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HomeMy WebLinkAboutItem 02 - Authorize San Luis Ranch CFD No. 2019-1 Special Tax BondsItem 2 �t�x ofi Council- d. Report ti ttjs o Department Name: Cost Center: For Agenda of: Placement: Estimated Time: Finance 2001 April 20, 2021 Business Item 15 minutes FROM: Brigitte Elke, Finance Director Prepared By: Esteban Cano-Gutierrez, Financial Analyst — Infrastructure Financing SUBJECT: AUTHORIZE THE ISSUANCE OF THE SAN LUIS RANCH CFD SPECIAL TAX BONDS, IN AN AGGREGATE PRINCIPAL AMOUNT OF NOT TO EXCEED $20,500,000, AUTHORIZING THE EXECUTION AND DELIVERY OF AN INDENTURE, A BOND PURCHASE AGREEMENT AND A CONTINUING DISCLOSURE CERTIFICATE, AUTHORIZING THE DISTRIBUTION OF AN OFFICIAL STATEMENT IN CONNECTION THEREWITH AND AUTHORIZING THE EXECUTION OF NECESSARY DOCUMENTS AND CERTIFICATES AND RELATED ACTIONS. RECOMMENDATION Approve the bond issuance for the City of San Luis Obispo Community Facilities District No. 2019-1 (San Luis Ranch) (CFD) by taking the following actions: 1. Adopt a Resolution authorizing the issuance of the San Luis Ranch CFD Special Tax Bonds, in an aggregate principal amount of not to exceed $20,500,000 (Attachment A), authorizing the execution and delivery of an Indenture, a Bond Purchase Agreement and a Continuing Disclosure Certificate, authorizing the distribution of an Official Statement in connection therewith and authorizing the execution of necessary documents and certificates and related actions. DISCUSSION Background On April 20, 2021, the City Council held a special election to approve the updated Rate and Method of Apportionment (RMA) for the CFD. The CFD was previously authorized to incur bonded indebtedness in the aggregate principal amount of not to exceed $25,000,000 to be secured by the levy of a Special Tax on taxable property within the CFD. Based on the adoption of the amended and restated RMA, the City Council can now take the necessary steps to issue bonds for the CFD the aggregate principal amount of the bonds cannot exceed $20,500,000. Packet Page 19 Item 2 Analysis The CFD will issue its Special Tax Bonds, Series 2021 (Bonds), for the purpose of financing certain public capital infrastructure necessary for the development of the San Luis Ranch project. The proceeds of the will be used to finance the acquisition and construction of certain public facilities, fund a debt service reserve fund, fund capitalized interest, and pay certain costs of issuance of the Bonds. By adopting the Proposed Resolution, the City Council is taking the following actions in connection with the Bonds: 1. Authorizing the issuance of an aggregate principal amount of not to exceed $20,500,000 in bonds. 2. Approving the execution and delivery of an Indenture (Attachment B) 3. Approving the execution and delivery of a Bond Purchase Agreement (Attachment C) 4. Approving the execution and delivery of a Continuing Disclosure Certificate (Attachment D and E) 5. Approving the execution and delivery of a Preliminary Official Statement and authorizing the preparation of a final Official Statement (Attachment F) 6. Authorizing the officers of the City to execute any and all documents and instruments, for and on behalf of the City and/or the CFD, to carry out the issuance of the Bonds. Next Steps Once all necessary documents are approved by the Council, the Official Statement for the bond issuance will be release and staff expect the bonds to be sold by the week of May 3rd. The City has closely coordinated with its bond counsel, its municipal advisor, special tax consultant, the selected underwriter (all parties), as well as the developer for a successful bond issuance that took into consideration an appraisal and absorption study for the CFD. Special Tax Levy The City has already established the necessary accounts with the County of San Luis Obispo Tax Collector to administer the special tax within the San Luis Ranch CFD. All necessary documentation and information will be provided to the County of San Luis Obispo (the "County") Tax Collector in proper form and required timelines to bill and collect the special tax on the secured property tax roll of the County. This does not exclude the City's right to utilize any other lawful means of billing, collecting, and enforcing the special tax, including direct billing, supplemental billing, and, when lawfully available, judicial foreclosure of the special tax lien. In connection with the amendment of the RMA, the City will adopt an amendment to its Ordinance No. to authorize the levy of the Special Tax in FY 2021-22 based on such amended RMA and in all future fiscal years Policy Context The approved San Luis Ranch Specific Plan and related entitlements are consistent with the City's s adopted General Plan, and findings to that effect were made in both the original project approved in July 2017 as well as the amended project approval in August 2018. An evaluation of the project's consistency with General Plan policies is discussed at length in Section 4.9 of the certified Final Environmental Impact Report. Packet Page 20 Item 2 The Specific Plan requires that funding mechanisms be included to ensure that public infrastructure is coordinated with future development under the plan. The formation of a CFD was consistent with this requirement. A CFD, as enabled by the Community Facilities District Act of 1982, allows a local jurisdiction to levy a special tax within a specified area to pay for public services and/ or infrastructure needed within the area. Over the past three decades, CFDs have become a common mechanism for cities to fund services and finance development -related infrastructure, and the use of a CFD, in this case, is consistent with the City's Economic Development Strategic Plan and the General Plan. The General Plan provides specific policies related to the funding of infrastructure noted below: 1.13.6. Required Plans: The City shall not allow the development of any newly annexed private land until the City has adopted a specific or development plan for land uses, open space protection, roads, utilities, the overall pattern of subdivision, and financing of public facilities for the area. 1.13.9. Costs of Growth: The City shall require the costs of public facilities and services needed for new development to be borne by the new development unless the community chooses to help pay the costs for a certain development to obtain community -wide benefits. The City shall consider a range of options for financing measures so that new development pays its fair share of costs of new services and facilities which are required to serve the project, and which are reasonably related to the new growth attributable to the development. The Special Tax Levy for San Luis Ranch CFD, the bond issuance, the execution of the Indenture, the Bond Purchase Agreement, and any other related documentation to complete the bond issuance process are consistent with these General Plan policies. The issuance of the Bonds is consistent with the City's Local Goals and Policies for Mello -Roos Community Facilities Districts. Public Engagement The Planning Commission considered and provided input on the originally approved San Luis Ranch project on nine occasions from 2014 through 2017, before finally recommending approval in June 2017. As noted under "Previous Council or Advisory Body Action," the approved project was considered in a variety of public workshops and hearings before many of the City's advisory bodies from 2014 through project approval as amended in 2018. On February 19, 2019, the City Council held a public hearing regarding the potential formation of a CFD, after which it adopted a Resolution of Intention to form a CFD. On March 16, 2021, a Resolution of Consideration was adopted to authorize the amendment of the RMA, as part of the process, it is necessary to conduct a Public Hearing on the April 20, 2021 Council Meeting. Also, the approval of the amendment is conditioned by a two-thirds vote of the San Luis Ranch registered voters or landowners. The results are going to be reported at the April 20, 2021 Council Meeting. Packet Page 21 Item 2 CONCURRENCE The Community Development Department concurs with the recommendations contained within this report. ENVIRONMENTAL REVIEW The California Environmental Quality Act does not apply to the recommended action in this report, because the action does not constitute a " Project" under CEQA Guidelines Sec. 15378. FISCAL IMPACT Budgeted: Yes/No Funding Identified: Yes/No Fiscal Analysis: Budget Year: 2021 Funding Sources Current FY Cost Annualized On -going Cost Total Project Cost General Fund N/A State Federal Fees Other: Total There will be no fiscal impact related to the bond issuance. The different necessary studies and documents for the process were made by a consultant that will get paid from the special tax proceeds for the CFD, as well as the City's costs involved in establishing and administering the San Luis Ranch CFD. The financial analysis conducted for the bond issuance process has considered and budgeted these costs. ALTERNATIVES 1. Do not adopt the Proposed Resolution. The City Council could choose not to adopt the proposed resolution, in which case the bonds will not be issued. In this case, the project will not move forward without the bonded debt that is required to provide for necessary infrastructure and public improvements, such as the Prado Road Interchange, to mitigate the development impact and increase the quality of life for San Luis Obispo residents. 2. Direct modifications and continue the approval of the Proposed Resolution to a Date Certain. If additional information is needed, the direction should be provided to staff so that it can be presented on that date. Packet Page 22 Item 2 Attachments: a - Draft Resolution b - COUNCIL READING FILE - Indenture Series 2021 4131-8415-2872 3 c - COUNCIL READING FILE - Bond Purchase Agreement d - Continuing Disclosure Certificate Series 2021 4133-5720-9899 2 e - Continuing Disclosure Certificate Series 2021 4124-9554-2571 2 f - COUNCIL READING FILE - Preliminary Official Statement Packet Page 23 Item 2 RESOLUTION NO. _ 2021 SERIES A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF SAN LUIS OBISPO, CALIFORNIA, AUTHORIZING THE ISSUANCE OF CITY OF SAN LUIS OBISPO COMMUNITY FACILITIES DISTRICT NO. 2019-1 (SAN LUIS RANCH) SPECIAL TAX BONDS, SERIES 2021, IN AN AGGREGATE PRINCIPAL AMOUNT OF NOT TO EXCEED $20,500,000 AUTHORIZING THE EXECUTION AND DELIVERY OF AN INDENTURE, A BOND PURCHASE AGREEMENT AND A CONTINUING DISCLOSURE CERTIFICATE, AUTHORIZING THE DISTRIBUTION OF AN OFFICIAL STATEMENT IN CONNECTION THEREWITH AND AUTHORIZING THE EXECUTION OF NECESSARY DOCUMENTS AND CERTIFICATES AND RELATED ACTIONS WHEREAS, the City Council (the "City Council") of the City of San Luis Obispo (the "City") has formed the City of San Luis Obispo Community Facilities District No. 2019-1 (San Luis Ranch) (the "Community Facilities District") under the provisions of the Mello -Roos Community Facilities Act of 1982 (the "Act"); and WHEREAS, the Community Facilities District is authorized under the Act to levy special taxes (the "Special Taxes") to pay for the costs of certain public facilities (the "Facilities") necessary to mitigate the impact of development within the Community Facilities District particularly described in the City Council's Resolution No. 10998 (2019 Series) adopted April 2, 2019 and to issue bonds payable from the Special Taxes; and WHEREAS, in order to provide funds to finance certain of the Facilities, the Community Facilities District proposes to issue its City of San Luis Obispo Community Facilities District No. 2019-1 (San Luis Ranch) Special Tax Bonds, Series 2021 (the "Series 2021 Bonds"), in the aggregate principal amount of not to exceed $20,500,000; and WHEREAS, in order to provide for the authentication and delivery of the Series 2021 Bonds, to establish and declare the terms and conditions upon which the Series 2021 Bonds are to be issued and secured and to secure the payment of the principal thereof, premium, if any, and interest thereon, the Community Facilities District proposes to enter into an Indenture with U.S. Bank National Association, as trustee (the "Trustee") (such Indenture, in the form presented to this meeting, with such changes, insertions and omissions as are made pursuant to this Resolution, being referred to herein as the "Indenture"); and WHEREAS, Piper Sandler & Co. (the "Underwriter"), has presented the Community Facilities District with a proposal, in the form of a Bond Purchase Agreement, to purchase the Series 2021 Bonds from the Community Facilities District (such Bond Purchase Agreement, in the form presented to this meeting, with such changes, insertions and omissions as are made pursuant to this Resolution, being referred to herein as the "Purchase Agreement"); and I:14 Packet Page 24 Item 2 Resolution No. (2021 Series) Page 2 WHEREAS, Rule 15c2-12 promulgated under the Securities Exchange Act of 1934 ("Rule 15c2-12") requires that, in order to be able to purchase or sell the Series 2021 Bonds, the underwriter thereof must have reasonably determined that the Community Facilities District has, or one or more appropriate obligated persons have, undertaken in a written agreement or contract for the benefit of the holders of the Series 2021 Bonds to provide disclosure of certain financial information and certain listed events on an ongoing basis; and WHEREAS, in order to cause such requirement to be satisfied, the Community Facilities District desires to enter into a Continuing Disclosure Certificate with U.S. Bank National Association in its capacity as trustee and in its capacity as dissemination agent thereunder (such Continuing Disclosure Certificate, in the form presented to this meeting, with such changes, insertions and omissions as are made pursuant to this Resolution, being referred to herein as the "Continuing Disclosure Certificate"); and WHEREAS, a form of the Preliminary Official Statement to be distributed in connection with the public offering of the Series 2021 Bonds has been prepared (such Preliminary Official Statement, in the form presented to this meeting, with such changes, insertions and omissions as are made pursuant to this Resolution, being referred to herein as the "Preliminary Official Statement"); and WHEREAS, there have been prepared and submitted to this meeting forms of - a) the Indenture; b) the Purchase Agreement; c) the Continuing Disclosure Certificate; d) the Preliminary Official Statement; WHEREAS, Integra Realty Resources has prepared and provided to the Community Facilities District an appraisal report (the "Appraisal"), providing an opinion of value of the property in the Community Facilities District as of November 29, 2020, which has been submitted to this meeting in draft form and which will be updated prior to distribution of the Preliminary Official Statement; and WHEREAS, Section 5852.1 of the California Government Code (the "Government Code") requires that the City Council obtain from an underwriter, financial advisor or private lender and disclose, in a meeting open to the public, prior to authorization of the issuance of the Series 2021 Bonds, good faith estimates of (a) the true interest cost of the Series 2021 Bonds, (b) the sum of all fees and charges paid to third parties with respect to the Series 2021 Bonds, (c) the amount of proceeds of the Series 2021 Bonds expected to be received net of the fees and charges paid to third parties and any reserves or capitalized interest paid or funded with proceeds of the Series 2021 Bonds, and (d) the sum total of all debt service payments on the Series 2021 Bonds calculated to the final maturity of the Series 2021 Bonds plus the fees and charges paid to third parties not paid with the proceeds of the Series 2021 Bonds; and I:14 Packet Page 25 Item 2 Resolution No. (2021 Series) Page 3 WHEREAS, in compliance with Section 5852.1 of the Government Code, the City Council has obtained from PFM Financial Advisors LLC, as the Community Facilities District's municipal advisor (the "Municipal Advisor"), the required good faith estimates, which the Municipal Advisor has prepared in consultation with the Underwriter, and such estimates are disclosed and set forth in Exhibit A attached hereto; and WHEREAS, the Community Facilities District desires to proceed to issue and sell the Series 2021 Bonds and to authorize the execution of such documents and the performance of such acts as may be necessary or desirable to effect the offering, sale and issuance of the Series 2021 Bonds; and WHEREAS, the City Council is the legislative body of the Community Facilities District. NOW, THEREFORE, BE IT RESOLVED by the City Council of the City of San Luis Obispo, as follows: SECTION 1. The foregoing recitals are true and correct, and the City Council so finds and determines. SECTION 2. Subject to the provisions of Section 3 hereof, the issuance of the Series 2021 Bonds, in an aggregate principal amount of not to exceed $20,500,000, on the terms and conditions set forth in, and subject to the limitations specified in, the Indenture, be and the same is hereby authorized and approved. The Series 2021 Bonds shall be dated, shall bear interest at the rates, shall mature on the dates, shall be subject to call and redemption, shall be issued in the form and shall be as otherwise provided in the Indenture, as the same shall be completed as provided in this Resolution. SECTION 3. The City reasonably expects that debt obligations in an amount not to exceed $25,000,000 will be issued and that certain of the proceeds of such debt obligations will be used to reimburse the City for certain expenditures in connection with the Facilities. This resolution shall constitute a statement of official intent for purposes of Treasury Regulations Section 1.150- 2. This declaration does not bind the City to make any expenditure, incur any indebtedness, or proceed with constructing the Facilities. SECTION 4. The Indenture, in substantially the form submitted to this meeting and made a part hereof as though set forth herein, be and the same is hereby approved. Each of the Mayor of the City, and such other member of the City Council as the Mayor may designate, the City Manager of the City, the Finance Director of the City and such other officer or employee of the City as the City Manager may designate (the "Authorized Officers") is hereby authorized, and any one of the Authorized Officers is hereby directed, for and in the name of the Community Facilities District, to execute and deliver the Indenture in the form submitted to this meeting, with such changes, insertions and omissions as the Authorized Officer executing the same may require or approve, such requirement or approval to be conclusively evidenced by the execution of the Indenture by such Authorized Officer; provided, however, that such changes, insertions and omissions shall not authorize an aggregate principal amount of Series 2021 Bonds in excess of $20,500,000, shall not result in a final maturity date of the Series 2021 Bonds later than September 1, 2052, and shall not result in a true interest cost for the Series 2021 Bonds in excess of 5.5%. f:7 Packet Page 26 Item 2 Resolution No. (2021 Series) Page 4 SECTION 5. The Purchase Agreement, in substantially the form submitted to this meeting and made a part hereof as though set forth in full herein, be and the same is hereby approved. Each of the Authorized Officers is hereby authorized, and any one of the Authorized Officers is hereby directed, for and in the name of the Community Facilities District, to execute and deliver the Purchase Agreement in the form presented to this meeting, with such changes, insertions and omissions as the Authorized Officer executing the same may require or approve, such requirement or approval to be conclusively evidenced by the execution of the Purchase Agreement by such Authorized Officer; provided, however, that such changes, insertions and omissions shall not result in an aggregate underwriter's discount (not including any original issue discount) from the principal amount of the Series 2021 Bonds in excess of 1.5% of the aggregate principal amount of the Series 2021 Bonds. The City Council hereby finds and determines that the sale of the Series 2021 Bonds at negotiated sale as contemplated by the Purchase Agreement will result in a lower overall cost. SECTION 6. The Continuing Disclosure Certificate, in substantially the form submitted to this meeting and made a part hereof as though set forth in full herein, be and the same is hereby approved. Each of the Authorized Officers is hereby authorized, and any one of the Authorized Officers is hereby directed, for and in the name of the Community Facilities District, to execute and deliver the Continuing Disclosure Certificate in the form presented to this meeting, with such changes, insertions and omissions as the Authorized Officer executing the same may require or approve, such requirement or approval to be conclusively evidenced by the execution of the Continuing Disclosure Certificate by such Authorized Officer. SECTION 7. The Preliminary Official Statement, in substantially the form presented to this meeting and made a part hereof as though set forth in full herein, with such changes, insertions and omissions therein as may be approved by an Authorized Officer, be and the same is hereby approved, and the use of the Preliminary Official Statement in connection with the offering and sale of the Series 2021 Bonds is hereby authorized and approved. Each of the Authorized Officers is hereby authorized to certify on behalf of the Community Facilities District that the Preliminary Official Statement is deemed final as of its date, within the meaning of Rule 15c2-12 (except for the omission of certain final pricing, rating, and related information as permitted by Rule 15c2- 12). SECTION 8. The preparation and delivery of a final Official Statement (the "Official Statement"), and its use in connection with the offering and sale of the Series 2021 Bonds, be and the same is hereby authorized and approved. The Official Statement shall be in substantially the form of the Preliminary Official Statement, with such changes, insertions and omissions as may be approved by an Authorized Officer, such approval to be conclusively evidenced by the execution and delivery thereof. Each of the Authorized Officers is hereby authorized, and any one of the Authorized Officers is hereby directed, for and in the name of the Community Facilities District, to execute the final Official Statement and any amendment or supplement thereto. I:14 Packet Page 27 Item 2 Resolution No. (2021 Series) Page 5 SECTION 9. Based upon the property values within the Community Facilities District reported in the Appraisal and the value -to -lien information set forth in the Preliminary Official Statement, the City Council, for purposes of Section 53345.8 of the Act, hereby finds and determines that the value of the real property that would be subject to the Special Tax to pay debt service on the Series 2021 Bonds will be at least three times the principal amount of the Series 2021 Bonds to be sold and the principal amount of all other bonds outstanding that are secured by a special tax levied pursuant to the Act on property within the Community Facilities District or a special assessment levied on property within the Community Facilities District. SECTION 10. The Authorized Officers and the officers and employees of the City are, and each of them is, hereby authorized and directed, for and in the name of the Community Facilities District to do any and all things and to execute and deliver any and all documents which they or any of them deem necessary or advisable in order to consummate the transactions contemplated by this Resolution and otherwise to carry out, give effect to and comply with the terms and intent of this Resolution. I:14 Packet Page 28 Item 2 Resolution No. (2021 Series) Page 6 SECTION 11. All actions heretofore taken by the officers and employees of the City with respect to the issuance and sale of the Series 2021 Bonds, or in connection with or related to any of the agreements or documents referred to herein, are hereby approved, confirmed, and ratified. SECTION 12. This Resolution shall take effect immediately upon its adoption. Upon motion of Council Member , and on the following roll call vote: AYES: NOES: RECUSED: The foregoing resolution was adopted this day of ATTEST: Teresa Purrington City Clerk APPROVED AS TO FORM: J. Christine Dietrick City Attorney seconded by Council Member 2021. Mayor Heidi Harmon IN WITNESS WHEREOF, I have hereunto set my hand and affixed the official seal of the City of San Luis Obispo, California, on Teresa Purrington City Clerk I:14 Packet Page 29 Item 2 Resolution No. (2021 Series) Page 1 EXHIBIT A GOOD FAITH ESTIMATES The good faith estimates set forth herein are provided with respect to the Series 2021 Bonds in accordance with Section 5852.1 of the Government Code. Such good faith estimates have been provided to the Community Facilities District by the Municipal Advisor, which the Municipal Advisor has prepared in consultation with the Underwriter. Principal Amount. The Municipal Advisor has informed the Community Facilities District that, based on the Community Facilities District's financing plan and current market conditions, its good faith estimate of the aggregate principal amount of the Series 2021 Bonds to be issued and sold is $18,370,000 (the "Estimated Principal Amount"), which excludes approximately $630,000 of net premium estimated to be generated based on current market conditions. Net premium is generated when, on a net aggregate basis for a single issuance of bonds, the price paid for such bonds is higher than the face value of such bonds. The Estimated Principal Amount plus the net premium represent the total estimated proceeds available in the aggregate amount of $19,000,000. True Interest Cost of the Series 2021 Bonds. The Municipal Advisor has informed the Community Facilities District that, assuming that the Estimated Principal Amount of the Series 2021 Bonds is issued and sold, and based on market interest rates prevailing at the time of preparation of such estimate, its good faith estimate of the true interest cost of the Series 2021 Bonds, which means the rate necessary to discount the amounts payable on the respective principal and interest payment dates to the purchase price received for the Series 2021 Bonds, is 3.85%. Finance Charge of the Series 2021 Bonds. The Municipal Advisor has informed the Community Facilities District that, assuming that the Estimated Principal Amount of the Series 2021 Bonds is issued and sold and based on market interest rates prevailing at the time of preparation of such estimate, its good faith estimate of the finance charge for the Series 2021 Bonds, which means the sum of all fees and charges paid to third parties (or costs associated with the Series 2021 Bonds), is $725,000. Amount of Proceeds to be Received. The Municipal Advisor has informed the Community Facilities District that, assuming that the Estimated Principal Amount of the Series 2021 Bonds is issued and sold, and based on market interest rates prevailing at the time of preparation of such estimate, its good faith estimate of the amount of proceeds expected to be received by the Community Facilities District for sale of the Series 2021 Bonds, less the finance charge of the Series 2021 Bonds, as estimated above, and any reserves or capitalized interest paid or funded with proceeds of the Series 2021 Bonds, is $16,000,000. Total Payment Amount. The Municipal Advisor has informed the Community Facilities District that, assuming that the Estimated Principal Amount of the Series 2021 Bonds is issued and sold, and based on market interest rates prevailing at the time of preparation of such estimate, its good faith estimate of the total payment amount, which means the sum total of all payments the Community Facilities District will make to pay debt service on the Series 2021 Bonds, plus the finance charge for the Series 2021 Bonds, as described above, not paid with the proceeds of the Series 2021 Bonds, calculated to the final maturity of the Series 2021 Bonds, is $33,000,000, which excludes any reserves or capitalized interest paid or funded with proceeds of the Series 2021 Bonds (which may offset such total payment amount). IS Packet Page 30 Item 2 Resolution No. (2021 Series) Page 2 The foregoing estimates constitute good faith estimates only and are based on market conditions prevailing at the time of preparation of such estimates. The actual principal amount of the Series 2021 Bonds issued and sold, the true interest cost thereof, the finance charges thereof, the amount of proceeds received therefrom and total payment amount with respect thereto may differ from such good faith estimates due to (a) the actual date of the sale of the Series 2021 Bonds being different than the date assumed for purposes of such estimates, (b) the actual principal amount of Series 2021 Bonds issued and sold being different from the Estimated Principal Amount, (c) the actual amortization of the Series 2021 Bonds being different than the amortization assumed for purposes of such estimates, (d) the actual market interest rates at the time of sale of the Series 2021 Bonds being different than those estimated for purposes of such estimates, (e) other market conditions, or (f) alterations in the Community Facilities District's financing plan, or a combination of such factors. The actual date of sale of the Series 2021 Bonds and the actual principal amount of Series 2021 Bonds issued and sold will be determined by the Community Facilities District based on the timing of the need for proceeds of the Series 2021 Bonds and other factors. The actual interest rates borne by the Series 2021 Bonds will depend on market interest rates at the time of sale thereof. The actual amortization of the Series 2021 Bonds will also depend, in part, on market interest rates at the time of sale thereof. Market interest rates are affected by economic and other factors beyond the control of the Community Facilities District. I7 Packet Page 31 Item 2 CITY CLERK'S CERTIFICATE I, , duly appointed and qualified City Clerk of the City of San Luis Obispo (the "City"), certify that attached is a full, true, and correct copy of Resolution No. , adopted April 20, 2021, during a meeting of the City Council of the City. Such meeting was duly and legally held at the regular meeting place of the City Council. All of the members of said council had due notice of such meeting and a majority thereof was present at such meeting. I have carefully compared the same with the original minutes of said meeting on file and of record in my office, and the foregoing is a full, true and correct copy of such resolution adopted at said meeting and entered in said minutes. Said resolution has not been amended, modified, or rescinded since the date of its adoption, and the same is now in full force and effect. Dated: Teresa Purrington, City Clerk Packet Page 32 Item 2 CONTINUING DISCLOSURE CERTIFICATE - DEVELOPER This Continuing Disclosure Certificate — Developer (the "Disclosure Certificate") dated as of [ ], 2021, is executed and delivered by [MI San Luis Ranch, LLC][Presidio WH SLR 80 Towns, LLC][Presidio MI SLR 96, LLC][ Presidio WH SLR 83 SFR, LLC][ Presidio MI SLR 198, LLC] (the "Developer") in connection with the issuance of $[PAR AMOUNT] aggregate principal amount of the City of San Luis Obispo Community Facilities District No. 2019-1 (San Luis Ranch) Special Tax Bonds (the "Bonds"). The Bonds are being issued pursuant to an Indenture, dated as of [ ], 2021 (the "Indenture"), among the City of San Luis Obispo Community Facilities District No. 2019-1 (San Luis Ranch) (the "District") and U.S. Bank National Association, as trustee (the "Trustee"). SECTION 1. Purpose of the Disclosure Certificate. This Disclosure Certificate is being executed and delivered by the Developer for the benefit of the holders and beneficial owners of the Bonds. The Developer acknowledges that the District has undertaken no responsibility with respect to any reports, notices or disclosures provided or required under this Disclosure Certificate, and has no liability to any person, including any holder or beneficial owner of the Bonds, with respect to this Disclosure Certificate. SECTION 2. Definitions. In addition to the definitions set forth in the Indenture, which apply to any capitalized term used in this Disclosure Certificate unless otherwise defined herein, the following capitalized terms shall have the following meanings: "Affiliate" of another Person means (a) any Person directly or indirectly owning, controlling, or holding with power to vote, 50% or more of the outstanding voting securities of such other Person, (b) any Person 50% or more of whose outstanding voting securities are directly or indirectly owned, controlled, or held with power to vote, by such other Person, and (c) any Person directly or indirectly controlling, controlled by, or under common control with, such other Person; for purposes hereof, control means the power to exercise a controlling influence over the management or policies of a Person, unless such power is solely the result of an official position with such Person. "Assumption Agreement" means an agreement containing terms substantially similar to this Disclosure Certificate, whereby a Major Developer agrees to provide Semiannual Reports and notices of significant events with respect to the portion of the Property owned by such Major Developer and its Affiliates, and with respect to the improvements or payments necessary to cause the Planned Development Stage to be reached that such Major Developer, or an Affiliate thereof, intends or is obligated (contractually or otherwise) to make or cause to be made. "Bonds" means the City of San Luis Obispo Community Facilities District No. 2019-1 (San Luis Ranch) Special Tax Bonds issued hereunder, and includes the Series 2021 Bonds and any Additional Bonds. "Developer" means [MI San Luis Ranch, LLC][Presidio WH SLR 80 Towns, LLC][Presidio MI SLR 96, LLC][ Presidio WH SLR 83 SFR, LLC][ Presidio MI SLR 198, LLC], a limited liability company organized and existing under the laws of the State of [Delaware], and its successors and assigns. "Development Plan" means with respect to a Major Developer, the specific improvements such Major Developer intends to make, or cause to be made, in order for the Planned Development Stage to be reached, the time frame in which such improvements are intended to be made and the estimated costs of such improvements; the Developer's Development Plan, as of the date hereof, is described in the Official Statement under the captions "PROPERTY OWNERSHIP AND THE DEVELOPMENT." "Disclosure Certificate" means this Disclosure Certificate as the same may be amended from time to time. 4133-5720-9899.2 Packet Page 33 Item 2 "Dissemination Agent" means , and any successor Dissemination Agent designated in writing by the Developer and which has filed with the District a written acceptance of such designation. "District" means the City of San Luis Obispo Community Facilities District No. 2019-1 (San Luis Ranch). "Event of Bankruptcy" means, with respect to a Person, that such Person files a petition or institutes a proceeding under any act or acts, state or federal, dealing with or relating to the subject or subjects of bankruptcy or insolvency, or under any amendment of such act or acts, either as a bankrupt or as an insolvent, or as a debtor, or in any similar capacity, wherein or whereby such Person asks or seeks or prays to be adjudicated a bankrupt, or is to be discharged from any or all of such Person's debts or obligations, or offers to such Person's creditors to effect a composition or extension of time to pay such Person's debts or asks, seeks or prays for reorganization or to effect a plan of reorganization, or for a readjustment of such Person's debts, or for any other similar relief, or if any such petition or any such proceedings of the same or similar kind or character is filed or instituted or taken against such Person, or if a receiver of the business or of the property or assets of such Person is appointed by any court, or if such Person makes a general assignment for the benefit of such Person's creditors. "Financing Plan" means, with respect to a Major Developer, the method by which such Major Developer intends to finance its Development Plan, including specific sources of funding for such Development Plan; the Developer's Financing Plan, as of the date hereof, is described in the Official Statement under the caption "PROPERTY OWNERSHIP AND THE DEVELOPMENT." "Listed Event" means any of the events listed in Section 5 hereof. "Major Developer" means any property owner, which owns (itself or through Affiliates) Taxable Parcels that are responsible in the aggregate for 20% or more of the Special Taxes levied on all of the Taxable Property for the then current Fiscal Year. "MSRB" shall mean the Municipal Securities Rulemaking Board or any other entity designated or authorized by the Securities and Exchange Commission to receive reports pursuant to the Rule. Until otherwise designated by the MSRB or the Securities and Exchange Commission, filings with the MSRB are to be made through the Electronic Municipal Market Access (EMMA) website of the MSRB, currently located at http://emma.msrb.org. "Official Statement" means the final, executed Official Statement relating to the Bonds. "Participating Underwriter" shall mean Piper Sandler & Co., the original underwriter of the Bonds. "Person" means an individual, corporation, limited liability company, firm, association, partnership, trust or other legal entity or group of entities, including a governmental entity or any agency or political subdivision thereof. "Planned Development Stage" means, with respect to any portion of the Property, the stage of development at which such portion of the Property is ready to be presented to the marketplace as a finished residential unit[.][[for MI San Luis Ranch LLC Only:]; provided that with respect to the Developer Planned Development Stage shall mean the stage of development when the Developer is no longer a Major Developer and has completed all of the facilities described in the Official Statement under the caption "PROPERTY OWNERSHIP AND THE DEVELOPMENT."] 2 4133-5720-9899.2 Packet Page 34 Item 2 "Rate and Method" means the rate and method of apportionment of the Special Taxes approved by the qualified electors of the District. "Rule" means Rule 15c2-12(b)(5) adopted by the Securities and Exchange Commission under the Securities Exchange Act of 1934, as the same may be amended from time to time. "Semiannual Report" shall mean any Semiannual Report provided by the Developer pursuant to, and as described in, Sections 3 and 4 of this Disclosure Certificate. "Special Taxes" means the special taxes described and defined in the Rate and Method as the "Special Tax" approved by the qualified electors of the Community Facilities District. "State" shall mean the State of California. "Taxable Parcel" has the meaning ascribed thereto in the Rate and Method. "Trustee" means U.S. Bank National Association, a national banking association organized and existing under the laws of the United States of America, or any successor thereto as Trustee hereunder substituted in its place as provided in the Indenture. SECTION 3. Provision of Semiannual Reports. So long as the Developer's obligations hereunder have not been terminated pursuant to Section 7, the Developer shall provide to the MSRB and the District a Semiannual Report which is consistent with the requirements of Section 4, not later than March 31 for the six-month period ending on the prior December 31, and not later than September 30 for the six-month period ending the prior June 30, commencing with the Semiannual Report for the six month period ending June 30, 2021. The Semiannual Report must be submitted in electronic format, accompanied by such identifying information as is prescribed by the MSRB, and may cross-reference other information as provided in Sections 4 or 5 hereof. SECTION 4. Content of Semiannual Reports. The Developer's Semiannual Report shall contain or incorporate by reference the following information: (a) If information regarding such Major Developer has not previously been included in a Semiannual Report or in the Official Statement, the Development Plan and Financing Plan of such Major Developer or, if information regarding such Major Developer has previously been included in a Semiannual Report or in the Official Statement, a description of the progress made in the Development Plan of such Major Developer since the date of such information and a description of any significant changes in such Development Plan and the Financing Plan and the causes or rationale for such changes. (b) Identification of any portion of the Taxable Parcel owned by the Developer consisting of 20% or more of the Special Tax levy on all of the Taxable Parcel within the Improvement Area that is conveyed by the Developer to an entity that is not an affiliate since the date of the most recent Semiannual Report. (c) The number of building permits issued with respect to such Major Developer's Property during the six-month period ending on April 30 and October 31 for the respective Semiannual Report date. (d) The number of lots that have not reached the Planned Development Stage sold within the Taxable Property owned by the Developer since the date of the Official Statement or a more recent Semiannual Report, and, if any such lots were sold to a Major Developer, the identity of the Major Developer. 4133-5720-9899.2 Packet Page 35 Item 2 (e) The number of finished homes sold and conveyed to individual homeowners by the Developer in the Improvement Area during the six-month period ending on April 30 and October 31 for the respective Semiannual Report date. (f) Any material amendments to land use entitlements for Taxable Property of the Developer, if such amendments would prevent or significantly delay the implementation of the Developer's Development Plan as described in the Official Statement or in any previous Semiannual Report. (g) The information required to be provided under Section 5 hereof during the six-month period ending on the respective April 30 and October 31 prior to the date by which such Semiannual Report must be filed in accordance with Section 3. SECTION 5. Reporting of Significant Events. Pursuant to the provisions of this Section 5, the Developer shall promptly give, or cause to be given, notice of the occurrence of any of the following events with respect to the Developer: (a) Any failure of the Developer to pay by the date due general property taxes or assessments with respect to its Taxable Parcel. (b) Any denial or termination of credit, any denial or termination of, or default under, any line of credit or loan or any other loss of a source of funds that could have a material adverse effect on the Developer's most recently disclosed Financing Plan or Development Plan or on the ability of the Developer, or any Affiliate of the Developer owning any Taxable Property, to pay any Special Taxes with respect to its Taxable Property when due. (c) The occurrence of an Event of Bankruptcy with respect to the Developer, or any Affiliate, that could have a material adverse effect on the Developer's most recently disclosed Financing Plan or Development Plan or on the ability of the Developer, or any Affiliate of the Developer owning any Taxable Property, to pay Special Taxes with respect to its Taxable Property when due. (d) Any previously undisclosed governmentally -imposed preconditions to commencement or continuation of development on the Developer's Taxable Property, if such preconditions would prevent or significantly delay the Developer's Development Plan as described in the Official Statement or in any previous Semiannual Report. (e) Any previously undisclosed legislative, administrative or judicial challenges to development on the Developer's Taxable Property, if such challenges would prevent or significantly delay the Developer's Development Plan as described in the Official Statement or in any previous Semiannual Report. Whenever the Developer obtains knowledge of the occurrence of a Listed Event, the Developer shall promptly report the occurrence of the Listed Event by filing a notice of such occurrence with the MSRB in electronic format, accompanied by such identifying information as is prescribed by the MSRB. SECTION 6. Assumption of Obligations. If any portion of the Taxable Parcels owned by the Developer, or any Affiliate of the Developer, is conveyed such that, upon such conveyance, such new owner will be a Major Developer, the obligations of the Developer under this Disclosure Certificate with respect to the Taxable Property transferred by the Developer shall be assumed by such Major Developer pursuant to an Assumption Agreement. 4 4133-5720-9899.2 Packet Page 36 Item 2 SECTION 7. Termination of Reporting Obli ag tom. All of the Developer's obligations under this Disclosure Certificate shall terminate upon the legal defeasance, prior redemption or payment in full of all the Bonds. The Developer's obligations under this Disclosure Certificate shall terminate upon the earliest to occur of (a)[[MI San Luis Ranch LLC only:](1) the date on which the Planned Development Stage has been reached and (2)] the date on which the Developer is no longer a Major Developer, as defined herein, or (b) the date on which all of the Developer's obligations are assumed under one or more Assumption Agreements entered into pursuant to Section 6 hereof, or (c) the date on which all Special Taxes levied on the Taxable Property owned by the Developer and its Affiliates are paid or prepaid in full. Upon the occurrence of any such termination prior to the final maturity of the Bonds, the Developer shall give notice of such termination in the same manner as for a Listed Event under Section 5 hereof. SECTION 8. Amendment; Waiver. Notwithstanding any other provision hereof, the Developer may amend provisions of this Disclosure Certificate and any provision hereof may be waived, provided that the following conditions are satisfied: (a) If the amendment or waiver relates to the provisions of Sections 3, 4 or 5 hereof, it may 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 (as defined in the Rule) with respect to the Bonds, or type of business conducted; and (b) The proposed amendment or waiver either (i) is approved by holders of the Bonds in the manner provided in the Indenture for amendments to the Indenture with the consent of holders, or (ii) does not, in the opinion of bond counsel approved by the District, materially impair the interests of the holders or beneficial owners of the Bonds. If the semiannual financial information or operating data to be provided in the Semiannual Report is amended pursuant to the provisions hereof, the first semiannual 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. SECTION 9. Additional Information. Nothing in this Disclosure Certificate shall be deemed to prevent the Developer from disseminating any other information, using the means of dissemination set forth in this Disclosure Certificate or any other means of communication, or including any other information in any Semiannual Report or notice of occurrence of a Listed Event, in addition to that which is required by this Disclosure Certificate. If the Developer chooses to include any information in any Semiannual Report or notice of occurrence of a Listed Event in addition to that which is specifically required by this Disclosure Certificate, the Developer shall have no obligation under this Disclosure Certificate to update such information or include it in any future Semiannual Report or notice of occurrence of a Listed Event. SECTION 10. Dissemination Agent. The Developer 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 Dissemination Agent, with or without appointing a successor Dissemination Agent. The Dissemination Agent may resign by providing 30 days' written notice to the Developer. The Developer shall be responsible for paying the fees and expenses of the Dissemination Agent. SECTION 11. Default. In the event of a failure of the Developer to comply with any provision of this Disclosure Certificate, any holder or beneficial owner of the Bonds may take such actions as may be necessary and appropriate, including seeking mandate or specific performance by court order, to cause the Developer to comply with its obligations under this Disclosure Certificate. A default under this Disclosure Certificate shall not be deemed an Event of Default under the Indenture, and the sole remedy under this 4133-5720-9899.2 Packet Page 37 Item 2 Disclosure Certificate in the event of any failure of the Developer to comply with this Disclosure Certificate shall be an action to compel performance. SECTION 12. Beneficiaries. This Disclosure Certificate shall inure solely to the benefit of the Developer, the Participating Underwriter, the District and holders and beneficial owners from time to time of the Bonds, and shall create no rights in any other Person. SECTION 13. Notices. Any notices or communications to the Developer may be given as set forth in Exhibit A hereto or such other address that shall be specified by the Developer to the District from time to time. SECTION 14. Governing Law. This Disclosure Certificate and any dispute arising hereunder shall be governed by and interpreted in accordance with the laws of the State of California. 0 4133-5720-9899.2 Packet Page 38 Item 2 IN WITNESS WHEREOF, the undersigned has executed this Disclosure Certificate as of the day and year written above. MI SAN LUIS RANCH, LLC a Delaware limited liability company By: MI ENTITLEMENT IV, LLC a Delaware limited liability company Its: Sole Member and Manager By: Presidio Merced Land IV Passive, LLC a Delaware limited liability company, its Manager 7 LN Michael M. Sullivan Its: Authorized Representative 4133-5720-9899.2 Packet Page 39 Item 2 EXHIBIT A TO CONTINUING DISCLOSURE CERTIFICATE — DEVELOPER Any notices or communications to or among any of the parties to this Disclosure Certificate may be given as follows: To Developer: MI San Luis Ranch, LLC Attn: Josh Bevin, Chief Financial Officer [ 1 [ 1 A-] 4133-5720-9899.2 Packet Page 40 Item 2 CONTINUING DISCLOSURE CERTIFICATE — DISTRICT THIS DISTRICT CONTINUING DISCLOSURE CERTIFICATE (this "Disclosure Certificate"), dated as of [ ], 2021, is executed and delivered by the City of San Luis Obispo Community Facilities District No. 2019-1 (San Luis Ranch) (the "District") in connection with the issuance by the District of the City of San Luis Obispo Community Facilities District No. 2019-1 (San Luis Ranch) Special Tax Bonds, Series 2021 (the "Bonds"). The Bonds are being issued pursuant to an Indenture (the "Indenture"), between the District and U.S. Bank National Association (the "Trustee"). The District covenants and agrees as follows. SECTION 1. Purpose of the Disclosure Certificate. The Disclosure Certificate is being executed and delivered by the District for the benefit of the Holders and Beneficial Owners of the Bonds and in order to assist the Participating Underwriter in complying with S.E.C. Rule 15c2- 12(b)(5). SECTION 2. Definitions. In addition to the definitions set forth in the Indenture, which apply to any capitalized term used in this Disclosure 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 District pursuant to, and as described in, Sections 3 and 4 hereof. "Annual Report Date" means the date in each year that is nine months after the end of the District's fiscal year, which date, as of the date of this Disclosure Certificate, is June 30, 2019. "Dissemination Agent" shall mean [Economic & Planning Systems, Inc.], or any successor Dissemination Agent designated in writing by the District and which has filed with the District a written acceptance of such designation. "EMMA System" means the MSRB's Electronic Municipal Market Access system, or such other electronic system designated by the MSRB. "Financial Obligation" means, for purposes of the Listed Events set out in Section 5(a)(10) and Section 5(b)(7), 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 defined in the Securities Exchange Act of 1934, as amended) as to which a final official statement (as defined in the Rule) has been provided to the MSRB consistent with the Rule. "Listed Events" means any of the events listed in subsection (a) of Section 5 hereof. "MSRB" means the Municipal Securities Rulemaking Board, or any successor thereto. "Official Statement" means the Official Statement, dated [ ], 2021, relating to the Bonds. 4124-9554-2571.2 Packet Page 41 Item 2 "Participating Underwriter" means the original underwriter of the Bonds required to comply with the Rule in connection with the offering of the Bonds. "Rule" means Rule 15c2-12(b)(5) adopted by the Securities and Exchange Commission under the Securities Exchange Act of 1934, as the same may be amended from time to time. SECTION 3. Provision of Annual Reports. (a) The District shall, or shall cause the Dissemination Agent to, provide to the MSRB through the EMMA System, in an electronic format and accompanied by identifying information all as prescribed by the MSRB, an Annual Report which is consistent with the requirements of Section 4 hereof, not later than the Annual Report Date, commencing with the report for the 2020- 21 Fiscal Year. 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 hereof; provided, however, that the audited financial statements of the District may be submitted separately from the balance of the Annual Report, and later than the date required above for the filing of the Annual Report if not available by that date. If the District's fiscal year changes, it shall, or shall instruct the Dissemination Agent to, give notice of such change in the same manner as for a Listed Event under subsection (e) of Section 5 hereof. The first Annual Report may include the filing of or reference to the Official Statement. (b) Not later than 15 business days prior to the date specified in subsection (a) of this Section for the providing of the Annual Report to the MSRB, the District shall provide the Annual Report to the Dissemination Agent. (c) If the Dissemination Agent is other than the District, then not later than fifteen (15) Business Days prior to said date, the District shall provide the Annual Report to the Dissemination Agent. If the District is unable to provide the Annual Report to the MSRB by the Annual Report Date, the District shall send a notice to the MSRB in substantially the form attached as Exhibit A to the Disclosure Certificate. (d) The Dissemination Agent shall: (i) provide any Annual Report received by it to the MSRB, as provided herein; and (ii) file a report with the District certifying that the Annual Report has been provided pursuant to this Disclosure Certificate and stating the date it was so provided. SECTION 4. Content of Annual Reports. The District's Annual Report shall contain or incorporate by reference the following: (a) The District's audited financial statements, if any, prepared in accordance with generally accepted accounting principles as promulgated to apply to governmental entities from time to time by the Governmental Accounting Standards Board. If the District's audited financial statements, if any, are not available by the time the Annual Report is required to be filed pursuant to subsection (a) of Section 3 hereof, the Annual Report shall contain unaudited financial statements, and the audited financial statements, if any, shall be filed in the same manner as the 2 4124-9554-2571.2 Packet Page 42 Item 2 Annual Report when they become available. If the District's financial statement is included or consolidated with the financial statement for the City of San Luis Obispo (the "City"), then the District shall file the City's audited financial statements as its own. (b) The following information: (i) The principal amount of Bonds and any Additional Bonds (as defined in the Official Statement) Outstanding as of the December 31 next preceding the Annual Report Date along with debt service schedules for the Bonds and any Additional Bonds (as defined in the Official Statement) Outstanding as of such date; (ii) The balance in each reserve account for the Bonds and any Additional Bonds, and a statement of the required bond reserve amount, as of the December 31 next preceding the Annual Report Date; (iii) The total assessed value of all parcels within the District on which the Special Taxes are levied, as shown on the assessment roll of the San Luis Obispo County Assessor last equalized prior to the December 31 next preceding the Annual Report Date, and a statement of assessed value -to -lien ratios therefor based on special tax and assessment debt, either by individual parcel or by categories (e.g., "below 3:1," "11 to 4:1" etc.); (iv) The Special Tax delinquency rate for the District as of the December 31 next preceding the Annual Report Date; the number of parcels within the District delinquent in payment of special taxes as of the December 31 next preceding the Annual Report Date; the amount of each delinquency; the length of time delinquent and the date on which foreclosure was commenced, or similar information pertaining to delinquencies deemed appropriate by the District; provided, however, that parcels with aggregate delinquencies of $1,000 or less (excluding penalties and interest) may be grouped together and such information may be provided by category; (v) The status of foreclosure proceedings and a summary of the results of any foreclosure sales in the District as of the December 31 next preceding the Annual Report Date; (vi) The identity of any property owner, representing more than 5% of the Special Tax levy, delinquent in payment of special taxes as of the December 31 next preceding the Annual Report Date; (vii) A table describing all tentative and final maps approved and/or recorded within the District, describing the gross acres, the planned commercial acres and the number and type of planned residential dwelling units; (viii) The number of new building permits issued and a description of the purpose of such permits (e.g., new single-family, new multi -family, new commercial, new industrial); 3 4124-9554-2571.2 Packet Page 43 Item 2 (ix) A land ownership summary listing the top ten Special Tax payers for the District, as shown on the assessment roll of the San Luis Obispo County Assessor last equalized prior to the December 31 next preceding the Annual Report Date; and (x) For the current Fiscal Year, the amount of the Maximum Special Tax and the actual Special Tax levied within the District, with such amounts reported separately for Developed Property, Final Map Property and Undeveloped Property; provided, however, that once all Taxable Property within the District is Developed Property, the Maximum Special Tax and the actual Special Tax levied may each be shown on an aggregate basis in the Annual Report. For the purposes of this subparagraph (x), all capitalized terms used but not otherwise defined herein shall have the meanings ascribed thereto in the Rate and Method of Apportionment for the District. In addition to any of the information expressly required to be provided under this Section, as set forth above, the District 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. 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 District or related public entities, which have been submitted to the MSRB through the EMMA System. The District shall clearly identify each such other document so included by reference. SECTION 5. Reporting of Significant Events. (a) Pursuant to the provisions of this Section, the District shall give notice, or cause notice to be given, not less than ten Business Days after the occurrence of any of the following events with respect to the Bonds: (i) Principal and interest payment delinquencies. (ii) Unscheduled draws on debt service reserves reflecting financial difficulties. (iii) Unscheduled draws on credit enhancements reflecting financial difficulties. (iv) Substitution of credit or liquidity providers, or their failure to perform. (v) 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 Bonds, or other material events affecting the tax-exempt status of the security. (vi) Defeasances. (vii) Tender offers. (viii) Bankruptcy, insolvency, receivership or similar event of the obligated person. 11 4124-9554-2571.2 Packet Page 44 Item 2 Note: For the purposes of the event identified in subparagraph (ix), the event is considered to occur when any of the following occur: the appointment of a receiver, trustee or similar officer for an obligated person in a proceeding under the U.S. 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 obligated person, or if such jurisdiction has been assumed by leaving the existing governmental 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 obligated person. (ix) Rating changes. (x) Default, event of acceleration, termination event, modification of terms or other similar events under the terms of a financial Obligation of the District, any of which reflect financial difficulties. (b) The District shall give notice, or cause notice to be given, not less than ten Business Days after the occurrence of any of the following events with respect to the Bonds, if material: (i) Modifications to rights of Bond holders. (ii) Bond calls. (111) Release, substitution or sale of property securing repayment of the Bonds. (iv) Non-payment related defaults. (v) The consummation of a merger, consolidation, or acquisition involving an obligated person or the sale of all or substantially all of the assets of the obligated person, other than in the ordinary course of business, the entry into a definitive agreement to undertake such an action or the termination of a definitive agreement relating to any such actions, other than pursuant to its terms. (vi) Appointment of a successor or additional trustee or the change of name of a trustee. (vii) Incurrence of a Financial Obligation of the District, or agreement to covenants, events of default, remedies, priority rights, or similar terms of a Financial Obligation of the District, any of which affect Bondholders. (c) Whenever the District obtains knowledge of the occurrence of a Listed Event described in subsection (b) above, the District shall determine if such event would be material under applicable federal securities laws. E 4124-9554-2571.2 Packet Page 45 Item 2 (d) If the District learns of the occurrence of a Listed Event described in subsection (a) of this Section, or determines that knowledge of a Listed Event described in subsection (b) of this Section would be material under applicable federal securities laws, the District shall notify the Dissemination Agent thereof in writing and instruct the Dissemination Agent to report the occurrence pursuant to subsection (e) of this Section. If in response to a request under subsection (b) of this Section, the District determines that the Listed Event would not be material under applicable Federal securities law, the District shall so notify the Dissemination Agent in writing and instruct the Dissemination Agent not to report the occurrence pursuant to subsection (e) of this Section. (e) If the Dissemination Agent has been instructed by the District to report the occurrence of a Listed Event, the Dissemination Agent shall file a notice of such occurrence with the MSRB through the EMMA System. Notwithstanding the foregoing, notice of Listed Events described in paragraph (vii) of subsection (a) of this Section and paragraph (ii) of subsection (b) of this Section 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 pursuant to the Indenture. SECTION 6. Termination of Reporting Obligation. The District's obligations under this Disclosure Certificate shall terminate upon the legal defeasance, prior redemption or payment in full of all of the Bonds. If such termination occurs prior to the final maturity of the Bonds, the District shall give notice of such termination in the same manner as for a Listed Event under subsection (e) of Section 5 hereof. SECTION 7. Dissemination Agent. The District 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 Dissemination Agent, with or without appointing a successor Dissemination Agent. The Dissemination Agent shall not be responsible in any manner for the content of any notice or report prepared by the District pursuant to the Disclosure Certificate. SECTION 8. Amendment; Waiver. Notwithstanding any other provision of this Disclosure Certificate, the District may amend this Disclosure Certificate, and any provision of this Disclosure Certificate may be waived, provided that the following conditions are satisfied: (a) if the amendment or waiver relates to the provisions of subsection (a) of Section 3 hereof, Section 4 hereof or subsections (a) and (b) of Section 5 hereof, it may only be made in connection with a change in circumstances that arises from a change in legal requirements, change in law, or change in the identity, nature or status of an obligated person with respect to the Bonds, or type of business conducted; (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 Bonds, after taking into account any amendments or interpretations of the Rule, as well as any change in circumstances; and (c) the proposed amendment or waiver (i) is approved by Owners of the Bonds in the manner provided in the Indenture for amendments to the Indenture with the consent of Owners, or 0 4124-9554-2571.2 Packet Page 46 Item 2 (ii) does not, in the opinion of nationally recognized bond counsel, materially impair the interests of Owners or Beneficial Owners of the Bonds. If the annual financial information or operating data to be provided in the Annual Report is amended pursuant to the provisions hereof, the annual financial information 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 statements or information, in order to provide information to investors to enable them to evaluate the ability of the District to meet its obligations. To the extent reasonably feasible, the comparison shall be quantitative. A notice of the change in the accounting principles shall be given in the same manner as for a Listed Event under subsection (e) of Section 5 hereof. SECTION 9. Additional Information. Nothing in this Disclosure Certificate shall be deemed to prevent the District 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 District 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 District 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 10. Default. In the event of a failure of the District or the Dissemination Agent to comply with any provision of this Disclosure Certificate, any Holder or Beneficial Owner of outstanding Bonds may take such actions as may be necessary and appropriate, including seeking mandate or specific performance by court order, to cause the District to comply with its obligations under the Disclosure Certificate. A default under the Disclosure Certificate shall not be deemed an Event of Default under the Indenture, and the sole remedy under the Disclosure Certificate in the event of any failure of the District to comply with the Disclosure Certificate shall be an action to compel performance. SECTION 11. Duties, Immunities and Liabilities of Dissemination Agent. The Dissemination Agent shall be entitled to the protections and limitations from liability afforded to the Trustee under the Indenture. The Dissemination Agent shall not be responsible for the form or content of any Annual Report or notice of Listed Event. The Dissemination Agent shall receive reasonable compensation for its services provided under this Disclosure Certificate. The Dissemination Agent shall have only such duties as are specifically set forth in this Disclosure Certificate, and the District agrees to indemnify and save the Dissemination Agent, its officers, 7 4124-9554-2571.2 Packet Page 47 Item 2 directors, employees and agents, harmless against any loss, expense and liabilities which it may incur arising out of or in the exercise or performance of its powers and duties hereunder, including the costs and expenses (including attorneys' fees) of defending against any claim of liability, but excluding liabilities due to the Dissemination Agent's negligence or willful misconduct. The obligations of the District under this Section shall survive resignation or removal of the Dissemination Agent and payment of the Bonds. SECTION 12. Beneficiaries. This Disclosure Certificate shall inure solely to the benefit of the District, the Dissemination Agent, the Participating Underwriter and Owners and Beneficial Owners from time to time of the Bonds, and shall create no rights in any other person or entity. SECTION 13. Counterparts. This Disclosure Certificate may be executed in several counterparts, each of which shall be an original and all of which shall constitute but one and the same instrument. 4124-9554-2571.2 Packet Page 48 Item 2 IN WITNESS WHEREOF, the District has executed this Disclosure Certificate as of the date first above written. CITY OF SAN LUIS OBISPO COMMUNITY FACILITIES DISTRICT NO. 2019-1 (SAN LUIS RANCH) 9 Finance Director of the City of San Luis Obispo 4124-9554-2571.2 Packet Page 49 Item 2 EXHIBIT A NOTICE OF FAILURE TO FILE ANNUAL REPORT Name of Issuer: City of San Luis Obispo Community Facilities District No. 2019-1 (San Luis Ranch) Name of Issue: City of San Luis Obispo Community Facilities District No. 2019-1 (San Luis Ranch) Special Tax Bonds, Series 2021 Date of Issuance: [ ], 2021 NOTICE IS HEREBY GIVEN that the City of San Luis Obispo Community Facilities District No. 2019-1 (San Luis Ranch) (the "District") has not provided an Annual Report with respect to the above -named Bonds as required by Section 3 of the Continuing Disclosure Certificate, dated [ ], 2021, executed by the District for the benefit of the Holders and Beneficial Owners of the above -referenced bonds. [The District anticipates that the Annual Report will be filed by .] Dated: CITY OF SAN LUIS OBISPO COMMUNITY FACILITIES DISTRICT NO. 2019-1 (SAN LUIS RANCH) I_N Finance Director of the City of San Luis Obispo 4124-9554-2571.2 Packet Page 50 �]i1�iTi District No- 2(7 w Bond Issuance Approval jA -,AA CITY OF SffR LUIS OBISPO Recommendation Approve the bond issuance for the City of San Luis Obispo Community Facilities District (CFD) No. 2019-1 (San Luis Ranch) by taking the following actions: 1. Adopt a Resolution authorizing the issuance of the San Luis Ranch CFD Special Tax Bonds, in an aggregate principal amount of not to exceed $20, 500, 000 2. Authorizing the execution and delivery of an Indenture, a Bond Purchase Agreement and a Continuing Disclosure Certificate 3. Authorizing the distribution of an Official Statement in connection therewith and authorizing the execution of necessary documents, certificates, and related actions. San Luis Ranch Community Facilities District 11 l vr�� Y AM Background • On April 20, 2021, the City Council held a special election to approve the updated Rate and Method of Apportionment (RMA) for the CFD. The CFD was previously authorized to incur bonded indebtedness in the aggregate principal amount of not ■ to exceed $25,000,000 to be secured by the levy of a Special ■ Tax on taxable property within the San Luis Ranch CFD. • Based on the adoption of the amended and restated RMA, the City Council can now take the necessary steps to issue bonds for the CFD. The aggregate principal amount of the bonds must not exceed $20,500,000. Analysis W 40 The purpose of the CFD Special Tax Bonds is to finance certain public infrastructure necessary for the development of the SLR project. The proceeds will be used to finance acquisition and construction of certain public facilities such as the Prado Road overpass that is currently estimated at $63 million, a debt service reserve fund, and cost related to the issuance of the Bonds. The City Staff has already established necessary accounts with the County Tax Collector to administer the special tax collection through the property tax roll. Next Steps • Once all necessary documents are approved by the Council, the Official Statement for the bond issuance will be release and staff expect the bonds to be sold by the week of May 3rd. • The City has closely coordinated with its bond counsel, its municipal advisor, special tax consultant, the selected underwriter, as well as the developer for a successful bond issuance that took into consideration an appraisal and absorption study for the CFD. Recommendation Approve the bond issuance for the City of San Luis Obispo Community Facilities District (CFD) No. 2019-1 (San Luis Ranch) by taking the following actions: 1. Adopt a Resolution authorizing the issuance of the San Luis Ranch CFD Special Tax Bonds, in an aggregate principal amount of not to exceed $20, 500, 000 2. Authorizing the execution and delivery of an Indenture, a Bond Purchase Agreement and a Continuing Disclosure Certificate 3. Authorizing the distribution of an Official Statement in connection therewith and authorizing the execution of necessary documents, certificates, and related actions.