FLORIN RESOURCE CONSERVATION DISTRICT (With respect to the Certificates of Participation Listed on Schedule A)

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1 FLORIN RESOURCE CONSERVATION DISTRICT (With respect to the Certificates of Participation Listed on Schedule A) S.E.C. RULE 15c2-12 NOTICE OF LISTED EVENT The Florin Resource Conservation District (the "District") hereby provides this notice of listed event (the "Notice") pursuant to the continuing disclosure undertakings it has entered into for the securities listed on Schedule A attached hereto (collectively, the "Sec uri ties"). Capitalized terms used in this Notice and not otherwise defined, shall have the meanings given to such terms as set forth in the Trust Agreement dated as of March 1, 2003 (the "Trust Agreement") by and between the District and Union Bank of California, N.A., as trustee (the "Trustee"). (The Bank of New York Mellon, N.A., is successor Trustee to Union Bank of California, N.A.) Issues As indicated on Schedule A attached hereto, this Notice relates to the following issues: Florin Resource Conservation District, Subordinate Lien Refunding Certificates of Participation, Office Building, Series 2003 B (the "Junior Lien Certificates") and referred to herein with the Senior Lien Certificates as the "Certificates"). The final maturity date for the Senior Lien Certificates was February 1, 2013, and they are no longer outstanding. Other Matters As described in prior notices filed by the District, dated October 26, 2011 (posted November 2, 2011) and October 2, 2013 (posted October 2, 2013) the financial condition of the Project has deteriorated and the District has limited remaining Gross Revenues, as defined below, to fund the amounts required to be deposited to the Operations and Maintenance Reserve Fund and the Administrative Expense Fund and for the payment of delinquent and current property taxes including associated penalties and interest. Depending upon the amount received by the Trustee from the County under the County Lease (described below) by January 27, 2015, there may not be sufficient funds available to make the payment of debt service in full on the Junior Lien Certificates due February 1, 2015 without drawing on the Reserve Fund. Background The Certificates were executed and delivered under the terms of the Trust Agreement, and represent undivided proportionate interests of the owners thereof in certain installment payments to be made by the District to the Florin Resource Conservation District Economic Development Corporation (the "Corporation") under an Installment Sale Agreement dated as of March 1, 2003 (the "Installment Sale Agreement")

2 Under the Installment Sale Agreement, the District is obligated to make installment paymex:tt.s to the Corporation as the purchase price for an office building located in Sacramento, California (the "Project" or the "Susie Gaines Mitchell Building"). Proceeds of the Certificates were used to (i) refinance the Project by refunding certain certificates of participation sold by the District to acquire the Project, (ii) fund a Reserve Fund, (iii) fund an Operation and Maintenance Reserve Fund, (iv) fund an Administrative Expense Fund, and (v) to pay the costs of delivering the Certificates. The Project is currently leased to the County of Sacramento (the "County") and the County makes rental payments for use and occupancy of the building under a First Amended and Restated Lease dated as of May 1, 1998, between the County and the District (the "County Lease"). The County is currently using the Project to house approximately 200 County employees in connection with administering welfare services and human assistance mandated by the federal government under the Federal Person Responsibility and Work Opportunity Reconciliation Act of The County Lease specified the original term ohhe Lease would end in May 2013, and granted the County two additional five-year options to extend the term. On September 29, 2011, the County, by way of letter to the District, exercised both options to Lease the Project until January 31,2023. Under the Installment Sale Agreement, the District has pledged all Gross Revenues (consisting primarily of payments made by the County for the use and possession of the Project under the County Lease) to the payment of the installment payments. The Installment Sale Agreement defines Gross Revenues as "all income, rents, rates, fees, charges, and other moneys derived by the District under the County Lease including, without limitation, the earnings on and income derived from the investment of such income, rents, fees, charges or other moneys." Gross Revenues represent the sole security for the payment of principal, interest and accreted value represented by the Certificates. Under the County Lease the District is obligated, at its sole cost, to maintain and service the Project in good order and repair. The estimated cost of needed repairs exceeds the balance in the Operation and Maintenance Reserve Fund and the Administrative Expense Fund. Pursuant to Section 7.10 of the County Lease, the County is permitted to make necessary repairs and deduct the amount from the lease payments made under the County Lease. The District has attempted to renegotiate the County Lease with the County, but has been unable to reach an agreement that would allow for the payment of all costs relating to the Project and all payments with respect to the Certificates. Without an increase in the amount of rent payable under the County Lease, the District may have a shortfall in the amount of "Gross Revenues" available to pay property taxes and associated penalties and interest, the costs of maintaining and operating the Project, and make all payments of principal, interest and accreted value represented by the Junior Lien Certificates. The District has attempted to annex the Project site, which would exempt the parcel from future property taxes effective as of the date of annexation. Annexation would not relieve the District of its obligation to pay delinquent property taxes and associated - 2-

3 penalties and interest, nor would it enable the District to fully fund all of the expenses associated with the Project under the tenns of the County Lease. The agency responsible for considering and approving changes of organization (including annexations) in Sacramento County, the Sacramento Local Agency Fonnation Commission ("Commission"), heard the District's annexation application on August 6, 2014 but took no action. The Commission directed the matter be brought back for further consideration after the District has established an overall plan for resolving the financial condition of the Project. Operation and Maintenance Reserve Fund and Administrative Expense Fund The Trust Agreement establishes an Operation and Maintenance Reserve Fund (the "0 & M Reserve") and an Administrative Expense Fund, each held and administered by the Trustee. Moneys in the 0 & M Reserve may be applied to pay for unforeseen or unbudgeted Operation and Maintenance Expenses or Administrative Expenses. Certificate proceeds in the amount of $500,000 were deposited in the 0 & M Reserve on the closing date for the Certificates. As of October 31, 2014, $180,323 was on deposit in the 0 & M Reserve. Such moneys are available to pay property taxes and other costs of the Project. The Trust Agreement requires the District to maintain $250,000 in the 0 & M Reserve. Certificate proceeds in the amount of $300, were deposited to the Administrative Expense Fund on the closing date for the Certificates. Moneys in the Administrative Expense Fund may be applied to pay for repainting and re-carpeting, and, at the direction of the District, operation and maintenance expenses, and administrative expenses or to pay principal and interest on the Certificates in the event of deficiency in the Installment Payment Fund which the Debt Service Fund is insufficient or unavailable to cover. As of October 31, 2014, $3,775 was on deposit in the Administrative Expense Fund. In addition, the District did not make the deposit of $202,200 to this fund as required by the Trust Agreement for the payment of Operation and Maintenance Expenses and Administrative Expenses on February 1, 2012; the $206,289 as required on February 1, 2013; or the $210,468 as required on February 1, Sections 7.1 through 7.6 of Article 7 (Maintenance and Service) of the County Lease obligates the District to provide maintenance or service, at its sole cost, to maintain and service the interior and exterior of the Project in good order and repair. The estimated cost of repairs could exceed the amounts of the funds in the 0 & M Reserves and may necessitate the use of monies in the Administrative Expense Fund, which has not been replenished as required by the Trust Agreement due to the lack of cash flow. Reserve Fund A Reserve Fund in the amount of $350,000 was originally established for the Senior Lien Certificates. The last maturity of the outstanding Senior Lien Certificates matured on February 1, 2013 and, after that date, the Reserve Fund became available to make payments on the Junior Lien Certificates. As of October 31, 2014, the Reserve Fund had a balance of$460,

4 Non Payment of Property Taxes Under the County Lease, the District is obligated to pay all property taxes associated with the Project. Due to insufficient funds on deposit in the Administrative Expense Fund, the District has failed to pay property taxes on the Project since 2009 and current property taxes and associated penalties with respect to the Project are estimated to be $854,000 as of September 30, This represents property taxes due for FY , FY , FY , FY , FY and all associated penalties and interest. On October 15, 2014, the District received a property tax bill for FY in the amount of $66, Failure to pay property taxes is an event of default under the County Lease and could result in an event of default under the Installment Sale Agreement. A failure to bring property taxes current could result in a property tax sale of the Project as early as July 1, On August 14, 2014, the Trustee sent to the Owners ofthe Certificates a Notice of Event of Default. That notice stated that the "Trustee hereby notifies you that an Event of Default has occurred and is continuing by reason of the District's failure to make required payment of real property taxes as due." Among its obligations under the Installment Sale Agreement, the District is required under Section 6.01 to pay all taxes assessed against the property when they become due. The Trustee further noted that "after five or more years of delinquency, property will be considered tax-defaulted and become subject to the Sacramento County Tax Collector's Power of Sale and may be sold at a tax sale." Failure to make any payment required to be paid under the Installment Sale Agreement when due constitutes an Event of Default under Section 10.02(i) of the Installment Sale Agreement and therefore an Event of Default under the Trust Agreement. The Trustee filed a Follow Up to Notice of Event of Default on October 2, 2014 requesting "[Bondholders] provide expressions of interest in forming an informal Bondholder's Ad Hoc Committee." Copies of all notices can be reviewed on the EMMA website at Additional Security Concerns Gross Revenues are the sole source of payment for the Certificates. Proposition 218 prohibits the District from using moneys in any of its enterprise funds to make any payments with respect to the Certificates or the Project. There are extremely limited District resources legally available to pay debt service on the Certificates, operation and maintenance costs with respect to the Project and to pay property taxes for the Project. The District originally acquired the Project in 1998 for $12,609,698. The District has not undertaken an MAl appraisal of the Project, but believes that the value of the Project is currently less than the original purchase price and less than the principal amount of Certificates outstanding. The District does not believe that it could obtain sufficient proceeds to prepay the Certificates in whole should the Project be sold. Limitation on Enforcement of Remedies - 4-

5 The enforcement of any remedies provided in the Installment Sale Agreement and the Trust_ Agreement could prove both expensive and time consuming. Although the Installment Sale Agreement provides that the Trustee may have such rights of access to the Project as may be necessary to exercise any remedies, portions of the Project may not be easily recoverable and could be of little value to others. Additionally, because the County is not in default under the County Lease, the exercise of such remedies may not be available to the extent such exercise would interfere with the County's quiet use and enjoyment of the Project. The Trust Agreement specifies that no Owner of Junior Lien Certificates shall have the right to institute any action, suit or proceeding to enforce any remedy unless the conditions set forth in the Trust Agreement have been satisfied. As of the date of this Notice, these conditions have not been met. The District has not yet determined the course of action to be taken with respect to the 2003 Corporation Subordinate Lien COPs. The District is working cooperatively with the Trustee in the Trustee's attempts to form a committee of the Owners of the Certificates. Depending on the extent of interest of the Owners of the Certificates in participation, the District may consider initiating a statutory process that allows for mediation among the interested parties of the Junior Lien Certificates. Enterprise Fund Securities Repayment of the securities described in Schedule B (the "Enterprise Fund Securities") attached hereto are not directly impacted by the Project's financial difficulties. These securities are secured by and payable from certain enterprise revenues, which are legally restricted and payable independently of funds available in the Susie Gaines Mitchell Building Fund. The District does not anticipate that the payment on the obligations secured by water enterprise revenue previously issued by the District will be negatively impacted. Certain statements contained in this Notice do not reflect historical facts but are forecasts and "forward looking statements. " No assurance can be given that future events and results discussed herein will transpire or be achieved, and actual events and results may differ materially from the events and forecasts described herein. In this respect, the words "estimate," 'forecast, " "project," "anticipate, " "expect," "intend," ''plan, " "believe, " "predict" and similar expressions are intended to identify forward looking statements. All projections, forecasts, assumptions, predictions and other forward looking statements are expressly qualified in their entirety by this cautionary statement. Dated: December 3, 2014 ~~ MARK J. MADISON GENERAL MANAGER FLORIN RESOURCE CONSERVATION DISTRICT - 5-

6 SCHEDULE A Florin Resource Conservation District Subordinate Lien Refunding Certificates of Participation Office Building, Series 2003 B Maturi!! Date 02/01/ /01/ /01/ /01/ /01/ /01 / /01 / /01/ /01 / / /01 / /01/ /01 / /0 1/ /01/ /0 1/ /0 1/ /0 1/ /01 / /0 1/ /01 /2029 COUI!On Princil!al CUSIP Reference , GM9 Certificate GN7 Certificate , GP2 Certificate , GQO Certificate GR8 Certificate , GS6 Certificate , GT4 Certificate GU1 Certificate GV9 Certificate GW7 Certificate , GX5 Certificate , GY3 Certificate GZO Certificate , HA4 Certificate , HB2 Certificate , HCO Certificate HD8 Certificate HE6 Certificate , HF3 Certificate , HG1 Certificate , HH9 Certificate Maturit! Date 08/01/ / /01 / /01/ /01/ /01/ /01 / /01/ /01/ /01/2028 Yield To Original Accreted CUSIP Reference Maturi!! Princil!a1 Value 7.000% HJ5 Certificate 7.000% , HK2 Certificate 7.125% HLO Certificate % 151, , HM8 Certificate 7.250% 152, , HN6 Certificate 7.250"/o HPJ Certificate 7.375% 141, HQ9 Certificate 7.375% , HR7 Certificate 7.500"/o 128, , HS5 Certificate 7.500% 123, HT3 Certificate Note: The CUSIP numbers set forth above are provided for the convenience of the owners ofthe above-referenced certificates of participation. The District is not responsible for the accuracy or completeness of the CUSIP numbers

7 SCHEDULED Enterprise Fund Securities The following securities are secured by and payable from certain enterprise revenues, which are legally restricted and payable independently of funds available in the District's Susie Gaines Mitchell Building Fund. Name of Issue Florin Resource Conservation District Capital Improvement Certificates of Participation, Elk Grove Water Service, Series 2005A Capital Improvement Certificates of Participation, Elk Grove Water Service, Series 2003 A Refunding Certificates of Participation, Elk Grove Water Service, Series 2002 A Refunding Certificates of Participation,.Elk Grove Water Service, Series 2002 B Maturity Dates Through Base CUSIP September I, September I, March I, March I, Note: The CUSIP numbers set forth above are provided for the convenience of the owners of the above-referenced certificates of participation. The District is not responsible for the accuracy or completeness of the CUSIP numbers. Schedule B