the Fiscal Agent’s retention policy then in effect.

(B) Destroyed or Stolen. If any Bond shall be lost, destroyed or stolen, the City shall execute and the Fiscal Agent shall authenticate and deliver a replacement Bond of like tenor and principal amount in lieu of and in substitution for the Bond so lost, destroyed or stolen, at the expense of the Owner, but only following provision by the Owner to the Fiscal Agent of indemnity for the City and the Fiscal Agent satisfactory to the Fiscal Agent and the City. The City may require payment of a sum not exceeding the actual cost of preparing each a replacement Bond delivered under this Section and the City and the Fiscal Agent may require payment of the expenses which may be incurred by the City and the Fiscal Agent for the preparation, execution, authentication and delivery thereof. 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 under this Agreement.

(C) Additional Stock. If the Fiscal Agent has an insufficient stock of unauthenticated printed Bonds for such purpose, it shall communicate with the Finance Director with respect to the printing of an additional stock of Bonds, in such quantities and as otherwise approved in writing by the Finance Director.

Section 2.10. 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 with a separate fully registered certificate (in print 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 of the City 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.

19 With respect to Bonds registered in the Bond register in the name of Cede & Co., as nominee of DTC, neither the City nor the Agent shall 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, neither the City nor the Fiscal Agent shall 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 Bonds to be redeemed in the event the City elects to redeem the Bonds, in part, (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 payments to any DTC Participant, any Beneficial Owner, or any person, other than DTC, of any amount with respect to the principal of or interest or premium on the Bonds, or (v) any consent given or other action taken by the Depository as Owner of the Bonds.

Except as set forth above, the City and 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 premium and interest on such Bonds, for the purpose of giving notices of redemption 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 on behalf of the City shall pay all principal of and premium and interest on the Bonds only to or upon the order of the Owners as shown on the Bond register, and all such payments shall be valid and effective to fully satisfy and discharge all obligations with respect to the principal of and premium and interest on the Bonds to the extent of the sums 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 City and 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 2.10 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 City and to the Fiscal Agent 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 transfer 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 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 willing to undertake such functions upon reasonable or customary terms, or if the City determines that it is in the best interest of the Beneficial Owners of the Bonds that they be able to obtain certified 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 names the Owners shall designate at that time, in accordance with Section 2.06.

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. 20 ARTICLE III

ISSUANCE OF BONDS

Section 3.01. Issuance and Delivery of 2022 Bonds. At any time after the execution of this Agreement, the City may issue the 2022 Bonds for the CFD in the aggregate principal amount set forth in Section 2.01 and deliver t he 2022 Bonds to the Fiscal Agent for authentication and delivery to the Original Purchaser. The Authorized Officers of the City are hereby authorized and directed to execute and deliver any and all documents and instruments necessary to cause the issuance of the 2022 Bonds in accordance with the provisions of the Act, the Resolution and this Agreement, to authorize the payment of Costs of Issuance and costs of the Project by the Fiscal Agent from the proceeds of the 2022 Bonds and to do and cause to be done any and all acts and things necessary or convenient for the timely delivery of the 2022 Bonds to the Original Purchaser.

The Fiscal Agent is hereby authorized and directed to authenticate the 2022 Bonds and deliver them to the Original Purchaser, upon receipt of the purchase price for the 2022 Bonds.

Section 3.02. Pledge of Special Tax Revenues. The Bonds shall be secured by a first pledge (which shall be effected in the manner and to the extent herein provided) of all of the Special Tax Revenues and all moneys deposited in the Bond Fund (including the Special Tax Prepayments Account), and, until disbursed as provided herein, in the Special Tax Fund. The Special Tax Revenues and all moneys deposited into such funds (except as otherwise provided herein) are hereby dedicated to the payment of the principal of, 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 o r until moneys or Federal Securities have been set aside irrevocably for that purpose under Section

9.03. The 2022 Bonds and all Related Parity Bonds shall be secured by a first pledge (which shall be effected in the manner and to the extent herein provided) of all moneys deposited in the 2022 Reserve Fund. The moneys in the 2022 Reserve Fund (except as otherwise provided herein) are hereby dedicated to the payment of the principal of, and interest and any premium on, the 2022 Bonds and all Related Parit y Bonds as provided herein and in the Act until all of the 2022 Bonds and all Related Parity Bonds have been paid and retired or until moneys or Federal Securities have been set aside irrevocably for that purpose under Section 9.03.

The 2022 Bonds shall be secured by a first pledge (which shall be effected in the manner and to the extent herein provided) of all of the moneys deposited in the 2022 Capitalized Interest Account.

Amounts in the Improvement Fund (and the accounts therein), the Administrative Expense Account and the Costs of Issuance Fund are not pledged to the repayment of the Bonds. The Project is not pledged to the repayment of the Bonds, nor are the proceeds of any condemnation or insurance award received by the City with respect to the Project.

Section 3.03. Limited Obligation. All obligations of the City under this Agreement and the Bonds shall not be general obligations of the City, but shall be limited obligations, payable solely from the Special Tax Revenues and the funds pledged therefor hereunder. Neither the faith and credit nor the taxing power of the City (except to the limited extent set forth herein) or of the State of California or any political subdivision thereof is pledged to the payment of the Bonds.

21 Section 3.04. No Acceleration. The principal of the Bonds shall not be subject to acceleration hereunder. Nothing in this Section shall in any way prohibit the redemption of Bonds under Section 2.03, or the defeasance of the Bonds and discharge of this Agreement under Section 9.03.

Section 3.05. Validity of Bonds. The validity of the authorization and issuance of the Bonds shall not be dependent upon the completion of the acquisition of the Project or upon the performance by any person of his obligation with respect to the Project.

Section 3.06. Parity Bonds. In addition t o the 2022 Bonds, the City may issue Bonds as Parity Bonds in such principal amount as shall be determined by the City , under a Supplemental Agreement entered into by the City and the Fiscal Agent. Any such Parity Bonds shall constitute Bonds hereunder and shall be secured by a lien on the Special Tax Revenues and funds pledged for the payment of the Bonds hereunder on a parity with all other Bonds Outstanding hereunder. The City may only issue Parity Bonds if they are Refunding Bonds and subject to the following specific conditions precedent:

(A) Compliance. Following issuance of the Parity Bonds, the City shall be in compliance with all covenants set forth in this Agreement and all Supplemental Agreements, and issuance of the Parity Bonds shall not cause the City to exceed the bonded indebtedness limit of the CFD.

(B) Same Payment Dates . The Supplemental Agreement providing for the issuance of such Parity Bonds shall provide that interest thereon shall be payable on the Interest Payment Dates, and principal thereof shall be payable on September 1 in any year in which principal is payable on the Parity Bonds (provided that there shall be no requirement that any Parity Bonds pay interest on a current basis).

(C) Debt Service Reserve Fund. The Supplemental Agreement providing for issuance of the Parity Bonds shall provide for either of the following:

(i) a deposit to the 2022 Reserve Fund in an amount necessary such that the amount deposited therein shall equal the 2022 Reserve Requirement following issuance of the Parity Bonds or

(ii) a deposit to a reserve account for the Parity Bonds (and such other series of Parity Bonds identified by the City ) in an amount defined in such Supplemental Agreement, as long as such Supplemental Agreement expressly declares that the Owners of such Parity Bonds will have no interest in or claim to the 2022 Reserve Fund and that the Owners of the Bonds covered by the 2022 Reserve Fund will have no interest in or claim to such other reserve account.

(D) Certificates. The City shall deliver to the Fiscal Agent an Officer's Certificate certifying that the conditions precedent to the issuance of such Parity Bonds set forth in subsections (A), (B) and (C) of this Section 3.06 have been satisfied.

Nothing in this Section 3.06 shall prohibit the City from issuing any other bonds or otherwise incurring debt secured by a pledge of the Special Tax Revenues subordinate to the pledge thereof under Section 3.02 of this Agreement.

22 ARTICLE IV

PROCEEDS, FUNDS AND ACCOUNTS

Section 4.01. Application of 2022 Bond Proceeds. The Proceeds of the 2022 Bonds received from the Original Purchaser in the amount of $_________ (which is equal to the initial principal amount of the 2022 Bonds, [plus an original issue premium of $__________], less an underwriter’s discount in the amount of $__________) shall be paid to the Fiscal Agent, which shall transfer or deposit the Proceeds on the Closing Date as follows:

(i) deposit $__________ into the Costs of Issuance Fund;

(ii) deposit $__________ into the 2022 Reserve Fund equaling the initial 2022 Reserve Requirement;

(iii) deposit $__________ into the Bond Proceeds Account of the Improvement Fund; and

(iv) $____________ into the 2022A Capitalized Interest Account.

Concurrently with the deposits described above, the City will transfer $__________ of Special Taxes to the Fiscal Agent for deposit into the Remainder Taxes Account of the Improvement Fund.

The Fiscal Agent may, in its discretion, establish a temporary fund or account to facilitate the foregoing transfers or deposits. Any remaining proceeds after the transfers listed above shall be transferred into the Bond Proceeds Account of the Improvement Fund.

Section 4.02. Costs of Issuance Fund.

(A) Establishment of Costs of Issuance Fund. The Costs of Issuance Fund is hereby established as a separate fund to be held by the Fiscal Agent, to the credit of which a deposit shall be made as required by Section 4.01.

Moneys in the Costs of Issuance Fund shall be held by the Fiscal Agent for the benefit of the City and shall be disbursed as provided in subsection (B) of this Section for the payment or reimbursement of Costs of Issuance.

(B) Disbursement. Amounts in the Costs of Issuance Fund shall be disbursed from time to time to pay Costs of Issuance, as set forth in a requisition substantially in the form of Exhibit C hereto, executed by the Finance Director, containing respective amounts to be paid to the designated payees and delivered to the Fiscal Agent. Each such requisition 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 Costs of Issuance Fund shall be invested and deposited by the Fiscal Agent under Section 6.01. Interest earnings and profits resulting from such investment shall be retained by the Fiscal Agent in the Costs of Issuance Fund to be used for the purposes of such fund. 23 (D) Closing of Fund. The Fiscal Agent shall maintain the Costs of Issuance Fund for a period of 90 days from the Closing Date and then the Fiscal Agent shall transfer any moneys remaining therein, including any investment earnings thereon, to the Bond Fund and used to pay debt service on the Bonds.

Section 4.03. 2022 Reserve Fund.

(A) Establishment of Fund. The 2022 Reserve Fund is hereby established as a separate fund to be held by the Fiscal Agent to the credit of which a deposit shall be made as required by Section 4.01, which deposit, as of the Closing Date, is equal to the initial 2022 Reserve Requirement with respect to the 2022 Bonds, and deposits shall be made as provided in Sections 3.06(C) and

4.05(A) and (B). Moneys in the 2022 Reserve Fund shall be held by the Fiscal Agent for the benefit of the Owners of the 2022 Bonds and any Related Parity Bonds as a reserve for the payment of the principal of, and interest and any premium on, the 2022 Bonds and any Related Parity Bonds and shall be subj ect to a lien in favor of the Owners of the 2022 Bonds and any Related Parity Bonds.

(B) Use of Reserve Fund . Except as otherwise provided in this Section, all amounts deposited in the 2022 Reserve Fund shall be used and withdrawn by the Fiscal Agent solely for the purpose of making transfers to the Bond Fund in the event of any deficiency at any time in the Bond Fund of the amount then required for payment of the principal of, and interest and any premium on, the 2022 Bonds and any Related Parity Bonds or, in accordance with the provisions of this Section, for the purpose of redeeming 2022 Bonds and any Related Parity Bonds from the Bond Fund. Whenever a transfer is made from the 2022 Reserve Fund to the Bond Fund due to a deficiency in the Bond Fund for payment of the principal of, and interest and any premium on, the 2022 Bonds and any Related Parity Bonds, the Fiscal Agent shall provide written notice thereof to the Finance Director, specifying the amount withdrawn.

(C) Transfer of Excess of Reserve Requirement . Whenever, on or before any Interest Payment Date, or on any other date at the request of the Finance Director, the amount in the 2022 Reserve Fund exceeds the 2022 Reserve Requirement, the Fiscal Agent shall transfer an amount equal to the excess from the 2022 Reserve Fund to the Bond Fund, to be used to pay interest on the 2022 Bonds and any Related Parity Bonds on the next Interest Payment Date.

(D) Transfer for Rebate Purposes. Amounts in the 2022 Reserve Fund shall be withdrawn for purposes of making payment to the federal government to comply with Section 5.11, upon receipt by the Fiscal Agent of an Officer's Certificate specifying the amount to be withdrawn and to the effect that such amount is needed for rebate purposes; provided, however, that no amounts in the 2022 Reserve Fund shall be used for rebate unless the amount in the 2022 Reserve Fund following such withdrawal equals the 2022 Reserve Requirement.

(E) Transfer When Balance Exceeds Outstanding Bonds.

Whenever the balance in the 2022 Reserve Fund exceeds the amount required to redeem or pay the Outstanding 2022 Bonds and all Outstanding Related Parity 24 Bonds, including interest accrued to the date of payment or redemption and premium, if any, due upon redemption, the Fiscal Agent shall, upon the written request of the Finance Director, transfer any cash or Permitted Investments in the 2022 Reserve Fund to the Bond Fund to be applied, on the redemption date to the payment and redemption, in accordance with Section 4.04 or 2.03 and the provisions of the Supplemental Agreement related to the Related Parity Bonds, as applicable, of all of the Outstanding 2022 Bonds and Outstanding Related Parity Bonds. In the event that the amount so transferred from the 2022 Reserve Fund to the Bond Fund exceeds the amount required to pay and redeem the Outstanding 2022 Bonds and Outstanding Related Parity Bonds, the balance in the 2022 Reserve Fund shall be transferred to the Finance Director to be used by the City for any lawful purpose.

Notwithstanding the provisions of the first paragraph of this Section

4.03(E), no amounts shall be transferred from the 2022 Reserve Fund under this Section 4.03(E) until after: (i) the calculation of any amounts due to the federal government under Section 5.11 and withdrawal of any such amount under Section

4.03(D) for purposes of making such payment to the federal government; and (ii) payment of any fees and expenses due to the Fiscal Agent.

(F) Transfer Upon Special Tax Prepayment. Whenever Special Taxes are prepaid and 2022 Bonds or any Related Parity Bonds are to be redeemed with the proceeds of such prepayment pursuant to Section 2.03(A)(iii) or a Supplemental Agreement related to any Related Parity Bonds, any resulting reduction in the 2022 Reserve Requirement shall be transferred on the Business Day prior to the redemption date by the Fiscal Agent to the Bond Fund to be applied to the redemption of the 2022 Bonds pursuant to Section 2.03(A)(iii) or a Supplemental Agreement related to any Related Parity Bonds . The Finance Director shall deliver to the Fiscal Agent an Officer’s Certificate specifying any amount to be so transferred, and the Fiscal Agent may rely on any such Officer’s Certificate.

(G) Investment. Moneys in the 2022 Reserve Fund shall be invested by the Fiscal Agent under Section 6.01.

(H) Qualified Reserve Account Credit Instrument s. The City shall have the right at any time to direct the Fiscal Agent to release funds from the 2022 Reserve Fund, in whole or in part, by tendering to the Fiscal Agent: (i) a Qualified Reserve Account Credit Instrument, and (ii) an opinion of Bond Counsel stating that neither the release of such funds nor the acceptance of such Qualified Reserve Account Credit Instrument will cause interest on the 2022 Bonds or any Related Parity Bonds the interest on which is excluded from gross income of the owners thereof for federal income tax purposes to become includable in gross income for purposes of federal income taxation. Upon tender of such items to the Fiscal Agent, and upon delivery by the City to the Fiscal Agent of a written calculation of the amount permitted to be released from the 2022 Reserve Fund (upon which calculation the Fiscal Agent may conclusively rely), the Fiscal Agent shall transfer such funds from the 2022 Reserve Fund to the Bond Proceeds Account of the Improvement Fund to be used for the purposes thereof. The Fiscal Agent shall comply with all documentation relating to a Qualified Reserve Account Credit Instrument as shall be required to maintain such Qualified Reserve Account 25 Credit Instrument in full force and effect and as shall be required to rec eive payments thereunder in the event and to the extent required to make any payment when and as required under this Section. Upon the scheduled expiration of any Qualified Reserve Account Credit Instrument, the City shall either (i) replace such Qualified Reserve Account Credit Instrument with a new Qualified Reserve Account Credit Instrument, or (ii) deposit or cause to be deposited with the Fiscal Agent an amount of funds equal to the 2022 Reserve Requirement, to be derived from the first available Special Tax Revenues. If the 2022 Reserve Requirement is being maintained partially in cash and partially with a Qualified Reserve Account Credit Instrument, the cash shall be first used to meet any deficiency which may exist from time to time in the Bond Fund with respect to the 2022 Bonds and any Related Parity Bonds. If the 2022 Reserve Requirement is being maintained with two or more Qualified Reserve Account Credit Instruments, any draw to meet a deficiency which may exist from time to time in the Bond Fund with respect to the 2022 Bonds and any Related Parity Bonds shall be pro- rata with respect to each such instrument.

In the event that a Qualified Reserve Account Credit Instrument is available to be drawn upon for only one or more particular series of Bonds, a separate subaccount in the 2022 Reserve Fund may be established for such series, and the calculation of the 2022 Reserve Requirement with respect to any Related Parity Bonds shall exclude the debt service on such issue of Related Parity Bonds.

The City will have no obligation to replace a Qualified Reserve Account Credit Instrument or to fund the 2022 Reserve Fund with cash if, at any time that the 2022 Bonds are Outstanding, the Qualified Reserve Account Credit Instrument (or its provider) is downgraded or the provider becomes insolvent, if there is an unscheduled termination of the Qualified Reserve Account Credit Instrument or if for any reason insufficient amounts are available to be drawn upon under the Qualified Reserve Account Credit Instr ument; provided, however, that the City shall reimburse the provider, in accordance with the terms of the Qualified Reserve Account Credit Instrument, for any draws made thereon.

The City and the Fiscal Agent shall comply with the terms of the Qualified Reserve Account Credit Instrument as shall be required to receive payments thereunder in the event and to the extent required under this Section.

Section 4.04. Bond Fund.

(A) Establishment of Bond Fund . The Bond Fund is hereby established as a separate fund to be held by the Fiscal Agent to the credit of which deposits shall be made as required by Section 4.01 (if any), Section 4.07 and Section 4.03 and as otherwise set forth in this Agreement. Moneys in the Bond Fund shall be held by the Fiscal Agent for the benefit of the City and the Owners of the Bonds, and shall be disbursed for the payment of the principal of, and interest and any premium on, the Bonds as provided below.

Within the Bond Fund there is hereby established a separate account designated as the “2022 Capitalized Interest Account” to be held in trust by the Fiscal Agent for the benefit of the City and the Owners of the Bonds into which shall be deposited the amount specified in Section 4.01 (if any). Amounts on 26 deposit in the 2022 Capitalized Interest Account shall be used and withdrawn by the Fiscal Agent solely for the payment of interest on the 2022 Bonds. When the amount in the 2022 Capitalized Interest Account is fully expended for the payment of interest, the account shall be closed.

Within the Bond Fund there is hereby created in the Bond Fund a separate account to be held by the Fiscal Agent, designated the “Special Tax Prepayments Account,” to the credit of which deposits shall be made as provided in clause (iii) of the second paragraph of Section 4.05(A).

(B) Deposits and Disbursements. At least 10 Business Days before each Interest Payment Date, the Fiscal Agent shall notify the Finance Director in writing in the form of an invoice of the following: (i) the principal and premium, if any, and interest due on the Bonds on the next Interest Payment Date (whether as a result of scheduled principal of and interest on the Bonds, optional redemption of the Bonds or a mandatory sinking fund redemption), (ii) the amount in the Bond Fund (and any accounts therein) that is available to pay the amounts due on such Interest Payment Date, (iii) the amount needed to be transferred by the City to the Fiscal Agent in order for the Fiscal Agent to pay the amount due on such Interest Payment Date and (iv) the amount needed (a) to be deposited in the 2022 Reserve Fund, taking into account amounts then on deposit in the 2022 Reserve Fund, such that the amount in the 2022 Reserve Fund is equal to the 2022 Reserve Requirement, and (b) to be deposited in the reserve account for any Parity Bonds that are not Related Parity Bonds, taking into account amounts then on deposit in the such reserve account, such that the amount in such reserve account is equal to the amount required to be on deposit therein.

At least 7 Business Days prior to each Interest Payment Date, the City shall transfer to the Fiscal Agent from the Special Tax Fund for deposit in the Bond Fund an amount equal to the lesser of (i) the amount in the Special Tax Fund and (ii) the amount described in clause (iii) of the previous paragraph.

On the fourth Business Day prior to each Interest Payment Date, the Fiscal Agent shall determine if the amounts then on deposit in the Bond Fund are sufficient to pay the Debt Service due on the Bonds on the next Interest Payment Date. In the event that amounts in the Bond Fund are insufficient for such purpose, the Fiscal Agent promptly shall notify the Finance Director by telephone (and confirm in writing) of the amount of the insufficiency then do the following:

(i) Withdraw from the 2022 Reserve Fund, in accordance with the provisions of Section 4.03, to the extent of any funds or Permitted Investments therein, amounts to cover the amount of such Bond Fund insufficiency related to the 2022 Bonds and any Related Parity Bonds.

Amounts so withdrawn from the 2022 Reserve Fund shall be deposited in the Bond Fund.

On each Interest Payment Date, the Fiscal Agent shall withdraw from the Bond Fund and pay to the Owners of the Bonds the principal of, and interest and any premium, due and payable on such Interest Payment Date on the Bonds. If, after the foregoing transfers, there are insufficient funds in the Bond Fund to make the payments due and payable on such Interest Payment Date, the Fiscal Agent shall apply the available funds first to the payment of interest on the Bonds, then to the payment of principal due on the Bonds other than by reason of sink ing payments, if any, and then to payment of principal due on the Bonds by reason of sinking payments.

Moneys in the Special Tax Prepayments Account shall be transferred by the Fiscal Agent to the Bond Fund on the next date for which notice of redemption of Bonds can timely be given under Section 2.03(A)(iii), and notice to the Fiscal Agent can timely be given under Section 2.03(B), and shall be used (together with any amounts transferr ed pursuant to Section 4.03(F)) to redeem Bonds on the redemption date selected in accordance with Section 2.03.

(D) Investment. Moneys in the Bond Fund , the 2022 Capitalized Interest Account, any capitalized interest account created for a series of Pari ty Bonds and the Special Tax Prepayments Account shall be invested under Section

6.01. Interest earnings and profits resulting from such investment shall be retained in the Bond Fund.

(E) Deficiency. If at any time it appears to the Fiscal Agent that there is a danger of deficiency in the Bond Fund and that the Fiscal Agent may be unable to pay Debt Service on the Bonds in a timely manner, the Fiscal Agent shall report to the Finance Director such fact. The City covenants to increase the levy of the Special Taxes in the next Fiscal Year (subject to the maximum amount authorized by the Resolution of Formation) in accordance with the procedures set forth in the Act for the purpose of curing Bond Fund deficiencies.

(F) Excess. Any excess moneys remaining in the Bond Fund following the payment of Debt Service on the Bonds on any September 1 (not including moneys in the 2022 Capitalized Interest Account or a similar account established for a series of Parity Bonds), shall be accounted for by the Fiscal Agent when it invoices the City for the next Interest Payment Date.

Section 4.05. Special Tax Fund.

(A) Establishment of Special Tax Fund. The Special Tax Fund is hereby established as a separate fund to be held by the City. The City shall promptly deposit any Special Tax Revenues received by it in the Special Tax Fund.

Within the Special Tax Fund there is hereby created a separate account to be held by the City, designated the “Administrative Expense Account,” to the credit of which deposits shall be made as required by Section 4.01 and this Section

4.05(A).
28 Notwithstanding the foregoing,

(i) Special Tax Revenues in an amount not to e xceed the amount included in the Special Tax levy for such Fiscal Year for Administrative Expenses shall be separately identified by the Finance Director and shall be deposited by the Finance Director in the Administrative Expense Account;

(ii) any Special Tax Revenues constituting the collection of delinquencies in payment of Special Taxes shall be separately identified by the Finance Director and shall be disposed of by the Finance Director first, for transfer to the Fiscal Agent for deposit in the Bond Fund to pay any past due Debt Service on the Bonds; second, without preference or priority, for transfer to the Fiscal Agent for deposit in the 2022 Reserve Fund to the extent needed to increase the amount then on deposit in the 2022 Reserve Fund u p to the then 2022 Reserve Requirement and for deposit in the reserve account for any Parity Bonds that are not Related Parity Bonds to the extent needed to increase the amount then on deposit therein to the required level; and third, to be held in the Special Tax Fund for use as described in Section 4.05(B) below; and

(iii) any proceeds of Special Tax Prepayments shall be separately identified by the Finance Director and shall be disposed of by the Finance Director as follows (with written instructions to the Fiscal Agent) : (a) that portion of any Special Tax Prepayment constituting a prepayment of construction costs (which otherwise could have been included in the proceeds of Parity Bonds) shall be transferred by the Finance Director to the Fiscal Agent for deposit in the Bond Proceeds Account of the Improvement Fund and (b) the remaining Special Tax Prepayment shall be transferred by the City to the Fiscal Agent for deposit in the Special Tax Prepayments Account established pursuant to Section 4.04(A).

(B) Disbursements. At least 7 Business Days prior to each Interest Payment Date, the Finance Director shall withdraw from the Special Tax Fund and transfer to the Fiscal Agent the following amounts in the following order of priority:

(i) as set forth in Section 4.04(B), for deposit in the Bond Fund an amount, taking into account any amounts then on deposit in the Bond Fund and any expected transfers from the Improvement Fund, the 2022 Reserve Fund, any reserve account for Parity Bonds that are not Related Parity Bonds, the 2022 Capitalized Interest Account, a capitalized interest account established for any series of Parity Bonds and the Special Tax Prepayments Account to the Bond Fund such that the amount in the Bond Fund equals the principal (including any sinking payment), premium, if any, and interest due on the Bonds on such Interest Payment Date and any past due principal or interest on the Bonds not theretofore paid from a transfer described in subparagraph (ii) of the second paragraph of Section 4.05(A),

(ii) without preference or priority (a) for deposit in the 2022 Reserve Fund an amount, taking into account amounts then on deposit in 29 the 2022 Reserve Fund, such that the amount in the 2022 Reserve Fund is equal to the 2022 Reserve Requirement , and (b) for deposit in the reserve account for any Parity Bonds that are not Related Parity Bonds, taking into account amounts then on deposit in the such reserve account, such that the amount in such reserve account is equal to the amount required to be on deposit therein (and in the event that amounts in the Special Tax Fund are not sufficient for the purposes of this paragraph, such amounts shall be applied to the 2022 Reserve Fund and any other reserve accounts ratably based on the then Outstanding principal amount of the Bonds), and

(iii) (A) on each October 1, beginning on October 1, 2022 and continuing through the Remainder Taxes Period, all of the moneys remaining in the Special Tax Fund shall be transferred to the Remainder Taxes Account and (B) on each subsequent October 1 after the end of the Remainder Taxes Period, all or a porti on of the moneys remaining in the Special Tax Fund shall be transferred to the Remainder Taxes Account as directed by the Finance Director

Within 15 days after the end of each Bond Year after the Remainder Taxes Account is closed pursuant to Section 4.07, and after the foregoing transfers have been made, the City shall transfer all amounts remaining on deposit in the Special Tax Fund to (x) the Administrative Expense Account, to be used as set forth in Subsection (D) below, (y) the Special Tax Fund or (z) the City for any lawful purposes.

(C) Investment. Moneys in the Special Tax Fund shall be invested and deposited by the City under 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.

(D) Administrative Expense Account.

(i) Disbursement.

Amounts in the Administrative Expense
Account (a) shall be used by the Finance Director from time to time to pay an Administrative Expense or a Cost of Issuance or, in the discretion of the Finance Director, may be transferred to the Special Tax Fund.

Pr
oceeds of the 2022 Bonds (if any) deposited into the
Administrative Expense Account shall be spent before any other moneys in the Administrative Expense Fund.

(ii) I nvestment . Moneys in the Administrative Expense Account shall be invested by the City under Section 6.01. Interest earnings and profits resulting from such investment shall be retained by the City in the Administrative Expense Account to be used for the purposes of such fund.

Sect
ion 4.07. Improvement Fund.

(A) Establishment of Improvement Fund. The Improvement Fund is hereby established as a separate fund to be held by the Fiscal Agent and to the 30 credit of which fund deposits shall be made as required by Sections 4.01, 4.02(D) and 4.05(A). The Remainder Taxes Account and the Bond Proceeds Account are hereby established as separate accounts within the Improvement Fund to be held by the Fiscal Agent.

Moneys in the Improvement Fund shall be disbursed, except as otherwise provided in subsections (B) and (D) of this Section, for the payment or reimbursement of costs of the Project.

(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 (which shall be for payment of a Project cost or to reimburse expenditures of the City or any other party for Project costs previously paid), and the person to which the disbursement is to be paid; and

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

Each such requisition 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.

Disbursements for the payment or reimbursement of costs of the Project shall be made from the Bond Proceeds Account and the Remainder Taxes Account in the following order:

First: payments or reimbursements shall be made from the Bond Proceeds Account so long as there are moneys available therein and such costs can be paid from Bond proceeds without violating the covenants set forth in Sections 5.09-5.14 and

Second: payments or reimbursements shall be made from the Remainder Taxes Account (1) even if Bond proceeds remain in the Bond Proceeds Account, if such payment or reimbursement would violate the covenants set forth in Sections

5.09-5.14 and (2) when no Bond proceeds remain in the Bond Proceeds Account.

At the direction of the Finance Director, and so long as such amounts have not been previously approved for payment of a Project cost, the Fiscal Agent shall transfer amounts from the Remainder Taxes Account to (1) the Bond Fund to pay Debt Service on the Bonds, (2) to the City for deposit in the Administrative Expense Account to pay Administrative Expenses and (3) the 2022 Reserve Fund to increase the amount therein to the 2022 Reserve Requirement or any debt service reserve account for Parity Bonds to increase the amount therein to its required amount.

31 (C) Investment. Moneys in the Improvement Fund shall be invested in accordance with Section 6.01. Interest earnings and profits from such investment shall be retained in the Improvement Fund to be used for the purpose of such fund.

(D) Closing of Fund. When the City believes that the Project has been completed, it shall provide a written notice to the Developer that the City believes the Project has been completed and that the Improvement Fund, Bond Proceeds Account and Remainder Taxes Account should be closed. The Developer shall have 30 days after receipt of such notice to dispute the City’s finding or to concur that the Project is complete. If the Developer concurs that the Project is complete, or fails to respond to the notice by the end of the 30-day period, the City may file an Officer’s Certificate directing the Fiscal Agent to close the Improvement Fund, Bond Proceeds Account and Remainder Taxes Account.

Upon the filing of an Officer’s Certificate stating that the Project has been completed and that all costs of the Project have been paid or are not required to be paid from the Improvement Fund, Bond Proceeds Account and Remainder Taxes Account, the Fiscal Agent shall transfer the amount, if any, remaining in the Improvement Fund, Bond Proceeds Account and Remainder Taxes Account to the Bond Fund for application to Debt Service payments due on the next succeeding Interest Payment Date and the Improvement Fund, Bond Proceeds Account and Remainder Taxes Account shall be closed. Moneys transferred from the Improvement Fund to the Bond Fund shall be used to pay Debt Service on the Bonds in the manner specified by the City in an Officer’s Certificate.

32 ARTICLE V

COVENANTS

Section 5.01. 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.

(A) Processing. On or within five (5) Business Days of each June 1, the Fiscal Agent shall provide the Finance Director with a notice stating (i) the amount then on deposit in the Bond Fund (including the 2022 Capitalized Interest Account and the capitalized interest account for any Parity Bonds) , the 2022 Reserve Fund and any reserve account for Parity Bonds that are not Related Parity Bonds that is held by the Fiscal Agent, and (ii) if the amount in the 2022 Reserve Fund is less than the 2022 Reserve Requirement or the amount in such other reserve account held by the Fiscal Agent is less than its required amount, informing the City that replenishment of the 2022 Reserve Fund or reserve account is necessary. The receipt of or failure to receive such notice by the Finance Director shall in no way affect the obligations of the Finance Director under the following two paragraphs and the Fiscal Agent shall not be liable for failure to provide such notices to the Finance Director. Upon receipt of such notice, the Finance Director shall communicate with the Auditor to ascertain the relevant parcels on which the Special Taxes are to be levied, taking into account any parcel splits or combinations during the preceding and then current year.

(B) Levy. The Finance Director shall effect the levy of the Special Taxes each Fiscal Year in accordance with the Ordinance by each August 1 that the Bonds are outstanding, or otherwise such that the computation of the levy is complete before the final date on which the Auditor will accept the transmission of the Special Tax amounts for the parcels within the CFD for inclusion on the next real property tax roll. Upon the completion of the computation of the amounts of the levy, the Finance Director shall prepare or cause to be prepared, and shall transmit to the Auditor, such data as the Auditor requires to include the levy of the Special Taxes on the next real property tax roll.

(C) Computation. The Finance Director shall fix and levy the amount of Special Taxes within the CFD required to pay the following amounts, taking into account the balances in the applicable funds established under this Agreement: (i) the principal of and interest on any outstanding Bonds of the CFD becoming due and payable during the ensuing calendar year, (ii) any necessary replenishment or expenditure of the 2022 Reserve Fund and any other reserve account for Parity Bonds that are not Related Parity Bonds to the extent such replenishment has not been included in the computation of the Special Taxes in a previous Fiscal Year , (iii) the Administrative Expenses, including amounts necessary to discharge any rebate obligation, during such year, (iv) an amount to cure delinquencies in the payment of principal or interest on Bonds that occurred in the previous Fiscal Year, and (v) any Project costs to be paid from Special Taxes to the extent that paying for such costs does not increase the Special Taxes levied on Undeveloped Property (as defined in the Rate and Method). During the Remainder Taxes Period, 33 the Finance Director shall fix and levy the Special Taxes at the Maximum Special Tax rate on Developed Property before considering any Capitalized Interest (as those terms are defined in the Rate and Method). The Special Taxes so levied shall not exceed the authorized amounts as provided in the proceedings under the Resolution of Formation.

(D) Collection. Except as set forth in the Ordinance, 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 time and in the same proportionate amounts and bear the same proportionate penalties and interest after delinquency as do the ad valorem taxes on real property.

Section 5.02. Covenant to Foreclose. Under the Act, the City hereby covenants with and for the benefit of the Owners of the Bonds that it will order, and cause to be commenced as hereinafter provided, and thereafter diligently prosecute to judgment (unless such delinquency is theretofore brought current), an action in the superior court to foreclose the lien of any Special Tax or installment thereof not paid when due as provided in the following two paragraphs. The Finance Director shall notify the City Attorney of any such delinquency of which the Finance Director is aware, and the City Attorney shall commence, or cause to be commenced, such proceedings.

On or about June 30 of each Fiscal Year, the Finance Director shall compare the amount of Special Taxes theretofore levied in the CFD to the amount of Special Tax Revenues theretofore received by the City, and:

(A) Individual Delinquencies. If the Finance Director determines that any single parcel subject to the Special Tax in the CFD is delinquent in the payment of Special Taxes in the aggregate amount of $5 ,000 or more, then the Finance Director shall send or cause to be sent a notice of delinquency (and a demand for immediate payment thereof) to the property owner within 45 days of such determination, and (if the delinquency remains uncured) foreclosure proceedings shall be commenced by the City within 90 days of such determination.

Notwithstanding the foregoing, the Finance Director may defer any such actions with respect to a delinquent parcel if (1) the CFD is then participating in the Alternative Method of Distribution of Tax Levies and Collections described in Revenue & Taxation Code Section 4701 et seq., or an equivalent procedure, (2) the amount in the 2022 Reserve Fund is at least equal to the 2022 Reserve Requirement and (3) the amount in the reserve account for any Parity Bonds that are not Related Parity Bonds is at least equal to the required amount.

(B) Aggregate Delinquencies. If the Finance Director determines that (i) the total amount of delinquent Special Tax for the prior Fiscal Year for the entire CFD (including the total of delinquencies under subsection (A) above), exceeds 5% of the total Special Tax due and payable for the prior Fiscal Year, determined by reference to the latest available secured property tax roll of the County, the Finance Director shall notify or cause to be notified property owners who are then delinquent in the payment of Special Taxes (and demand immediate payment of the delinquency) within 45 days of such determination, and shall commence foreclosure proceedings within 90 days of such determination against each parcel of land in the CFD with a Special Tax delinquency.
34 (C) Individual Owner Delinquencies. As to any owner of more than one parcel within the CFD, if the Finance Director determines that the aggregate amount of delinquent Special Taxes for all preceding tax years on all parcels owned by such owner (whether such parcels are owned solely by such owner or jointly by such owner and one or more others) exceeds $10,000, then the Finance Director shall send or cause to be sent a notice of delinquency (and a demand for immediate payment thereof) to the property owner within 45 days of such determination, and (if the delinquency remains uncured) shall commence foreclosure proceedings within 90 days of such determination, regardless of when such delinquencies occurred.

The Finance Director and the City Attorney, as applicable, are hereby authorized to employ counsel to conduct any such foreclosure proceedings. The fees and expenses of any such counsel (including a charge for City staff time) in conducting foreclosure proceedings shall be an Administrative Expense hereunder.

Section 5.03. 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 st rict conformity with the terms of this Agreement and any Supplemental 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 5.04. 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 5.05. 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, or their Owners, except as permitted by this Agreement.

Section 5.06. Books and Records.

(A) City. 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 Special Tax Revenues and the funds held by the City hereunder. Such books of record and accounts shall at all times during business hours be subject to the inspection of the Fiscal Agent (who shall have no duty to inspect) and the Owners of not less than 10% of the principal amount of the Bonds then Outstanding, or their representatives duly authorized in writing.

(B) Fiscal Agent . The Fiscal Agent shall provide to the City such information relating to the Bonds and the funds and accounts maintained by the 35 Fiscal Agent hereunder as the City shall reasonably request, including but not limited to monthly statements reporting funds held and transactions by the Fiscal Agent, including the value of any investments held by the Fiscal Agent. 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 made by it relating to the expenditure of amounts disbursed from the funds, and, if any, accounts in such funds held by the Fiscal Agent hereunder. Such books of record and accounts shall at all times during business hours 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 upon reasonable prior notice.

Section 5.07. 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.

Section 5.08. 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.

Section 5.09. Private Activity Bond Limitations. The City shall assure that the proceeds of the 2022 Bonds are not so used as to cause the 2022 Bonds to satisfy the private business tests of section 141(b) of the Tax Code or the private loan financing test of section 141(c) of the Code.

Section 5.10. 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 the 2022 Bonds to be “federally guaranteed” within the meaning of Section 149(b) of the Tax Code.

Section 5.11. Rebate Requirement. The City shall take any and all actions necessary to assure compliance with section 148(f) of the Tax Code, relating to the rebate of excess investment earnings, if any, to the federal government, to the extent that such section is applicable to the 2022 Bonds. The Finance Director shall take note of any investment of monies hereunder in excess of the yield on the 2022 Bonds, and shall take such actions as are necessary to ensure compliance with this Section 5.11, such as increasing the portion of the Special Tax levy for Administrative Expenses as appropriate to have funds available in the Administrative Expense Account to satisfy any rebate liability under this Section. If necessary to satisfy its obligations under this Section 5.11, the City may use:

(A) Amounts in the 2022 Reserve Fund if the amount on deposit in the 2022 Reserve Fund, following the proposed transfer, is at least equal to the 2022 Reserve Requirement, and amounts in any other reserve account for Parity Bonds that are not Related Parity Bonds to the extent permitted by the Supplemental Agreement;

(B) Amounts on deposit in the Administrative Expense Account; and

36 (C) Any other funds available to the City, including amounts advanced by the City, in its sole discretion, to be repaid as soon as practicable from amounts described in the preceding clauses (A) and (B).

Section 5.12. 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 proceeds of the 2022 Bonds which, if such action had been reasonably expected to have been taken, or had been deliberately and intentionally taken, on the date of issuance of the 2022 Bonds would have caused the 2022 Bonds to be “arbitrage bonds” within the meaning of section 148 of the Tax Code.

Section 5.13. Yield of the 2022 Bonds. In determining the yield of the 2022 Bonds to comply with Sections 5.11 and 5.12, 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, regarding prepayments of Special Taxes and use of prepayments for redemption of the 2022 Bonds, without regard to whether or not prepayments are received or 2022 Bonds redeemed.

Section 5.14. Maintenance of Tax- Exemption; Record Retention; Compliance with Tax Certificates. The City shall take all actions necessary to assure the exclusion of interest on the 2022 Bonds from the gross income of the Owners of t he 2022 Bonds to the same extent as such interest is permitted to be excluded from gross income under the Tax Code as in effect on the date of issuance of the 2022 Bonds.

The City will retain its records of all accounting and monitoring it carries out wit h respect to the 2022 Bonds for at least 3 years after the 2022 Bonds mature or are redeemed (whichever is earlier); however, if the 2022 Bonds are redeemed and refunded, the City will retain its records of accounting and monitoring at least 3 years after the earlier of the maturity or redemption of the obligations that refunded the 2022 Bonds.

The City will comply with the provisions of the Certificate as to Arbitrage and the Certificate Regarding Use of Proceeds with respect to the 2022 Bonds. The covenants of this paragraph will survive payment in full or defeasance of the 2022 Bonds.

Section 5.15. Continuing Disclosure. 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 an event of default for the purposes of this Agreement. However, any Owner or Beneficial Owner of the 2022 Bonds may take such actions as may be necessary and appropriate to compel performance, including seeking mandate or specific performance by court order.

One or more owners of the real property in the CFD as of the Closing Date may also have executed a continuing disclosure agreement for the benefit of the holders and Beneficial Owners of the 2022 Bonds. Any Participating Underwriter or Holder or Beneficial Owner may take such actions as may be necessary and appropriate directly against any such landowner to compel performance by it of its obligations thereunder, including seeking mandate or specific performance by court order; however the City shall have no obligation whatsoever to enforce any obligations under any such agreement.

Section 5.16. Limits on Special Tax Waivers and Bond Tenders. The City covenants not to exercise its rights under the Act to waive delinquency and redemption penalties related to 37 the Special Taxes or to declare a Special Tax penalties amnesty program if to do so would materially and adversely affect the interests of the Owners of the Bonds and further covenants not to permit the tender of Bonds in payment of any Special Taxes except upon receipt of a certificate of an Independent Financial Consultant that to accept such tender will not result in the City having insufficient Special Tax Revenues to pay the principal of and interest on the Bonds and any Parity Bonds remaining Outstanding following such tender.

Section 5.17. City Bid at Foreclosure Sale. The City will not bid at a foreclosure sale of property in respect of delinquent Special Taxes, unless it expressly agrees to take the property subject to the lien for Special Taxes imposed by the City and that the Special Taxes levied on the property are payable while the City owns the property.

Section 5.18. Amendment of Rate and Method.

(A) General. The City shall not initiate proceedings under the Act to modify the Rate and Method if such modification would adversely affect the security for the Bonds. If an initiative is adopted that purports to modify the Rate and Method in a manner that would adversely affect the security for the Bonds, the City shall, to the extent permitted by law, commence and pursue reasonable legal actions to prevent the modification of the Rate and Method in a manner that would adversely affect the security for the Bonds.

(B) Exception. Notwithstanding clause (A) of this section, the City may initiate proceedings t o reduce the maximum Special Tax rates under the Rate and Method, if, in connection therewith: (i) the City receives a certificate from one or more Independent Financial Consultants which, when taken together, certify that, on the basis of the parcels of land and improvements existing in the CFD as of the July 1 preceding the reduction, the maximum amount of the Special Tax which may be levied on then-existing Taxable Property (as such term is defined in the Rate and Method) in each Bond Year for any Bonds and Parity Bonds Outstanding will equal at least the sum of the estimated Administrative Expenses and 110% of Debt Service in each Bond Year on all Bonds and Parity Bonds to remain Outstanding after the reduction is approved; (ii) the reduction does not adversely affect the financing of the Project and (iii) the City is not delinquent in the payment of the principal of or interest on the Bonds or any Parity Bonds.

For purposes of estimating Administrative Expenses for the foregoing calculation, the Independent Financial Consultant will compute the Administrative Expenses for the current Fiscal Year and escalate such amounts by 2% in each subsequent Fiscal Year.

38 ARTICLE VI

INVESTMENTS; LIABILITY OF THE CITY

Section 6.01. Deposit and Investment of Moneys in Funds.

(A) Moneys Held by the Fiscal Agent . 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, which in any event by their terms mature prior to the date on which such moneys are required to be paid out hereunder, as directed pursuant to an Officer’s Certificate filed with the Fiscal Agent at least two Business Days in advance of the making of such investments. In the absence of any such Officer’s Certificate, the Fiscal Agent shall hold such funds uninvested. The Finance Director shall make note of any investment of funds hereunder in excess of the yield on the Bonds so that appropriate actions can be taken to assure compliance with Section 5.11.

(B) Moneys Held by the City. Moneys in any fund or account created or established by this Agreement and held by the Finance Director shall be invested by the Finance Director in any Permitted Investment or in any other lawful investment for City funds, which in any event by its terms matures 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.

Whenever in this Agreement any moneys are required to be transferred by the City to the Fiscal Agent, such transfer may be accomplished by transferring a like amount of Permitted Investments.

(C) Actions of Of ficials. The Fiscal Agent and its affiliates or the Finance Director may act as sponsor, advisor, depository, principal or agent in the acquisition or disposition of any investment. Neither the Fiscal Agent nor the Finance Director shall incur any liability for losses arising from any investments made pursuant to this Section. The Fiscal Agent shall not be required to determine the legality of any investments.

(D) Valuation of Investments. 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 Tax Code) shall be acquired, disposed of, and valued (as of the date that valuation is required by this Agreement or the Tax Code) at Fair Market Value. Investments in funds or accounts (or portions thereof) that are subject to a yield restriction under the applicable provisions of the Tax Code and (unless valuation is undertaken at least annually) investments in the 2022 Reserve Fund shall be valued at their present value (within the meaning of section 148 of the Tax Code). The Fiscal Agent shall not be liable for verification of the application of such sections of the Tax Code or for any determination of Fair Market Value or present value and may conclusively rely upon an Officer’s Certificate as to such valuations.

(E) Commingled Money . 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 Finance Director hereunder, provided that the Fiscal Agent or the Finance Director, as applicable, shall at 39 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.

(F) Confirmations Waiver. 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 shall include detail for all investment transactions made by the Fiscal Agent hereunder.

(G) Sale of Investments . The Fiscal Agent or the Finance Director, as applicable, shall sell at Fair Market Value, 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 Finance Director shall be liable or responsible for any loss resulting from the acquisition or disposition of such investment security in accordance herewith.

Section 6.02. Liability of City.

(A) General. The City shall not incur any responsibility or liability in respect of the Bonds or this Agreement other than in connection with the duties or obligations explicitly herein or in the Bonds assigned to or imposed upon it. The City shall not be liable in connection with the performance of its duties hereunder, except for its own negligence or willful default. The City shall not be bound to ascertain or inquire as to the performance or observance of any of the terms, conditions, covenants or agreements of the Fiscal Agent herein or of any of the documents executed by the Fiscal Agent in connection with the Bonds, or as to the existence of a default or event of default thereunder.

(B) Reliance. In the absence of bad faith, the City, including the Finance Director, 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 City by the Fiscal Agent or an Independent Financial Consultant and conforming to the requirements of this Agreement. The City, including the Finance Director, shall not be liable for any error of judgment made in good faith unless it shall be proved that it was negligent in ascertaining the pertinent facts. The City may rely and shall be protected in acting or refraining from acting upon any notice, resolution, request, consent, order, certificate, report, 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. The City may consult with counsel, who may be the City Attorney, 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.

(C) No General Liability . No provision of this Agreement shall require the City to expend or risk its own general funds or otherwise incur any financial liability (other than with respect to the Special Tax Revenues) in the performance of any of its obligations 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.

(D) Owner of Bonds . The City 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.
40 Section 6.03. Employment of Agents by City . In order to perform its duties and obligations hereunder, the City may employ such persons or entities as it deems necessary or advisable. The City shall not be liable for any of the acts or omissions of such persons or entities employed by it in good faith hereunder, and shall be entitled to rely, and shall be fully protected in doing so, upon the opinions, calculations, determinations and directions of such persons or entities.

41 ARTICLE VII

THE FISCAL AGENT

Section 7.01. The Fiscal Agent.

(A) Appointment. The Fiscal Agent is hereby appointed as the fiscal, authentication, paying and transfer agent hereunder 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 duties, covenants or obligations shall be read into this Agreement against the Fiscal Agent.

(B) Merger. 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 7.01 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 Fiscal Agent shall give the Finance Director written notice of any such succession hereunder.

(C) Removal. Upon 30 days written notice, 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, 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.

(D) Resignation. The Fiscal Agent may at any time resign by giving written notice to the City by certified mail return receipt requested, 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.

(E) No Successor . If no appointment of a successor Fiscal Agent shall be made pursuant to the foregoing provisions of this Section 7.01 within 45 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, at the expense of the City, or any Owner 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.

(F) Court Order . If, by reason of the judgment of any court, the Fiscal Agent is rendered unable to perform its duties hereunder, all such duties and all of the rights and powers of the Fiscal Agent hereunder shall be assumed by and vest in the Finance Director of the City in trust for the benefit of the Owners. The City covenants for the direct benefit of the Owners that its 42 Finance Director in such case shall be vested with all of the rights and powers of the Fiscal Agent hereunder, and shall assume all of the responsibilities and perform all of the duties of the Fiscal Agent hereunder, in trust for the benefit of the Owners of the Bonds.

Section 7.02. Liability of Fiscal Agent.

(A) General. 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, nor makes any representations as to the validity or sufficiency of this Agreement or of the Bonds, nor shall the Fiscal Agent 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, statement or recital in any offering memorandum or other disclosure material prepared or distributed with respect to the issuance of the Bonds. All indemnifications and releases from liability granted to the Fiscal Agent hereunder shall extend to the directors, officers and employees of the Fiscal Agent.

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 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.

(B) Reliance. The Fiscal Agent may conclusively rely, as to the truth of the statements and the correctness of the opinions expressed therein, upon certificates, documents, written instructions or opinions furnished to the Fiscal Agent and conforming to the requirements of this Agreement; but in the case of any such certificates, documents, written instructions 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 accordance with the terms of this Agreement, upon any resolution, order, notice, request, consent or waiver, certificate, statement, affidavit, facsimile transmission, electronic mail, or other paper or document which it shall 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.

(C) No Duty to Inquire. The Fiscal Agent shall not be bound to ascertain or inquire as to the performance or observance of any of the terms, conditions, covenants or agreements of the City or the CFD herein or of any of the documents executed by the City or the CFD in connection with the Bonds, or as to the existence of a default or event of default thereunder.

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

(E) No Expenditures. 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.

(F) No Action. 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 under this Agreement unless such Owners shall have offered to the Fiscal Agent reasonable security or indemnity satisfactory to the Fiscal Agent against the costs, expenses and liabilities which might be incurred by it in compliance with such request or direction.

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

Section 7.03. Reserved.

Section 7.04. Notice to Fiscal Agent. The Fiscal Agent may rely and shall be protected in acting or refraining from acting upon any notice, resolution, request, consent, order, certificate, facsimile transmission, electronic mail, written instructions, report, 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. The Fiscal Agent may consult with counsel, who may be the City Attorney, 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, suffered or omitted by it hereunder in accordance therewith.

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 an Officer’s 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.

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 (“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 system 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 listing officers with the authority to provide such Instructions (“Authorized Officers”) and containing specimen signatures of such Authorized Officers, which incumbency certificate shall be amended 44 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 and 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 listed on the incumbency certificate provided to the Fiscal Agent have been sent by such Authorized Officer. The City shall be responsible for ensuring that only Authorized Officers transmit such Instructions to the Fiscal Agent and that the City and all Authorized Officers are solely responsible to safeguard the use and confidentiality of applicable user and authorization codes, passwords and/or authentication keys upon receipt by the City. The 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 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 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 Fiscal Agent may execute any of the duties or powers hereof and perform the duties required of it hereunder either directly or by or through attorneys or agents, and shall be entitled to rely on advice of counsel concerning all matters of its duty hereunder.

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 such actions other than as a result of its negligence or willful misconduct.

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 its attorneys (including the allocated costs of in- house 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 liabilities, costs, claims or expenses, including 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 obligations 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, but any monetary obligation of the City arising under this Section shall be limited solely to amounts on deposit in the Administrative Expense Account. 45 ARTICLE VIII

MODIFICATION OR AMENDMENT

Section 8.01. Amendments Permitted.

(A) With Consent. 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 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 this Agreement), or reduce the percentage of Bonds required for the amendment hereof.

(B) Without 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:

(i) to add to the covenants and agreements of the City herein, 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;

(ii) to make modifications not adversely affecting any Outstanding Bonds in any material respect;

(iii) 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 not inconsistent with this Agreement, and which shall not adversely affect the rights of the Owners of the Bonds;

(iv) to make such additions, deletions or modifications as may be necessary or desirable to assure exclusion from gross income for federal income tax purposes of interest on the Bonds;

(v) in connection with the issuance of any Parity Bonds under and pursuant to Section 3.06.

(C) Fiscal Agent’s Consent. Any amendment of this Agreement may not modify any of the rights or obligations of the Fiscal Agent without its written consent. The Fiscal Agent shall be furnished an opinion of counsel that any such Supplemental Agreement entered into by the City and the Fiscal Agent complies with the provisions of this Section 8.01 and the Fiscal Agent may conclusively rely on such opinion and shall be absolutely protected in so relying. 46 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.

Section 8.03. Procedure for Amendment with Written Consent of Owners. The City and the Fiscal Agent may at any time adopt 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(A), to take effect when and as provided in this Section

8.03. A copy of such Supplemental Agreement, together with a request to Owners for their consent thereto, shall be mailed by first class mail, by the Fiscal Agent, at the expense of the City, 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 8.03 provided.

Such 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 Section 8.04) and a notice shall have been mailed as hereinafter in this Section 8.03 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 8.03 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 8.03 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 8.03 (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 hereinabove 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 60-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 of the Fiscal Agent, the City shall specify in a certificate to the Fiscal Agent those Bonds disqualified pursuant to this Section and the Fiscal Agent may conclusively rely on such certificate.
47 Section 8.05. Effect of Supplemental Agreement . From and after the time any Supplemental Agreement becomes effective under 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 , the Fiscal Agent and all Owners of Bonds Outstanding shall thereafter be determined, exercised and enforced hereunder subject in all respects to such 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 upon 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. 48 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 and 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 Agr eement. The City may pay and discharge the entire indebtedness on all Bonds Outstanding in any one or more of the following ways:

(A) by paying or causing to be paid the principal of, and interest and any premium on, all Bonds Outstanding, as and when the same become due and payable;

(B) by depositing with the Fiscal Agent at or before maturity, money which, together with the amounts then on deposit in the funds and accounts provided for in the Bond Fund and the 2022 Reserve Fund hereof, is fully sufficient to pay all Bonds Outstanding, including all principal, interest and redemption premiums; or

(C) by irrevocably depositing with the Fiscal Agent cash and/or 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 moneys then on deposit in the fund and accounts provided for in the Bond Fund and the 2022 Reserve Fund (to the extent invested in Federal Securities), be fully sufficient to pay and discharge the indebtedness on all Bonds (including all principal, interest and redemption premiums) at or before their respective maturity dates.

If the City shall have taken any of the actions specified in (A), (B) or (C) above, and if such Bonds are to be redeemed prior to the maturity thereof and 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 Special 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. Notice of such election shall be filed with the Fiscal Agent.

49 Notwithstanding the foregoing, the following obligations and pledges of the City shall continue in any event: (i) the obligation of the City to pay or cause to be paid to the Owners of the Bonds not so surrendered and paid all sums due thereon, (ii) the obligation of the City to pay amounts owing to the Fiscal Agent pursuant to Section 7.05, and (iii) the obligation of the City to assure that no action is taken or failed to be taken if such action or failure adversely affects the exclusion of interest on the Bonds from gross income for federal income tax purposes.

Upon compliance by the City with the foregoing with respect to all Bonds Outstanding, any funds held by the Fiscal Agent after payment of all fees and expenses of the Fiscal Agent, which are not required for the purposes of the preceding paragraph, shall be paid over to the City and any Special Taxes thereafter received by the City shall not be remitted to the Fiscal Agent but shall be retained by the City to be used for any purpose permitted under the Act and the Resolution of Formation.

Section 9.04. Execution of Documents and Proof of Ownership by Owners . Any request, declaration, consent 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, declaration, consent 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 registration books maintained by the Fiscal Agent under Section 2.07.

Any request, declaration, consent 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.

50 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 facsimile transmission receipt of which has been confirmed or by being deposited postage prepaid in a post office letter box addressed (until another address is filed by the City with the Fiscal Agent) as follows:

City of Tracy
333 Civic Center Plaza
Tracy, CA 95376
Fax: (209) 835-1113
Attention: Finance Director

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 facsimile transmission receipt of which has been confirmed or by being deposited postage prepaid in a post office letter box 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, CA 94111
Attn: Global Corporate Trust Services

Section 9.07. Partial Invalidity. If any Section, paragraph, sentence, clause or phrase of this Agreement shall for any reason be held by a court of competent jurisdiction to be illegal or unenforceable, such holding shall not affect the validity of the remaining portions of this Agreement.

Section 9.08. Unclaimed Moneys . Anything contained herein to the contrary notwithstanding, any moneys held by the Fiscal Agent for the payment and discharge of the principal of, and the interest and any premium on, the Bonds which remains unclaimed for two (2) years after the date when the payment of such principal, interest and premium have become payable, if such moneys were held by the Fiscal Agent at such date, shall be repaid by the Fiscal Agent to the City as its absolute property, and the Fiscal Agent shall thereupon be released and discharged with respect thereto and the Owners of such Bonds shall look only to the City for the payment of the principal of, and interest and any premium on, such Bonds. Any right of any Owner to look to the City for such payment shall survive only so long as required under applicable law.

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

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 under 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.

51 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 under this Agreement, is other than a Business Day, the payment of interest or principal (and premium, if any) or the action shall 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. State Reporting Requirements. In addition to Section 5.15, the following requirements shall apply to the Bonds:

(A) Annual Reporting. Not later than October 30 of each calendar year, beginning with the October 30 first succeeding the date of the 2022 Bonds, and in each calendar year thereafter until the October 30 following the final maturity of the Bonds, the Finance Director shall cause the information required by California Government Code Section 53359.5(b) to be supplied to CDIAC. The annual reporting shall be made using such form or forms as may be prescribed by CDIAC.

(B) Other Reporting. If at any time the Fiscal Agent fails to pay principal and interest due on any scheduled payment date for the Bonds due to insufficiency of funds on deposit in the Bond Fund, or if funds are withdrawn from the 2022 Reserve Fund to pay principal and interest on the Bonds so as to reduce the amount in the 2022 Reserve Fund to less than the 2022 Reserve Requirement, the Fiscal Agent shall notify the Finance Director of such failure or withdrawal in writing. The Finance Director shall notify CDIAC and the Original Purchasers of such failure or withdrawal within 10 days of such failure or withdrawal.

(C) Special Tax Reporting. The Finance Director shall file a report with the City no later than January 1, 2023, and at least once a year thereafter, which annual report shall contain:
(i) the amount of Special Taxes collected and expended with respect to the CFD, (ii) the amount of Bond proceeds collected and expended with respect to the CFD, and (iii) the status of the Project. It is acknowledged that the Special Tax Fund and the Special Tax Prepayments Account are the accounts into which Special Taxes collected on the City will be deposited for purposes of Section 50075.1(c) of the California Government Code, and the funds and accounts listed in Section 4.01 are the funds and accounts into which Bond proceeds will be deposited for purposes of Section 53410(c) of the California Government Code, and the annual report described in the preceding sentence is intended to satisfy the requirements of Sections 50075.1(d), 50075.3(d) and 53411 of the California Government Code.

(D) Compliance with Section 53343.2. The City shall comply with the provisions of California Government Code Section 53343.2, which require the City, within seven months after the last day of each fiscal year of the CFD, to display prominently on its Internet Web site all of the following information:

(a) A copy of an annual report for that fiscal year if requested pursuant to Section 53343.1.

(b) A copy of the report provided to the California Debt and Investment Advisory Commission pursuant to Section 53359.5.

52 (E) Amendment. The reporting requirements of this Section 9.13 shall be amended from time to time, without action by the City or the Fiscal Agent (i) with respect to subparagraphs (A) and (B) above, to reflect any amendments to Section 53359.5(b) or Section 53359.5(c) of the Act, (ii) with respect to subparagraph (C) above, to reflect any amendments to Section 50075.1, 50075.3, 53410 or 53411 of the California Government Code and (iii) with respect to subparagraph (D) above, to reflect any amendments to Section 53343.2. Notwithstanding the foregoing, any such amendment shall not, in itself, affect the City ’s obligations under the Continuing Disclosure Certificate. The City shall notify the Fiscal Agent in writing of any such amendments which affect the reporting obligations of the Fiscal Agent under this Agreement.

(E) No Liability. None of the City and its officers, agents and employees, the Finance Director or the Fiscal Agent shall be liable for any inadvertent error in reporting the information required by this Section 9.13.

The Finance Director shall provide copies of any such reports to any Bondowner upon the written request of a Bondowner and payment by the person requesting the information of the cost of the City to photocopy and pay any postage or other delivery cost to provide the same, as determined by the Finance Director. The term “Bondowner” for purposes of this Section 9.13 shall include any Beneficial Owner of the Bonds as described in Section 2.10.

Section 9.14. Counterparts. This Agreement may be executed in counterparts, each of which shall be deemed an original.

* * * * * * * * * *
53 IN WITNESS WHEREOF, the City and the Fiscal Agent have caused this Agreement to be executed as of the date first written above.

CITY OF TRACY,
for and on behalf of

CITY OF TRACY COMMUNITY FACILITIES
DISTRICT NO. 2021-1 (HILLVIEW)

By:

Finance Director

U.S. BANK TRUST COMPANY, NATIONAL

ASSOCIATION,
as Fiscal Agent

By:

Authorized Officer

Exhibit A

Page 1 ends

Tracy City CouncilApril 5, 2022

Tracy City Council
April 5, 2022