COUNTY OF EL DORADO COMMUNITIES FACILITIES DISTRICT NO (Blackstone) $20,920, SERIES A SENIOR LIEN SPECIAL TAX BONDS

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1 NEW ISSUE RATINGS: AGM INSURED BONDS: S&P: AA SENIOR BONDS UNDERLYING RATING: S&P: BBB See RATINGS herein JUNIOR (SUBORDINATE) BONDS NOT RATED OR INSURED In the opinion of Jones Hall, A Professional Law Corporation, San Francisco, California, Bond Counsel, subject, however to certain qualifications described herein, under existing law, the interest on the Bonds is excluded from gross income for federal income tax purposes and such interest is not an item of tax preference for purposes of the federal alternative minimum tax imposed on individuals and corporations, although for the purpose of computing the alternative minimum tax imposed on certain corporations, such interest is taken into account in determining certain income and earnings. In the further opinion of Bond Counsel, such interest is exempt from California personal income taxes. See "LEGAL MATTERS - Tax Exemption." Dated: Date of Delivery COUNTY OF EL DORADO COMMUNITIES FACILITIES DISTRICT NO (Blackstone) $20,920, SERIES A SENIOR LIEN SPECIAL TAX BONDS $7,210, SERIES B JUNIOR LIEN SPECIAL TAX BONDS Due: September 1, as shown on inside cover The County of El Dorado Communities Facilities District No (Blackstone) 2016 Series A Senior Lien Special Tax Bonds (the Senior Lien Bonds ), the County of El Dorado Communities Facilities District No (Blackstone) 2016 Series B Junior Lien Special Tax Bonds (the Junior Lien Bonds, and together with the Senior Lien Bonds, the Bonds ) are being issued under the Mello-Roos Community Facilities Act of 1982, as amended (the Act ) and as to each series a separate Fiscal Agent Agreement, each dated as of July 1, 2016 (together, the Fiscal Agent Agreements ), by and between the County of El Dorado (the County ) and The Bank of New York Mellon Trust Company, N.A., as fiscal agent (the Fiscal Agent ), and are payable from proceeds of Special Taxes (as defined herein) levied on property within the County of El Dorado Communities Facilities District No (Blackstone) (the District ) according to the rate and method of apportionment of special tax approved by the qualified electors of the District and by the Board of Supervisors of the County, as legislative body of the District. The Bonds are being issued to (i) refund the District s outstanding County of El Dorado Community Facilities District No (Blackstone) Special Tax Bonds Series 2005, (ii) purchase a reserve fund insurance policy for the Senior Lien Bonds and establish a cash debt service reserve fund for the Junior Lien Bonds, (iii) finance capital improvements of benefit to property in the District, and (iv) pay the costs of issuing the Bonds. See FINANCING PLAN. Interest on the Bonds is payable on March 1, 2017, and semiannually thereafter on each March 1 and September 1. The Bonds will be issued in denominations of $5,000 or integral multiples of $5,000. The Bonds, when delivered, will be initially registered in the name of Cede & Co., as nominee of The Depository Trust Company ( DTC ), New York, New York. DTC will act as securities depository for the Bonds. See THE BONDS General Bond Terms and APPENDIX F DTC and the Book-Entry Only System. The Bonds are subject to optional redemption, mandatory sinking fund redemption, and special mandatory redemption from prepaid Special Taxes. See THE BONDS - Redemption. The Bonds are special limited obligations of the County. The Senior Lien Bonds are payable from Special Tax Revenues (as defined herein), consisting primarily of the proceeds of special taxes levied and collected by the County on properties within the District, as described herein. The Junior Lien Bonds are payable from Special Tax Revenues, subordinate to the lien of the Senior Lien Bonds. Ownership of the Junior Lien Bonds is subject to a significant degree of risk. The Junior Lien Bonds are not rated by any national rating agency. Accordingly, there may be a limited trading market for the Junior Lien Bonds. Potential investors are advised to read carefully the section entitled SPECIAL RISK FACTORS. The scheduled payment of principal of and interest on the Senior Lien Bonds maturing on September , (the Insured Bonds ), when due will be guaranteed under an insurance policy to be issued concurrently with the delivery of the Insured Bonds by ASSURED GUARANTY MUNICIPAL CORP. See BOND INSURANCE and APPENDIX H Specimen Municipal Bond Insurance Policy herein. MATURITY SCHEDULE (see inside cover) The Bonds, the interest thereon, and any premiums payable on the redemption of any of the Bonds, are not an indebtedness of the County, the State of California (the "State") or any of its political subdivisions, and neither the County (except to the limited extent described herein), the State nor any of its political subdivisions is liable on the Bonds. Neither the faith and credit nor the taxing power of the County (except to the limited extent described herein) or the State or any political subdivision thereof is pledged to the payment of the Bonds. Other than the Special Taxes, no taxes are pledged to the payment of the Bonds. The Bonds are not a general obligation of the County, but are limited obligations of the County payable solely from the Special Taxes as more fully described herein. This cover page contains certain information for quick reference only. Potential investors must read this entire Official Statement to obtain information essential for making an informed investment decision. Investment in the Bonds involves risks that may not be appropriate for some investors. See SPECIAL RISK FACTORS for a discussion of special risk factors that should be considered in evaluating the investment quality of the Bonds. The Bonds are offered when, as and if issued by the County and accepted by the Underwriter, subject to approval as to their legality by Jones Hall, A Professional Law Corporation, San Francisco, California, Bond Counsel, and subject to certain other conditions. Jones Hall has also served as disclosure counsel to the County. Certain matters will be passed upon for the County by the County Counsel. Certain matters will be passed upon for the Underwriter by its counsel, Stradling, Yocca, Carlson & Rauth, a Professional Corporation, Newport Beach, California. It is anticipated that the Bonds, in book-entry form, will be available for delivery through the facilities of DTC on or about July 28, The date of this Official Statement is: July 21, 2016.

2 MATURITY SCHEDULE SERIES A SENIOR LIEN BONDS $ 15,690,000 Serial Bonds Maturity Principal Interest CUSIP (September 1) Amount Rate Yield Price (283113) 2017 $520, % 0.750% FZ , GA , GB , GC , GD , GE , GF , GG , GH , HJ ,000, GJ ,055, C GK ,140, C GL ,225, C GM ,325, C GN ,425, C GP ,530, C GQ5 $5,230,000 Term Bond* $5,230, % Term Bond due September 1, 2035, Price: % C ; Yield: 2.720%; CUSIP GR3 SERIES B JUNIOR LIEN BONDS $5,150,000 Serial Bonds Maturity Principal Interest CUSIP (September 1) Amount Rate Yield Price (283113) 2017 $285, % 0.780% GS , GT , GU , GV , GW , GX , GY , GZ , HA , HB , HC , HD , HE , HF , HG6 $2,060,000 Term Bond $2,060, % Term Bond due September 1, 2035, Price: % C ; Yield: 3.000%; CUSIP HH4 C: Priced to the first optional redemption date of September 1, 2026, at par. * Insured Bond. Copyright 2016, American Bankers Association. CUSIP data are provided by Standard & Poor s CUSIP Service Bureau, a division of The McGraw-Hill Companies, Inc., and are provided for convenience of reference only. Neither the County, the District or the Underwriter make any representation as to the occurrence of the CUSIP information.

3 COUNTY OF EL DORADO, CALIFORNIA Board of Supervisors Ron Mikulaco, District No. 1 Shiva Frentzen, District No. 2 Brian Veerkamp, District No. 3 Michael Ranalli, District No. 4 Sue Novasel, District No. 5 County Officials Karl Weiland, Assessor Joe Harn, Auditor-Controller C.L. Raffety, Treasurer-Tax Collector County Staff Don Ashton, Chief Administrative Officer Michael Ciccozzi, County Counsel Steve Pedretti, Director of Community Development Agency SPECIAL SERVICES Bond Counsel Jones Hall, a Professional Law Corporation San Francisco, California Fiscal Agent The Bank of New York Mellon Trust Company, N.A. Los Angeles, California District Administrator NBS Government Finance Group Temecula, California Appraiser Seevers Jordan Ziegenmeyer Rocklin, California Verification Agent Causey Demgen & Moore P.C. Denver, Colorado Disclosure Counsel Jones Hall, A Professional Law Corporation San Francisco, California

4 GENERAL INFORMATION ABOUT THIS OFFICIAL STATEMENT Use of Official Statement. This Official Statement is submitted in connection with the sale of the Bonds referred to herein and may not be reproduced or used, in whole or in part, for any other purpose. This Official Statement is not to be construed as a contract with the purchasers of the Bonds. Statements contained in this Official Statement which involve estimates, forecasts or matters of opinion, whether or not expressly so described herein, are intended solely as such and are not to be construed as a representation of facts Estimates and Forecasts. When used in this Official Statement and in any continuing disclosure by the Authority or the County, in any press release and in any oral statement made with the approval of an authorized officer of the Authority or the County, the words or phrases "will likely result," "are expected to," "will continue," "is anticipated," "estimate," "project," "forecast," "expect," "intend" and similar expressions may identify "forward looking statements." Such statements are subject to risks and uncertainties that could cause actual results to differ materially from those contemplated in such forward-looking statements. Any forecast is subject to such uncertainties. Inevitably, some assumptions used to develop the forecasts will not be realized and unanticipated events and circumstances may occur. Therefore, there are likely to be differences between forecasts and actual results, and those differences may be material. The information and expressions of opinion herein are subject to change without notice, and neither the delivery of this Official Statement nor any sale made hereunder shall, under any circumstances, give rise to any implication that there has been no change in the affairs of the Authority or the County since the date hereof. The information and expressions of opinions herein are subject to change without notice and neither delivery of this Official Statement nor any sale made hereunder shall, under any circumstances, create any implication that there has been no change in the affairs of the County or the Authority since the date hereof. All summaries of the Trust Agreement or other documents referred to in this Official Statement, are made subject to the provisions of such documents, respectively, and do not purport to be complete statements of any or all of such provisions. Limit of Offering. No dealer, broker, salesperson or other person has been authorized by the Authority or the Underwriter to give any information or to make any representations other than those contained herein and, if given or made, such other information or representation must not be relied upon as having been authorized by any of the foregoing. This Official Statement does not constitute an offer to sell or the solicitation of an offer to buy nor shall there be any sale of the Bonds by a person in any jurisdiction in which it is unlawful for such person to make such an offer, solicitation or sale. This Official Statement is not to be construed as a contract with the purchasers of the Bonds. Involvement of Underwriter. The Underwriter has provided the following sentence for inclusion in this Official Statement. The Underwriter has reviewed the information in this Official Statement in accordance with, and as a part of, its responsibilities to investors under the federal securities laws as applied to the facts and circumstances of this transaction, but the Underwriter does not guarantee the accuracy or completeness of such information. Bond Insurance. Assured Guaranty Municipal Corp. ( AGM ) makes no representation regarding the Bonds or the advisability of investing in the Bonds. In addition, AGM has not independently verified, makes no representation regarding, and does not accept any responsibility for the accuracy or completeness of this Official Statement or any information or disclosure contained herein, or omitted herefrom, other than with respect to the accuracy of the information regarding AGM supplied by AGM and presented under the heading BOND INSURANCE and Appendix H Specimen Municipal Bond Insurance Policy. IN CONNECTION WITH THIS OFFERING, THE UNDERWRITER MAY OVERALLOT OR EFFECT TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE BONDS OFFERED HEREBY AT A LEVEL ABOVE THAT WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN MARKET. SUCH STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME. THE UNDERWRITER MAY OFFER AND SELL THE BONDS TO CERTAIN DEALERS, INSTITUTIONAL INVESTORS AND OTHERS AT PRICES LOWER THAN THE PUBLIC OFFERING PRICE STATED ON THE COVER PAGE HEREOF AND SAID PUBLIC OFFERING PRICE MAY BE CHANGED FROM TIME TO TIME BY THE UNDERWRITER. THE BONDS HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, IN RELIANCE UPON AN EXCEPTION FROM THE REGISTRATION REQUIREMENTS CONTAINED IN SUCH ACT. THE BONDS HAVE NOT BEEN REGISTERED OR QUALIFIED UNDER THE SECURITIES LAWS OF ANY STATE. The County maintains an Internet website, but the information it contains is not incorporated in this Official Statement.

5 TABLE OF CONTENTS Page INTRODUCTION... 1 FINANCING PLAN... 5 Refunding Plan... 5 Estimated Sources and Uses of Funds... 6 THE BONDS... 7 Authority for Issuance... 7 Description of the Bonds... 7 Redemption... 8 Transfer or Exchange of Bonds SECURITY FOR THE BONDS General Special Taxes Special Tax Methodology Levy of Annual Special Tax; Maximum Annual Special Tax Delinquent Payments of Special Tax; Covenant for Superior Court Foreclosure Reserve Funds Special Tax Fund Redemption Fund Community Facilities Fund Additional Bonds DEBT SERVICE SCHEDULES BOND INSURANCE THE DISTRICT Location of the District Master Developer Completed and Anticipated Development Infrastructure Improvements Measure E Slow Growth Initiative on June 2016 Ballot Water Availability Completed Development The Homebuilders SPECIAL TAX REVENUE AND ESTIMATED VALUE OF PROPERTY IN THE DISTRICT.. 40 Assessed Valuation Appraisal of Certain Parcels Special Tax Revenue Special Tax Collection and Delinquency Rate Value to Special Tax Burden Ratios Direct and Overlapping Governmental Obligations Page Estimated Tax Burden on Single Family Home SPECIAL RISK FACTORS Concentration of Property Ownership Failure or Inability to Complete Proposed Development on a Timely Basis Disclosures to Future Purchasers Impact Fees Litigation - Austin v. County of El Dorado Future Land Use Regulations California Drought; State of Emergency Proclamation Water Reports Potential Impact of Water Shortage Earthquakes Endangered Species Hazardous Substances Naturally Occurring Asbestos Direct and Overlapping Public Indebtedness Private Indebtedness Collection of Special Tax Maximum Annual Special Tax Rates No Rating of Junior Lien Bonds Exempt Properties FDIC/Federal Government Interests in Properties Bankruptcy and Foreclosure Delays No Acceleration Provision Loss of Tax Exemption Ballot Initiatives Absence of Secondary Market for the Bonds Recent Case Law Related to the Mello-Roos Act LEGAL MATTERS Legal Opinions Tax Exemption No Litigation CONTINUING DISCLOSURE RATINGS UNDERWRITING PROFESSIONAL FEES EXECUTION APPENDIX A General Information about the County of El Dorado APPENDIX B Rate and Method of Apportionment APPENDIX C The Appraisal APPENDIX D Forms of County Continuing Disclosure Certificate and Developer Continuing Disclosure Certificate APPENDIX E Form of Opinion of Bond Counsel APPENDIX F DTC and the Book-Entry Only System APPENDIX G Summary of Certain Provisions of the Fiscal Agent Agreements APPENDIX H Specimen Municipal Bond Insurance Policy

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7 OFFICIAL STATEMENT COUNTY OF EL DORADO COMMUNITIES FACILITIES DISTRICT NO (Blackstone) $20,920, SERIES A SENIOR LIEN SPECIAL TAX BONDS $7,210, SERIES B JUNIOR LIEN SPECIAL TAX BONDS This Official Statement, including the cover page, inside cover and attached appendices, is provided to furnish information regarding the bonds captioned above (the Bonds ) to be issued by the County of El Dorado (the County ) on behalf of the County of El Dorado Community Facilities District No (Blackstone) (the District ). Any statements made in this Official Statement involving matters of opinion or of estimates, whether or not so expressly stated, are set forth as such and not as representations of fact, and no representation is made that any of the estimates will be realized. Definitions of certain terms used herein and not defined herein have the meaning set forth in the Fiscal Agent Agreement. INTRODUCTION This introduction is not a summary of the entire Official Statement. It is only a brief description of and guide to, and is qualified by, more complete and detailed information contained throughout the Official Statement, including the cover page, inside cover and attached appendices, and documents summarized or described in this Official Statement. A full review should be made of the entire Official Statement. The offering of the Bonds to potential investors is made only by means of the entire Official Statement. Authority for Issuance of the Bonds. The Bonds are being issued pursuant to the provisions of the Mello-Roos Community Facilities Act of 1982, as amended (Sections 53311, et seq., of the Government Code of the State of California) (the Act ); two separate Fiscal Agent Agreements, each dated as of July 1, 2016 (the Senior Lien Fiscal Agent Agreement and the Junior Lien Fiscal Agent Agreement, and together, the Fiscal Agent Agreements ), by and between the County and The Bank of New York Mellon Trust Company, N.A. (the Fiscal Agent ); and Resolution No (the Resolution ) adopted on June 28, 2016 by the Board of Supervisors of the County (the Board of Supervisors ). The authorized amount of bonds for the District was set in 2005 at a maximum of $35,000,000, $32,655,000 of which has been previously issued. Following the issuance of the Bonds which includes $2,345,000 representing new money, no new money capacity will remain. Additional bonds limited only to 1

8 refunding bonds are allowed to be issued in the future under the Fiscal Agent Agreements. See THE BONDS Additional Bonds. The County. The County is located in northern California adjacent to Sacramento County. For economic and demographic information regarding the area in and around the County, see APPENDIX A General Information about the County of El Dorado. The Bonds are not an obligation of the general fund of the County. Description of the Bonds. The Bonds will be issued in denominations of $5,000 or any integral multiple of $5,000. Interest is payable semiannually on each March 1 and September 1, commencing March 1, See THE BONDS. The Bonds will be initially issued only in book-entry form and registered to Cede & Co. as nominee of The Depository Trust Company, New York, New York ( DTC ), which will act as securities depository of the Bonds. Principal and interest (and premium, if any) on the Bonds is payable by the Trustee to DTC, which remits such payments to its Participants for subsequent distribution to the registered owners as shown on the Trustee s books. Use of Proceeds. Proceeds of the Bonds will be used primarily to refund the outstanding County of El Dorado Community Facilities District No (Blackstone) Special Tax Bonds Series 2005 issued on August 3, 2005 in the original principal amount of $32,655,000 (the Prior Bonds ). Proceeds of the Prior Bonds were primarily used to finance the costs of acquiring certain public infrastructure improvements necessary for development of property within the District, and such proceeds have been expended for completed improvements. The Prior Bonds have an outstanding principal balance of $28,920,000 as of June 1, New money proceeds of the Bonds will be used to finance water, recycled water and wastewater facility capacity charges of El Dorado Irrigation District relating to continued development of property within the District. Bond proceeds will also be used to establish debt service reserve funds and to pay costs of issuance. See FINANCING PLAN. Redemption of Bonds Before Maturity. The Bonds are subject to optional redemption, mandatory sinking fund redemption, and special mandatory redemption from prepaid Special Taxes. See THE BONDS Redemption. Formation of the District. The District was formed pursuant to Resolution No adopted March 8, 2005 by the Board of Supervisors of the County, as legislative body of the District, under the Mello-Roos Community Facilities Act of 1982, as amended (the Act ) following a public hearing and landowner election at which the qualified electors of the District (being four developer entities) authorized the County to incur bonded indebtedness for the District in an amount not to exceed $35,000,000 and approved the levy of special taxes according to a Rate and Method of Apportionment (described herein). The District. The District encompasses the partially developed master planned community known as Blackstone, located in the unincorporated community of El Dorado Hills in southwestern El Dorado County, California. The District is located south of U.S. Highway 50, approximately 23 miles east of Sacramento. The nearest city is Folsom, to the west. See THE DISTRICT. Security and Sources of Payment for the Bonds. The Board of Supervisors annually levies special taxes on property in the District (the Special Taxes ) in accordance with the Rate 2

9 and Method of Apportionment for County of El Dorado Community Facilities District No (Blackstone) (as amended, the Rate and Method ), which is attached as APPENDIX B hereto. The Senior Lien Bonds are secured by and payable from a first pledge of Special Tax Revenues. Special Tax Revenues are proceeds of the Special Taxes received by the County, including any scheduled payments thereof, interest and proceeds of the redemption or sale of property sold as a result of foreclosure of the lien of the Special Taxes to the amount of said interest (but not including any interest in excess of the interest due on the Bonds or any penalties collected in connection with any such foreclosure). See SECURITY FOR THE BONDS - Special Tax Methodology. The Junior Lien Bonds are payable from Special Tax Revenues, subordinate to the lien of the Senior Lien Bonds. See SECURITY FOR THE BONDS - Special Tax Fund. The Senior Lien Bonds are sized so that the Maximum Annual Special Tax Revenues from homes completed as of June 1, 2016 would support more than 100% of the Senior Lien Bonds debt service. (See the Special Tax Levy by Land Use table in SPECIAL TAX REVENUE AND ESTIMATED VALUE OF PROPERTY IN THE DISTRICT - Special Tax Revenue and the 2016 Senior Lien and Junior Lien Special Tax Bonds Debt Service Coverage in DEBT SERVICE SCHEDULES ). Pursuant to the Act, the Resolution of Formation (as defined herein), and the Fiscal Agent Agreements, so long as any Bonds are outstanding, the County will annually levy the Special Tax against all land within the District taxable under the Act and the Rate and Method in accordance with the proceedings for the authorization and issuance of the Bonds and to make provision for the collection of the Special Tax in amounts which will be sufficient to pay interest on, principal of and redemption premium (if any) on the Bonds as such becomes due and payable and to replenish the Reserve Funds (as defined herein) as necessary. See SECURITY FOR THE BONDS - Special Taxes herein. Unpaid Special Taxes do not constitute a personal indebtedness of the owners of any of the parcels within the District. In the event of delinquency, proceedings may be conducted only against the real property on which the Special Tax is delinquent. The unpaid Special Taxes are not required to be paid upon sale of property within the District. Value Estimate of Property in the District. In connection with valuing property in the District, the County reports that the FY County assessed valuation (the Assessed Valuation ) of the property in the District is $363,129,665; including $302,199,876 attributable to the 604 parcels with improvement value as of the January 1, 2015 lien date for the FY15-16 roll. In order to provide an alternate valuation of certain parcels in the District, the County ordered preparation of an appraisal report of the not-less-than estimated market value of all parcels without an improvement value on the FY15-16 assessment roll. In total, 862 parcels were appraised, consisting of 29 unimproved custom lots, 109 partially improved production lots, 407 finished production lots, 62 partially completed homes and 255 completed single-family homes not assessed for an improvement value on the County property tax roll as described herein under the caption VALUE ESTIMATE OF PROPERTY WITHIN THE DISTRICT. Based on the Assessed Valuation and the appraised valuation, the estimated Composite Value of property in the District is as follows: 3

10 Number of Planned Homes FY15-16 Assessed Value Appraised Composite Parcels Value Value Completed homes on FY15-16 roll (1) 604 $ 302,109,876 N/A $ 302,109,876 Appraised parcels ,019, ,270, ,270,000 1,466 $ 363,129,665 $261,270,000 $ 563,379,876 (1) Includes all parcels with an improvement value of at least $40,000 on the FY15-16 roll. Source: NBS for assessed values, Seevers Jordan Ziegenmeyer for the appraised value. Based on an issuance of the Bonds in the aggregate principal amount of $28,130,000, the aggregate ratio of the estimated Total Composite Value to the principal amount of the Bonds is approximately 20:1 and to the principal amount of the Bonds plus overlapping debt is approximately 17:1. Debt Service Reserve Fund. A debt service reserve fund (the Reserve Fund ) will be established for each series of the Bonds in order to further secure the payment of their respective principal and interest. The County will utilize a reserve fund insurance policy issued by Assured Guaranty Municipal Corp. ( AGM ) in an amount equal to the Reserve Requirement (as defined herein) for the Senior Lien Bonds. See SECURITY FOR THE BONDS - Reserve Funds. Covenant to Foreclose. The County has covenanted in the Fiscal Agent Agreements to cause foreclosure proceedings to be commenced and prosecuted against certain parcels with delinquent installments of the Special Taxes. For a more detailed description of the foreclosure covenant see SECURITY FOR THE BONDS - Delinquent Payments of Special Tax; Covenant for Superior Court Foreclosure. Risk Factors Associated with Purchasing the Bonds. See the section of this Official Statement entitled SPECIAL RISK FACTORS for a discussion of special factors that should be considered, in addition to the other matters set forth herein, in considering the investment quality of the Bonds. Ownership of the Junior Lien Bonds, in particular, is subject to a significant degree of risk that may not be appropriate for some investors. The Junior Lien Bonds are not rated by any national rating agency and will not be insured by any bond insurance provider. Bond Insurance. Concurrently with the issuance of the Bonds, AGM will issue its municipal bond insurance policy (the Policy ) for the Senior Lien Bonds term bond maturing on September 1, 2035 (the Insured Bonds ). The Policy guarantees the scheduled payment of principal of and interest on the Insured Bonds when due as set forth in the form of the Policy. The Policy is not covered by any insurance security or guaranty fund established under New York, California, Connecticut or Florida insurance law. See BOND INSURANCE and APPENDIX H attached hereto. 4

11 FINANCING PLAN Refunding Plan The County issued the Prior Bonds for the purpose of financing a portion of the costs of acquiring and constructing certain public infrastructure improvements (the Facilities ). The Facilities generally consist of water, wastewater, roadway and other infrastructure improvements necessary for residential development of property in the District. The Facilities financed by the Prior Bonds are complete. Proceeds of the Bonds will be used primarily to refund the outstanding County of El Dorado Community Facilities District No (Blackstone) Special Tax Bonds Series 2005 issued on August 3, 2005 in the original principal amount of $32,655,000 (the Prior Bonds ). Proceeds of the Prior Bonds were used to finance a now completed portion of the Facilities. The Prior Bonds have an outstanding principal balance of $28,920,000 as of June 1, Bond proceeds will also be used to provide funds for the reserve fund insurance policy issued by AGM for the Senior Lien Bonds, establish a cash debt service reserve fund for the Junior Lien Bonds and to pay costs of issuance. A portion of the proceeds of the Bonds and a portion of the reserve fund from the Prior Bonds will also be used to provide reimbursement to West Valley, LLC, the master developer of the project, for El Dorado Irrigation District ( EID") water, recycled water and wastewater facility capacity charges not reimbursed from the Prior Bonds. The Fiscal Agent will establish and maintain an Acquisition and Construction Fund, into which fund amounts shall be deposited to be used for financing the acquisition and construction of the Facilities, including payment of costs incidental to or connected with financing such acquisition and construction, or for the repayment of funds advanced to or for the District. The outstanding Prior Bonds will be redeemed in full on September 1, 2016 (the Redemption Date ), at a redemption price equal to 100% of their principal amount, together with interest thereon to the Redemption Date. Upon delivery of the Bonds, the County will direct the fiscal agent for the Prior Bonds to utilize a portion of the proceeds of the Bonds to pay the principal of and interest on the Prior Bonds on the Redemption Date. 5

12 Estimated Sources and Uses of Funds The sources and uses of funds relating to the Bonds and Prior Bonds are shown below. Senior Lien Bonds Junior Lien Bonds [5] Sources Total Principal Amount of Bonds $20,920, $7,210, $28,130, Plus: Net Premium 2,867, , ,265, Plus: Funds Related to Prior Bonds 3,901, ,901, Total Sources $27,688, $7,608, $35,297, Uses Refunding of Prior Bonds [1] $25,069, $4,588, $29,658, Junior Lien Bonds Reserve Fund [2] , , Costs of Issuance [3] 657, , , Acquisition and [4] Construction Fund 1,962, ,213, ,175, Total Uses $27,688, $7,608, $35,297, [1] Will be used to prepay the Prior Bonds on September 1, See Refunding Plan above. [2] Equals the Reserve Requirement on the date of delivery of the Junior Lien Bonds; the Senior Lien Bonds reserve is in the form of a reserve insurance policy. See SECURITY FOR THE BONDS - Reserve Funds. [3] Includes, among other things, the fees and expenses of Bond Counsel and Disclosure Counsel, Fiscal Agent, Bond insurance premium, reserve surety premium, District Administrator, the Underwriter s discount, Rating Agency, and the costs of printing the preliminary and final Official Statement. [4] Includes $1,962, released from the reserve fund established for the Prior Bonds. [5] Includes $2,345,000 of principal for new money purposes attributable to the remaining bond authorization. 6

13 THE BONDS This section generally describes certain of the terms of the Bonds contained in the Fiscal Agent Agreements. Authority for Issuance The Bonds are issued pursuant to the Fiscal Agent Agreements, approved by a resolution adopted by the Board of Supervisors on June 28, 2016, and the Act. On March 8, 2005, the County Board of Supervisors adopted Resolution No (the Resolution of Formation ), which formed the District. At a special election in the District held on the same day, the District was authorized to incur bonded indebtedness in an aggregate principal amount not to exceed $35,000,000. Under the provisions of the Act, since there were fewer than 12 registered voters residing within the District at a point during the 90-day period preceding the adoption of the Resolution of Formation, the qualified electors entitled to vote in the special election consisted of developer entities, who cast one vote for each gross acre or portion of an acre of land owned within the District. The landowners voted to incur the indebtedness and to approve the annual levy of Special Taxes to be collected within the District. On June 28, 2005, the County Board of Supervisors adopted Resolution No which approved amendments to the Rate and Method. See THE DISTRICT herein. Description of the Bonds The Bonds are being issued as fully registered bonds, registered in the name of Cede & Co. as nominee of The Depository Trust Company, New York, New York ( DTC ), and will be available to ultimate purchasers in the denomination of $5,000 or any integral multiple thereof, under the book-entry system maintained by DTC. Ultimate purchasers of Bonds will not receive physical certificates representing their interest in the Bonds. So long as the Bonds are registered in the name of Cede & Co., as nominee of DTC, references herein to the Owners will mean Cede & Co., and will not mean the ultimate purchasers of the Bonds. Payments of the principal, premium, if any, and interest on the Bonds will be made directly to DTC, or its nominee, Cede & Co., so long as DTC or Cede & Co. is the registered owner of the Bonds. Disbursements of such payments to DTC s participants is the responsibility of DTC, and disbursements of such payments to the Beneficial Owners is the responsibility of DTC s participants and indirect participants, as more fully described in APPENDIX F to this Official Statement. The Bonds will be dated as of, and bear interest from, the date of their delivery at the rates contained, and mature in the amounts and years shown on the inside cover page of this Official Statement. The principal of, and any redemption premium due with respect to, the Bonds will be payable in lawful money of the United States of America at the principal corporate trust office of the Fiscal Agent in San Francisco, California, or such other place as designated by the Fiscal Agent, upon presentation and surrender of the Bonds. Interest on the Bonds, computed on the basis of a 360-day year consisting of twelve 30-day months, will be paid in lawful money of the United States of America semiannually on March 1 and September 1 of each year (each an Interest Payment Date ), commencing March 1,

14 Interest on the Bonds (including the final interest payment upon maturity or earlier redemption) is payable by check of the Fiscal Agent mailed on each Interest Payment Dates by first class mail to the registered Owner thereof at such registered Owner s address as it appears on the registration books maintained by the Fiscal Agent at the close of business on the 15th day of the calendar month preceding the Interest Payment Date (the Record Date ), or by wire transfer made on such Interest Payment Date upon written instructions received by the Fiscal Agent on or before the Record Date preceding the Interest Payment Date, of any Owner of $1,000,000 or more in aggregate principal amount of Bonds; provided that so long as any Bonds are in book-entry form, payments with respect to such Bonds will be made by wire transfer, or such other method acceptable by the Fiscal Agent, to DTC. See APPENDIX F DTC and the Book-Entry Only System. Each Bond will bear interest from the Interest Payment Date next preceding the date of authentication thereof unless (i) it is authenticated on an Interest Payment Date, in which event it will bear interest from such date of authentication, or (ii) it is authenticated prior to an Interest Payment Date and after the close of business on the Record Date preceding such Interest Payment Date, in which event it will bear interest from such Interest Payment Date, or (iii) it is authenticated prior to the Record Date preceding the first Interest Payment Date, in which event it will bear interest from the dated date; provided, however, that if at the time of authentication of a Bond, interest is in default thereon, such Bond will bear interest from the Interest Payment Date to which interest has previously been paid or made available for payment thereon. So long as the Bonds are registered in the name of Cede & Co., as nominee of DTC, payments of the principal, premium, if any, and interest on the Bonds will be made directly to DTC, or its nominee, Cede & Co. Disbursements of such payments to DTC s participants is the responsibility of DTC and disbursements of such payments to the Beneficial Owners is the responsibility of DTC s participants and indirect participants, as more fully described herein. See APPENDIX F DTC and the Book-Entry Only System. Redemption Senior Lien Bonds - Optional Redemption. The Senior Lien Bonds maturing on or after September 1, 2027 are subject to redemption prior to their stated maturities, at the option of the County, from any source of available funds, other than prepayments of Special Taxes, in whole or in part among maturities as selected by the County and by lot within a maturity, on any date on or after September 1, 2026, at a redemption price equal to 100% of the principal amount thereof to be redeemed together with accrued interest to the redemption date, without premium. Senior Lien Bonds - Redemption From Prepayments of Special Tax. Senior Lien Bonds also subject to mandatory redemption from prepayments of the Special Tax by property owners (which prepayments shall be allocated pro rata among the Senior Lien Bonds and Junior Lien Bonds), in whole or in part on a pro-rata basis according to principal among the Senior Lien Bonds, and among maturities therein, by lot within a maturity, on March 1, 2017 or on any Interest Payment Date thereafter, at the following respective redemption prices (expressed as percentages of the principal amount of the Senior Lien Bonds to be redeemed), plus accrued interest thereon to the date of redemption: 8

15 Redemption Dates Redemption Price On or after March 1, 2017 through March 1, % September 1, 2024 and March 1, September 1, 2025 and March 1, September 1, 2026 and thereafter 100 Senior Lien Bonds - Mandatory Sinking Fund Redemption. The Senior Lien Bond maturing September 1, 2035 is subject to mandatory sinking payment redemption in part on September 1, 2033 and on each September 1 thereafter to maturity, by lot, at a redemption price equal to 100% of their principal amount to be redeemed, without premium, in the aggregate respective principal amounts as set forth in the following table: $5,230,000 Term Senior Lien Bond Maturing September 1, 2035 Mandatory Redemption Date (September 1) Sinking Fund Payment 2033 $1,640, ,740, (Maturity) 1,850,000 Junior Lien Bonds - Optional Redemption. The Junior Lien Bonds maturing on or after September 1, 2027 are subject to redemption prior to their stated maturities, at the option of the County, from any source of available funds, other than prepayments of Special Taxes, in whole or in part among maturities as selected by the County and by lot within a maturity, on any date on or after September 1, 2026 at a redemption price equal to 100% of the principal amount thereof to be redeemed together with accrued interest to the redemption date, without premium. Junior Lien Bonds - Redemption From Prepayments of Special Tax. The Junior Lien Bonds are also subject to mandatory redemption from prepayments of the Special Tax by property owners (which prepayments shall be allocated pro rata among the Senior Lien Bonds and Junior Lien Bonds), in whole or in part on a pro-rata basis according to principal among the Junior Lien Bonds, and among maturities therein, by lot within a maturity, on March 1, 2017 or on any Interest Payment Date thereafter, at the following respective redemption prices (expressed as percentages of the principal amount of the Junior Lien Bonds to be redeemed), plus accrued interest thereon to the date of redemption: Redemption Dates Redemption Price On or after March 1, 2017 through March 1, % September 1, 2024 and March 1, September 1, 2025 and March 1, September 1, 2026 and thereafter 100 Junior Lien Bonds - Mandatory Sinking Fund Redemption. The Junior Lien Bond maturing September 1, 2035 is subject to mandatory sinking payment redemption in part on September 1, 2032, and on each September 1 thereafter to maturity, by lot, at a redemption price equal to 100% of their principal amount to be redeemed, without premium, in the aggregate respective principal amounts as set forth in the following table: 9

16 $2,060,000 Term Junior Lien Bond Maturing September 1, 2035 Mandatory Redemption Date (September 1) Sinking Fund Payment 2032 $465, , , (Maturity) 560,000 The amounts in the foregoing tables will be reduced pro rata, in order to maintain substantially proportional debt service, as a result of any prior partial optional redemption or mandatory redemption of the respective series of Bonds. In lieu of redemption, moneys in the Redemption Fund may be used and withdrawn by the Fiscal Agent for purchase of Outstanding Bonds (as defined in the Fiscal Agent Agreements), upon the filing with the Fiscal Agent of an Officer s Certificate requesting such purchase, at public or private sale as and when, and at such prices (including brokerage and other charges) as such Officer s Certificate may provide, but in no event may Bonds be purchased at a price in excess of their principal amount, plus interest accrued to the date of purchase. Redemption Procedure by Fiscal Agent. The Fiscal Agent will cause notice of any redemption to be mailed by first class mail, postage prepaid, at least 30 days but not more than 60 days prior to the date fixed for redemption, to the MSRB, and to the respective registered Owners of any Bonds designated for redemption, at their addresses appearing on the Bond registration books in the Principal Office of the Fiscal Agent; but such mailing will not be a condition precedent to such redemption and failure to mail or to receive any such notice, or any defect therein, will not affect the validity of the proceedings for the redemption of such Bonds. The notice will state the redemption date and the redemption price and, if less than all of the then Outstanding Bonds are to be called for redemption, will designate the CUSIP numbers and Bond numbers of the Bonds to be redeemed by giving the individual CUSIP number and Bond number of each Bond to be redeemed or will state that all Bonds between two stated Bond numbers, both inclusive, are to be redeemed or that all of the Bonds of one or more maturities have been called for redemption, will state as to any Bond called in part the principal amount thereof to be redeemed, and will require that such Bonds be then surrendered at the Principal Office of the Fiscal Agent for redemption at the said redemption price, and will state that further interest on such Bonds will not accrue from and after the redemption date. Any notice of redemption may indicate that such redemption will be conditional upon the Fiscal Agent having sufficient moneys available on the date specified to cause the redemption to occur as provided in the notice. The County has the right to rescind any notice of prepayment delivered by the Fiscal Agent prior to the date fixed for prepayment. Upon the payment of the redemption price of Bonds being redeemed, each check or other transfer of funds issued for such purpose will, to the extent practicable, bear the CUSIP number identifying, by issue and maturity, the Bonds being redeemed with the proceeds of such check or other transfer. 10

17 Whenever provision is made in the Fiscal Agent Agreements for the redemption of less than all of the Bonds of any maturity, the Fiscal Agent will select the Bonds to be redeemed, from all Bonds or such given portion thereof of such maturity by lot in any manner which the Fiscal Agent in its sole discretion will deem appropriate. Upon surrender of Bonds redeemed in part only, the County will execute and the Fiscal Agent will authenticate and deliver to the registered Owner a new Bond or Bonds, of the same series and maturity, of authorized denominations in aggregate principal amount equal to the unredeemed portion of the Bond or Bonds. Effect of Redemption. From and after the date fixed for redemption, if funds available for the payment of the principal of, and interest and any premium on, the Bonds so called for redemption will have been deposited in the Redemption Fund of each respective series of Bonds, the Bonds so called will cease to be entitled to any benefit under the Fiscal Agent Agreements other than the right to receive payment of the redemption price, and no interest will accrue on the called Bonds on or after the redemption date specified in the notice. Transfer or Exchange of Bonds So long as the Bonds are registered in the name of Cede & Co., as nominee of DTC, transfers and exchanges of Bonds will be made in accordance with DTC procedures. See APPENDIX F DTC and the Book-Entry Only System. Any Bond may, in accordance with its terms, be transferred or exchanged by the person in whose name it is registered, in person or by his duly authorized attorney, upon surrender of such Bond for cancellation, accompanied by delivery of a duly written instrument of transfer in a form approved by the Fiscal Agent. Whenever any Bond(s) will be surrendered for transfer or exchange, the County will execute and the Fiscal Agent will authenticate and deliver a new Bond(s), for a like aggregate principal amount of Bond(s) of authorized denominations and of the same maturity. The County will pay the cost for any services rendered or any expenses incurred by the Fiscal Agent in connection with any such transfer or exchange. The Fiscal Agent will collect from the Owner requesting such transfer any tax or other governmental charge required to be paid with respect to such transfer or exchange. No transfers or exchanges of Bonds will be required to be made (i) within 15 days prior to the date established by the Fiscal Agent for selection of Bonds for redemption or (ii) with respect to a Bond after that Bond has been selected for redemption. 11

18 SECURITY FOR THE BONDS General Pursuant to the Act, the Rate and Method, the Resolution of Formation and the Fiscal Agent Agreements, the County will annually levy the Special Taxes within the District in an amount sufficient to pay the principal of and interest on the Bonds and, to the extent necessary, to replenish the Reserve Funds and pay other authorized costs. The Senior Lien Bonds are secured by and payable from a first pledge of Special Tax Revenues. Special Tax Revenues are proceeds of the Special Taxes levied and received by the County within the District under the Act, including any scheduled payments thereof, and interest and proceeds of the redemption or sale of property sold as a result of foreclosure of the lien of the Special Taxes to the amount of said interest, but shall not include any interest in excess of the interest due on the Bonds or any penalties collected in connection with any such foreclosure. The Senior Lien Bonds are further secured by a first pledge of all moneys deposited in the Senior Lien Redemption Fund and the Senior Lien Reserve Fund (which will be funded in the form of a debt service reserve insurance policy), both of which are established for the Senior Lien Bonds under the Senior Lien Fiscal Agent Agreement. Furthermore, on a semi-annual basis, until disbursed as provided in the Senior Lien Fiscal Agent Agreement, the Senior Lien Bonds are secured by a first pledge of all moneys in the Special Tax Fund. The Special Tax Revenues and all moneys deposited into the Special Tax Fund are dedicated to the payment of the principal of, and interest and any premium on, the Senior Lien Bonds as provided in the Senior Lien Fiscal Agent Agreement and, on a subordinate basis, to the payment of the principal of, and interest and any premium on, the Junior Lien Bonds as provided in the Junior Lien Fiscal Agent Agreement, and after the disbursements called for by the Senior Lien Fiscal Agent Agreement, any moneys remaining in the Special Tax Fund will be transferred to a Community Facilities Fund, as defined in the Senior Lien Fiscal Agent Agreement, and such moneys will be free of the pledge for payment of the Bonds. The Junior Lien Bonds are secured by and payable from a first pledge of Special Tax Revenues, subordinate to the lien of the Senior Lien Bonds. The Junior Lien Bonds are further secured by a first pledge of all moneys deposited in the Junior Lien Redemption Fund and the Junior Lien Reserve Fund, both of which are established for the Junior Lien Bonds under the Junior Lien Fiscal Agent Agreement. Furthermore, until disbursed as provided in the Senior Lien Fiscal Agent Agreement, the Junior Lien Bonds shall be secured by a pledge of all moneys in the Special Tax Fund, subordinate to the Senior Lien Bonds. The Surplus Special Tax Revenues and all moneys deposited into the Junior Lien Redemption Fund and the Junior Lien Reserve Fund are dedicated to the payment of the principal of, and interest and any premium on, the Junior Lien Bonds as provided in the Junior Lien Fiscal Agent Agreement and in the Act, and after the disbursements called for by the Junior Lien Fiscal Agent Agreement, any moneys remaining in the Junior Lien Redemption Fund will be transferred to the Senior Lien Fiscal Agent for deposit in the Senior Lien Redemption Fund established under the Senior Lien Fiscal Agent Agreement. Amounts to be transferred into the Administrative Expense Fund established under the Senior Lien Fiscal Agent Agreement are to be made on a subordinate basis to amounts necessary to be paid on the Bonds. Amounts in the Administrative Expense Fund will be used to 12

19 pay Administrative Expenses, as defined in the Senior Lien Fiscal Agent Agreement. The Facilities financed with the proceeds of the Prior Bonds or the Bonds are not in any way pledged to pay the debt service on the Bonds. Any proceeds of condemnation, destruction or other disposition of any such Facilities are not pledged to pay the debt service on the Bonds and are free and clear of any lien or obligation imposed under the Fiscal Agent Agreements. Special Taxes The County has covenanted in the Fiscal Agent Agreements to comply with all requirements of the Act so as to assure the timely collection of Special Tax Revenues, including without limitation, the enforcement of delinquent Special Taxes. The Fiscal Agent Agreements provide that the Special Taxes shall be payable and be collected in the same manner and at the same time and in the same installment as the general taxes on real property are payable, and have the same priority, become delinquent at the same times and in the same proportionate amounts and bear the same proportionate penalties and interest after delinquency as do the general taxes on real property. Because the annual Special Tax levy is limited to the Maximum Annual Special Tax rates set forth in the Rate and Method, no assurance can be given that, in the event of Special Tax delinquencies, the receipts of Special Taxes will, in fact, be collected in sufficient amounts in any given year to pay the Bonds. In addition, Section 53321(d) of the Act provides that the Special Tax levied against any parcel for which an occupancy permit for private residential use has been issued may not be increased as a consequence of delinquency or default by the owner of any other parcel within the community facilities district by more than 10% above the amount that would have been levied in such Fiscal Year had there never been any such delinquencies or defaults. A Special Tax applicable to each taxable parcel in the District will be levied and collected according to the tax liability determined by the Board of Supervisors through the application of the Rate and Method prepared by Economic & Planning Systems, Sacramento, California and currently administered by NBS Government Finance Group, and set forth in APPENDIX B hereto for all taxable properties in the District. Interest and principal on the Bonds is payable from the annual Special Taxes to be levied and collected on taxable parcels within the District, from amounts held in the funds and accounts established under the Fiscal Agent Agreements (other than the Rebate Fund) and from the proceeds, if any, from the sale of such property for delinquency of such Special Taxes. The Special Taxes are exempt from the property tax limitation of Article XIIIA of the California Constitution, pursuant to Section 4 thereof, as a special tax authorized by a twothirds vote of the qualified electors. The levy of the Special Taxes was authorized by the County pursuant to the Act in an amount determined according to the Rate and Method approved by the County as approved by a two-thirds vote of the qualified electors. See Special Tax Methodology below and APPENDIX B - Rate and Method of Apportionment. The amount of Special Taxes that may be levied in any year, and from which principal and interest on the Bonds is to be paid, is strictly limited by the maximum rates set forth as the annual Maximum Annual Special Tax in the Rate and Method. The Special Taxes and any interest earned on the Special Taxes constitute a trust fund for the principal of and interest on the Bonds pursuant to the Fiscal Agent Agreements and, so long as the principal of and interest on these obligations remains unpaid, the Special Taxes and investment earnings thereon will not be used for any other purpose, except as permitted by the Fiscal Agent Agreements, and 13

20 will be held in trust for the benefit of the owners thereof and will be applied pursuant to the Fiscal Agent Agreements. The Rate and Method apportions the Annual Costs (as defined in the Rate and Method and described below) among the taxable parcels of real property within the District according to the rate and methodology set forth in the Rate and Method. See - Special Tax Methodology below. See also APPENDIX B - Rate and Method of Apportionment. The County has covenanted to annually levy the Special Taxes in an amount at least sufficient to satisfy the Annual Costs (as defined below). Because each annual Special Tax levy is limited to the Maximum Annual Special Tax rates authorized as set forth in the Rate and Method, no assurance can be given that, in the event of Special Tax delinquencies, the amount of the Annual Costs will in fact be collected in any given year. See SPECIAL RISK FACTORS Collection of Special Taxes herein. The Special Taxes are collected for the County by the District in the same manner and at the same time as ad valorem property taxes. Special Tax Methodology The Special Tax authorized under the Act applicable to land within the District will be levied and collected according to the tax liability determined by the County through the application of the appropriate amount or rate as described in the Rate and Method set forth in APPENDIX B - Rate and Method of Apportionment. Capitalized terms set forth in this section and not otherwise defined have the meanings set forth in the Rate and Method. The discussion below incorporates summaries of certain provisions of the Rate and Method, the complete text of which appears in APPENDIX B. Determination of Annual Costs. Each year, the County will determine the Annual Costs of the District for the upcoming fiscal year. The Annual Costs are defined in the Rate and Method to include: (i) debt service on the Bonds; (ii) administrative expenses; and (iii) amounts needed to replenish bond reserve funds and to pay for delinquencies in Special Taxes for the previous Fiscal Year or anticipated for the current year, less certain earnings related to available CFD funds.. Parcels Subject to the Special Tax. The County will cause to be taxed all parcels within the District except property which is exempt from the Special Tax pursuant to the Rate and Method. Taxable parcels that are acquired by a public agency after the District is formed will remain subject to the Special Tax unless a trade resulting in no loss of Special Tax revenue can be made, as described in the Rate and Method. Maximum Annual Special Tax. The annual Special Tax will be calculated and levied to provide money for payment of Annual Costs of the District. In no event may the County levy a Special Tax in any year above the annual Maximum Annual Special Tax identified for each parcel under the Rate and Method. The Special Tax has been levied each year since Developed Parcels will be levied at their Maximum Annual Special Tax rate through fiscal year so that annual Special Tax Revenues that are not needed for Annual Costs may be used for Facilities to be constructed or acquired by the District on a pay as you go basis (the Pay-As-You-Go Expenditures ); The FY16-17 levy is the first year revenues are expected to be available for such purpose. A table showing the Maximum Annual Special Tax rates for the District projected for Fiscal Year is set forth below; the Maximum Annual Special Tax rate is increased 2% per year. 14

21 TABLE 1 County of El Dorado CFD No (Blackstone) Maximum Annual Special Tax Rates and Estimated Tax Capacity Base Year and Fiscal Year Property Type Parcels (1) Expected Homes (2) Max Tax FY FY Estimated Max Tax Revenues (3) Per Unit Village $1,616 $284,484 Village , ,721 Village , ,749 Village ,616 87,285 Village 5A , ,897 Village 5B , ,834 Village , ,648 Village , ,738 Village , ,322 Village , ,953 Lot Y , ,014 Lot Z ,989 21,883 Net Acres Per Acre Lot V ,973 63,711 Lot W ,217 73,546 Lot X , ,921 Total 1,381 1,466 $2,488,706 (1) Current active parcels as of June 1, (2) Lots expected at buildout. (3) Revenues estimated based on current parcels rather than lots expected at buildout; lots V, W and X are taxed based on acreage. Source: NBS Termination of the Special Tax. The Special Tax will be levied and collected for as long as needed to pay the Annual Costs. However, the Rate and Method provides that the Special Tax may not be levied on any parcel in the District after Fiscal Year Prepayment of the Special Tax. The Rate and Method provides that landowners may permanently satisfy all or, upon the approval of the County, as the administrator of the Rate and Method, a portion of the Special Tax by a cash settlement with the County. The amount of the prepayment required is to be calculated according to a formula set forth in the Rate and Method, which is generally based on the Parcel s share of the outstanding Bonds, remaining facilities costs which have not been bonded, the Reserve Fund, fees, call premiums, negative arbitrage and any expenses incurred by the County in connection with the prepayment and expected future facilities costs. To date, there have been no prepayments. 15

22 Pursuant to the Fiscal Agent Agreements, the County is required to transfer amounts received as prepayments of the Special Tax to the Fiscal Agent to be used to redeem Bonds or portions thereof. See also THE BONDS - Redemption. In addition to payment of the Special Tax, the property owners within the District will be obligated to pay ad valorem property taxes levied against such property, certain other taxes and assessments, and taxes and assessments to pay existing and any additional overlapping debt for which the property within the District may become obligated. (See THE DISTRICT - Direct and Overlapping Governmental Obligations ). The actual amount of these taxes, which may be levied or assessed in the future, will vary depending upon a number of factors, including the assessed value of the property within the District at such time, the actual amount of the Special Tax that is levied annually in the future and the existence of additional taxes and assessments levied in the future. Levy of Annual Special Tax; Maximum Annual Special Tax The Act provides that the Special Tax shall be collected in the same manner as ordinary ad valorem property taxes are collected and shall be subject to the same penalties and the same procedure, sale, and lien priority in case of delinquency as is provided for ad valorem taxes. The County may deduct the reasonable administrative costs incurred in collecting the Special Tax. In the Resolution of Formation, the Board has reserved the right to utilize any method of collecting the Special Tax which it will from time to time determine to be in the best interests of the County. The Fiscal Agent Agreements provide for the Special Taxes to appear annually on the ad valorem property tax bills prepared by the County Tax Collector for taxable parcels and to be collected in the same manner and, except with respect to foreclosure as provided below under Delinquent Payments of Special Tax; Covenant for Foreclosure, subject to the same penalties and the same procedure, sale, and lien priority in case of delinquency as is provided for ad valorem property taxes. Section 4701 et seq. of the California Revenue and Taxation Code authorizes counties, at their option, to adopt an Alternative Method of Distribution of Tax Levies and Collections and of Tax Sale Proceeds specified therein (the Teeter Plan ) to simplify the tax-levying and apportioning process and increase flexibility in the use of available cash resources. For so long as a Teeter Plan is in effect in a particular county, each entity levying property taxes of a class covered by such county s Teeter Plan may draw on the uncollected taxes and assessments credited by the county to such entity s fund following completion of the tax roll whether or not the amount credited has actually been collected. Penalties and collection costs, when received, will be credited to various County-maintained funds rather than to the participating levying entity. The County has a Teeter Plan in effect with respect to the collection of the 1% base ad valorem property tax and with respect to general obligation bonds, but not with respect to special taxes or special assessments. The result is that the amount of the Special Tax that may be drawn upon by the District will be limited to actual collections credited to the Special Tax Fund (as defined herein) rather than amounts allocated to such fund in anticipation of collections as provided for with respect to Teeter Plan levies. See THE DISTRICT - Special Tax Collection and Delinquency Rate herein for a description of historic collections and delinquency rates within the District. For information concerning limits on ad valorem property taxes and the existence of other public and private debt encumbering property within the District, see THE DISTRICT - Direct and Overlapping Governmental Obligations. 16

23 Pursuant to the Fiscal Agent Agreements, the County is required, upon receipt of Special Taxes, to deposit such proceeds in the Special Tax Fund, which is held by the County. Moneys in the Special Tax Fund are to be disbursed, as received and as needed, as provided in the Fiscal Agent Agreements. Limitations on Increases in Special Tax Levy. If owners are delinquent in the payment of Special Taxes, the County may not increase Special Tax levies to make up for delinquencies for prior Fiscal Years above the Maximum Annual Special Tax rates. See SECURITY FOR THE BONDS Special Tax Methodology. In addition, Section 53321(d) of the Act provides that the special tax levied against any parcel for which an occupancy permit for private residential use has been issued may not be increased as a consequence of delinquency or default by the owner of any other parcel within a community facilities district by more than 10% above the amount that would have been levied in such Fiscal Year had there never been any such delinquencies or defaults. In cases of significant delinquency, these factors may result in defaults in the payment of principal of and interest on the Bonds. See SPECIAL RISK FACTORS. Delinquent Payments of Special Tax; Covenant for Superior Court Foreclosure Bills for property taxes on the secured roll are mailed annually by the first of September. Such taxes are due in two installments, on November 1 and February 1 of each Fiscal Year. If unpaid, such taxes become delinquent on December 10 and April 10, respectively, and a 10% penalty attaches to any delinquent payment. Property on the secured roll with respect to which taxes are delinquent becomes tax-defaulted on or about June 30 of the fiscal year. Such property may thereafter be redeemed by payment of a penalty of 1.5% per month to the time of redemption, plus costs and a redemption fee. Pursuant to Section 3691 of the California Revenue and Taxation Code, tax defaulted property not so redeemed within five years after it has become tax-defaulted becomes subject to sale by the County Tax Collector. The Act provides the additional remedy of judicial foreclosure for delinquencies in the payment of a special tax for so long as debt secured by the special tax is outstanding. Pursuant to the Act, the Board may order the institution of a superior court action to foreclose the lien securing a delinquent special tax within four years after the due date of the last installment of the principal thereof. A judgment in such an action will include the amount of the delinquency for each parcel to be foreclosed, reasonable attorneys fees, interest, penalties, and other authorized charges and costs and will order the parcel to be sold on execution as in other cases of the sale of real property by process of the court. Such judicial foreclosure action is not mandatory. However, the Board has covenanted for the benefit of the owners of the Bonds that the County Auditor-Controller will review the County s records in connection with the collection of the Special Tax not later than October 1 of each year to determine the amount of the Special Tax collected in the prior Fiscal Year. The County will, not later than the succeeding December 1, institute civil actions to foreclose the lien of the Special Tax against all parcels delinquent in the amount of $2,500 or more (excluding penalties and interest) and thereafter will vigorously prosecute the same to completion. Pursuant to the Fiscal Agent Agreements, in the event that the total amount collected is less than 95% of the total amount of the Special Taxes levied in such Fiscal Year, the County will also, not later than the succeeding December 1, institute civil actions to foreclose the lien of the Special Tax against all delinquent parcels, and thereafter will diligently prosecute and pursue such foreclosure proceedings to judgment and sale; provided, that any actions taken to enforce delinquent Special Tax liens shall be taken only consistent 17

24 with Sections through , both inclusive, of the Government Code of the State of California. In the event that sales or foreclosures of property are necessary, there could be a delay in payments to owners of the Bonds (if the Reserve Funds have first been depleted) pending such sales or the prosecution of such foreclosure proceedings and receipt by the County of the proceeds of sale. There is no assurance that the Maximum Annual Special Tax, or that collections of the Special Tax at such Maximum Annual Special Tax rates, will be at all times sufficient to pay the amounts required to be paid by the Fiscal Agent Agreements. See - Limitations on Increases in Special Tax Levy and SPECIAL RISK FACTORS - Maximum Annual Special Tax Rates. Prior to July 1, 1983, the right of redemption from foreclosure sale was limited to a period of one year from the date of sale. Under legislation effective July 1, 1983, the statutory right of redemption from foreclosure sale where there is no right to a deficiency judgment was repealed. However, for residential property of four or fewer units, a period of 120 days must elapse after the property is levied upon and before the notice of sale of such parcel can be given (for other property the 120 day period may be shortened to 20 days). Furthermore, if the purchaser at the sale is the judgment creditor, i.e. the County, an action may be commenced by the delinquent property owner within 90 days after the date of sale to set aside such sale. If, as a result of such an action, a foreclosure sale is set aside, the judgment is revived and the judgment creditor is entitled to interest on the revived judgment as if the sale had not been made. If the purchaser at the sale is other than the judgment creditor, the sale cannot be set aside. No assurances can be given that the real property subject to foreclosure sale will be sold or, if sold, that the proceeds of sale will be sufficient to pay any delinquent Special Tax installment. The Act does not require the County to purchase or otherwise acquire any lot or parcel of property if there is no other purchaser at such sale. Reserve Funds In order to further secure the payment of principal of and interest on the Bonds, a separate Reserve Fund, to be held by the Fiscal Agent, will be established for the Senior Lien Bonds and the Junior Lien Bonds pursuant to each respective Fiscal Agent Agreement. The amount on deposit in each Reserve Fund will be established in the amount of the Reserve Requirement for each Series of Bonds, which, for the Senior Lien Bonds, is the least of 10% of the initial offering price to the public of the Senior Lien Bonds, 100% of maximum annual debt service on the Senior Lien Bonds, or 125% of average annual debt service as of the date of issuance of the Senior Lien Bonds, and for the Junior Lien Bonds, is the least of 10% of the initial offering price to the public of the Junior Lien Bonds, 100% of maximum annual debt service on the Junior Lien Bonds, or 125% of average annual debt service as of the date of issuance of the Junior Lien Bonds. The Reserve Fund for the Senior Lien Bonds secures only the Senior Lien Bonds and any Additional Bonds issued under the Senior Lien Fiscal Agent Agreement, and the Reserve Fund for the Junior Lien Bonds secures only the Junior Lien Bonds and any Additional Bonds issued under the Junior Lien Fiscal Agent Agreement. On the Closing Date, the County will purchase from AGM a Qualified Reserve Account Credit Instrument in the form of a reserve fund insurance policy in the amount of the Reserve 18

25 Requirement for the Senior Lien Bonds ($1,924,000). The Reserve Requirement for the Junior Lien Bonds ($582,400) will initially be met in cash generated from proceeds of the Junior Lien Bonds. If, at any time, the Reserve Fund for the Senior Lien Bonds or the Reserve Fund for the Junior Lien Bonds is funded in whole or in part with cash, the County has the right at any time to cause the Fiscal Agent to release funds from the Reserve Fund for the Senior Lien Bonds or the Reserve Fund for the Junior Lien Bonds, in whole or in part, by tendering to the Fiscal Agent: (1) a Qualified Reserve Account Credit Instrument, as defined in the Senior Lien Bonds Fiscal Agent Agreement, and (2) an opinion of Bond Counsel stating that such release will not, of itself, cause the portion of the Proceeds of the Bonds designated as and comprising interest to become includable in gross income for purposes of federal income taxation. Upon tender of such items to the Fiscal Agent, the Fiscal Agent will transfer such funds from the respective Reserve Fund of the Senior Lien Bonds or the Reserve Fund for the Junior Lien Bonds to the County to be used for any authorized District purpose. The County is required to maintain an amount of money or other security equal to the Reserve Requirement in each Reserve Fund at all times that the respective series of Bonds to which the Reserve Fund relates are outstanding. All amounts deposited in the Reserve Funds will be used and withdrawn by the Fiscal Agent solely for the purpose of making transfers to the respective Redemption Fund in the event of any deficiency at any time in such Redemption Fund of the amount then required for payment of the principal of, and interest on, the respective Series of Bonds. Whenever transfer is made from a Reserve Fund to the respective Redemption Fund due to a deficiency in the Redemption Fund, the Fiscal Agent will provide written notice thereof to the County. Whenever, on any Interest Payment Date, the amount in the Reserve Funds exceeds the then applicable Reserve Requirement, the Fiscal Agent will transfer an amount equal to the excess from the respective Reserve Fund to the respective Redemption Fund, except that investment earnings on amounts in the Reserve Fund may be withdrawn from the Reserve Fund for purposes of making payment to the Federal government to comply with rebate requirements. Moneys in the Reserve Funds will be invested and deposited in accordance with the Fiscal Agent Agreements. Interest earnings and profits resulting from the investment of moneys in the Reserve Funds and other moneys in the Reserve Funds will remain therein until the balance exceeds the respective Reserve Requirement. Whenever on or before any Interest Payment Date, the balance in the Reserve Fund exceeds the amount required to redeem or pay all of the Outstanding respective series of Bonds, including interest accrued to the date of payment or redemption and premium, if any, due upon redemption, and make any other transfer required under each respective Fiscal Agent Agreement, the Fiscal Agent will transfer the amount in the Reserve Fund to the respective Redemption Fund to be applied, on the next succeeding Interest Payment Date, to the payment and redemption of all of the Outstanding Bonds of such series. If the amount so transferred from the Reserve Fund to the respective Redemption Fund exceeds the amount required to pay and redeem the respective Outstanding Bonds, the balance in the Reserve Fund will be transferred to the County, after payment of any amounts due the Fiscal Agent, to be used for any lawful purpose of the County. 19

26 Special Tax Fund Pursuant to the Senior Lien Fiscal Agent Agreement, the County establishes a separate fund to be held by the Auditor-Controller, to the credit of which the Auditor-Controller is required to deposit all Special Tax Revenue received by the County. Moneys in the Special Tax Fund will be held by the Auditor-Controller for the benefit of the County and the Owners of the Bonds, will be disbursed as provided in the Fiscal Agent Agreements, as provided below, and, pending any disbursement, are subject to a first lien in favor of the Owners of the Senior Lien Bonds, and a subordinate lien in favor of the Owners of the Junior Lien Bonds. Disbursements. As soon as practicable after the receipt by the County of any Special Tax Revenues or the transfer of amounts under the Senior Lien Fiscal Agent Agreement, the Auditor-Controller shall withdraw from the Special Tax Fund and transfer in the following order of priority: (i) to the Fiscal Agent for deposit in the Senior Lien Redemption Fund, (a) an amount necessary to pay any principal or interest on the Senior Lien Bonds not paid when due, together with additional interest at the interest rate of the Senior Lien Bonds to the expected date of payment from the date such payment was due, plus (b) from the first installment collections, an amount, taking into account any amounts then on deposit in the Senior Lien Redemption Fund for payment of the Senior Lien Bonds, such that the amount in the Senior Lien Redemption Fund equals the interest due on the Senior Lien Bonds on the next Interest Payment Date and 50% of the principal due during the Bond Year, and from the second installment collections, an amount such that the amount in the Senior Lien Redemption Fund equals the interest due on the Senior Lien Bonds on the next Interest Payment Date and 100% of the principal due during the Bond Year; (ii) to the Fiscal Agent an amount, taking into account amounts then on deposit in the Senior Lien Bonds Reserve Fund, so that the amount in the Senior Lien Bonds Reserve Fund equals the Senior Lien Bonds Reserve Requirement; (iii) to the Junior Lien Fiscal Agent for deposit in the Junior Lien Redemption Fund, (a) an amount necessary to pay any principal or interest on the Junior Lien Bonds not paid when due, together with additional interest at the interest rate of the Junior Lien Bonds to the expected date of payment from the date such payment was due, plus (b) from the first installment collections, an amount, taking into account any amounts then on deposit in the Junior Lien Bonds Fund for payment of the Junior Lien Bonds, such that the amount in the Junior Lien Redemption Fund equals the interest due on the Junior Lien Bonds on the next Interest Payment Date and 50% of the principal due on the Junior Lien Bonds during the Bond Year and from the second installment collections, an amount such that the amount in the Junior Lien Redemption Fund equals the interest due on the Junior Lien Bonds on the next Interest Payment Date and 100% of the principal due during the Bond Year, and (iv) to the Junior Lien Fiscal Agent for deposit in the Junior Lien Bonds Reserve Fund, an amount, taking into account amounts then on deposit in the Junior Lien Bonds Reserve Fund, so that the amount in the Junior Lien Bonds Reserve Fund equals the Reserve Requirement for the Junior Lien Bonds; (v) provided the respective annual amounts needed for payment of the Senior Lien Bonds and the Junior Lien Bonds is sufficiently provided for, to the Administrative Expense Fund; and 20

27 (vi) after the foregoing disbursements, on September 1 of each year, any moneys remaining in the Special Tax Fund shall be transferred to the Community Facilities Fund and free of the pledge for payment of the Bonds. Notwithstanding the foregoing, no Special Tax Revenues shall be used by the Fiscal Agent or the County for payment of principal or interest on the Junior Lien Bonds prior to satisfaction of any obligations of the County to AGM for moneys paid by AGM under the insurance policy. Redemption Fund Senior Lien Redemption Fund. Moneys in the Senior Lien Redemption Fund established pursuant to the Senior Lien Fiscal Agent Agreement will be held by the Fiscal Agent for the benefit of the County and the Owners of the Senior Lien Bonds. At least 15 Business Days before each Interest Payment Date, the Fiscal Agent will notify the Auditor-Controller in writing as to the principal and premium, if any, and interest due on the Senior Lien Bonds on the next Interest Payment Date. At least 5 Business Days prior to each Interest Payment Date, the Fiscal Agent will determine if the amounts then on deposit in the Senior Lien Redemption Fund are sufficient to pay the principal and premium, if any, and interest due, on the Senior Lien Bonds on the next Interest Payment Date. On each Interest Payment Date, the Fiscal Agent will withdraw from the Senior Lien Redemption Fund and pay to the Owners of the Senior Lien Bonds the principal of, and interest and any premium, due and payable on such Interest Payment Date on the Senior Lien Bonds. In the event that amounts in the Senior Lien Redemption Fund are insufficient for such purpose with respect to any Interest Payment Date, the Fiscal Agent shall withdraw from the Senior Lien Reserve Fund to the extent of any funds or Permitted Investments therein, amounts to cover the amount of such Senior Lien Redemption Fund insufficiency. If, after the foregoing transfers, there are insufficient funds in the Senior Lien Redemption Fund to make such payments, the Fiscal Agent shall apply the available funds first to the payment of interest on the Senior Lien Bonds, then to the payment of principal due on the Senior Lien Bonds other than by reason of sinking payments, if any, and then to payment of principal due on the Senior Lien Bonds by reason of sinking payments. Junior Lien Redemption Fund. Moneys in the Junior Lien Redemption Fund established pursuant to the Junior Lien Fiscal Agent Agreement will be held by the Fiscal Agent for the benefit of the County and the Owners of the Junior Lien Bonds. At least 15 Business Days before each Interest Payment Date, the Fiscal Agent will notify the Auditor-Controller in writing as to the principal and premium, if any, and interest due on the Junior Lien Bonds on the next Interest Payment Date. At least 5 Business Days prior to each Interest Payment Date, the Fiscal Agent will determine if the amounts then on deposit in the Junior Lien Redemption Fund are sufficient to pay the debt service due on the Junior Lien Bonds on the next Interest Payment Date. On each Interest Payment Date, the Fiscal Agent will withdraw from the Junior Lien Redemption Fund and pay to the Owners of the Junior Lien Bonds the principal of, and interest and any premium, due and payable on such Interest Payment Date on the Junior Lien Bonds. In the event that amounts in the Junior Lien Redemption Fund are insufficient for such purpose with respect to any Interest Payment Date, the Fiscal Agent shall withdraw from the Junior Lien 21

28 Reserve Fund to the extent of any funds or Permitted Investments therein, amounts to cover the amount of such Junior Lien Redemption Fund insufficiency. If, after the foregoing transfers, there are insufficient funds in the Junior Lien Redemption Fund to make such payments, the Fiscal Agent shall apply the available funds first to the payment of interest on the Junior Lien Bonds, then to the payment of principal due on the Junior Lien Bonds other than by reason of sinking payments, if any, and then to payment of principal due on the Junior Lien Bonds by reason of sinking payments. Any excess moneys remaining in the Junior Lien Redemption Fund following the disbursements above are to be transferred to the Senior Lien Fiscal Agent for deposit in the Redemption Fund established under the Senior Lien Fiscal Agent Agreement. The County covenants in the Fiscal Agent Agreements to increase the levy of the Special Taxes in the next Fiscal Year (subject to the maximum amount authorized by the Rate and Method and the Act) in accordance with the procedures set forth in the Rate and Method for the purpose of curing any Senior Lien or Junior Lien Redemption Fund deficiencies. Community Facilities Fund Pursuant to the Senior Lien Fiscal Agent Agreement, the County establishes a separate fund to be held by the Auditor-Controller, to be known as the County of EI Dorado Community Facilities District No (Blackstone) Community Facilities Fund, which fund is held and maintained in trust by the County, and all money remaining in the Special Tax Fund on September 1 of each year, after transferring all of the sums required to be transferred therefrom on or prior to such date by the provisions of the Fiscal Agent Agreements, shall be deposited by the County in the Community Facilities Fund. All money in the Community Facilities Fund shall be used and withdrawn by the County for the payment of costs of the acquisition and construction of the Facilities or otherwise in any manner for the benefit of the District in accordance with and as permitted by the Act. Additional Bonds The authorized amount of bonds for the District was set in 2005 at a maximum of $35,000,000, $32,655,000 of which has been previously issued. Following the issuance of the Bonds which includes $2,345,000 representing new money, no new money capacity will remain. Additional bonds limited only to refunding bonds are allowed to be issued in the future under the Fiscal Agent Agreements. Additional Senior Lien Bonds may also be issued to refund Junior Lien Bonds to senior lien status payable on parity with the Senior Lien Bonds, subject to the condition that that the Fiscal Agent shall have received a certificate of the District Administrator to the effect that (i) the proceeds that would be available to the County if the Special Tax were to be levied and collected at the Maximum Annual Special Tax rates on all Improved Parcels (defined in the Senior Lien Fiscal Agent Agreement as taxable parcels with improvement value on the County assessor roll or determined by the County to include a completed structure which will be reflected on the next County assessor roll) in the District based upon the Rate and Method are equal to at least 100% of Debt Service on all Outstanding Senior Lien Bonds in each Bond Year after the issuance of the Additional Bonds; and (ii) that the proceeds that would be available to the County if the Special Tax were to be levied and collected at the Maximum Annual Special Tax rates and amounts on all taxable parcels in the District based upon the Rate and Method are equal to at least 110% of Debt Service on all Outstanding Senior Lien Bonds and Junior Lien Bonds in each Bond Year after the issuance of the Additional Bonds. 22

29 DEBT SERVICE SCHEDULES The following tables show annual debt service on the Bonds, assuming no optional redemption or special mandatory redemption from prepaid Special Taxes. As can be seen from Table 3 below, the Senior Lien Bonds are sized so that the Maximum Annual Special Tax Revenues from homes completed as of June 1, 2016 would support more than 100% of the Senior Lien Bonds debt service. TABLE 2 COUNTY OF EL DORADO Community Facilities District No (Blackstone) 2016 Senior Lien and Junior Lien Special Tax Bonds Year Ending (Sept. 1) Senior Bonds Principal Senior Bonds Interest Senior Bonds Total Junior Bonds Principal Junior Bonds Interest Junior Bonds Total Grand Total 2017 $520, $911, $1,431, $285, $260, $545, $1,977, , , ,459, , , , ,003, , , ,487, , , , ,044, , , ,517, , , , ,082, , , ,575, , , , ,086, , , ,578, , , , ,082, , , ,579, , , , ,086, , , ,614, , , , ,083, , , ,611, , , , ,083, ,000, , ,614, , , , ,098, ,055, , ,649, , , , ,141, ,140, , ,681, , , , ,184, ,225, , ,709, , , , ,228, ,325, , ,748, , , , ,271, ,425, , ,781, , , , ,317, ,530, , ,815, , , , ,363, ,640, , ,849, , , , ,413, ,740, , ,883, , , , ,462, ,850, , ,924, , , , ,506, Total: $20,920, $10,591, $31,511, $7,210, $2,794, $10,004, $41,516, Source: The Underwriter. 23

30 TABLE Senior Lien and Junior Lien Special Tax Bonds Debt Service Coverage Year Ending (1) Maximum Special Tax Revenues (2)(3) Max Tax on Completed Homes (3)(4) Projected Annual Special Tax Levy (3)(5) Senior Bonds Debt Service Senior Coverage (6) Junior Bonds Debt Service Total Bonds Debt Service All-In Coverage (7) 2017 $2,488,706 $1,432,854 $2,424,990 $1,431, $545,854 $1,977, ,538,480 1,461,511 2,538,480 1,459, ,250 2,003, ,589,250 1,490,741 2,589,250 1,487, ,050 2,044, ,641,035 1,520,556 2,641,035 1,517, ,450 2,082, ,693,855 1,550,967 2,334,090 1,575, ,650 2,086, ,747,733 1,581,987 2,329,250 1,578, ,450 2,082, ,802,687 1,613,627 2,333,650 1,579, ,050 2,086, ,858,741 1,645,899 2,330,350 1,614, ,050 2,083, ,915,916 1,678,817 2,329,965 1,611, ,050 2,083, ,974,234 1,712,393 2,347,015 1,614, ,450 2,098, ,033,719 1,746,641 2,393,600 1,649, ,800 2,141, ,094,393 1,781,574 2,441,313 1,681, ,925 2,184, ,156,281 1,817,206 2,489,300 1,709, ,550 2,228, ,219,407 1,853,550 2,536,875 1,748, ,050 2,271, ,283,795 1,890,621 2,587,805 1,781, ,600 2,317, ,349,471 1,928,433 2,637,910 1,815, ,400 2,363, ,416,460 1,967,002 2,692,800 1,849, ,800 2,413, ,484,789 2,006,342 2,747,140 1,883, ,800 2,462, ,554,485 2,046,469 2,795,540 1,924, ,400 2,506, (1) Revenues presented on a fiscal year ending June 30; debt service presented on the bond year beginning in the fiscal year. (2) Total estimated maximum annual special taxes for FY16-17 are $2,488,706 and increase at 2% annually. (3) The special tax levy on residential property with a certificate of occupancy can only be increased by 10% due to delinquencies of another property owner. Counsequently, the County cannot levy at the maximum annual special tax rates in all cases. (4) Represents maximum annual tax levy on parcels developed with a completed home as recognized by County data sources as of June 1, (5) The maximum annual special taxes are expected to be levied at the maximum for Developed Parcels through FY Thereafter, the special tax levy is based on the District's Annual Costs estimated at total debt service, plus administrative expenses and a 10% cushion for delinquencies. The final map for Lot V was approved by the County on July 19, 2016; therefore Lot V would also be taxed as Developed Parcels beginning in FY (6) Senior Coverage is calculated by dividing the Projected Annual Special Tax levy by Senior Bond Debt Service. (7) All-in Coverage is calculated by dividing the Projected Annual Special Tax levy by Total Bond Debt Service. Source: NBS Government Group for estimated revenues and Stifel for debt service. 24

31 BOND INSURANCE Bond Insurance Policy. Concurrently with the issuance of the Bonds, AGM will issue the Policy for the Insured Bonds. The Policy guarantees the scheduled payment of principal of and interest on the Insured Bonds when due as set forth in the form of the Policy included as APPENDIX H to this Official Statement. The Policy is not covered by any insurance security or guaranty fund established under New York, California, Connecticut or Florida insurance law. Assured Guaranty Municipal Corp. AGM is a New York domiciled financial guaranty insurance company and an indirect subsidiary of Assured Guaranty Ltd. ( AGL ), a Bermudabased holding company whose shares are publicly traded and are listed on the New York Stock Exchange under the symbol AGO. AGL, through its operating subsidiaries, provides credit enhancement products to the U.S. and global public finance, infrastructure and structured finance markets. Neither AGL nor any of its shareholders or affiliates, other than AGM, is obligated to pay any debts of AGM or any claims under any insurance policy issued by AGM. AGM s financial strength is rated AA (stable outlook) by S&P Global Ratings, a business unit of Standard & Poor s Financial Services LLC ( S&P ), AA+ (stable outlook) by Kroll Bond Rating Agency, Inc. ( KBRA ) and A2 (stable outlook) by Moody s Investors Service, Inc. ( Moody s ). Each rating of AGM should be evaluated independently. An explanation of the significance of the above ratings may be obtained from the applicable rating agency. The above ratings are not recommendations to buy, sell or hold any security, and such ratings are subject to revision or withdrawal at any time by the rating agencies, including withdrawal initiated at the request of AGM in its sole discretion. In addition, the rating agencies may at any time change AGM s long-term rating outlooks or place such ratings on a watch list for possible downgrade in the near term. Any downward revision or withdrawal of any of the above ratings, the assignment of a negative outlook to such ratings or the placement of such ratings on a negative watch list may have an adverse effect on the market price of any security guaranteed by AGM. AGM only guarantees scheduled principal and scheduled interest payments payable by the Authority of Bonds insured by AGM on the date(s) when such amounts were initially scheduled to become due and payable (subject to and in accordance with the terms of the relevant insurance policy), and does not guarantee the market price or liquidity of the securities it insures, nor does it guarantee that the ratings on such securities will not be revised or withdrawn. Current Financial Strength Ratings. On June 29, 2015, S&P issued a credit rating report in which it affirmed AGM s financial strength rating of AA (stable outlook). AGM can give no assurance as to any further ratings action that S&P may take. On December 8, 2015, Moody s published a credit opinion maintaining its existing insurance financial strength rating of A2 (stable outlook) on AGM. AGM can give no assurance as to any further ratings action that Moody s may take. On December 10, 2015, KBRA issued a financial guaranty surveillance report in which it affirmed AGM s insurance financial strength rating of AA+ (stable outlook). AGM can give no assurance as to any further ratings action that KBRA may take. 25

32 For more information regarding AGM s financial strength ratings and the risks relating thereto, see AGL s Annual Report on Form 10-K for the fiscal year ended December 31, Capitalization of AGM. At March 31, 2016, AGM s policyholders surplus and contingency reserve were approximately $3,742 million and its net unearned premium reserve was approximately $1,530 million. Such amounts represent the combined surplus, contingency reserve and net unearned premium reserve of AGM, AGM s wholly owned subsidiary Assured Guaranty (Europe) Ltd. and 60.7% of AGM s indirect subsidiary Municipal Assurance Corp.; each amount of surplus, contingency reserve and net unearned premium reserve for each company was determined in accordance with statutory accounting principles. Incorporation of Certain Documents by Reference. Portions of the following documents filed by AGL with the Securities and Exchange Commission (the SEC ) that relate to AGM are incorporated by reference into this Official Statement and shall be deemed to be a part hereof: (i) the Annual Report on Form 10-K for the fiscal year ended December 31, 2015 (filed by AGL with the SEC on February 26, 2016); and (ii) the Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2016 (filed by AGL with the SEC on May 5, 2016). All consolidated financial statements of AGM and all other information relating to AGM included in, or as exhibits to, documents filed by AGL with the SEC pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended, excluding Current Reports or portions thereof furnished under Item 2.02 or Item 7.01 of Form 8- K, after the filing of the last document referred to above and before the termination of the offering of the Bonds shall be deemed incorporated by reference into this Official Statement and to be a part hereof from the respective dates of filing such documents. Copies of materials incorporated by reference are available over the internet at the SEC s website at at AGL s website at or will be provided upon request to Assured Guaranty Municipal Corp.: 31 West 52 nd Street, New York, New York 10019, Attention: Communications Department (telephone (212) ). Except for the information referred to above, no information available on or through AGL s website shall be deemed to be part of or incorporated in this Official Statement. Any information regarding AGM included herein under the caption BOND INSURANCE Assured Guaranty Municipal Corp. or included in a document incorporated by reference herein (collectively, the AGM Information ) shall be modified or superseded to the extent that any subsequently included AGM Information (either directly or through incorporation by reference) modifies or supersedes such previously included AGM Information. Any AGM Information so modified or superseded shall not constitute a part of this Official Statement, except as so modified or superseded. Miscellaneous Matters. AGM makes no representation regarding the Bonds or the advisability of investing in the Bonds. In addition, AGM has not independently verified, makes no representation regarding, and does not accept any responsibility for the accuracy or completeness of this Official Statement or any information or disclosure 26

33 contained herein, or omitted herefrom, other than with respect to the accuracy of the information regarding AGM supplied by AGM and presented under the heading BOND INSURANCE. THE DISTRICT The District was formed in 2005 to facilitate development of the master-planned residential community of approximately 990 acres known as Blackstone.. The District is planned for a total of approximately 1,466 single-family homes in multiple villages, along with public uses including an elementary school, parks, open space, drainage, and public roads and landscaped corridors. Most of the major backbone infrastructure required for the development is complete. As of May 11, 2016, approximately 859 single-family homes had been built, another 62 were under construction, 407 parcels were improved to finished lot condition and 109 parcels were partially improved. There are also a total of 29 unimproved lots, generally located on ridge tops, which could be sold as custom lots or developed by a production builder. Six merchant builders are actively selling homes in 9 communities. As of June 19, 2016, 822 homes had been sold to homeowners and another 85 home sales were in contract. See Completed and Anticipated Development below. All homeowners within the District are members of the Blackstone Master Association and have access to The Club, an approximately 10,500 square foot private facility, as a part of their monthly membership dues. The Club includes 3 pools, a spa, a large workout/exercise facility, an aerobics room, locker rooms, massage room, children's play room with an outdoor play yard, a large multi-purpose gathering area with adjoining kitchen and a living room. Additional features include a tot playground, shady pavilions, courtyards, gazebos, fountains and an outdoor fireplace. The Buckeye Union School District ( BUSD ) completed construction of Valley View Elementary School within the Blackstone community in May The new elementary school is currently being utilized for BUSD offices until there are sufficient students to open the school. Location of the District The District is located in the El Dorado Hills area of the County within a portion of the Valley View Specific Plan area (described below), approximately 23 miles east of the central business district of Sacramento and about 85 miles northeast of San Francisco. This area is close to Sacramento County communities especially the city of Folsom and therefore relates significantly to the greater Sacramento area. US Highway 50 is the east/west travel artery serving Sacramento and the area; it continues eastward to Lake Tahoe (55 miles), Reno, Nevada, and points beyond. North/south traffic in the immediate area is carried by Latrobe Road, which becomes El Dorado Hills Boulevard north of Highway 50. The El Dorado Hills population was estimated at about 42,000 at the 2010 census, based on an approximate 48 square mile area. Although primarily a residential community, the area includes a Town Center mixed-use project, located at the intersection of Highway 50 and El Dorado Hills Boulevard, which includes local and national retailers, cafés, restaurants and bars, movie theater, hotel, gourmet market, fitness club, day spa, luxury car dealership, professional and medical offices, public amphitheater, fountains and waterways, and broad public plazas on approximately 100 acres. Within the southeast quadrant of this interchange 27

34 there is a Ralph s Market, a CVS Drugs and numerous other retail stores and commercial outlets. Also east of Latrobe Road, along Town Center Boulevard, there has recently been extensive new construction of commercial and office facilities, fast food stores, and banks. The El Dorado Hills Business Park provides nearby space for businesses that employ about 6,000. Students in grades K-12 attend schools of the Buckeye Union, Rescue Union and El Dorado Union High school districts. Valley View Specific Plan. The Valley View Specific Plan area comprises approximately 2,037 acres east of Latrobe Road and south of the Town Center commercial area in the southern, part of the El Dorado Hills community.. Valley, View's regional location near Highway 50 at the foot of the Sierra foothills, places it within a major economic and transportation activity corridor, of the Sacramento region. The majority of the Valley View Specific Plan area occupies the eastern side of an open valley containing the El Dorado Hills Business Park, the Town Center, the Carson Creek Specific Plan area and an existing residential area commonly known as Springfield Meadows. The Valley View Specific Plan area includes three major components White Rock Village, East Ridge Village and the largest, West Valley Village, which has been developed as the Blackstone master planned community described herein. 28

35 BLACKSTONE EL DORADO HILLS, CALIFORNIA JUNE, 2016

36 Master Developer The District was first developed by West Valley, LLC, the Master Developer, constructing backbone infrastructure, and marketing property to merchant builders. The Master Developer is a joint venture between AKT West Valley Investors, LLC, a California limited liability company and Lennar West Valley, LLC, a California limited liability company. AKT West Valley Investors, LLC is affiliated with AKT Development Corporation ("AKT"), a major Sacramento area land development firm that was started more than 40 years ago by Angelo K. Tsakopoulos, who is still active in the business. AKT has developed land projects on which have been built over 60,000 homes and 30 million square feet of office, commercial and industrial facilities. Lennar West Valley, LLC is affiliated with Lennar Communities and Lennar Corporation ( Lennar ), a diversified real estate company headquartered in Miami, Florida and publicly traded on the New York Stock Exchange under the symbol LEN. AKT and Lennar have partnered on other projects in the past, with AKT typically finding land and securing entitlements, and Lennar designing the community, marketing the residential lots to merchant builders, and acquiring a substantial portion of the lots for home development by one or more of its affiliated homebuilding entities. The Master Developer completed the majority of the backbone infrastructure improvements required for development of the District. Completed and Anticipated Development The Master Developer and, to a lesser extent, other owners of property in the District have provided the information set forth below. No assurance can be given that all information is complete or that proposed development will occur as described herein. No assurance can be given that development of the property will be completed, or that it will be completed in a timely manner. Since the ownership of the parcels is subject to change, the development plans outlined herein may not be continued by a subsequent owner if the parcels are sold; however, development by any subsequent owner will be subject to the policies and requirements of the County, subject to the terms of the Development Agreement (as described below). The Special Taxes are not personal obligations of the owners and developers or of any subsequent landowners; the Bonds are secured solely by the Special Taxes. See SECURITY FOR THE BONDS and SPECIAL RISK FACTORS herein. The Development Agreement. El Dorado Hills Investors, LTD., a California limited partnership, executed a Development Agreement dated December 8, 1998 (the Development Agreement ) with the County in accordance with applicable state and local codes. The Development Agreement vests certain development rights, sets forth obligated infrastructure improvements and dedication requirements, secures the timing and methods for financing improvements, and specifies other performance obligations as related to development in the applicable portion of the Valley View Specific Plan area and established certainty as to zoning standards and land use regulations of the County governing the construction and implementation of the development project throughout the term of the Development Agreement. All of the property in the District is subject to the requirements of the Development Agreement as well as the Valley View Specific Plan. The Development Agreement was entered into in accordance with Sections through of the California Government Code, as implemented through a County Zoning Ordinance. Included are provisions relating to infrastructure improvements, public dedication requirements, landscaping amenities and other obligations of the parties. 30

37 The Development Agreement has a 20-year term, is assignable, runs with the property, and may be modified only by mutual consent of the County and the developer in a manner consistent with the Valley View Specific Plan. Zoning and Entitlements; Map Status. All Taxable Property within the District has obtained at least an approved Tentative Map. Currently there are 1,466 planned single family residential units within the District, and all but 29 of those units also have an approved final subdivision map for single family residential units in their currently planned configuration, as described below: 31

38 TABLE 4 El Dorado County CFD No (Blackstone) Development Summary Completed Homes as of 5/11/16 Development status of 5/11/16 (7) Sales as of 6/19/16 (8) Homes Since under Finished Partially Custom Homes Pending 1/1/15 (7) Subtotal construction Lots Improved Lots Subtotal Sold Sales Village Developer Product Parcels Homes Tax Rolls (1) Current Planned On FY 15/16 1 Lennar Shenandoah Centex/Lennar AltaMira/Shenandoah II Standard Pacific Laurelton C AKT Custom lots (2) Meritage Del Sol A Lennar The Ridge B Meritage Solstice C DiRe Custom lots (3) A/6C K Hovnanian The Estates B KB Fiora Lennar Saint Laurent, Summit A/C AKT Custom lots (4) Taylor Morrison The Pinnacles Lennar/StanPac Chateau/Sagewood Lot V Lennar The Palisades II (5) Lot W New Home The Chapparal Lot X Lennar The Palisades Lot Y Lennar The Enclave Lot Y AKT Custom lots (6) Lot Z Lennar The Enclave Lot Z AKT Custom lots (6) Total 1,381 1, (1) Except as noted below, all lots have a final map recorded. (2) A tentative map (TM ) was approved on 5/23/13 and expires on 5/23/18 to create 8 single family lots from 4 existing final mapped lots. AKT is preparing improvement plans. (3) A tentative map (TM ) was approved on 6/27/13 and expires on 6/27/18 to create 12 single family lots from 5 existing final mapped lots. The current owners currently have no plans to develop the lots themselves and are expected to sell the lots to a developer in the future. (4) A tentative map (TM ) was approved on 9/9/10 and expires on 9/9/17 to create 6 single family lots from 2 existing final mapped lots. AKT is preparing improvement plans. (5) A tentative map TM ) was approved on 5/8/14 and expires on 5/8/17 to create 70 single family lots. Subdivision improvements are underway. The County approved the final map to create 70 single family lots on July 19, (6) A tentative map (TM R) was approved on 11/13/14 and expires on 12/11/17 to create 3 single family lots on 2 large lot parcels previously planned for 9 single family lots. The development of these parcels is not expected until the rough grading of Valley View Parkway is completed by the developer of property outside the District. (7) Per the Appraiser. (8) Per the Master Developer. Source: The Master Developer and the Appraiser. Remaining Lots 32

39 Infrastructure Improvements Prior Bond Proceeds of approximately $29.4 million were used to construct a public library, prepay Traffic Impact Mitigation Fees which the County used to complete Latrobe Road and White Rock Road improvements, and pay for El Dorado Irrigation District water, recycled water and wastewater facility capacity charges serving residential lots within the District. It is anticipated that new money proceeds generated from the Bonds will also be utilized to fund El Dorado Irrigation District water, recycled water and wastewater facility capacity charges. The Master Developer reports that with the exception of the rough grading of a segment of Valley View Parkway that is required to be completed to allow the development of the three planned single family residential parcels in Lots Y & Z owned by AKT, all backbone infrastructure required for the full development of the Taxable Property within the District has been completed. Further development of the three 3 lots in Lots Y & Z will likely await the rough grading of Valley View Parkway by the developer of the adjacent East Ridge planned community located to the east. Measure E Slow Growth Initiative on June 2016 Ballot At the June 7, 2016 general election, voters in the County passed Measure E ( Measure E ) amending policies to the County General Plan related to traffic impact mitigation by new development. In 1998, voters enacted the Control Traffic Congestion Initiative (Measure Y) which added five policies to the 1996 General Plan regarding traffic impact mitigation by new development. Those policies were scheduled to expire in The policies were placed on the ballot for amendment and renewal in The 2008 amendments included: (1) clarification that the prohibition against residential projects of five or more units causing or worsening Level of Service ( LOS ) F applies only to single-family subdivisions; (2) a provision that a road may be allowed to operate at LOS F by a 4/5 vote of the Board of Supervisors; and (3) deletion of the prohibition against using county tax revenues to fund road projects to serve new development. The 2008 measure passed. (LOS F is a measure of traffic congestion associated with gridlock or stop and go traffic). Measure E rescinded the 2008 amendments and makes further amendments to the County s General Plan policies regarding traffic impact mitigation by new development. The amended policies would remain in effect indefinitely and could only be amended by voter approval. Measure E amended Policy TC-Xa to require that road capacity improvements needed to prevent new development s cumulative traffic impacts from reaching LOS F be completed before any form of discretionary approval can be given to a project. Measure E also amended Policy TC-Xf, which provided two methods for the County to mitigate traffic impacts: (1) condition the project to construct necessary road improvements, or (2) ensure that the necessary road improvements are scheduled for construction within the County s Capital Improvement Program, which is primarily funded by impact fees collected with each building permit. Measure E eliminated the second option. Measure E further requires that mitigation fees and assessments be applied to the geographic zone from which they originated. Measure E also added a policy prohibiting the use of County tax revenues to pay for building road capacity improvements to offset traffic impacts from new development, unless County voters first approve. 33

40 It is unclear if implementation of Measure E will impact existing development projects which haven t yet received all of their discretionary approvals, and the extent of those impacts if any, in part because the language of Measure E allows significant room for interpretation. All major transportation improvements required to enable development of the District have been completed and all but 29 of the 1,466 planned homes in the District have already received final map approvals. The remaining 29 units have tentative maps with expiration dates ranging from September 2017 through June (See Table 4 - Development Summary ) So long as final maps are approved before the tentative maps expire, additional discretionary approvals would not be required to complete development in the District. Consequently, the Master Developer expects that the impacts of the passage of Measure E will not affect further development in the District since all the land use and development entitlements for the property within the District have been obtained and granted under an existing Development Agreement. Since it appears that the project has obtained discretionary approvals for the lots from which the Special Tax Revenues will be derived to secure the Bonds, the requirements of Measure E regarding traffic impact mitigation would likely not apply to further development of the District. Water Availability The El Dorado Irrigation District ( EID ), a special irrigation district created under California Water Code et seq., is the water and wastewater purveyor for the portion of the County of which the District is a part. EID is a separate entity from the County, governed by an independent elected board, which has adopted various policies concerning the provision of water service within the District. EID provides water service to developments in accordance with Regulation No. 2 Water Supply Reliability of its Rules and Regulations Governing the Distribution and Use of Water/Wastewater and Recycled Water. Section 2.4 of Regulation No. 2 states that EID will endeavor to provide water supplies having a System Firm Yield (i.e., 95% of the time water will be delivered) greater than or equal to the normal, unrestricted, water demands of EID ' s system. In the remaining 5% of the time, shortages not to exceed 20% of demand annually will be allowed. These shortages would be met by varying levels of conservation (increasing from voluntary to mandatory) as outlined in the Attachment to Regulation No. 2, EID's 4-Stage Water Supply Matrix and Water Shortage Response Measures. According to EID s 2015 Water Resources and Service Reliability Report dated August 10, 2015, its most recently adopted Water Resources and Service Reliability Report, water supply in El Dorado Hills is currently restricted by the infrastructure capacity of the El Dorado Hills Water Treatment Plant and other facilities. However, EID estimates that as of January 1, 2015, this infrastructure-constrained, available potable water supply is adequate to serve current and anticipated future demand, including the ability to serve an additional 4,088 Equivalent Dwelling Units (EDUs) in the El Dorado Hills supply area. Existing agreements commit a total of 3,579 EDUs of this available supply to specific uses in El Dorado Hills. The Master Developer reports that all of the taxable property in the District consists of single family residential lots. All single family residential lots must obtain their Meter Award Letters from EID upon purchase of their water meters following completion of improvement plans for the lots, but no later than prior to approval and recordation of the associated small lot final subdivision map. Meter Award Letters represent EID's commitment to provide water service to a property. As such, the only taxable property within the District which does not yet have water meters and Meter Award Letters are those lots that do not yet have a final small lot subdivision map for the planned number of residential lots. In the District, this consists of 18 lots including the AKT owned Village 3C (an additional 4 planned single family lots); the Di Re 34

41 owned Village 5C (an additional 7 planned custom lots); the AKT owned Village 7C (an additional 4 planned single family lots); and the three planned single family lots within Lot Y & Z that are owned by AKT. These 18 planned single family lots have their needed allocation of 9 EDU's by virtue of an allocation associated with the property's prior participation in Assessment District No. 3 financing of certain improvements to provide water and sewer services to the El Dorado Hills service area of EID. (While normally 1.0 EDU's is required per single family dwelling unit for water service, because Blackstone agreed to dual plumb all of its residential units with both potable water and recycled water, only 0.5 EDU's is required for water service per single family lot). In January 2014, with California facing water shortfalls in the then-driest year in recorded state history, the State governor proclaimed a State of Emergency and directed State officials to take all necessary actions to prepare for these drought conditions. On April 1, 2015, for the first time in State history, the Governor of California directed the State Water Resources Control Board ( SWRCB ) to implement mandatory water reductions in cities and towns across California to reduce water usage by 25 percent. In addition, the proclamation gave State water officials more flexibility to manage supply throughout California under drought conditions. On May 17, 2016, the SWRCB rescinded these mandatory water reductions due to an improved water supply outlook. The SWRCB also granted individual water suppliers like EID broad control over future conservation orders. Notwithstanding the drought, water supply infrastructure, rather than water supply itself, is expected to be the limiting factor for new development in the El Dorado Hills area of western El Dorado County in coming years. See SPECIAL RISK FACTORS - California Drought; State of Emergency Proclamation. Seismic Zone. According to the Seismic Safety Commission, the property in the District is located within Zone 3, which is considered to be the lowest risk zone in California. There are only two zones in California: Zone 4, which is assigned to areas near major faults; and Zone 3, which is assigned to all other areas of more moderate seismic activity. In addition, the subject is not located in a Fault-Rupture Hazard Zone (formerly referred to as an Alquist-Priolo Special Study Zone), as defined by Special Publication 42 (revised January 1994) of the California Department of Conservation, Division of Mines and Geology. The nearest mapped active fault to the site is the Dunnigan Hills fault located about 38 miles to the west-northwest. Flood Zone. According to the Federal Emergency Management Agency s flood insurance rate maps, all of the property lies in Zone X, defined by FEMA as an area determined to be outside of the 100-year and the 500-year flood plain. Local Asbestos Circumstance. There exists in western portions of the County serpentine bedrock which can contain a natural form or forms of asbestos. Disturbance of the serpentine bedrock during development could release asbestos into the air. In response to this potential for release of asbestos into the air, the County and others are implementing construction control measures to be applied whenever development occurs within serpentine bedrock. Those measures require sites to be kept wet and machinery to be kept dust free during periods of exposure and work in serpentine bedrock. In 2004, the Master Developer caused a study to be conducted to gather information regarding the potential presence of naturally occurring asbestos within the then-proposed improvement area of the District. Additionally, in May 2000, the California Department of Conservation s California Geological Survey (CGS) released a map showing areas where naturally occurring asbestos is more likely to be found in Western El Dorado County, which indicated property in the District to be located in an area with a lower probability of asbestos than certain other areas. 35

42 The Master Developer has indicated that it is aware of a couple of instances of encountering either serpentine bedrock or naturally occurring asbestos ( NOA ) within the District, and that it is their understanding that the County's procedures for addressing such encounters were followed and that they were not aware of any further requirements or issues related to those encounters. The Master Developer provides buyers with a disclosure regarding NOA and sale agreements to homeowners also include such disclosure. See also SPECIAL RISK FACTORS Naturally Occurring Asbestos. Utilities and Services. Public utilities, including electricity, natural gas, water and telephone service, are available to property in the District. The Master Developer does not expect development of property in the District to be delayed by water issues. See Water Availability above. The following are service providers for the District: Fire: El Dorado Hills County Water District (El Dorado Hills Fire District) Police: El Dorado County Sheriff's Department Elementary: Rescue Union School District/Buckeye Union School District Intermediate: Rescue Union School District/Buckeye Union School District High School: El Dorado Union High School District Recreation and Parks: El Dorado Hills Community S District Water and Sewer: El Dorado Irrigation District Electricity and Gas: Pacific Gas & Electric Telephone: Pacific Bell Completed Development Home sales began in the District in As of the January 1, 2015 lien date for the FY15-16 assessment roll, 604 homes had been built, the majority of which had sold to individual homeowners. The median FY15-16 Assessed Value for these homes was $500,324. From January 1, 2015 through May 11, 2016, an additional 255 single-family homes have been completed, according to the Appraiser. As of June 19, 2016, a total of 822 homes had been sold and closed to individual homebuyers and another 85 homes had been sold but not yet closed, according to the Master Developer, as described below. Production Finished or Partially Improved Lots. In addition to completed homes, the District included, as of May 11, 2016, 109 partially improved production lots, 407 finished production lots, and 62 partially completed homes. Final maps have been recorded for all of these planned homes. Additional in-tract improvements remaining to be completed include 39 lots in Village 6C owned by K. Hovnanian which are also expected to be completed in

43 Home Sales Activity. Lennar, Standard Pacific, K. Hovnanian, KB Homes, Meritage and The New Home Company are all actively selling homes in the District. (See The Homebuilders below for additional information on each.) The table below provides a summary of product offerings and base home prices for these active villages. TABLE 5 El Dorado County CFD No (Blackstone) Production Home Sales Update Total Homes Planned As of June 19, 2016 Developer Village Product Number of Home Plans Range of Home Sq. Footage Base Prices (1) Total Sales Closed Pending Remaining Lennar 5A The Ridge 5 2,861-4,253 $632,000-$691, Lennar 7 Summit 4 2,707-4,253 $610,000-$692, Lennar Lot X The Palisades I 4 1,429-2,426 $420,000-$460, Lennar Lot V The Palisades II 5 1,429-2,426 $420,000-$460, n/a Lennar Lot Y The Enclave 4 2,150-3,529 $500,000s n/a Lennar Lot Z The Enclave 4 2,150-3,529 $500,000s n/a Standard Pacific 3 Laurelton 5 2,828-4,159 $650,000-$730, K Hovnanian 6A/6C The Estates 6 2,385-3,878 $530,990-$590, KB 6B Fiora 6 2,533-3,413 $488,500-$543, Meritage 5B Solstice 8 2,762-4,575 $555,450-$757, New Home Lot W The Chapparal 3 1,994-2,422 $434,000 - $456, (1) Does not reflect current sales incentives ranging from $6,000 to $22,500 per home (2) Based on average monthly sales pace for the last six months Source: the Master Developer and the Appraiser Monthly Avg. Sales Pace (2) 37

44 Unimproved Parcels. There are 13 parcels planned for 29 custom home lots with approved tentative maps, as described below. AKT owns 8 unimproved parcels expected to be developed as 17 custom lots in Villages 3C, 7C and a portion of Lots Y & Z. Depending upon the market, AKT may construct the necessary improvements and market custom lots for sale to individuals or custom builders or AKT may sell the lots to homebuilders to complete the in-tract improvements and construct homes. Improvement plans are expected to be completed by Fall 2016, and the final maps are expected to be recorded by late 2016 or early 2017 for 14 of these planned lots. The 3 home sites in Lot Y & Z require rough grading of an extension of Valley View Parkway; timing of the development of these lots will likely be tied to the rough grading of Valley View Parkway by the developer of adjacent property in the planned East Ridge community. Danny and Sheralyn Di Re own 5 unimproved parcels in Village 5C expected to be developed as 12 custom lots. Danny and Sheralyn Di Re are investors that purchased the parcels from AKT and currently have no plans to develop the lots themselves. They are expected to sell the lots to a developer in the future. Each approved tentative map, including the conditions that must be met before a final map can be recorded, is a matter of public record and can be examined by contacting the Planning Director, County of El Dorado, 2850 Fairlane Court, Placerville, California 95667, telephone: (530) Pursuant to California statute and County ordinance, a tentative map in El Dorado County expires 36 months after approval. A landowner may extend a tentative map by automatic extensions for up to 10 years by recording successive final maps on portions of the land within the tentative map, provided that certain requirements of the Subdivision Map Act have been met, including the requirement that the landowner make certain required expenditures for off-site improvements. The Homebuilders Lennar Homes. Property in the District owned by Lennar Homes of California, Inc. is being developed by a wholly-owned subsidiary of Lennar Corporation, a Delaware corporation ( Lennar Corporation ). Lennar Corporation is a diversified real estate company headquartered in Miami, Florida and publicly traded on the New York Stock Exchange under the symbol LEN. Lennar Corporation started as a Dade County, Florida homebuilder in 1954 and currently reports that it is one of the largest homebuilders in the United States with operations in Arizona, California, Colorado, Florida, Illinois, Maryland, Minnesota, Nevada, New Jersey, North Carolina, Ohio, Pennsylvania, South Carolina, Texas, Virginia, West Virginia, and Wisconsin marked the eighteenth year Lennar Corporation has operated in the Sacramento Area. Lennar Corporation is subject to the informational requirements of the Securities Exchange Act of 1934, as amended, and in accordance therewith files reports, proxy statements and other information with the SEC. Such filings, particularly the Annual Report on Form 10-K and its most recent Quarterly Report on Form 10-Q, may be inspected and copied at the public reference facilities maintained by the SEC at 450 Fifth Street, N.W., Washington, D.C at prescribed rates. Such files can also be accessed over the Internet at the SEC s website at For further information on the Lennar Corporation, see its Internet homepage located at The website address is given for reference and convenience only, and the 38

45 information on the website may be incomplete or inaccurate and has not been reviewed by the County or the Underwriter. Nothing on this website is a part of this Official Statement or incorporated into this Official Statement by reference and no representation is made in this Official Statement as to the accuracy or adequacy of the information contained on the internet site. K. Hovnanian Homes. K. Hovnanian Homes is a subsidiary of Hovnanian Enterprises Inc., a publicly owned company whose stock is listed on the New York Stock Exchange (NYSE:HOV). Its annual and quarterly filings are available on the internet at Information on K. Hovnanian Homes, including current home offerings, is available on the internet from its website at The website address is given for reference and convenience only, the information on the websites may be incomplete or inaccurate and has not been reviewed by the County or the Underwriter. Nothing on the website is a part of this Official Statement or incorporated into this Official Statement by reference Standard Pacific Homes. Standard Pacific Homes is a publicly owned company whose stock is listed on the New York Stock Exchange (NYSE:SPF). Its annual and quarterly filings are available on the internet at Information on Standard Pacific Homes, including current home offerings, is available on the internet from its website at The website address is given for reference and convenience only, the information on the websites may be incomplete or inaccurate and has not been reviewed by the County or the Underwriter. Nothing on the website is a part of this Official Statement or incorporated into this Official Statement by reference. The New Home Company. The New Home Company is a publicly owned company whose stock is listed on the New York Stock Exchange (NYSE:NWHM). Its annual and quarterly filings are available on the internet at Information on The New Home Company, including current home offerings, is available on the internet from its website at The website address is given for reference and convenience only, the information on the websites may be incomplete or inaccurate and has not been reviewed by the County or the Underwriter. Nothing on the website is a part of this Official Statement or incorporated into this Official Statement by reference. KB Home. KB Home is a publicly owned company whose stock is listed on the New York Stock Exchange (NYSE:KBH). Its annual and quarterly filings are available on the internet at Information on KB Home, including current home offerings, is available on the internet from its website at The website address is given for reference and convenience only, the information on the websites may be incomplete or inaccurate and has not been reviewed by the County or the Underwriter. Nothing on the website is a part of this Official Statement or incorporated into this Official Statement by reference. Meritage Homes. Meritage Homes is a publicly owned company whose stock is listed on the New York Stock Exchange (NYSE:MTH). Its annual and quarterly filings are available on the internet at Information on Meritage Homes, including current home offerings, is available on the internet from its website at The website address is given for reference and convenience only, the information on the websites may be incomplete or inaccurate and has not been reviewed by the County or the Underwriter. Nothing on the website is a part of this Official Statement or incorporated into this Official Statement by reference. 39

46 SPECIAL TAX REVENUE AND ESTIMATED VALUE OF PROPERTY IN THE DISTRICT The value of the land within the District is a critical factor in determining the investment quality of the Bonds. If a property owner defaults on the payment of the Special Tax, the County s only remedy is to foreclose on the delinquent property in an attempt to obtain funds with which to pay the delinquent Special Tax. A variety of economic, political, and natural occurrences incapable of being accurately predicted can affect land values. See SPECIAL RISK FACTORS - Land Values. Unpaid Special Taxes do not constitute a personal indebtedness of the owners of the parcels within the District, and the owners have made no commitment to pay the principal of or interest on the Bonds or to support payment of the Bonds in any manner. There is no assurance that the owners have the ability to pay the Special Taxes or that, even if they have the ability, they will choose to pay such taxes. An owner may elect to not pay the Special Taxes when due and cannot be legally compelled to do so. Neither the County nor any Bondholder will have the ability at any time to seek payment from the owners of property within the District of any Special Tax or any principal or interest due on the Bonds, or the ability to control who becomes a subsequent owner of any property within the District. Assessed Valuation In connection with valuing property in the District, the County has obtained the County assessed valuation (the Assessed Valuation ) of the property in the District. In addition, to comply with internal policies and in order to provide a more accurate valuation of certain parcels in the District, the County ordered an appraisal of such parcels. The full cash assessed values of all of the taxable parcels in the District has been established by the County Assessor for fiscal year in the amount of $363,129,665. The following table summarizes the historical assessed valuation of property in the District over the last nine years. TABLE 6 El Dorado County CFD No (Blackstone) History of Aggregate Assessed Valuations Fiscal Year through Fiscal Year Total % Change $83,287, ,157, % ,859, ,546,182 (39) ,859, ,416, ,714, ,615, ,129, Source: NBS 40

47 Due to the recent and ongoing nature of development of homes in the District, the County assessed valuations are not in all cases reflective of the most current development status, as is the case with certain properties in the District. As provided by Article XIII A of the California Constitution, property is assessed at the lower of the market value as of the date the property was last assessed (or 1975, which ever is more recent), increased by a maximum of 2% per year, or the current market value as of the annual lien date. The assessed values of parcels in the District thus reflect, for undeveloped parcels, the estimate of the County Assessor (the Assessor ) of market value when acquired (or 1975, whichever is later), possibly increased by 2% per year, and for parcels on which construction has occurred since their date of acquisition, the Assessor's estimate of market value as of the time of construction, possibly increased by 2% per year. The actual market value of parcels in the District, if sold at foreclosure, may be higher or lower than the Assessor's assessed values, depending upon the date of the Assessor's most recent assessment. The actual fair market value of any parcel can often be more accurately established through an arms-length sale or an appraisal by an independent appraiser. The assessed value of property can be lowered due to declines in market value to comply with the provisions of Article XIIIA, as described in the preceding paragraph. In the event of such a decline, the Assessor annually reviews and adjusts those properties under a lowered value to reflect the current market value as of the lien date. Increases in assessed valuation after such reductions can exceed 2% per year until the assessed valuation prior to such downward adjustment is reached. Because of the general limitation to 2% per year in increases in full cash value of properties that remain in the same ownership, the County tax roll does not reflect values uniformly proportional to actual market values. No assurance can be given that, should a parcel with delinquent Special Taxes be foreclosed and sold for the amount of the delinquency, any bid will be received for such property, or that if a bid is received, such bid will be sufficient to pay such delinquent installments. Appraisal of Certain Parcels The County ordered preparation of an appraisal report of the not-less-than estimated market value of all parcels without an improvement value for the fiscal year Assessment Roll. The Appraised Property includes 862 parcels in the District, consisting of 29 unimproved custom lots, 109 partially improved production lots, 407 finished production lots, 62 partially completed homes and 255 completed single-family homes not assessed for an improvement value on the County property tax roll (the Appraisal ). The Appraisal was prepared by Seevers Jordan Ziegenmeyer, Sacramento, California (the Appraiser ). The description herein of the Appraisal is intended for limited purposes only; a copy of the Appraisal is available from the County upon request, and is also attached hereto in its entirety as APPENDIX C. The conclusions reached in the Appraisal are subject to certain assumptions, hypothetical conditions and qualifications which are set forth in the Appraisal. A summary of the appraised value of the appraised parcels, broken out by ownership and development status, as of May 11, 2016 date is as follows: 41

48 Owner Custom Lots Partially Improved Lots Finished Lots Partially Completed Homes Completed Homes Total Appraised Value Individual Homeowners $55,930,000 Lennar ,180,000 Standard Pacific Homes ,490,000 K. Hovnanian Homes ,600,000 KB Home ,030,000 Meritage Homes ,480,000 The New Home Company ,000,000 AKT ,010,000 Danny and Sheralyn Di Re ,000 Totals $261,270,000 The Appraiser's opinion that the cumulative, or aggregate, value of the fee simple interest in the appraised properties, in accordance with the assumptions and conditions set forth in the Appraisal, is no less than $261,270,000. This estimated value represents a not-less-than value due to the fact that the Appraiser was requested to provide a market value of the smallest floor plan (by project) on each of the 255 completed single-family homes not currently assessed for an improvement value on the County property tax roll. The aggregate value is not the market value of the appraised properties in bulk. As defined by The Dictionary of Real Estate Appraisal, an aggregate value is the total of multiple market value conclusions. For purposes of the Appraisal, market value was estimated by ownership. The estimates of market value account for the impact of the lien of the Special Taxes securing the bonds. The estimates of market value, by ownership, estimated in the Appraisal specifically assume the appraised properties are not marketed concurrently, which would suggest a market under duress. The market value of the appraised properties by ownership and Assessor s parcel can be found in the appendix to the Appraisal. See APPENDIX C. Additional details on each owner s ownership of appraised properties can be found in APPENDIX C THE APPRAISAL. In considering the estimate of value evidenced by the Appraisal, it should be noted that the Appraisal is based upon a number of standard and special assumptions that affect the estimate as to value, as discussed below and in the Appraisal. Because the Appraisal sets forth the Appraiser s opinion as to value only as of the date of such Appraisal, it does not reflect any changes to value that have occurred since that date or which may occur in the future. Property values may not be evenly distributed throughout the District; thus, certain parcels may have a greater value than others. This disparity is significant because in the event of nonpayment of the Special Tax, the only remedy is to foreclose against the delinquent parcel. No assurance can be given that the foregoing valuation can or will be maintained during the period of time that the Bonds are outstanding in that the County has no control over the market value of the property within the District or the amount of additional indebtedness that may be issued in the future by other public agencies, the payment of which, through the levy of a tax or an assessment, may be on a parity with the Special Taxes. See Priority of Lien below. There were no hypothetical conditions upon which the estimates of value were based. However, the Appraisal is based upon a number of standard and extraordinary assumptions, which affect the estimates as to value of the appraised parcels, some of which include the 42

49 following. See APPENDIX C The Appraisal for a complete list of the assumptions used by the Appraiser. The Appraiser assumed that there are no adverse soil conditions, toxic substances or other environmental hazards that may interfere or inhibit development of the appraised parcels. If, at some future date, items are discovered that are determined to have a detrimental impact on value, the Appraiser reserves the right to amend the opinion of value stated in the Appraisal. The aggregate value presented in the Appraisal is not the market value in bulk of the entire subject property. As defined by The Dictionary of Real Estate Appraisal, an aggregate value is the total of multiple market value conclusions. For purpose of the Appraisal, market value has been estimated by the individual ownerships only. The Appraiser has also assumed that there is no hazardous material on or in the property that would cause a loss in value. The value estimated is predicated on the assumption there is no such material on or in the property that would cause a loss in value. No responsibility is assumed by the Appraiser for such conditions or for any expertise or engineering knowledge required to discover them. Investors are urged to retain an expert in this field, if desired. Site cost and permits and fees estimates were provided to the Appraiser by a representative of the Master Developer, Mr. Ryan Fong (River Rock Development Company), who in turn procured the figures from the respective individual developers, where possible. The Appraiser assumed the cost/fee estimates are accurate and complete, and relied upon them in the analysis contained in the Appraisal. Potential investors should note there were a few components within the appraised properties for which the Appraiser was unable to obtain site cost estimates and/or permits and fees information. However, the Appraiser was able to estimate these figures based upon its knowledge of other costs/fees within Blackstone. Any deviation of actual costs from the estimates inputted in the Appraisal could materially affect the conclusion(s) of value contained therein. The Appraiser assumed that all remaining lots within the appraised properties have allocated water rights from the El Dorado Irrigation District (EID), as was represented by the development group. Any deviation from this assumption could materially affect the conclusion(s) of value contained therein. Based on the Assessed Valuation and the appraised valuation, the estimated Composite Value of property in the District is as follows: Parcels Number of Planned Homes FY15-16 Assessed Value Appraised Value Composite Value Completed homes on FY15-16 roll (1) 604 $ 302,109,876 N/A $ 302,109,876 Appraised parcels ,019, ,270, ,270,000 1,466 $ 363,129,665 $261,270,000 $ 563,379,876 (1) Includes all parcels with an improvement value of at least $40,000 on the FY15-16 roll. Source: NBS for assessed values, Seevers Jordan Ziegenmeyer for the appraised value. For a description of certain risks that might affect the assumptions made in the Appraisal, see SPECIAL RISK FACTORS herein. 43

50 Special Tax Revenue The following table summarizes the allocation of the projected fiscal year Special Tax levy by development status in the District: TABLE 7 Community Facilities District No (Blackstone) Special Tax Levy by Land Use FY16-17 Land Use Category Lots (2) Expected Lots (3) Composite Values Total (4) Tax Levy % of Levy Completed homes as of June 1, 2016 (1) $428,807,319 $1,432, % Single Family Lots Under Development Village 6 - K Hovnanian ,060, , Village 6 - KB Homes ,395,000 61, Village 5A, 7, X, Y and Z - Lennar Homes ,033, , Village 5B - Meritage Homes ,880,000 59, Lot W - New Home Co ,000,000 73, Village 3 - Standard Pacific ,229, , Unimproved Custom Lots (5) Lot Y and Z - AKT West Vlly Investors ,619 3, Village 3 and 7 - AKT West Vlly Investors ,381 11, Village 5C - Di Re Danny D & Sheralyn ,000 9, Undeveloped Parcels (6) Lot V - Lennar Homes ,570, Total 1,381 1,466 $564,534,876 $2,424, % (1) Developed with completed homes. The Appraiser reported 859 completed homes and 62 homes under construction as of May 11, The difference in the number of completed homes shown above compared to the 859 homes identified in the appraisal is due to lagging County data sources. (2) Current active lots. (3) Lots expected at buildout. (4) Values based on a combination of secured roll assessed values and May 2016 appraisal values with slight differences due to rounding amounts. (5) These parcels have tentative maps approved for reconfiguring parcels that previously had been final mapped. Consequently these parcels are taxed as Developed Parcels per the Rate and Method. (6) O n July , the County Board approved a final map for Lot V, creating 70 single-family lots. Consequently, these parcels will be taxed as Developed Parcels per the Rate and Method beginning in FY Source: NBS 44

51 Special Tax Collection and Delinquency Rate The table below shows the annual Special Tax levies and current delinquencies for the past five years, with collections reflected as of May 1, TABLE 8 County of El Dorado Community Facilities District No (Blackstone) Special Tax Levy & Delinquencies Amounts Delinquent Total Special At Fiscal Year End As of May 1, 2016 Tax Levy In $ As In $ As % Fiscal Year % $2,081,905 $1, % $ % ,121, ,162,937 3, , ,211,118 1, , ,244,541 N/A N/A 17, Source: NBS Future delinquencies in the payment of property taxes (including the Special Taxes) with respect to property in the District could result in draws on the Reserve Fund established, and perhaps, ultimately, a default in the payment on the Bonds. See SPECIAL RISK FACTORS. Value to Special Tax Burden Ratios The value of the land within the District is a critical factor in determining the investment quality of the Bonds. If a property owner defaults in the payment of a Special Tax, the County's only remedy is to foreclose on the delinquent property in an attempt to obtain funds with which to pay the delinquent Special Taxes. See SECURITY FOR THE BONDS - Covenant to Commence Superior Court Foreclosure and SPECIAL RISK FACTORS - Bankruptcy and Foreclosure Delays. Reductions in District property values due to a downturn in the economy, natural disasters such as earthquakes or floods, stricter land use regulations or other events could have an adverse impact on the security for payment of the Special Taxes. The Special Tax is levied on each parcel within the Districts and only the respective individual parcel is responsible for such Special Tax. In comparing the value of the real property within the District and the principal amount of the Bonds, it should be noted that only the real property upon which there is a delinquent Special Tax can be foreclosed upon, and the real property within the District cannot be foreclosed upon as a whole to pay delinquent Special Taxes of the owners of such parcels within the District unless all of the property is subject to a delinquent Special Tax. In any event, individual parcels may be foreclosed upon separately to pay delinquent Special Taxes levied against such parcels. The following tables summarize the top property owners by levy amount and composite values based on parcel ownership information as of June 1, This information does not reflect subsequent sales by merchant builders to individuals. 45

52 TABLE 9 El Dorado County Community Facilities District No (Blackstone) Top Property Owners by Levy Amount FY Assessed Values Owner Lots Lots Land Value Value Value Value (3) Value (4) Levy Levy (1) (2) Expected Structure Total Assessed Appraised Composite FY15-16 Tax % of Tax Lennar Homes of Ca Inc $25,061,916 $0 $25,061,916 $101,180,000 $102,335,000 $557,695 25% Standard Pacific A De Corp ,992,809 3,480,962 10,473,771 28,490,000 32,585, ,485 8 K Hovnanian Blackstone ,014, ,014,637 25,600,000 25,600, ,791 6 Ca Meritage Homes of Ca Inc ,009,646 1,667,259 2,676,905 17,480,000 19,206,413 95,569 4 KB Homes Sacramento Inc ,482,855 1,595,000 7,077,855 15,030,000 17,068,536 80,819 4 AKT West Vlly Investors Ca , ,157 1,010,000 1,010,000 15,828 1 New Home Co Nor Ca A , ,001 16,000,000 16,000,000 12,710 1 De LL Di Re Danny D & Sheralyn , , , ,000 9,752 0 All Others ,185, ,292, ,478,002 55,930, ,179,213 1,148, Total: 1,381 1,466 $146,093,851 $217,035,814 $363,129,665 $261,270,000 $564,534,876 $2,244, % (1) Ownership data as of June 1, 2015; does not reflect all ownership changes from home closings since that date. (2) Current active lots. (3) Appraised values have been rounded down on a per parcel basis. (4) Values based on a combination of secured roll assessed values and appraisal values, with minor differences attributable to rounding. Source: NBS 46

53 TABLE 10 El Dorado County Community Facilities District No (Blackstone) Value to Bonded Debt Categories Value-to-Debt Category Parcels Planned Homes Composite Value Total Allocated Bond Share Special Tax Levy Percent of Levy (1) (2) Anticipated FY :1 and Greater $386,477,383 $16,058,494 $1,199, % Equal to or greater than 10:1 less than 20: ,556,210 6,455, , Equal to or greater than 5:1 less than 10: ,732,629 9,486, , Equal to or greater than 3:1 less than 5: ,581, ,524 28, Equal to or greater than 2:1 less than 3: ,628 53,267 3, Equal to or greater than 1:1 - less than 2: ,469 26,634 1, Total 1,381 1,466 $564,534,877 $32,465,463 $2,424, % (1) Current active lots (2) Estimated Par Amount of $28 million plus overlapping debt (which has been allocated based on the FY15-16 assessed values). Source: NBS 47

54 Other public agencies whose boundaries overlap those of the District could, without the consent of the County and in certain cases without the consent of the owners of the land within the District, impose additional taxes or assessment liens on the land within the District. The purpose would be to finance additional regional or local public improvements or services. The lien created on the land within the District through the levy of such additional taxes or assessments may be on a parity with the lien of the Special Tax. In addition, construction loans may be obtained by the Current Developer or home loans may be obtained by ultimate homeowners. The deeds of trust securing such debt on property within the District, however, will be in a junior position to the lien of the Special Tax. Direct and Overlapping Governmental Obligations Priority of Lien. The principal of and interest on the Bonds are payable from the Special Tax authorized to be collected within the District, and payment of the Special Tax is secured by a lien on certain real property within the District. Such lien is co-equal to and independent of the lien for general taxes and any other liens imposed under the Act, regardless of when they are imposed on the property in the District. The imposition of additional special taxes, assessments and general property taxes will increase the amount of independent and co-equal liens which must be satisfied in foreclosure. The County, the County and certain other public agencies are authorized by the Act to form other community facilities districts and improvement areas and, under other provisions of State law, to form special assessment districts, either or both of which could include all or a portion of the land within the District. There can be no assurance that the property owners within the District will not petition for the formation of other community facilities districts and improvement areas or for a special assessment district or districts and that parity special taxes or special assessments will not be levied by the County or some other public agency to finance additional public facilities, however no other special districts are currently contemplated by the County or the Current Developer. Private liens, such as deeds of trust securing loans obtained by a property owner, may be placed upon property in the District at any time. Under California law, the Special Taxes have priority over all existing and future private liens imposed on property subject to the lien of the Special Taxes. Overlapping Debt Statement. Contained within the boundaries of the District are certain overlapping local agencies providing public services. Many of these local agencies have outstanding debt. The direct and overlapping debt affecting the District as of May 13, 2016, is shown in the table below, a direct and overlapping debt report (the Debt Report ) prepared by California Municipal Statistics, Inc. The Debt Report is included for general information purposes only. Neither the County nor the Underwriter has reviewed the Debt Report for completeness or accuracy and makes no representation in connection therewith. The Debt Report generally includes long term obligations sold in the public credit markets by public agencies whose boundaries overlap the boundaries of the District in whole or in part. These long-term obligations are not payable from revenues of the District (except as indicated) nor are they necessarily obligations secured by land within the District. In many cases long-term obligations issued by a public agency are payable only from the general fund or other revenues of such public agency. The amount shown reflects the amount outstanding as of the date indicated and does not reflect the amount of authorized but unissued debt. The contents of the Debt Report are as follows: (1) the first column indicates the public agencies that have outstanding debt as of the date of the Debt Report and whose territory overlaps the District; (2) the second column shows the percentage of the assessed valuation of the overlapping 48

55 public agency identified in column 1 which is represented by property located within the District; and (3) the third column is an apportionment of the dollar amount of each public agency's outstanding debt (which amount is not shown in the table) to property in the District, as determined by multiplying the total outstanding debt of each agency by the percentage of the public agency's assessed valuation represented in column 2. TABLE 11 County of El Dorado Community Facilities District No (Blackstone) Direct and Overlapping Governmental Obligations As of May 13, 2016 EL DORADO COUNTY COMMUNITY FACILITIES DISTRICT NO Local Secured Assessed Valuation: $360,093,449 (Land and Improvements) DIRECT AND OVERLAPPING TAX AND ASSESSMENT DEBT: % Applicable Debt 5/1/16 Los Rios Community College District General Obligation Bonds 0.220% $770,820 El Dorado Union High School District General Obligation Bonds ,271,128 Buckeye Union School District General Obligation Bonds ,465,035 El Dorado Irrigation District General Obligation Bonds ,481 El Dorado County Community Facilities District No ,920,000 (1) TOTAL DIRECT AND OVERLAPPING TAX AND ASSESSMENT DEBT $32,465,464 Ratios to Assessed Valuation: Direct Debt ($28,920,000) % Total Direct and Overlapping Tax and Assessment Debt % (1) Reflects outstanding 2005 Bonds; Excludes the Bonds. Source: California Municipal Statistics, Inc. 49

56 Estimated Tax Burden on Single Family Home Based on the fiscal year assessed valuation of $520,500, for an average home within the District the County s District Administrator has estimated that the overall tax burden on such home estimated to be approximately 1.60% in fiscal year , as shown below. TABLE 12 El Dorado County CFD No (Blackstone) Illustrative Tax Burden for Single-Family Residential Parcel* (Fiscal Year Estimate) Anticipated FY Amount Basic Prop 13 Property Taxes $5,205 GO Overrides 282 Total General Tax $5,487 Blackstone Special Taxes $1,616 (1) Other Taxes and Fees 1,242 Total Taxes and Charges $8,345 Assessed Value: $520,500 Total Taxes as % of AV 1.60% (1) The anticipated Special Tax for FY * The sample parcel was selected due to having an average assessed value and billing amount for developed parcels in the District. Source: NBS 50

57 SPECIAL RISK FACTORS The following is a discussion of certain risk factors which should be considered, in addition to other matters set forth herein, in evaluating the investment quality of the Bonds. This discussion does not purport to be comprehensive or definitive. The occurrence of one or more of the events discussed herein could adversely affect the ability or willingness of property owners in the District to pay their Special Taxes when due. Such failures to pay Special Taxes could result in a rapid depletion of the Reserve Fund and/or a default in payments of the principal of, and interest on, the Bonds. In addition, the occurrence of one or more of the events discussed herein could adversely affect the value of the property in the District. See " - Land Values" below. Concentration of Property Ownership A portion of the taxable property in the District is currently under development and owned by several merchant builders. Such concentration of ownership means that the timely payment of the Bonds is dependent upon the continued willingness and ability of these merchant builders and the other developer entities to pay the Special Taxes when due. Until further diversification of ownership occurs, the failure of the merchant builders or others purchasing substantial portions of the property in the District to pay installments of the Special Taxes when due could result in the rapid total depletion of the Reserve Funds prior to reimbursement from delinquent collections or the sale or redemption of the property in connection with foreclosure proceedings. If additional delinquencies were to occur following depletion of the Reserve Funds, there could be a delay in payments to the Bondholders of principal of and interest on the Bonds. The County has covenanted for the benefit of the owners of the Bonds that the County will initiate judicial foreclosure proceedings under certain conditions in the event of a delinquency in payment of one or more installments of the Special Tax as more fully described herein. See "SECURITY FOR THE BONDS - Delinquent Payments of Special Tax; Covenant for Foreclosure." Although the only asset of any owner of real property subject to the Special Tax securing the Bonds is such real property, the overall financial condition of the owner may affect the owner's willingness or ability to pay the Special Tax when due. Failure or Inability to Complete Proposed Development on a Timely Basis A major risk to the Bondholders is that development within the District may be subject to unexpected delays, disruptions and changes which may affect the willingness and ability of the property owners to pay Special Taxes when due. For example, proposed development within the District may be adversely affected by economic conditions, an inability of the merchant builders or future owners of the parcels to obtain financing, fluctuations in the real estate market or interest rates, unexpected increases in development costs, changes in federal, state or local governmental policies relating to the ownership of real estate, water allocation related issues, or the appearance of previously unknown environmental impacts necessitating preparation of a supplemental environmental impact report, and by other similar factors. Partially developed land may be less valuable than developed land and may provide less security to the owners of the Bonds should it be necessary for the District to foreclose on undeveloped property due to the nonpayment of Special Taxes. Moreover, failure to complete the development on a timely basis could adversely affect the land values of those parcels which have been completed. Lower land values result in less security for the payment of principal of and interest on the Bonds and lower proceeds from any foreclosure sale necessitated by delinquencies in the payment of the Special Tax. 51

58 Disclosures to Future Purchasers The District has recorded a Notice of Special Tax Lien in the Office of the County Recorder. While title companies normally refer to such notices in title reports, there can be no guarantee that such reference will be made or, if made, that a prospective purchaser or lender will consider such Special Tax obligation in the purchase of a parcel of land, a home or a commercial or retail facility in the District or the lending of money thereon. The Act requires the subdivider (or its agent or representative) of a subdivision to notify a prospective purchaser or long-term lessor of any lot, parcel, or unit subject to a Mello-Roos special tax of the existence and maximum amount of such special tax using a statutorily prescribed form. California Civil Code Section b requires that in the case of transfers other than those covered by the above requirement, the seller must at least make a good faith effort to notify the prospective purchaser of the special tax lien in a format prescribed by statute. Failure by an owner of the property to comply with the above requirements, or failure by a purchaser or lessor to consider or understand the nature and existence of the Special Tax, could adversely affect the willingness and ability of the purchaser or lessor to pay the Special Tax when due. Impact Fees Litigation - Austin v. County of El Dorado In December 2015, a lawsuit was filed claiming that the County failed to adopt the required periodic findings specified by statute with respect to the collection and expenditure of development impact fees collected by the County and deposited into eight County-maintained funds, and the County is thus obligated to refund all moneys held in these funds to the current lot owners. Of the eight impact fee funds that are the subject of the litigation, Developer paid specific impact fees into these five funds: 2004 General Plan El Dorado Hills, 2004 General Plan Highway 50 Variable Fee Fund, El Dorado Hills County Safety Fee Fund, El Dorado Hills Community Services District Park Fee Fund, El Dorado Hills County Water District Fire Impact Fee Fund. The impact fees are imposed, collected, and programmed by the County with the exception of the park and fire funds. The lawsuit has no direct impact on the construction or completion of development within the District. If plaintiffs ultimately prevail and the County is required to refund the moneys held in these funds to the current lot owners, it may potentially delay the construction or completion of public road improvements and park facilities in the El Dorado Hills area. Future Land Use Regulations Notwithstanding that the Development Agreement and certain other land use approvals have been obtained, no assurance can be given that such documentation will ultimately exempt the remaining development from future land use or development restrictions, such as a limitation on the number of building permits that the County may issue each year. There are currently no reported cases in California which address the issue of whether the provisions of the Development Act, coupled with the existence of a recorded development agreement, will succeed in overriding the provisions of a subsequently enacted voter initiative or certain other land use regulations, including those of successor cities. Because the completion of the 88 lots without meter letters will not occur for several years, the imposition of future initiatives and other regulations on the Development could cause delays and cost increases not currently anticipated, thereby reducing the ability or willingness of property owners to pay the Special Taxes when due or causing land values within the District to decrease from those on the County s assessment roll or as estimated by the Appraiser. See "SPECIAL RISK FACTORS - Land Values" herein. 52

59 It is also possible that future federal or state regulations, or regulations of other public agencies having jurisdiction over an aspect of the Development, could be applicable to the Development and could negatively affect the ability to complete the proposed Development. For example, EID could impose a water moratorium or new restrictions on the number of water allocations granted each year. In addition, it is the County's understanding that any further use of Folsom Reservoir for water supplies will require that EID must enter into a contract with the United States Bureau of Reclamation (the "Bureau") for the use of the Bureau's Folsom Lake storage facilities. Before entering into this contract, the Bureau may be required to initiate and complete a consultation with the United States Fish and Wildlife Service under Section 7 of the Federal Endangered Species Act. This process could add to the time required for completion of the Development and could result in additional restrictions on the use of such water supplies, including related land use restrictions. In addition, measures could be imposed to protect any endangered species which might be identified in or near the Development in the future (see "Endangered Species'). This possibility presents a risk to prospective purchasers of the Bonds, or beneficial. ownership interests therein, in that an inability to complete the Development as planned increases the risk that the Bonds will not be repaid when due. See "SPECIAL RISK FACTORS - Failure or Inability to Complete Proposed Development on a Timely Basis. California Drought; State of Emergency Proclamation On January 17, 2014, with California facing water shortfalls in the then-driest year in recorded state history, Governor Edmund G. Brown Jr. proclaimed a State of Emergency and directed state officials to take all necessary actions to prepare for these drought conditions. In the State of Emergency declaration, Governor Brown directed state officials to assist farmers and communities that were economically impacted by dry conditions and to ensure the State could respond if Californians faced drinking water shortages. The Governor also directed State agencies to use less water and hire more firefighters and greatly expanded water conservation public awareness. In addition, the proclamation gave state water officials more flexibility to manage supply throughout California under drought conditions. The Governor s drought State of Emergency declaration followed a series of actions the administration had taken to ensure that California was prepared for record dry conditions. In May 2013, Governor Brown issued an Executive Order to direct State water officials to expedite the review and processing of voluntary transfers of water and water rights. Following these actions and the State of Emergency declaration, the Governor formed a Drought Task Force to review expected water allocations, California s preparedness for water scarcity and whether conditions merited a drought declaration. California set a new low water mark on April 1, 2015, with its early-april snowpack measurement. The statewide electronic reading of the snowpack s water content stood at 1.4 inches, or 5 percent, of the 28-inch average. The lowest previous reading since 1950 was 25 percent of the average, so water year 2015 was the driest winter in California s written record. Subsequently, on April 1, 2015, for the first time in State history, the Governor directed the State Water Resources Control Board to implement mandatory water reductions in cities and towns across California to reduce water usage by 25 percent. This savings amounted to approximately 1.5 million acre-feet of water over nine months. Following a wet winter that partly replenished the mountain snowpack and a year of savings in State water use, the State Water Resources Control Board announced that it would suspend the mandatory Statewide reduction in urban water use, effective June 1, Although the State is still in a drought, the State Water Resources Control Board adopted new rules that would allow local communities to set their own conservation standards based on their own projection of water supplies, 53

60 assuming that the next three years would continue to be uncommonly dry. These projections would be subject to State review, and the State could impose restrictions on communities it determines were being unrealistic. Should communities revert to water-wasting habits, or if subsequent years are dry again, the State may return to the mandatory statewide reductions. The County cannot predict how long the drought conditions will last, what effect drought conditions may have on property values or whether or to what extent water reduction requirements in effect today or mandated in the future may affect the District. Water Reports On August 22, 1995, The Board of Supervisors adopted Ordinance No (the Water Ordinance ). The Water Ordinance requires the County to obtain water supply and demand data (the Water Data ) from public water agencies and districts within the County, provide for public review of the Water Data, and hold public hearings prior to acceptance of the Water Data. The Water Ordinance further requires that a long term water plan be prepared and updated annually. This plan is required to contain information relating to public water needs of projects in the County, and a water availability assessment for each public water district, among other things. The County is required to mail a summary of this assessment to all County property owners on the current property tax assessment roll. The County does not believe it is currently in compliance with all of the requirements of the Water Ordinance, and has not provided a summary of the water availability assessment to the County property owners on its most recent property tax assessment roll. The County does not believe that such instances of non-compliance will have any negative impacts on the proposed development in the District. Potential Impact of Water Shortage As described herein under "THE DISTRICT - Water Availability," the number of existing water allotments is limited, and no assurance can be made that additional water supplies will be made available or that existing supplies will not be reduced. EID has invoked water shortage emergency powers pursuant to California Water Code Section 350 et seq. during two periods within the last 15 years (from March 12, 1990 through June 12, 1992 and from November 9, 1992 through August 9, 1993). In the first case, this was due to a perceived shortage of water supply, and in the second case, delivery of available water supply was interrupted as a result of a major forest fire. In the first case, EID ceased allowing new hook-ups pending confirmation of its capacity to serve but constructed facilities to more fully utilize existing water supplies which were made available for new hook-ups. In the second case, EID developed water conservation plans and water shortage response measures to deal with this and future emergencies. While the Master Developer projects that there will be sufficient allotments available to all parcels within the District, including the remaining 18 lots without meter letters, no assurance can be made that this will in fact be the case. See "THE DISTRICT - Water Availability" above. Moreover, the County, like most of the State of California, experienced an extended drought period that began in 1987 and continued until the winter of and is currently experiencing an extended drought again. Due to the volatility of weather patterns, there can be no assurance that drought conditions will not persist or reoccur and such conditions can affect water allocation plans that otherwise would have accommodated full development of the District and in the event that the water supply is cut off to future phases of the development by virtue of existing limitations or future actions resulting from drought 54

61 conditions, or by virtue of water moratoriums or any other reason, development within the District may be delayed. See also the risk factor Future Land Use Regulations above. Earthquakes The District, like all California communities, may be subject to unpredictable seismic activity. The occurrence of seismic activity in the District could result in substantial damage to properties in the District which, in turn, could substantially reduce the value of such properties and could affect the ability or willingness of the property owners to pay their Special Taxes. The District is not located in any existing special study zone delineated by the Chief of the Division of Mines and Geology of the State of California as an area of known active faults and is not otherwise known to be located within an area of any significant seismic activity. Endangered Species It is illegal to harm or disturb any plants or animals in their habitat that have been listed as endangered species by the United States Fish & Wildlife Service under the Federal Endangered Species Act or by the California Fish & Game Commission under the California Endangered Species Act without a permit. During recent years, there has been an increase in activity at the State and federal level related to the possible listing of certain plant and animal species found in California as endangered species. An increase in the number of endangered species is expected to curtail development in a number of areas. The Master Developer indicates that no special status plant or wildlife species were found on site during the field surveys conducted in preparation of the EIR. According to the Master Developer, a few Valley Elderberry Longhorn Beetle ("VELB") bushes have been identified to date, but the Master Developer indicates that it has complied with all regulatory requirements by avoiding all bushes that are protected, and such bushes do not hinder the development plan. The Master Developer reports that there has been no other indication to date that any plant or animal species listed (or proposed for listing by the California Department of Fish and Game or the United States Fish and Wildlife Service) as threatened or endangered under either the State of California or federal endangered species acts, inhabits any of the property within the District. Notwithstanding this fact, new species are proposed to be added to the State and federal protected lists on a regular basis. Any action by the State or federal governments to protect species located on or adjacent to the property within the District could negatively affect the Master Developer's or other property owner s ability to complete the Development as planned. This, in turn, could reduce the likelihood of timely payment of the Special Taxes and would likely reduce the value of the land and the potential revenues available at a foreclosure sale for delinquent Special Taxes. See "SPECIAL RISK FACTORS - Failure or Inability to Complete Proposed Development on a Timely Basis" and " - Land Values." 55

62 Hazardous Substances While governmental taxes, assessments, and charges are a common claim against the value of a taxed parcel, other less common claims may be relevant. One of the most serious in terms of the potential reduction in the value that may be realized to pay the Special Tax is a claim with regard to hazardous substances. In general, the owners and operators of parcels within the District may be required by law to remedy conditions of the parcels related to the releases or threatened releases of hazardous substances. The federal Comprehensive Environmental Response, Compensation, and Liability Act of 1980, sometimes referred to as "CERCLA" or the " Superfund Act," is the most wellknown and widely applicable of these laws, but California laws with regard to hazardous substances are also stringent and similar. Under many of these laws, the owner or operator is obligated to remedy a hazardous substances condition of a property whether or not the owner or operator has anything to do with creating or handling the hazardous substance. There exists in western portions of the County serpentine bedrock which can contain a natural form or forms of asbestos. Disturbance of the serpentine bedrock during development could release asbestos into the air. In response to this potential for release of asbestos into the air, the County adopted and is implementing Ordinance No which contains construction control measures to be applied whenever development occurs within serpentine bedrock. Those measures require sites to be kept wet and machinery to be kept dust free during periods of exposure and work in serpentine bedrock. See "Naturally Occurring Asbestos" below. The effect of any parcel within the District being affected by a hazardous substance could be to reduce the marketability and value of the parcel by the costs of remedying the condition, because the owner is obligated to remedy the condition. Further, such liabilities may arise not simply from the existence of a hazardous substance but from the method of handling it. All of these possibilities could significantly affect the financial and legal ability of a property owner to develop the affected parcel or other parcels, as well as the value of the property that is realizable upon a delinquency and foreclosure. The Appraisal does not take into account the possible liability of the owner (or operator) for the remedy of a hazardous substance condition of the parcel. Naturally Occurring Asbestos Naturally occurring asbestos is found in the rocks (primarily serpentine) and soil of EI Dorado Hills. Natural weathering or human disturbance can break the asbestiform minerals down to microscopic fibers, which are easily suspended in air. There is no known health threat if asbestos fibers in soil remain undisturbed and do not become airborne. When inhaled, these thin fibers irritate tissues and resist the body's natural defenses. Asbestos causes cancers of the lung (such as mesothelioma) and the lining of internal organs, asbestosis, and other diseases that inhibit lung function. Scientists consider certain types of asbestos fibers (i.e., tremolite fibers and similarly structured amphibole asbestos particles) that are frequently identified in EI Dorado County to be more potent than other types in causing mesothelioma. In response to the potential for release of asbestos fibers into the air, the County first adopted a ordinance that contains construction control measures to be applied whenever development occurs in areas containing serpentine rock. These regulations do not prohibit construction activities, but in areas where naturally occurring asbestos can be found, construction projects must have dust-control measures in place as well as mitigation procedures for soil and rock areas disturbed by construction. In addition, the asbestos ordinance requires a disclosure as part of real estate transactions for properties where naturally occurring asbestos soils are known to have been disturbed. In 2002, a vein of rock containing amphibole asbestos was uncovered during construction of new soccer fields at Oak 56

63 Ridge High School, which is located in Serrano, north of Highway 50 approximately 5 miles from the District. As a result, the U.S. Environmental -Protection Agency (EPA) conducted a comprehensive investigation to assess the potential for exposure from naturally occurring asbestos. In 2004, the EPA collected samples in local community areas and schools, including children's playgrounds and local parks. The EPA collected fixed samples of air and soil and "activity-based" samples of air. The "activity-based" air samples were collected during simulated recreational activities to more accurately estimate the level of exposure for children and adults engaged in these activities. The EPA's report of its investigation showed that asbestos fibers were found in almost all of the samples collected. On August 16, 2011, the Agency for Toxic Substances and Disease Registry (ATSDR) of the U.S. Department of Health and Human Services released the final version of its report on its health consultation, titled "Evaluation of Community-Wide Asbestos Exposures, EI Dorado Hills Naturally Occurring Asbestos Site." ATSDR reached two conclusions in the health consultation: breathing in naturally occurring asbestos in the EI Dorado Hills area, over a lifetime, has the potential to harm people's health, and reducing exposures to naturally occurring asbestos will protect people's health and is warranted in EI Dorado County based on estimates of past exposures. The report noted that mesothelioma incidence, which is tracked by the California Cancer Registry, was not higher than expected in western EI Dorado County at the time of the report. However, mesothelioma may take decades after exposure to appear. ATSDR recommended that state and local entities continue to enforce applicable dust regulations throughout the community, which will reduce releases of naturally occurring asbestos fibers and that community members and groups learn how to minimize their exposure to asbestos while conducting their normal activities. The health concerns associated with the presence of naturally occurring asbestos in EI Dorado Hills may adversely affect the marketability of property in the area. Direct and Overlapping Public Indebtedness The ability or willingness of an owner of land within the District to pay the Special Taxes could be affected by the existence of other taxes and assessments imposed upon the property. The lien of the Special Tax is co-equal to and independent of the lien for general property taxes, other special taxes, and certain special assessments. Thus the existence of general property taxes, other special taxes, and assessments may reduce the value-to-lien ratio of the affected parcels. In addition, other public agencies whose boundaries overlap those of the District could, with (or in some circumstances without) the consent of the owners of the land within the District, impose additional taxes or assessment liens on the property within the District in order to finance public improvements to be located inside of or outside of the District. The District and the County may have no control over the ability of other public agencies to issue indebtedness secured by special taxes or assessments payable from all or a portion of the property within the District. In addition, the property owners within the District may, without the consent or knowledge of the County or the District, petition other public agencies to issue public indebtedness secured by special taxes or assessments. Any such special taxes would create a lien on such property on a parity with that securing the Special Tax, and any such special assessments may create a lien on such property on a parity with that securing the Special Tax. The imposition of additional liens on a parity with the Special Taxes could reduce the ability or willingness of the landowners to pay the Special Taxes and increases the possibility that foreclosure proceeds will not be adequate to pay delinquent Special Taxes or the principal of and interest on the Bonds when due. Private Indebtedness Deeds of trust securing residential mortgages or construction financing may encumber certain 57

64 properties. Such existing private liens, as well as any future private liens secured by land within the District, are subordinate to the lien securing the Special Tax. Liens securing construction financing may be satisfied and released from residential parcels (using sale proceeds) when such parcels are sold. Nevertheless, the existence of such private debt and of any additional residential mortgages or construction financing that may be needed in connection with completion or sale of homes in the Development could reduce the ability of owners of the property to pay the Special Tax. In addition, other financial obligations of property owners, such as homeowners' association fees, may also affect their ability to pay the Special Tax. Collection of Special Tax In order to pay debt service on the Bonds, it is necessary that the Special Taxes against taxable land within the District be paid in a timely manner. Should the Special Taxes not be paid on time, the County has established Reserve Funds in the amount of the Reserve Requirements to pay debt service on the Bonds to the extent other funds are not available therefore. See "SECURITY FOR THE BONDS - Reserve Funds." The Fiscal Agent Agreements and the Act provide that the Special Tax is to be collected in the same manner as ordinary ad valorem property taxes are collected and, except as provided in the special covenant for foreclosure described below and in the Act, is to be subject to the same penalties and the same procedure, sale, and lien priority in case of delinquency as is provided for ad valorem property taxes. See "SECURITY FOR THE BONDS - Special Taxes." Pursuant to the Act, in the event of any delinquency in the payment of the Special Tax, the County may order the institution of a superior court action to foreclose the lien therefore within specified time limits. In such an action, the real property subject to the unpaid amount may be sold at judicial foreclosure sale. Such judicial foreclosure action is not mandatory. However, the County has covenanted for the benefit of the owners of the Bonds that the County will initiate judicial foreclosure proceedings under certain conditions in the event of a delinquency in the payment of one or more installments of the Special Tax as more fully described herein. In lieu of instituting any particular foreclosure action, the County will have the right, but not the obligation, to advance from any available funds, other than any funds or accounts established under the Fiscal Agent Agreements, the amount of the delinquency; all as more fully described herein under "SECURITY FOR THE BONDS - Delinquent Payments of Special Tax; Covenant for Foreclosure. " The County has enacted a Teeter Plan with respect to collection of the 1% base ad valorem property tax and with respect to general obligation bonds, but not with respect to special taxes or special assessments. In the event that sales or foreclosures of property are necessary, there could be a delay in payments to holders of the Bonds pending such sales or the prosecution of foreclosure proceedings and receipt by the County of the proceeds of sale if the Reserve Fund is depleted. See "SECURITY FOR THE BONDS - Delinquent Payments of Special Tax; Covenant for Foreclosure." The County may be unable to make full or timely payment of debt service on the Bonds if property owners fail to pay installments of the Special Tax when due, if the Reserve Funds are depleted, or if the County is unable to sell foreclosed parcels for amounts sufficient to cover the delinquent installments of the Special Tax. Maximum Annual Special Tax Rates Within the limits of the Special Tax, the County may adjust the Special Tax levied on all property within the District to provide an amount required to pay interest on and principal of and minimum sinking fund payments for the Bonds, and the amount, if any, necessary to cure delinquencies and replenish the Reserve Funds to an amount equal to the Reserve Requirements and 58

65 to pay all annual expenses. However, the amount of the Special Tax that may be levied against particular categories of property within the District is subject to the Maximum Annual Special Tax rates. In the event of delinquencies, there is no assurance that the imposition of the Maximum Annual Special Taxes on the various taxable parcels within the District will create enough revenue to pay debt service on the Bonds. For information concerning the Rate and Method, see "SECURITY FOR THE BONDS - Special Tax Methodology." No Rating of Junior Lien Bonds Ownership of the Junior Lien Bonds is subject to a significant degree of risk that may not be appropriate for some investors. The Junior Lien Bonds are not rated by any national rating agency, and the County does not presently intend to seek any rating of the Junior Lien Bonds nor does the County anticipate that the Junior Lien Bonds would qualify for an investment grade rating due to the structure and size of the Senior Lien Bonds. Exempt Properties Certain properties are exempt from the Special Tax in accordance with the Rate and Method. In addition, the Act provides that properties or entities of the State, federal or local government are exempt from the Special Tax; provided, however, that property within the District acquired by a public entity through a negotiated transaction or by gift or devise, which is not otherwise exempt from the Special Tax, will continue to be subject to the Special Tax. The Act further provides that if property subject to the Special Tax is acquired by a public entity through eminent domain proceedings, the obligation to pay the Special Tax with respect to that property is to be treated as if it were a special assessment. The constitutionality and operation of these provisions of the Act have not been tested. In particular, insofar as the Act requires payment of the Special Tax by a federal entity acquiring property within the District, it may be unconstitutional. If for any reason property within the District becomes exempt from taxation by reason of ownership by a nontaxable entity such as the federal government, another public agency or a religious organization, the Special Tax would have to be reallocated, subject to the limitation of the maximum authorized rates, to the remaining taxable properties within the District. This would result in the owners of such property paying a greater amount of the Special Tax and could have an adverse impact upon the timely payment of the Special Tax. Moreover, if a substantial portion of land within the District becomes exempt from the Special Tax because of public ownership or otherwise, the Maximum Annual Special Tax which could be levied upon the remaining acreage might not be sufficient to pay principal of and interest on the Bonds when due, and a default would occur with respect to the payment of such principal and interest. FDIC/Federal Government Interests in Properties General. The ability of the District to foreclose the lien of delinquent unpaid Special Tax installments may be limited with regard to properties in which the Federal Deposit Insurance Corporation (the FDIC ), the Drug Enforcement Agency, the Internal Revenue Service, or other federal agency has or obtains an interest. Federal courts have held that, based on the supremacy clause of the United States Constitution, in the absence of Congressional intent to the contrary, a state or local agency cannot foreclose to collect delinquent taxes or assessments if foreclosure would impair the federal government interest. The supremacy clause of the United States Constitution reads as follows: This Constitution, and the Laws of the United States which shall be made in Pursuance thereof; and all Treaties made, 59

66 or which shall be made, under the Authority of the United States, shall be the supreme Law of the Land; and the Judges in every State shall be bound thereby, any Thing in the Constitution or Laws of any State to the contrary notwithstanding. This means that, unless Congress has otherwise provided, if a federal governmental entity owns a parcel that is subject to Special Taxes within the District but does not pay taxes and assessments levied on the parcel (including Special Taxes), the applicable state and local governments cannot foreclose on the parcel to collect the delinquent taxes and assessments. Moreover, unless Congress has otherwise provided, if the federal government has a mortgage interest in the parcel and the District wishes to foreclose on the parcel as a result of delinquent Special Taxes, the property cannot be sold at a foreclosure sale unless it can be sold for an amount sufficient to pay delinquent taxes and assessments on a parity with the Special Taxes and preserve the federal government s mortgage interest. In Rust v. Johnson (9th Circuit; 1979) 597 F.2d 174, the United States Court of Appeal, Ninth Circuit held that the Federal National Mortgage Association ( FNMA ) is a federal instrumentality for purposes of this doctrine, and not a private entity, and that, as a result, an exercise of state power over a mortgage interest held by FNMA constitutes an exercise of state power over property of the United States. Bankruptcy and Foreclosure Delays The payment of Special Taxes and the ability of the County to foreclose the lien of a delinquent unpaid Special Tax could be significantly limited by bankruptcy, insolvency, or other laws generally affecting creditors' rights or by the laws of the State relating to judicial foreclosure. In addition, the prosecution of a foreclosure action could be delayed due to crowded local court calendars or delays in the legal process. The various legal opinions to be delivered concurrently with the delivery of the Bonds (including Bond Counsel's approving legal opinion) will be qualified, as to the enforceability of the various legal instruments, by bankruptcy, reorganization, insolvency or other similar laws affecting the rights of creditors generally. Although bankruptcy proceedings would not cause the Special Taxes to become extinguished, bankruptcy of a property owner could result in a delay in prosecuting superior court foreclosure proceedings and could result in the possibility of delinquent Special Tax installments not being paid in full. Such a delay would increase the likelihood of a delay or default in payment of the principal of and interest on the Bonds. As a result, sufficient monies might not be available in the Reserve Fund for transfer to the Redemption Fund to make up shortfalls resulting from delinquent payments of the Special Tax and thereby to pay principal of and interest on the Bonds on a timely basis. On July 30, 1992, the United States Court of Appeals for the Ninth Circuit issued its opinion in a bankruptcy case entitled In re Glasply Marine Industries. In that case, the court held that ad valorem property taxes levied by Snohomish County in the State of Washington after the date that the property owner filed a petition for bankruptcy were not entitled to priority over a secured creditor with a prior lien on that property. The court upheld the priority of unpaid ad valorem taxes imposed before the bankruptcy petition (the "pre-petition taxes"), but unpaid taxes imposed after the filing of the bankruptcy petition ("post-petition taxes") were declared to be unsecured "administrative expenses " of the bankruptcy estate, and were therefore held to be payable from the bankruptcy estate only after payment of all secured creditors. As a result, the secured creditor of the property was able to foreclose on the property and retain all of the proceeds of the sale except for the amount of the pre-petition taxes. 60

67 According to the court's ruling, as administrative expenses, post-petition taxes would have to be paid, but only if the debtor had sufficient assets not subject to other perfected security interests to do so. In certain circumstances, payment of such administrative expenses may also be allowed to be deferred. Once the property is transferred out of the bankruptcy estate (through foreclosure or otherwise) it would at that time again become subject to and would secure liens for then current and future ad valorem taxes. Glasply was controlling precedent on bankruptcy courts in the State of California for several years subsequent to the date of the Ninth Circuit's holding. Pursuant to state law, the lien date for general ad valorem property taxes levied in the State of California is the January 1 preceding the fiscal year for which the taxes are levied. Under the Glasply holding, a bankruptcy petition filing would have prevented the lien for general ad valorem property taxes levied in fiscal years subsequent to the filing of a bankruptcy petition from attaching and becoming a lien so long as the property was a part of the estate in bankruptcy. However, the Glasply holding was for the most part subsequently rendered inoperative with respect to the imposition of a lien for and the collection of ad valorem taxes by amendments to the federal Bankruptcy Code (Title 11 U.S.C.) which were part of the Bankruptcy Reform Act of 1994 (the "Bankruptcy Reform Act") passed by Congress during the later part of The Bankruptcy Reform Act added a provision to the automatic stay section of the Bankruptcy Code which, pursuant to Section 362(b)(18) thereof, excepts from the Bankruptcy Code's automatic stay provisions, "the creation of a statutory lien for an ad valorem property tax imposed by... a political subdivision of a state, if such tax comes due after the filing of the petition" by a debtor in bankruptcy court. The effect of this provision is to continue the secured interest of ad valorem taxes on real property (i.e., post-petition taxes) in effect during the period following the filing of a bankruptcy petition, including during the period bankruptcy proceedings are pending. Without further clarification by the courts or Congress, the original rationale of the Glasply holding could, however, still result in the treatment of post-petition special taxes as "administrative expenses," rather than as tax liens secured by real property, at least during the pendency of bankruptcy proceedings. This treatment might result from the fact that, although the lien of special taxes is of record from the date of the filing of a Notice of Special Tax Lien, the actual special tax is levied annually. As noted above, special taxes have a different lien date than the lien date for general ad valorem taxes in the State of California noted above. The lien of a Mello-Roos special tax attaches upon recordation of the notice of the special tax lien, as provided for in Section of the Act, as opposed to the annual January 1 lien date for general ad valorem taxes. Thus, in deciding whether the original Glasply ruling is applicable to a bankruptcy proceeding involving special taxes rather than general ad valorem property taxes, a court might consider the differences in the statutory provisions for creation of the applicable tax lien (general ad valorem or special tax) in determining whether there is a basis for post petition special taxes to be entitled to a lien on the property during pending bankruptcy proceedings. If a court were to apply Glasply to eliminate the priority of the special tax lien as a secured claim against property with respect to post-petition levies of the Special Taxes made against property owners within the District who file for bankruptcy, collections of the Special Taxes from such property owners could be reduced as the result of being treated as "administrative expenses" of the bankruptcy estate. Also, and most importantly, is the fact that the original holding in Glasply and the mitigation of that holding by the Bankruptcy Reform Act of 1994 both appear to be applicable only to general ad valorem taxes, and, therefore, the exemption from the automatic stay in Section 362(b)(18) discussed above may not be applicable to special taxes since they were not expressly mentioned or provided for in this section, nor defined to be included within the term "ad valorem taxes." 61

68 No Acceleration Provision The Bonds do not contain a provision allowing for the acceleration of the Bonds in the event of a payment default or other default under the terms of the Bonds or the Fiscal Agent Agreements. Pursuant to the Fiscal Agent Agreements, a bondholder is given the right, for the equal benefit and protection of all bondholders similarly situated, to pursue certain remedies described under "THE FISCAL AGENT AGREEMENT - Remedies of Bondholders." So long as the Bonds are in book-entry form, DTC will be the sole bondholder and will be entitled to exercise all rights and remedies of bondholders. See APPENDIX F DTC AND THE BOOK-ENTRY SYSTEM. Loss of Tax Exemption As discussed under the caption "LEGAL MATTERS - Tax Exemption," interest on the Bonds might become includable in gross income for purposes of federal income taxation retroactive to the date the Bonds were issued, as a result of future acts or omissions of the County in violation of its covenants in the Fiscal Agent Agreements. The Fiscal Agent Agreements do not contain a special redemption feature triggered by the occurrence of an event of taxability. As a result, if interest on the Bonds were to be includable in gross income for purposes of federal income taxation, the Bonds would continue to remain outstanding until maturity unless earlier redeemed pursuant to optional or mandatory redemption or redemption upon prepayment of the Special Tax. See "THE BONDS - Redemption." Ballot Initiatives From time to time initiative measures could be adopted by California voters which might place limitations on the ability of the State, the County or local public agencies to increase revenues or to increase appropriations or on the ability of the Developer to complete the Development. Government Code Section requires a city or county to permit the portion of a development project served by bond-financed infrastructure to proceed in a manner consistent with an approved tentative map or vesting tentative map, notwithstanding the effect of an initiative measure enacted at least 90 days after the issuance of bonds, if the legislative body of the city or county finds that as a result of the initiative measure there is likely to be a default on the land-secured bonds issued to finance such infrastructure. To date, there are no reported cases in California with respect to the constitutionality of Government Code Section Absence of Secondary Market for the Bonds No application has been made for a credit rating for the Junior Lien Bonds, and it is not known whether a credit rating could be secured either now or in the future for the Junior Lien Bonds. There can be no assurance that there will ever be a secondary market for purchase or sale of the Junior Lien Bonds. From time to time there may be no market for them, depending upon prevailing market conditions, the financial condition or market position of firms who may make the secondary market, the financial condition and results of operations of the owners of property located within the boundaries of the District, and the extent of the proposed development of the parcels within the District. The Junior Lien Bonds should therefore be considered long-term investments in which funds are committed to maturity, subject to redemption prior to maturity as described herein. 62

69 Recent Case Law Related to the Mello-Roos Act On August 1, 2014, the California Court of Appeal, Fourth Appellate District, issued its opinion in City of San Diego v. Melvin Shapiro, et al. (D063997). The case involved a Convention Center Facilities District (the "CCFD") established by the City of San Diego. The CCFD is a financing district established under the City s charter (the "Charter") and was intended to function much like a community facilities district established under the Mello-Roos Act. The CCFD was comprised of all of the real property in the entire City. However, the CCFD special tax was to be levied only on properties in the CCFD that were improved with a hotel. At the election to authorize the CCFD special tax, the CCFD proceedings limited the electorate to owners of hotel properties and lessees of real property owned by a governmental entity on which a hotel was located. Registered voters in the City of San Diego were not permitted to vote. This definition of the qualified electors of the CCFD was based on Section 53326(c) of the Mello-Roos Act, which generally provides that, if a special tax will not be apportioned in any tax year on residential property, the legislative body may provide that the vote shall be by the landowners of the proposed community facilities district whose property would be subject to the special tax. The San Diego Court held that the CCFD special tax election did not comply with the City s Charter and with applicable provisions of the California Constitution -- specifically Article XIIIA, section 4 ("Cities, Counties and special districts, by a two-thirds vote of the qualified electors of such district, may impose special taxes on such district.") and Article XIIIC, section 2(d) ("No local government may impose, extend, or increase any special tax unless and until that tax is submitted to the electorate and approved by a two-thirds vote.") -- because the electors in the CCFD election should have been the registered voters residing within the CCFD (the boundaries of which were coterminous with the boundaries of the City of San Diego). Significantly, the San Diego Court expressly stated that it was not addressing the validity of a landowner election to impose special taxes on residential property pursuant to the Mello-Roos Act in situations where there are fewer than 12 registered voters. Therefore, by its terms, the San Diego Court s holding does not apply to the special tax election in the District. Moreover, Sections and of the Act establish a limited period of time in which special taxes levied under the Mello-Roos Act may be challenged by a third party: Any action or proceeding to attack, review, set aside, void, or annul the levy of a special tax or an increase in a special tax pursuant to [the Mello-Roos Act] shall be commenced within 30 days after the special tax is approved by the voters An action to determine the validity of bonds issued pursuant to [the Mello-Roos Act] or the validity of any special taxes levied pursuant to [the Mello-Roos Act] shall. be commenced within 30 days after the voters approve the issuance of the bonds or the special tax 1 Section 53326(b) of the Mello-Roos Act defines the authorized voters for an election in which the special taxes will be levied on residential property: "Except as otherwise provided in subdivision (c), if at least 12 persons, who need not necessarily be the same 12 persons, have been registered to vote within the territory of the proposed community facilities district for each of the 90 days preceding the close of the protest hearing, the vote shall be by the registered voters of the proposed district, with each voter having one vote. Otherwise, the vote shall be by the landowners of the proposed district and each person who is the owner of land at the close of the protest hearing, or the authorized representative thereof, shall have one vote for each acre or portion of an acre of land that he or she owns within the proposed community facilities district not exempt from the special tax." 63

70 Landowner voters, as the sole qualified electors in the District, approved the Special Taxes and the issuance of bonds for the District in compliance with all applicable requirements of the Mello-Roos Act in 2005 and the Bonds were authorized to be issued and approved by the Board of Supervisors, as the legislative body of the District in Pursuant to Sections and of the Mello- Roos Act, the statute of limitations period to challenge the validity of the Special Taxes has expired. The San Diego Court expressly stated that it did not consider the validity of landowner voting to impose special taxes and because the period for challenging the Special Taxes has passed, the County and Bond Counsel believe that no successful challenge to the levy of the Special Taxes or the issuance or validity of the Bonds may now be brought. Legal Opinions LEGAL MATTERS The legal opinion of Jones Hall, A Professional Law Corporation, San Francisco, California, Bond Counsel, approving the validity of the Bonds will be made available to purchasers at the time of original delivery and is attached in substantially final form as APPENDIX D. Jones Hall, A Professional Law Corporation, San Francisco, California, has served as Disclosure Counsel to the County. The County Attorney will pass upon certain legal matters for the County as its general counsel. Stradling, Yocca, Carlson & Rauth, a Professional Corporation, Newport Beach, California, has served as counsel to the Underwriter, as defined below. Tax Exemption Opinion of Bond Counsel. In the opinion of Jones Hall, A Professional Law Corporation, San Francisco, California, Bond Counsel, subject, however to the qualifications set forth below, under existing law, the interest on the Bonds is excluded from gross income for federal income tax purposes and such interest is not an item of tax preference for purposes of the federal alternative minimum tax imposed on individuals and corporations, provided, however, that, for the purpose of computing the alternative minimum tax imposed on corporations (as defined for federal income tax purposes), such interest is taken into account in determining certain income and earnings. The opinions set forth in the preceding paragraph are subject to the condition that the County comply with all requirements of the Internal Revenue Code of 1986, as amended (the "Tax Code") that must be satisfied subsequent to the issuance of the Bonds. The County has covenanted to comply with each such requirement. Failure to comply with certain of such requirements may cause the inclusion of such interest in gross income for federal income tax purposes to be retroactive to the date of issuance of the Bonds. If the initial offering price to the public (excluding bond houses and brokers) at which a Bond is sold is less than the amount payable at maturity thereof, then such difference constitutes "original issue discount" for purposes of federal income taxes and State of California personal income taxes. If the initial offering price to the public (excluding bond houses and brokers) at which a Bond is sold is greater than the amount payable at maturity thereof, then such difference constitutes "original issue premium" for purposes of federal income taxes and State of California personal income taxes. De minimis original issue discount and original issue premium is disregarded. 64

71 Under the Tax Code, original issue discount is treated as interest excluded from federal gross income and exempt from State of California personal income taxes to the extent properly allocable to each owner thereof subject to the limitations described in the first paragraph of this section. The original issue discount accrues over the term to maturity of the Bond on the basis of a constant interest rate compounded on each interest or principal payment date (with straight-line interpolations between compounding dates). The amount of original issue discount accruing during each period is added to the adjusted basis of such Bonds to determine taxable gain upon disposition (including sale, redemption, or payment on maturity) of such Bond. The Tax Code contains certain provisions relating to the accrual of original issue discount in the case of purchasers of the Bonds who purchase the Bonds after the initial offering of a substantial amount of such maturity. Owners of such Bonds should consult their own tax advisors with respect to the tax consequences of ownership of Bonds with original issue discount, including the treatment of purchasers who do not purchase in the original offering, the allowance of a deduction for any loss on a sale or other disposition, and the treatment of accrued original issue discount on such Bonds under federal individual and corporate alternative minimum taxes. Under the Tax Code, original issue premium is amortized on an annual basis over the term of the Bond (said term being the shorter of the Bond's maturity date or its call date). The amount of original issue premium amortized each year reduces the adjusted basis of the owner of the Bond for purposes of determining taxable gain or loss upon disposition. The amount of original issue premium on a Bond is amortized each year over the term to maturity of the Bond on the basis of a constant interest rate compounded on each interest or principal payment date (with straight-line interpolations between compounding dates). Amortized Bond premium is not deductible for federal income tax purposes. Owners of premium Bonds, including purchasers who do not purchase in the original offering, should consult their own tax advisors with respect to State of California personal income tax and federal income tax consequences of owning such Bonds. In the further opinion of Bond Counsel, interest on the Bonds is exempt from California personal income taxes. Owners of the Bonds should also be aware that the ownership or disposition of, or the accrual or receipt of interest on, the Bonds may have federal or state tax consequences other than as described above. Bond Counsel expresses no opinion regarding any federal or state tax consequences arising with respect to the Bonds other than as expressly described above. No Litigation At the time of delivery of and payment for the Bonds, the County Attorney will deliver his opinion that to the best of its knowledge there is no action, suit, proceeding, inquiry or investigation at law or in equity before or by any court or regulatory agency pending against the County affecting its existence or the titles of its officers to office or seeking to restrain or to enjoin the issuance, sale or delivery of the Bonds, the application of the proceeds thereof in accordance with the Fiscal Agent Agreements, or the collection or application of the Special Tax to pay the principal of and interest on the Bonds, or in any way contesting or affecting the validity or enforceability of the Bonds, the Fiscal Agent Agreements or any action of the County contemplated by any of said documents, or in any way contesting the completeness or accuracy of this Official Statement or any amendment or supplement thereto, or contesting the powers of the County or its authority with respect to the Bonds or any action of the County contemplated by any of said documents. 65

72 CONTINUING DISCLOSURE The County has covenanted for the benefit of owners of the Bonds to provide certain financial information and operating data relating to the District by not later than April 30 after the end of the County s fiscal year (presently June 30) in each year (the "Annual Report"), commencing with its report for fiscal year , and provide notices of the occurrence of certain enumerated events. Lennar Homes of California, Inc. has also covenanted for the benefit of owners of the Bonds to provide certain financial information and operating data relating to its property semi-annually for reporting periods ending December 31st and June 30th, commencing with the report to be filed on or before February 1, 2017 and to provide notices of the occurrence of certain enumerated events. The obligation of Lennar Homes of California, Inc. to provide such information is in effect only so long as the Developer and its affiliates, or their successors, are collectively responsible for 20% of the Special Taxes. The Annual Report and Lennar Homes of California, Inc. s report will be filed with the Municipal Securities Rulemaking Board ("MSRB") or otherwise as required by Securities Exchange Commission Rule 15c2-12(b)(5) (the "Rule"). Likewise, the notices of enumerated events will be filed with the MSRB. These covenants have been made in order to assist the Underwriter in complying with the Rule. The specific nature of the information to be contained in the Annual Report and Lennar Homes of California, Inc. s report and the notices of enumerated events by the County and Lennar Homes of California, Inc. are summarized in "APPENDIX D - Forms of County Continuing Disclosure Certificate and Developer Continuing Disclosure Certificate." The County has existing disclosure undertakings that have been made pursuant to the Rule in connection with the issuance of bonds. Within the last five years, the County has not met its disclosure undertakings with regards to timing of filing its audited financial statements. The County s audited financial statement for fiscal year was filed 1,048 days late, the audited financial statement for fiscal year was filed 181 days late, the audited financial statement for fiscal year was filed 188 days late, the audited financial statement for fiscal year was filed 182 days late, and the audited financial statement for fiscal year was filed 180 days late. Within the last five years, with respect to previously issued Special Tax Bonds, the required operating data was generally timely filed except in the following instances: (i) operating data for CFD which was required to be filed for fiscal year was filed eight days late; (ii) operating data which was required to be filed for fiscal year was filed on time but was missing a Special Tax Levy by Land Use table; and (iii) operating data for CFD was missing a table for fiscal year The County is now in full compliance with its disclosure undertakings. In order to assist it in complying with its disclosure undertakings, including timely submission of information for the Bonds, the District will utilize a third party to serve as its dissemination agent to assist with future disclosure undertakings. The District s initial dissemination agent will be NBS Government Finance Group. The District has also revised the due date for its annual reports from the October 30 date on several of its other outstanding bonds to April 30 for the Bonds in order to further enhance its ability to comply with its continuing disclosure obligations. The County expects to be able to meet its disclosure obligations for the Bonds. 66

73 RATINGS S&P Global Ratings ( S&P ) is expected to assign the rating of AA to the Insured Bonds with the understanding that, upon delivery of the Senior Lien Bonds, the Policy will be issued by AGM. S&P has assigned a rating of "BBB" to the Senior Lien Bonds, without regard to the issuance of the Policy. Such ratings reflect only the view of S&P, and an explanation of the significance of such ratings, and any outlook assigned to or associated with the ratings, should be obtained from S&P. No rating has been assigned to the Junior Lien Bonds. The County provided certain information and materials to the rating agency (some of which does not appear in this Official Statement) in connection with the application for ratings. Generally, a rating agency bases its rating on the information and materials furnished to it, as well as investigations, studies and assumptions of its own. There is no assurance that such ratings will continue for any given period of time or that they will not be revised downward or withdrawn entirely by S&P, if in the judgment of the rating agency, circumstances so warrant. Any such downward revision or withdrawal of any rating on the Senior Lien Bonds or the Insured Bonds may have an adverse effect on their market price or marketabilitys. UNDERWRITING The Senior Lien Bonds are being purchased by Stifel, Nicolaus & Company, Inc (the "Underwriter"), at a purchase price of $23,549, (representing the principal amount of the Senior Lien Bonds, less an underwriter s discount of $237,859.00, plus a net premium of $2,867,305.55). The Junior Lien Bonds are being purchased by the Underwriter at a purchase price of $7,492, (representing the principal amount of the Junior Lien Bonds, less an underwriter s discount of $115,827.22, plus a net premium of $398,476.50). The purchase agreement relating to the Bonds provides that the Underwriter will purchase all of the Bonds, if any are purchased, the obligation to make such purchase being subject to certain terms and conditions set forth in such purchase agreement. The Underwriter may offer and sell the Bonds to certain dealers and others at prices lower than the offering prices stated on the inside cover page hereof. The offering prices may be changed from time to time by the Underwriter. PROFESSIONAL FEES In connection with the issuance of the Bonds, fees or compensation payable to certain professionals are contingent upon the issuance and delivery of the Bonds. Those professionals include: the Underwriter; Jones Hall, A Professional Law Corporation, as Bond Counsel and Disclosure Counsel; Stradling, Yocca, Carlson & Rauth, a Professional Corporation,, as Underwriter s Counsel; and The Bank of New York Mellon Trust Company, N.A., as Fiscal Agent for the Bonds. 67

74 EXECUTION The execution and delivery of the Official Statement by the County has been duly authorized by the Board of Supervisors, acting as the legislative body of the District. COUNTY OF EL DORADO By: /s/ Joe Harn Auditor-Controller 68

75 APPENDIX A GENERAL INFORMATION ABOUT THE COUNTY OF EL DORADO The District s boundaries include portions of the County of El Dorado. See SECURITY AND SOURCES OF PAYMENT FOR THE BONDS Assessed Valuation in the body of the Official Statement. This section provides certain information about the economy and demographic trends in the County. However, no revenues of the County or taxes on economic activity in the County are pledged to payment of the Bonds. The Bonds are payable from an ad valorem property tax required to be levied on all taxable property within the District s boundaries in an amount sufficient to pay debt service on the Bonds as it comes due. General and Location The County of El Dorado (the County ) was incorporated as a general law county in 1850, with the City of Placerville as the county seat. The County was organized and has been operating as a charter county since 1994, when voters adopted a county charter by majority vote under Article XI, Section 4 of the California Constitution. A five-member Board of Supervisors functions as the County s legislative body, and each supervisor is elected by voters within his or her supervisorial district. Because much of the County is comprised of unincorporated areas, the County provides a wide range of services through its departments and by special districts for these areas. The County s 1,711.5 square miles encompass a portion of Lake Tahoe on the east and extend to the west within 25 miles of Sacramento. The City of Placerville is located 150 miles east of San Francisco, 44 miles east of Sacramento and 60 miles west of the City of Lake Tahoe. Federal, State or local government owns more than half of the land in the County. Population The historic population estimates for the County and the State of California as of January 1 of the calendar years 2011 through 2016 are listed below. County of El Dorado and State of California Population Estimates Calendar Year El Dorado County State of California ,170 37,536, ,952 37,881, ,588 38,239, ,731 38,567, ,743 38,907, ,750 39,255,883 Source: California State Department of Finance A-1

76 Effective Buying Income Effective Buying Income is defined as personal income less personal tax and nontax payments, a number often referred to as disposable or after-tax income. Personal income is the aggregate of wages and salaries, other labor-related income (such as employer contributions to private pension funds), proprietor s income, rental income (which includes imputed rental income of owneroccupants of non-farm dwellings), dividends paid by corporations, interest income from all sources, and transfer payments (such as pensions and welfare assistance). Deducted from this total are personal taxes (federal, state and local), nontax payments (fines, fees, penalties, etc.) and personal contributions to social insurance. According to U.S. government definitions, the resultant figure is commonly known as disposable personal income. The following table summarizes the total effective buying income for the County, the State and the United States for the period 2010 through Effective Buying Income data is not yet available for calendar year El DORADO COUNTY Effective Buying Income 2010 through 2015 Year Area Total Effective Buying Income (000 s Omitted) Median Household Effective Buying Income 2010 El Dorado County $4,642,448 $52,782 El Dorado Hills 1,124,743 86,136 California 801,393,028 47,177 United States 6,365,020,076 41, El Dorado County $4,914,270 $52,902 El Dorado Hills 1,279,598 84,332 California 814,578,458 47,062 United States 6,438,704,663 41, El Dorado County $5,207,083 $54,870 El Dorado Hills 1,693,403 85,957 California 864,088,828 47,307 United States 6,737,867,730 41, El Dorado County $4,829,780 $52,204 El Dorado Hills 1,534,708 82,929 California 858,676,636 48,340 United States 6,982,757,379 43, El Dorado County $5,395,993 $58,399 El Dorado Hills 1,718,595 88,591 California 901,189,699 50,072 United States 7,357,153,421 45, El Dorado County $5,353,528 $54,408 El Dorado Hills 1,833,843 90,087 California 981,231,666 53,589 United States 7,757,960,399 46,738 Source: The Neilson Company Inc. A-2

77 Taxable Transactions A summary of historic taxable sales within El Dorado County during the past five years in which data is available is shown in the following table. Annual figures for calendar years 2014 and 2015 are not yet available. Total taxable sales during the first three quarters of 2014 in El Dorado County were reported to be $1.44 million a 3.89% increase over the total taxable sales of $1.38 million reported during the first three quarters of EL DORADO COUNTY Taxable Transactions Number of Permits and Valuation of Taxable Transactions (Dollars in Thousands) Retail Stores Total All Outlets Number of Permits Taxable Transactions Number of Permits Taxable Transactions ,831 1,073,469 5,592 1,527, ,928 1,119,482 5,702 1,561, ,849 1,189,421 5,589 1,651, ,939 1,267,343 5,627 1,740, ,144 1,373,546 5,783 1,877,143 Source: California State Board of Equalization, Taxable Sales in California. A-3

78 Largest Employers The following chart presents the major employers in the County as of March EL DORADO COUNTY Major Employers March 2016 Employer Name Location Industry Ameri Gas Placerville Gas Companies Barton Health South Lake Tahoe Hospitals Beach Retreat & Lodge South Lake Tahoe Hotels & Motels Blue Shield of California El Dorado Hills Insurance CEMEX El Dorado Hills Concrete Contractors Child Development Programs Placerville Child Care Service County of Eldorado Placerville County Government-General Offices Cyber Quest-Red Hawk Casino Placerville Amusement & Theme Parks DST Output El Dorado Hills Business Services NEC El Dorado Cnty Transportation Placerville Government Offices-County El Dorado County Human Svc Placerville Government Offices-County El Dorado County Sheriff Placerville Government Offices-County El Dorado Irrigation District Placerville Water & Sewage Companies-Utility Lake Tahoe Community College South Lake Tahoe Schools-Universities & Colleges Academic Marriott-Grand Residence Tahoe South Lake Tahoe Hotels & Motels Marriott-Timber Lodge South Lake Tahoe Hotels & Motels Mc Clone Construction Co Cameron Park General Contractors More Placerville Rehabilitation Services Mother Lode Bail Bonds Placerville Bonds-Bail Raley's El Dorado Hills Grocers-Retail Raley's Placerville Grocers-Retail Safeway South Lake Tahoe Grocers-Retail Sierra At Tahoe Resort Twin Bridges Skiing Centers & Resorts South Lake Tahoe City Manager South Lake Tahoe Government Offices-City, Village & Twp Spare Time Inc El Dorado Hills Health Clubs Studios & Gymnasiums Source: State of California Employment Development Department, America's Labor Market Information System (ALMIS) Employer Database, nd Edition. A-4

79 Employment The District is included in the Sacramento--Roseville--Arden-Arcade Metropolitan Statistical Area ( MSA ). The unemployment rate in the Sacramento--Roseville--Arden-Arcade MSA was 4.7 percent in May 2016, down from a revised 5.1 percent in April 2016, and below the year-ago estimate of 5.7 percent. This compares with an unadjusted unemployment rate of 4.7 percent for California and 4.5 percent for the nation during the same period. The unemployment rate was 4.7 percent in El Dorado County, 4.0 percent in Placer County, 4.9 percent in Sacramento County, and 5.0 percent in Yolo County. The table below lists employment by industry group for the MSA for the years 2011 through Annual figures are not yet available for calendar year SACRAMENTO--ARDEN-ARCADE--ROSEVILLE MSA (El Dorado, Placer, Sacramento, Yolo Counties) Annual Average Labor Force and Employment Industry Calendar Years 2011 through 2015 (March 2015 Benchmark) Civilian Labor Force (1) Employment 921, , , , ,100 Unemployment 123, ,200 90,900 74,700 62,100 Unemployment Rate 11.8% 10.3% 8.7% 7.1% 5.9% Wage and Salary Employment (2) Agriculture 8,200 8,600 8,900 9,200 9,300 Mining and Logging Construction 36,900 38,400 43,300 45,400 49,900 Manufacturing 33,200 33,900 34,100 35,400 36,300 Wholesale Trade 23,700 25,200 25,000 24,500 24,600 Retail Trade 89,400 91,800 93,800 95,300 97,500 Transportation, Warehousing and Utilities 21,100 22,000 22,900 23,600 24,600 Information 16,300 15,600 14,800 13,900 14,200 Finance and Insurance 34,700 35,700 36,300 35,500 37,100 Real Estate and Rental and Leasing 12,000 12,500 13,100 13,400 13,900 Professional and Business Services 104, , , , ,700 Educational and Health Services 122, , , , ,300 Leisure and Hospitality 81,700 84,500 88,700 91,800 94,900 Other Services 28,000 28,600 29,000 30,200 30,800 Federal Government 14,000 13,700 13,500 13,600 13,700 State Government 109, , , , ,400 Local Government 100,900 99,600 99, , ,900 Total, All Industries (3) 837, , , , ,700 (1) Labor force data is by place of residence; includes self-employed individuals, unpaid family workers, household domestic workers, and workers on strike. (2) Industry employment is by place of work; excludes self-employed individuals, unpaid family workers, household domestic workers, and workers on strike. (3) Totals may not add due to rounding. Source: State of California Employment Development Department. A-5

80 Construction Trends Provided below are the building permits and valuations for the County for calendar years 2011 through Annual figures are not yet available for calendar year EL DORADO COUNTY Building Permit Valuation (Valuation in Thousands of Dollars) Permit Valuation New Single-family $54,694.8 $51,963.9 $116,123.0 $155,902.6 $237,724.2 New Multi-family , , , Res. Alterations/Additions 41, , , , ,275.2 Total Residential 96, , ,133.0 $205,575.5 $272,999.4 New Commercial 11, ,119.4 $5,188.8 $39,880.2 New Industrial New Other 1, , , ,128.8 Com. Alterations/Additions 47, , , ,758.5 Total Nonresidential $60,674.9 $1,688.0 $97,370.6 $55,578.8 $85,767.5 New Dwelling Units Single Family Multiple Family TOTAL Source: Construction Industry Research Board, Building Permit Summary. Tourism Tourism has long been a major component of the County s economy. Lake Tahoe on the County s eastern edge is a world-class destination attraction with a varied offering of both winter and summer sports. Marshall State Park Gold Discovery Site, Folsom Lake, Apple Hill (a ranch marketing area) and other attractions in the western part of the County provide another range of diversity to visitors. Much of the central part of the County lies in the El Dorado and Tahoe National Forests, which provide hiking, camping, fishing, hunting and other outdoor recreation. Transportation Two major highways (U.S. 50 and U.S. 49) intersect the County while Interstate 5 and Interstate 80 are within 45 minutes of the City of Placerville. Commercial air service is provided to the western portion of the County by the Sacramento Metropolitan Airport, 50 miles west of the City of Placerville. More than 200 trucking firms serve the County area, with interstate, local and special hauling. The County is also served by Greyhound Bus Lines.. A-6

81 APPENDIX B RATE AND METHOD OF APPORTIONMENT FOR COUNTY OF EL DORADO COMMUNITY FACILITIES DISTRICT NO (BLACKSTONE) B-1

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83 EXHIBIT A County of El Dorado Community Facilities District No (Blackstone) RATE, METHOD OF APPORTIONMENT, AND MANNER OF COLLECTION OF SPECIAL TAX 1. Basis of Special Tax Levy A Special Tax authorized under the Mello Roos Community Facilities Act of 1982 (Act) applicable to the land in the County of El Dorado (County) Community Facilities District No (Blackstone) shall be levied and collected according to the tax liability determined by the County through the application of the appropriate amount or rate, as described below. 2. Definitions Act means the Mello Roos Community Facilities Act of 1982, as amended Sections and following of the California Government Code. Administrative Expenses means the following actual or reasonably estimated costs related to the administration of the CFD, including: Costs of computing Special Taxes and preparing annual Special Tax collection schedules (whether by the County or designee thereof or both); Costs of collecting the Special Taxes (whether by the County, or otherwise); Costs of remitting the Special Taxes to the Trustee; Costs of the Trustee (including its legal counsel) in the discharge of the duties required of it under the Bond Indenture; Costs to the County, CFD or any designee thereof of complying with arbitrage rebate requirements; Costs to the County, CFD or any designee thereof of complying with County, CFD or obligated persons disclosure requirements; Costs associated with preparing Special Tax disclosure statements; Costs incurred in responding to public inquiries regarding the Special Taxes; A rm6.doc

84 Revised Rate and Method County of El Dorado CFD No (Blackstone) June 7, 2005 Costs to the County, CFD or designee thereof related to any appeal of the Special Tax; Costs associated with the release of funds from an escrow account, if any; and Amounts estimated to be advanced or advanced by the County for any other administrative purposes, including attorney s fees and other costs related to commencing and pursuing to completion any foreclosure of delinquent Special Taxes. Administrator means the County Auditor Controller or his or her designee. Annual Costs means, for any Fiscal Year, the total of the following: i) Debt Service to be paid from Special Taxes collected during such Bond Year; ii) Administrative Expenses for such Fiscal Year; iii) The amount needed to replenish the reserve fund for the Bonds to the level required under the Bond Indenture; iv) An amount equal to the amount of delinquencies in payments of Special Taxes levied in the previous Fiscal Year or anticipated for the current Fiscal Year; and v) Less any earnings on the reserve fund and Special Tax fund that are transferred to the bond redemption fund pursuant to the Bond Indenture. Anticipated Construction Proceeds means that amount that is anticipated to be available from Bonds for the acquisition or construction of Authorized Facilities. Assessor s Parcel means a parcel of land in the County identified by Assessor s Parcel Number. Assessor s Parcel Number means the number as assigned to a Parcel by the Assessor as recorded by the Assessor on the last equalized tax roll. Auditor Controller means the Auditor Controller of the County. Authorized Facilities means those facilities to be financed as identified in the resolution forming the CFD. Base Year means the Fiscal Year beginning on July 1, 2005 and ending on June 30, Benefit Share means the Maximum Annual Special Tax for a Parcel divided by the Maximum CFD Revenue. Board means the Board of Supervisors of El Dorado County acting for the CFD under the Act. A rm6.doc

85 Revised Rate and Method County of El Dorado CFD No (Blackstone) June 7, 2005 Bond(s) means bond(s) issued or other indebtedness incurred by the County for the CFD under the Act. Bond Indenture means the indenture, resolution, fiscal agent agreement, or other financing document pursuant to which any Bonds are issued. Bond Share means the share of bonds assigned to a Parcel as specified in Section 7, Part A, Step 3 of this Rate and Method of Apportionment. Bond Year means the 12 month period ending on the second bond payment date of each calendar year as defined in the resolution authorizing the issuance of Bonds. CFD means the County of El Dorado Community Facilities District No (Blackstone). County means the County of El Dorado, California. Debt Service means the total amount of principal, interest, and any scheduled sinking fund payments of the Bonds. Developed Parcel means a Parcel receiving one of the following development approvals from the County where right of way for streets and other public facilities are dedicated: Land Use Single Family Residential Parcels Other Land Uses Development Approval Final Subdivision Map Building Permit Final Subdivision Map means a recorded map designating individual Single family Residential Parcels or condominium units. Fiscal Year means the period starting July 1 and ending the following June 30. Gross Acre(age) means the actual acreage of a parcel, before dedication of right of way for streets, roads, landscaping, and other public purposes. Large Lot Subdivision Map means a recorded subdivision map creating Parcels by land use. However, the Large Lot Subdivision Map does not delineate Single family Residential Parcels. A Final Subdivision Map will create individual single family parcels. Maximum CFD Revenue means the sum of the Maximum Annual Special Tax for all of the Taxable Parcels in the CFD for a Fiscal Year. A rm6.doc

86 Revised Rate and Method County of El Dorado CFD No (Blackstone) June 7, 2005 Maximum Annual Special Tax means the maximum amount of Special Tax that can be levied against a Taxable Parcel in any Fiscal Year as shown in Attachment 1, as adjusted annually after the Base Year in accordance with the Tax Escalation Factor. Maximum Annual Special Tax per Unit means the maximum amount of Special Tax that can be levied against a Single family Residential Parcel or a Net Acre of land for Other Use Parcels in any Fiscal Year. The Maximum Annual Special Tax per Unit for Undeveloped Parcels is based on Gross Acreage. Attachment 1 shows the Maximum Annual Special Tax per Unit for all Villages. Each time a Village is Subdivided, a Maximum Annual Special Tax per Unit will be assigned to the Successor Parcels based on methods defined in Section 5.C. Maximum Annual Special Tax Revenue means the maximum amount of revenue that can be collected by levying the Maximum Annual Special Tax against a group of Parcels within a specific classification, such as Developed Parcels. Net Acre(age) means the acreage of a Parcel as shown on the final map or parcel map excluding the right of way dedicated for major roads, landscaping, parks, and other public purposes. Other Land Uses means all taxable Developed Parcels with land uses other than Singlefamily Residential Parcels. Multifamily residential, retail, office, mixed use, and industrial property would be taxable as Other Land Uses. Outstanding Bonds means the total principal amount of Bonds that have been issued and not fully repaid or legally defeased. Parcel means any Assessorʹs Parcel in the CFD based on the equalized tax rolls of the County as of January 1 of each Fiscal Year. Partial Prepayment means a prepayment of a portion of a Parcel s Special Tax obligation, as set forth in Section 7. Partial Prepayment Factor means a factor by which the Maximum Annual Special Tax for a Partial Prepayment Parcel is multiplied to calculate an adjusted Maximum Annual Special Tax for such Parcel. Each Partial Prepayment Factor shall be calculated according to the steps described under Section 7 hereof. Pay As You Go Expenditure means the use of annual Special Tax revenues that are not needed for Annual Costs for Authorized Facilities to be constructed or acquired by the CFD. Pay As You Go Expenditures may be used through Fiscal Year , or until all Authorized Facilities have been constructed or acquired. A rm6.doc

87 Revised Rate and Method County of El Dorado CFD No (Blackstone) June 7, 2005 Planned Residential Lots means the number of single family Units planned for each Village as shown in Attachment 1. Prepayment means the partial or complete fulfillment of a Parcel s Special Tax obligation, as determined by following the procedures in Section 7. Public Parcel means any parcel that is, or is intended to be, publicly owned, as designated in the CFD as adopted by the Board, that is normally exempt from the levy of general ad valorem property taxes under California law, including public streets, schools, parks, public water tank parcels, public sewer lift station parcels, public drainageways, public landscaping, greenbelts, and public open space. These parcels are exempt from the levy of Special Taxes. Realized Residential Lots means the number of lots realized by the recordation of a Final Subdivision Map. Reserve Fund Requirement means the amount required to be held in the bond reserve fund created under the Bond Indenture. Reserve Fund Share means the lesser of: (i) Reserve Fund Requirement or (ii) the reserve fund balance at the time of such calculation, multiplied by the Benefit Share for a given Parcel. Single Family Residential Parcel means a single family residential lot created by the recordation of a Final Subdivision Map. Special Tax(es) mean(s) any tax levy under the Act in the CFD. Subdivision or Subdivided means a division of a Parcel into two or more Parcels through the Subdivision Map Act process. Tax Collection Schedule means the document prepared by the County for the County Auditor to use in levying and collecting the Special Taxes each Fiscal Year. Taxable Parcel means any Parcel that is not a Tax Exempt Parcel. Tax Escalation Factor means a factor of 2 percent that will be applied annually to increase the Maximum Annual Special Tax, as shown in Attachment 1.. Tax Exempt Parcel means a Parcel not subject to the Special Tax. Tax Exempt Parcels include: (i) Public Parcels or (ii) any Parcel that has prepaid its Special Taxes under Section 7 hereof. Certain privately owned Parcels may also be exempt from the levy of Special Taxes A rm6.doc

88 Revised Rate and Method County of El Dorado CFD No (Blackstone) June 7, 2005 including common areas owned by homeowner s associations or property owner associations, wetlands, detention basins, water quality ponds, and open space. Tentative Map means the Revised Tentative Map for West Valley Village as approved by the Board in July of 2004 under Ordinance Number 4517 and Resolution Number Undeveloped Parcel means a Taxable Parcel that is not a Developed Parcel or Village. Unit(s) means a Single family Residential Parcel, or the number of single family residential lots assigned to a Taxable Parcel. Unrealized Residential Units means the difference in the number of Units derived by subtracting the number of Realized Residential Units for a Village from the number of Planned Residential Units for the Village, as shown in Attachment 1. Village means a planned unit of development in the CFD, identified by number or letter designation, which is assigned several Planned Residential Lots (or Net Acres), a Maximum Annual Special Tax per Unit, and a Maximum Annual Special Tax, as shown in Attachment 1. Villages are created by a Large Lot Subdivision Map. 3. Determination of Parcels Subject to Special Tax The Administrator shall prepare a list of Taxable Parcels using the records of the County Assessor as of January 1. The Administrator shall identify the Taxable Parcels from a list of all Parcels in the CFD using the procedure described below. 1) Exclude all Tax Exempt Parcels. However, Taxable Parcels that are acquired by a public agency after the CFD is formed or subsequent Final Subdivision Maps are recorded will remain subject to the applicable Special Tax unless the Special Tax obligation is satisfied pursuant to Section of the Government Code by the procedure described in Section 7. An exception to this may be made if Public Parcels, such as a school site, are relocated and the previously Tax Exempt Parcels of comparable acreage become Taxable Parcels. This trading of Parcels will be permitted to the extent that there is no net loss in Maximum Annual Special Tax Revenue. 2) The remaining Parcels shall be subject to the Special Tax according to the method detailed in Section 5. A rm6.doc

89 Revised Rate and Method County of El Dorado CFD No (Blackstone) June 7, Termination of the Special Tax The Special Tax will be levied and collected from all Taxable Parcels for as long as needed to pay the Annual Costs. However, in no event shall the Special Tax be levied beyond Fiscal Year When all Annual Costs incurred by the CFD have been paid, the Special Tax shall cease to be levied. The Board shall direct the County Recorder to record a Notice of Cessation of Special Tax. Such notice will state that the obligation to pay the Special Tax has ceased and that the lien imposed by the Notice of Special Tax Lien is extinguished. The Notice of Cessation of Special Tax shall identify the previously Taxable Parcels by the book and page of the Book of Maps of Assessment and Community Facilities Districts where the map of the boundaries of the CFD is recorded. 5. Assignment of Maximum Annual Special Tax A. Classification of Parcels. Each Fiscal Year, using the Definitions above, the parcel records of the County Assessorʹs Secured Tax Roll as of January 1, and other County development approval records as of June 1, the Administrator shall cause: 1. Each Parcel to be classified as a Tax Exempt Parcel or a Taxable Parcel; 2. Each Taxable Parcel to be classified as a Developed Parcel, Village, or Undeveloped Parcel. B. Assignment of Maximum Annual Special Tax. The Administrator shall then assign the Maximum Annual Special Tax, as adjusted by the Tax Escalation Factor, to each Taxable Parcel as follows: 1. Undeveloped Parcels: At the time the CFD is formed, Taxable Parcels will be classified as Undeveloped Parcels. The Maximum Annual Special Tax for an Undeveloped Parcel is calculated by multiplying the Gross Acreage of the Parcel times the Maximum Annual Special Tax per Gross Acre as shown in Attachment Villages: Undeveloped Parcels will be Subdivided into Villages and Singlefamily Residential Parcels. The Maximum Annual Special Tax and the Maximum Annual Special Tax per Unit for each Village is shown in Attachment 1. As each Undeveloped Parcel is Subdivided into a Village, the Maximum Annual Special Tax is assigned to Villages as follows. A rm6.doc

90 Revised Rate and Method County of El Dorado CFD No (Blackstone) June 7, 2005 a. Planned Residential Lots or Net Acreage is assigned to Villages using the Tentative Map and Attachment 1. All Planned Residential Lots must be assigned to Villages designated for single family residential land uses so that there is no net loss in Planned Residential Lots as shown in Attachment 1. Net Acreage is assigned to Villages designated for other than single family residential land uses so that there is no net loss in Net Acreage as shown in Attachment 1. b. For single family residential land use Villages, the assigned Planned Residential Lots is multiplied by the Maximum Annual Special Tax per Unit for the Village, as shown in Attachment 1, to derive the Maximum Annual Special Tax per Village. c. For Villages with a land use other than single family residential, the assigned Net Acreage is multiplied by the Maximum Annual Special Tax per Unit for the Village, as shown in Attachment 1, to derive the Maximum Annual Special Tax per Village. d. As Undeveloped Parcels are Subdivided into Villages, there shall not be any net loss in Maximum CFD Revenue. 3. Developed Parcels: Developed Parcels shall be assigned the Maximum Annual Special Tax using Attachment 1 and using the steps below. a) Single family Residential Parcels: Single family Residential Parcels are assigned the Maximum Annual Special Tax per Unit assigned to each Village as shown in Attachment 1. As Villages are Subdivided, the Maximum Annual Special Tax is allocated to Single family Residential Parcels as follows. 1) Compare the number of Realized Residential Lots for each Village to the number of Planned Residential Lots for each Village, as shown in Attachment 1. 2) If the number of Realized Residential Lots created by a Final Subdivision Map for any of the villages is equal to, or greater than the number of Planned Residential Parcels shown in Attachment 1, assign the Maximum Annual Special Tax per Unit, as shown in Attachment 1 to all Single family Residential Parcels in the Village, as adjusted by the Tax Escalation Factor. A rm6.doc

91 Revised Rate and Method County of El Dorado CFD No (Blackstone) June 7, ) If the number of Realized Residential Lots created by a Final Subdivision Map for any Village is less than the Planned Residential Lots shown in Attachment 1, assign the Maximum Annual Special Tax assigned to the Village to all Single family Residential Parcels created by the Subdivision using the following steps. Step 1: Step 2: Step 3: Step 4: Multiply the number of Planned Residential Lots for the Village times the Maximum Annual Special Tax per Unit, as shown in Attachment 1, as adjusted by the Tax Escalation Factor. Divide the amount calculated in Step 1 by the Realized Residential Lots for the Village. Assign the amount calculated in the previous step as the Maximum Annual Special Tax per Unit for each of the Single family Residential Parcels created by the Final Small Lot Subdivision Map. In the event the amount of Maximum Annual Special Tax per Unit calculated in Step 3 is deemed by the Administrator or landowner to be a burden to potential purchasers of the Taxable Parcels, the Maximum Annual Special Tax per Unit may be eliminated using the steps in Section 5.C or reduced using steps in Section 5.D. b) Other Land Uses: Calculate the Maximum Annual Special Tax for Other Land Uses by multiplying the Net Acreage assigned to the Parcel in Section 5.B.2 by the Maximum Annual Special Tax per Unit shown in Attachment 1 for the Village, as adjusted by the Tax Escalation Factor. Assign the result to the Parcel as the Maximum Annual Special Tax. Villages V, W, and X shown in Attachment 1 may be developed as singlefamily residential uses, townhouses, or condominiums. In this case, the Maximum Annual Special Tax per Unit will be derived by dividing the Maximum Annual Special Tax for the Village, as adjusted by the Tax Escalation Factor, by the number of Realized Residential Lots. C. Prepayment of Special Tax Obligation for Unrealized Residential Lots. In the event the number of Realized Residential Lots created by a Final Subdivision Map for any Village is A rm6.doc

92 Revised Rate and Method County of El Dorado CFD No (Blackstone) June 7, 2005 less than the Planned Residential Parcels shown in Attachment 1, at the landowner s request, and approval of the Administrator, Prepayment of the Special Tax for all Unrealized Residential Lots may be calculated using the following steps. The Administrator may require the Prepayment of the Special Tax obligation for Unrealized Residential Lots rather than use the provisions in Section 5.B.3.a) 3) or Section 5.D. if such Prepayment is deemed to be in the best interest of the County. Step 1: Step 2: Step 3: Subtract the number of Realized Residential Lots from the number of Planned Residential Lots. Multiply the number calculated in Step 1 times the Maximum Annual Special Tax per Unit for the Village, as shown in Attachment 1, and adjusted by the Tax Escalation Factor, to derive the Maximum Annual Special Tax to be prepaid. Use the steps in Section 7 to calculate the amount required to prepay the Special Tax for Unrealized Residential Lots. The amount calculated in Step 2 will be used as the Maximum Annual Special Tax for the purpose of Step 1 of the prepayment formula in Section 7. Before the issuance of Bonds, the County is not required to collect the Prepayment of the Special Tax obligation for Unrealized Residential Lots. D. Assignment of Maximum Annual Special Tax Partial Prepayment Parcel. The Maximum Annual Special Tax for a Partial Prepayment Parcel is assigned by multiplying the Maximum Annual Special Tax per Unit from Attachment 1, or as otherwise calculated for a Developed Parcel, by the Partial Prepayment Factor for the Parcel. E. Conversion of a Tax Exempt Parcel to a Taxable Parcel. If a Parcel designated in the CFD as a Tax Exempt Parcel is not needed for public use and is converted to a private use, it shall become subject to the Special Tax. The Maximum Annual Special Tax for each such Parcel shall be assigned according to the Special Tax rate per Unit, Net Acre, or Gross Acre shown on Attachment 1, depending on the taxable status of the Parcel. The Administrator will assign a Maximum Annual Special Tax per Unit to the Taxable Parcel by first identifying the proposed land use of the Taxable Parcel. The Administrator will then review the land uses and Maximum Annual Special Tax per Unit for Villages shown in Attachment 1 to determine which land use most closely matches the land use of the Taxable Parcel. The Administrator will assign the Maximum Annual Special Tax per Unit to the Taxable Parcel from the Village that most closely matches to the proposed land use of the Taxable Parcel. A rm6.doc

93 Revised Rate and Method County of El Dorado CFD No (Blackstone) June 7, 2005 F. Taxable Parcel Acquired by a Public Agency. A Taxable Parcel that is acquired by a public agency after the CFD is formed will remain subject to the applicable Special Tax unless the Special Tax obligation is satisfied pursuant to Section of the Government Code. An exception to this may be made if a Public Parcel, such as a school site, is relocated to a Taxable Parcel, in which case the previously Tax Exempt Parcel of comparable acreage becomes a Taxable Parcel and the Maximum Annual Special Tax from the previously Taxable Parcel is transferred to the new Taxable Parcel. This trading of a Parcel from a Taxable Parcel to a Public Parcel will be permitted to the extent there is no net loss in Maximum CFD Revenue, and the transfer is agreed to by the owners of the Parcels involved in the transfer and the Administrator. 6. Setting the Annual Special Tax Levy for Taxable Parcels The County shall calculate the Special Tax levy for each Taxable Parcel for each Fiscal Year as follows: A. Calculate the Special Tax for each Taxable Parcel by the following steps: Step 1: Step 2: Step 3: Step 4: Step 5: Compute 100 percent of the Maximum Annual Special Tax Revenue for all Developed Parcels by summing the Maximum Annual Special Tax for each Taxable Parcel. Compute the Annual Costs using the definition of Annual Costs in Section 2. Compare the Annual Costs with the Maximum Annual Special Tax Revenue from Developed Parcels calculated in the previous step. If the Annual Costs are less than the Maximum Annual Special Tax Revenue, levy 100 percent of the Maximum Annual Special Tax on Developed Parcels. In each Fiscal Year through Fiscal Year , subtract the Annual Costs calculated in Step 2 from the Maximum Special Tax Revenue for Developed Parcels calculated in Step 1 to determine the amount that may be used for Pay As You Go Expenditures. Beginning in Fiscal Year , decrease proportionately the Special Tax levy for each Developed Parcel until the Special Tax Revenue equals the Annual Cost. If the Annual Costs are greater than the Maximum Annual Special Tax Revenue from Developed Parcels, levy a proportional amount of Special Tax on each Village to just equal the amount of Annual Costs or until 100 A rm6.doc

94 Revised Rate and Method County of El Dorado CFD No (Blackstone) June 7, 2005 percent of the Maximum Annual Special Tax is reached for such Villages. No Special Tax revenue is available for Pay As You Go Expenditures. Step 6: If the Annual Costs are greater than the Maximum Annual Special Tax Revenue from Developed Parcels and Villages, levy a proportional amount of Special Tax on each Undeveloped Parcel to just equal the amount of Annual Costs or until 100 percent of the Maximum Annual Special Tax is reached for such Undeveloped Parcels. No Special Tax revenue is available for Pay As You Go Expenditures. B. Levy on each Taxable Parcel the amount calculated above. C. Prepare the Tax Collection Schedule listing the tax levy for each Taxable Parcel and send it to the County Auditor Controller requesting that it be placed on the general, secured property tax roll for the Fiscal Year. The Tax Collection Schedule shall not be sent later than the date required by the County Auditor Controller for such inclusion. The Administrator shall make every effort to correctly calculate the Special Tax for each Parcel. It shall be the burden of the taxpayer to correct any errors in the determination of the Parcels subject to the tax and their Special Tax assignments. As development and Subdivision of the CFD takes place, the Administrator will maintain a file of each current County Assessorʹs Parcel in the CFD, its Maximum Annual Special Tax, and the Maximum Annual Special Tax Revenues for all Parcels in the CFD available for public inspection. This record shall show the Maximum Annual Special Tax on all Undeveloped, Villages (or Large Lot Parcels), and Developed Parcels and a brief description of the process of assigning the Special Tax each time a new Parcel was created, including any adjustments because of change in use. 7. Prepayment of Special Tax Obligation Landowners may permanently satisfy the Special Tax obligation by a cash settlement with the County as permitted under Government Code Section Prepayment is permitted only under the following conditions: The Administrator determines that the Prepayment of the Special Tax obligation does not jeopardize its ability to make timely payments of Debt Service on Outstanding Bonds. A rm6.doc

95 Revised Rate and Method County of El Dorado CFD No (Blackstone) June 7, 2005 Any landowner prepaying the Special Tax obligation must pay any and all delinquent special taxes and penalties before prepayment. The landowner may make a request to the Administrator to partially prepay the Special Tax obligation for a Taxable Parcel or Parcels, and the Administrator will determine whether or not to allow the Partial Prepayment. The Prepayment amount shall be established by following the steps in Part A and Part B below: Part A: Full Prepayment of Special Tax Obligation Before the Sale of Bonds The Prepayment amount before Bond sale is equal to the amount of the Anticipated Construction Proceeds for the Parcel, plus any Administrative Expenses incurred in the establishment of the CFD and the calculation of the Prepayment amount. The amount of the Anticipated Construction Proceeds shall be reduced for any Pay As You Go Expenditures that will be used to finance the principal amount of the Anticipated Construction Proceeds if Special Taxes have already been levied for Pay As You Go Expenditures up to and including the current Fiscal Year of the Prepayment. The Prepayment amount shall be established by following the steps below. Step A.1 Determine the Maximum Annual Special Tax for the prepaying Parcel by following the procedures in Section 5. Step A.2 Divide the Maximum Annual Special Tax from Step A.1 by the Maximum Annual Special Tax Revenue to arrive at the Benefit Share. Step A.3 Determine the Anticipated Construction Proceeds for the Parcel by multiplying the Benefit Share from Step A.2 by the Anticipated Construction Proceeds. Step A.4 Determine the Prepayment amount by adding to the Anticipated Construction Proceeds for the prepaying Parcel calculated in Step A.3 any fees and expenses incurred by the County in connection with the prepayment calculation. If Special Taxes have already been levied, but not collected, at the time the Prepayment is calculated, the owner of the Parcel must pay the Special Taxes included on the property tax bill in addition to the Prepayment amount. Part B: Full Prepayment of Special Tax Obligation After Sale of Bonds The Prepayment amount shall be established by following the steps below. A rm6.doc

96 Revised Rate and Method County of El Dorado CFD No (Blackstone) June 7, 2005 Step B.1 Determine the Maximum Annual Special Tax for the prepaying Parcel by following the procedures in Section 5. Step B.2 Divide the Maximum Annual Special Tax from Step B.1 by the Maximum Annual Special Tax Revenue to arrive at the Benefit Share. Step B.3 Determine the Bond Share for the Parcel by multiplying the Benefit Share from Step B.2 by the Outstanding Bonds. For the purpose of the calculation, reduce the Outstanding Bond balance by the amount of the principal payment for which Special Taxes have been levied but not collected. Step B.4 Determine the Reserve Fund Share associated with the Bond Share determined in Step B.3 and reduce the Bond Share by the amount of the Reserve Fund Share. The Reserve Fund Share is equal to the reserve requirement on all Outstanding Bonds or the actual Reserve Fund, whichever is less, multiplied by the Benefit Share. Step B.5 Determine the Prepayment amount by adding to the revised Bond Share amount calculated in Step B.4 any fees, call premiums, and expenses incurred by the County in connection with the Prepayment calculation or the application of the proceeds of the Prepayment to the call of Bonds. If Special Taxes have already been levied, but not collected, at the time the Prepayment is calculated, the owner of the Parcel must pay the Special Taxes included on the property tax bill in addition to the prepayment amount. Part C: Partial Prepayment of Special Tax Obligation If the Prepayment is a Partial Prepayment, then the property owner shall designate an amount which is less than the full Prepayment amount determined above for the Parcel (or group of such Parcels) for which the Special Tax is to be partially prepaid but which, based upon a calculation provided by the Administrator, will provide sufficient funds for a Bond call in a whole number multiple of $5,000. If the Administrator approves a Partial Prepayment, the Administrator shall determine the Partial Prepayment Factor by the following procedure: Step C.1 Step C.2 Step C.3 Calculate the Full Prepayment Amount from Step A.4 or B.5 above; Subtract the amount of the Partial Prepayment from the Full Prepayment amount calculated in Part A or Part B above; Subtract any fixed costs (such as the cost of the Prepayment calculation and other fees which do not vary proportionally with the size of the Prepayment) of the Prepayment from the Full Prepayment amount in Step C.1; A rm6.doc

97 Revised Rate and Method County of El Dorado CFD No (Blackstone) June 7, 2005 Step C.4 Step C.5 Divide the result of Step C.2 by the result of Step C.3 to arrive at the Partial Prepayment Factor. The Partial Prepayment Factor is used in decreasing the Maximum Annual Special Tax for the Parcel for which the Special Tax is partially prepaid; If a Partial Prepayment has previously been made for this Parcel, multiply the result of Step C.4 times the previously calculated Partial Prepayment Factor. 8. Appeals Any taxpayer that feels that the amount of the Special Tax assigned to a Parcel is in error may appeal the levy of the Special Tax by filing a notice with the County. The County will then promptly review the appeal, and if necessary, meet with the applicant. If the County verifies that the tax should be modified or changed, a recommendation at that time will be made to the Board and, as appropriate, the Special Tax levy shall be corrected and, if applicable in any case, a refund shall be granted. Interpretations may be made by Resolution of the Board for purposes of clarifying any vagueness or ambiguity as it relates to the Special Tax rate, the method of apportionment, the classification of properties or any definition applicable to the CFD. 9. Collection of Annual Special Tax The Special Tax shall be collected on the secured property tax roll of the County; provided that, in accordance with Section of the Act, the County reserves the right to utilize any method of collecting the Special Tax, following approval of the County Treasurer Tax Collector and the Administrator. The County may also require the payment in full of current Fiscal Year Special Taxes at the time of the recordation of a subdivision map, lot line adjustment, or other process that changes the boundaries of a Parcel in the CFD. A rm6.doc

98 Attachment 1 County of El Dorado CFD No (Blackstone) Maximum Annual Special Tax - Base Year [1] Planned Maximum Annual Residential Special Tax Maximum Annual Village Units Per Unit Special Tax [2] [3] Units per Unit $1,300 $228, $1,300 $136, $1,600 $188, $1,300 $70,200 5A 104 $1,600 $166,400 5B 110 $1,600 $176, $1,300 $241, $1,600 $190, $1,600 $102, $1,300 $139,100 Lot Y 96 $1,600 $153,600 Lot Z 16 $1,600 $25,600 Subtotal 1,255 $1,819,600 Net Acres per Net Acre [4] [5] Lot V $4,000 $51,240 Lot W $5,000 $59,150 Lot X 8.79 $9,600 $84,384 Subtotal $194,774 Total Special Tax Revenue $2,014,374 per Gross Acre Undeveloped Parcels [6] $1,800 [1] The Base Year is Fiscal Year The Maximum Annual Special Tax per Unit, Net Acre, or Gross Acre is increased by the Tax Escalation Factor in each Fiscal Year after the Base Year. "Att_1" [2] Villages as identified on Revised Tentative Map for West Valley Village. Prepared by EPS A model.xls 6/20/2005

99 [3] Planned Residential Lots are assigned to each Village based on the Revised Tentative Map of July If a Village has less Realized Residential Lots than Planned Residential Lots, the Administrator may require the Prepayment of the Special Tax obligation for Unrealized Residential Lots. [4] Net Acres are assigned to non-residential or mixed use Villages in the Special Tax Formula. The Net Acres are used to calculate the Maximum Annual Special Tax for a non-residential or mixed use Village. Once assigned, the Maximum Annual Special Tax for a non-residential or mixed use Village will not be decreased. [5] The Maximum Annual Special Tax for a Village is assigned in the Special Tax Formula and will not be decreased once assigned. [6] Undeveloped Parcels are assigned a Maximum Annual Special Tax based on Gross Acreage. Prepared by EPS A model.xls 6/20/2005

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101 APPENDIX C THE APPRAISAL C-1

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103 Appraisal Report Properties within El Dorado County Community Facilities District , Blackstone (portion of) El Dorado Hills, California Date of Report: July 6, 2016 Prepared For: Mr. Don Ashton, CAO Chief Administrative Office El Dorado County 360 Fair Lane Placerville, CA Prepared By: Kevin K. Ziegenmeyer, MAI Eric A. Segal, MAI Justin E. Kobilis, MAI

104 July 6, 2016 Mr. Don Ashton, CAO Chief Administrative Office El Dorado County 360 Fair Lane Placerville, CA RE: Properties within El Dorado County Community Facilities District , Blackstone (portion of) El Dorado Hills, California Dear Mr. Ashton: At the request and authorization of your office, Seevers Jordan Ziegenmeyer has prepared an appraisal report for the purpose of estimating the market value (fee simple estate) of certain developed and undeveloped properties within the boundaries of the El Dorado County Community Facilities District No , Blackstone (the CFD ), under the assumptions and limiting conditions contained in this report. The appraisal report has been conducted in accordance with appraisal standards and guidelines found in the Uniform Standards of Professional Appraisal Practice (USPAP) and the Appraisal Standards for Land Secured Financing published by the California Debt and Investment Advisory Commission (2004). This document is an Appraisal Report, which is intended to comply with the reporting requirements set forth under Standards Rule 2-2(a) of the edition of USPAP. The appraised properties represent various parcels within Blackstone, a master planned community located within the Valley View Specific Plan of El Dorado County. The appraised properties consist of 29 unimproved custom lots, 109 partially improved production lots, 407 finished production lots and 62 partially completed homes. There are also 255 completed single-family homes within the boundaries of the CFD not currently assessed for an improvement value by the El Dorado County Assessor; as such, a not-less-than estimate of market value for the smallest floor plan constructed within each subdivision was appraised and assigned to each respective Assessor s parcel within the CFD. The Blackstone master planned community is generally located east of Latrobe Road, south of White Rock Road. In total, Blackstone is estimated to contain approximately 1,466 single-family residential lots (inclusive of lots that are tentatively mapped). In addition to the single-family home sites, other uses within the Blackstone project include an elementary school, three park sites and a clubhouse/recreation area Atherton Road, Suite 500 Rocklin, CA Phone: Fax:

105 Mr. Don Ashton, CAO July 6, 2016 Page 2 We have been requested to provide a market value of the appraised properties by ownership and Assessor s parcel, as well as an aggregate, or cumulative value of the properties, as of the date of value. The value estimates assume a transfer would reflect a cash transaction or terms that are considered to be equivalent to cash. The estimates are also premised on an assumed sale after reasonable exposure in a competitive market under all conditions requisite to a fair sale, with buyer and seller each acting prudently, knowledgeably, for their own self-interest and assuming neither is under duress. The market value of the appraised properties, by ownership, as well as the cumulative, or aggregate, value of the appraised properties in the CFD account for the impact of the Lien of the Special Tax securing the El Dorado County Community Facilities District No Bonds. As a result of our analysis, it is our opinions the cumulative, or aggregate, values, in accordance with the assumptions and conditions set forth in the attached document (please refer to pages 6 and 7), are: Aggregate Value of Appraised Properties $ 261,270,000 Aggregate Retail Value of Existing Homes $ 302,109,876 Based on Assessed Value* Total Aggregate Value of Appraised and $ 563,379,876 Assessed Properties in the District *Provided by the Assessor's Office This estimate of value above represents a not-less-than value due to the fact we were requested to provide a market value of the smallest floor plan (by project) on each single-family residential lot improved with a completed home without an assessed value assigned. The estimate of market value is subject to the hypothetical condition the El Dorado County Community Facilities District No Bonds (Series 2005) have been refunded by the El Dorado County Community Facilities District No Refunding Bonds (Series 2016). Any properties within the appraised portion of the District not subject to the Lien of the Special Tax securing the Bonds (public and quasi-public land use sites), are not a part of this appraisal and, therefore, are not included in the table above. We were requested to include the assigned assessed value for both land and improvements for the existing single-family homes (that have assessed values) to provide the total aggregate value of the appraised and assessed properties. The market value of the appraised properties by ownership and Assessor s parcel can be found in the Appendix of this appraisal report.

106 Mr. Don Ashton, CAO July 6, 2016 Page 3 Please note the aggregate value is not the market value of the appraised properties in bulk. As defined by The Dictionary of Real Estate Appraisal, an aggregate value is the total of multiple market value conclusions. For purposes of this report, market value is estimated by ownership. The estimates of market value account for the impact of the Lien of the Special Taxes securing the Bonds. The estimates of market value provided assume a transfer would reflect a cash transaction or terms considered to be equivalent to cash. The estimates are also premised on an assumed sale after reasonable exposure in a competitive market under all conditions requisite to a fair sale, with buyer and seller acting prudently, knowledgeably, for their own self-interest and assuming neither is under duress. Further, the estimates of market value, by ownership, estimated herein specifically assume the appraised properties within the boundaries of the CFD are not marketed concurrently, which would suggest a market under duress. We hereby certify the properties have been inspected and have impartially considered all data collected in the investigation. Further, we have no past, present or anticipated future interest in the properties. This letter must remain attached to the report, which contains 160 pages, plus related exhibits and Appendix, in order for the value opinions set forth herein to be considered valid. The appraised properties do not have any significant natural, cultural, recreational or scientific value. The appraisers certify this appraisal assignment was not based on a requested minimum valuation, a specific valuation or the approval of a loan. This appraisal has been performed in accordance with the requirements of USPAP, the Code of Professional Ethics and the Standards of Professional Practice of the Appraisal Institute and the Appraisal Standards for Land Secured Financing, published by the California Debt and Investment Advisory Commission (2004). Additionally, this valuation is offered in accordance with the limiting conditions and assumptions set forth in this report. Thank you for the opportunity to work with your office on this assignment. Respectfully submitted, Kevin K. Ziegenmeyer, MAI Eric A. Segal, MAI State Certification No.: AG State Certification No.: AG Expires: June 4, 2017 Expiration Date: February 18, 2017 Justin E. Kobilis, MAI State Certification No.: AG Expires: June 16, 2017 /dtn

107 TABLE OF CONTENTS Transmittal Letter Summary of Important Facts and Conclusions 1 Appraisal Conditions Client, Intended User and Intended Use 3 Appraisal Report Format 3 Type and Definition of Value 3 Property Rights Appraised 4 Dates of Inspection, Value and Report 4 Scope of Work 4 Extraordinary Assumptions and Hypothetical Conditions 6 General Assumptions and Limiting Conditions 8 Certification Statements 10 Appraised properties Property Ownership and History 13 Property Legal Data 17 Site Description 27 Subject Photographs 30 Market Analysis El Dorado County 33 Neighborhood 39 Residential Market 46 Highest and Best Use 67 Valuation Approaches to Value 70 Floor Plan Valuation 73 Production (Bulk) Lot Valuation 93 Custom Lot Valuation 120 Market Valuation by Ownership 147 Summary and Conclusion 158 Exposure Time 160 Appendix A Tax Roll Value by Assessor s Parcel B Assessor s Parcel Maps C Tentative Maps/Final Maps D Readdressing/Reassigning Appraisal Reports E Glossary of Terms F Qualifications of Appraisers

108 SUMMARY OF IMPORTANT FACTS AND CONCLUSIONS Property: Location: Assessor Parcel Numbers / Owners of Record: The appraised properties comprise the improved, partially improved and unimproved residential lots within the boundaries of the El Dorado County Community Facilities District No (Blackstone) not improved with a single-family residence. In addition, those residential lots with completed single-family homes without an assessed value for vertical improvements were included in the scope of this appraisal assignment. The appraised properties are located within the Blackstone master planned community in El Dorado Hills. Blackstone is located east of Latrobe Road, south of White Rock Road. The appraised properties consist of 29 unimproved custom lots, 109 partially improved production lots, 407 finished production lots and 62 partially completed homes, which are identified within the Appendix to this report (see Tax Roll). There are also 255 completed single-family homes within the boundaries of the CFD not currently assessed for an improvement value by the El Dorado County Assessor; as such, a not-less-than estimate of market value for the smallest floor plan constructed within each subdivision was appraised and assigned to each respective Assessor s parcel within the CFD. The appraised parcels are owned by multiple ownership groups, which are described in more detail in the Property Legal Data section. Most of the completed single-family homes without an assessed value for vertical improvements are owned by individual homeowners. Zoning: The various land use components representing the appraised properties are located within the Valley View Specific Plan. The zoning designations are variations of single-family residence land uses. For a complete description of the underlying zoning ordinances, please refer to the Property Legal Data section of this report. Flood Zone: Flood Zone X Areas determined to be outside of the 0.2% annual chance flood plain Earthquake Zone: Zone 3 Moderate seismic activity (not located in a Fault- Rupture Hazard Zone) Highest and Best Use: Near term single-family residential development Seevers Jordan Ziegenmeyer 1

109 Property Rights Appraised: Fee simple estate Date of Inspection: May 11, 2016 Effective Date of Value: May 11, 2016 Date of Report: July 6, 2016 Exposure Time/Marketing Time: Conclusion of Cumulative, or Aggregate, Value: 12 months Aggregate Value of Appraised Properties $ 261,270,000 Aggregate Retail Value of Existing Homes $ 302,109,876 Based on Assessed Value* Total Aggregate Value of Appraised and $ 563,379,876 Assessed Properties in the District *Provided by the Assessor's Office This estimate of value above represents a not-less-than value due to the fact we were requested to provide a market value of the smallest floor plan (by project) on each single-family residential lot improved with a completed home without an assessed value assigned. The market value of the appraised properties by Assessor s parcel can be found in the Appendix of this appraisal report. The market value of the appraised properties by ownership can be found at the end of this report. Any properties within the appraised portion of the District not subject to the Lien of the Special Tax securing the Bonds (public and quasi-public land use sites), are not a part of this appraisal and, therefore, are not included in the table above. We were requested to include the assigned assessed value for both land and improvements for the existing single-family homes (that have assessed values) to provide the total aggregate value of the appraised and assessed properties. Please note the aggregate value noted above is not the market value of the appraised properties in bulk. As defined by The Dictionary of Real Estate Appraisal, an aggregate value is the total of multiple market value conclusions. For purposes of this report, market value is estimated by ownership. The estimates of market value account for the impact of the Lien of the Special Taxes securing the Bonds. The estimates of market value, by ownership, estimated herein specifically assume the appraised properties within the boundaries of the CFD are not marketed concurrently, which would suggest a market under duress. The market value conclusions noted above are subject to the Extraordinary Assumptions, Hypothetical Conditions, General Assumptions and Limiting Conditions referenced on pages 6 and 7 of this report. Seevers Jordan Ziegenmeyer 2

110 CLIENT, INTENDED USER AND INTENDED USE The client and intended user of this appraisal report is El Dorado County and the associated Finance Team. The appraisal report is intended for use in bond underwriting, and will be included in the official statement used to market the bonds. APPRAISAL REPORT FORMAT This document is an Appraisal Report, intended to comply with the reporting requirements set forth under Standards Rule 2-2(a) of the edition of the Uniform Standards of Professional Appraisal Practice (USPAP). TYPE AND DEFINITION OF VALUE The purpose of this appraisal is to estimate the market value (fee simple estate), by ownership and Assessor s parcel, and the cumulative, or aggregate value of the appraised properties comprising a portion of the El Dorado County Community Facilities District (CFD) No (Blackstone). Market value and aggregate value are defined as follows: Market Value: The most probable price which a property should bring in a competitive and open market under all conditions requisite to a fair sale, the buyer and seller each acting prudently and knowledgeably, and assuming the price is not affected by undue stimulus. Implicit in this definition is the consummation of a sale as of a specified date and the passing of title from seller to buyer under conditions whereby: (1) Buyer and seller are typically motivated; (2) Both parties are well informed or well advised, and acting in what they consider their own best interests; (3) A reasonable time is allowed for exposure in the open market; (4) Payment is made in terms of cash in U.S. dollars or in terms of financial arrangements comparable thereto; and (5) The price represents the normal consideration for the property sold unaffected by special or creative financing or sales concessions granted by anyone associated with the sale. 1 1 Code of Federal Regulations, Title 12, Section (55 Federal Register 34696, Aug. 24, 1990; as amended at 57 Federal Register 12202, Apr. 9, 1992; 59 Federal Register 29499, June 7, 1994). Seevers Jordan Ziegenmeyer 3

111 Aggregate Value: The sum of the separate and distinct market value opinions for each of the units in a condominium, subdivision development, or portfolio of properties, as of the date of valuation. The aggregate of retail values does not represent the value of all the units as though sold together in a single transaction; it is simply the total of the individual market value conclusions 2 PROPERTY RIGHTS APPRAISED The market values estimated herein are for the fee simple estate, defined as follows: Fee Simple Estate: absolute ownership unencumbered by any other interest or estate, subject only to the limitations imposed by the governmental powers of taxation, eminent domain, police power, and escheat. 3 DATES OF INSPECTION, VALUE AND REPORT An inspection of the appraised properties was completed on May 11, 2016, which represents the effective date of market value. This Appraisal Report was completed and assembled on July 6, SCOPE OF WORK This Appraisal Report has been prepared in accordance with the Uniform Standards of Professional Appraisal Practice (USPAP). This analysis is intended to be an appraisal assignment, as defined by USPAP; the intention is the appraisal service be performed in such a manner that the result of the analysis, opinions, or conclusion be that of a disinterested third party. Several legal and physical aspects of the appraised properties were researched and documented. A physical inspection of the properties was completed and serves as the basis for the site description contained in this report. Documentation identifying the subject parcels by Assessor s parcel number (APN) was provided by El Dorado County and N.B.S. for use in the appraisal. Our primary points of contact for project information were 1) Mr. Ryan Fong of River Rock Development Company, a representative of the master developer and 2) Mr. Jack Sevey of Lennar, also a representative of the master developer. The subjects zoning and entitlement information, earthquake zones, flood zones, utilities and tax information were obtained from the respective agencies. Data relating to the subjects neighborhood and surrounding market area were analyzed and documented. This information was obtained through personal inspections of portions of the neighborhood and market area; newspaper articles; real estate conferences; and interviews with various market participants, including property owners, property managers, land brokers, developers and local government agencies. 2 The Dictionary of Real Estate Appraisal, 6 th ed. (Chicago: Appraisal Institute, 2015), 6. 3 The Dictionary of Real Estate Appraisal, 90. Seevers Jordan Ziegenmeyer 4

112 In this appraisal we determined the highest and best use of the appraised properties as though vacant based on the four standard tests (legal permissibility, physical possibility, financial feasibility and maximum productivity). As will be shown in the Highest and Best Use Analysis section, the highest and best use of the appraised properties as vacant is for near term single-family residential development. We also determined the highest and best use of the appraised properties as improved. We have been requested to provide estimates of market value of the appraised properties by ownership and Assessor s parcel, as well as an aggregate, or cumulative value of the properties. The sales comparison approach to value was used to determine the market value of each component comprising the appraised properties (unimproved custom lots, partially improved production lots, finished production lots, partially completed homes and completed homes without assessed values). Additionally, three discounted cash flow analyses were presented in the report. The first two were employed to estimate the market value, in bulk, of the custom lots owned by AKT (one analysis) and Danny and Sheralyn Di Re (second analysis). The third was employed to estimate the market value, in bulk, of the lot holdings (including partially completed lots, finished lots and partially completed homes, but excluding completed homes) of Lennar, the largest property owner in Blackstone. The cumulative, or aggregate, value of the appraised properties represents the sum of the value estimates concluded for each ownership interest, which is not equivalent to the market value of the CFD as a whole. It should also be noted there are 92 completed homes owned by individuals that do not have assessed improvement value. For the purposes of this analysis, this group of homes will be considered as a single component. This appraisal report has been conducted in accordance with appraisal standards and guidelines found in the Uniform Standards of Professional Appraisal Practice (USPAP) and the Appraisal Standards for Land Secured Financing published by the California Debt and Investment Advisory Commission (2004). The individuals involved in the preparation of this appraisal include Kevin K. Ziegenmeyer, MAI, and Justin E. Kobilis, MAI. Mr. Kobilis, assisted in 1) inspecting the appraised properties, 2) reviewing the subjects information provided by the master developer, 3) the collection and confirmation of market data, 4) the analysis of the market data and 5) preparing the report. Mr. Ziegenmeyer 1) inspected the appraised properties, 2) provided professional input and direction, and 3) made any necessary revisions and/or amplifications to the report. Seevers Jordan Ziegenmeyer 5

113 EXTRAORDINARY ASSUMPTIONS AND HYPOTHETICAL CONDITIONS It is noted the use of an extraordinary assumption or hypothetical condition may have affected the results of the appraisal. Extraordinary Assumptions 1. It is presumed there are no adverse soil conditions, toxic substances or other environmental hazards that may interfere or inhibit development of the appraised properties. If, at some future date, items are discovered that are determined to have a detrimental impact on value, the appraiser reserves the right to amend the opinion of value stated herein. 2. There exists in western portions of El Dorado County serpentine bedrock that can contain a natural form or forms of asbestos. Disturbance of the serpentine bedrock during development could release asbestos into the air. In response to this potential for release of asbestos into the air, the County and others have implemented construction control measures to be applied whenever development occurs within serpentine bedrock. Those measures require sites to be kept wet and machinery to be kept dust free during periods of exposure and work in serpentine bedrock. For purposes of this appraisal, it is assumed there are no concentrations of asbestos that would interfere with or inhibit development of the appraised properties. 3. The aggregate value presented herein is not the market value in bulk of the entire appraised properties. As defined by The Dictionary of Real Estate Appraisal, an aggregate value is the total of multiple market value conclusions. For purpose of this report, market value has been estimated by the individual ownerships only. 4. Site cost and permits and fees estimates were provided by a representative of the Master Developer, Mr. Ryan Fong (River Rock Development Company), who in turn procured the figures from the respective individual developers, where possible. It is assumed the cost/fee estimates are accurate and complete, and will be relied upon in the analysis contained herein. The reader should note there were a few components within the appraised properties for which we were unable to obtain site cost estimates and/or permits and fees information. However, we were able to estimate these figures based upon our knowledge of other costs/fees within Blackstone. Any deviation of actual costs from the estimates inputted in this appraisal could materially affect the conclusion(s) of value contained herein. 5. It is an assumed that all remaining lots within the appraised properties have allocated water rights from the El Dorado Irrigation District (EID), as was represented by the development group. Any deviation from this assumption could materially affect the conclusion(s) of value contained herein. Seevers Jordan Ziegenmeyer 6

114 EXTRAORDINARY ASSUMPTIONS AND HYPOTHETICAL CONDITIONS (cont.) 6. At the June 2016 general election, voters in the County passed Measure E, a growth-control initiative, which reversed a law, passed by voters in 2008 (Measure Y), that gave the County Board of Supervisors authority to authorize construction of new county roads for major residential developments that contribute to traffic congestion. The County and the Developer expect that the impacts of the passage of Measure E will not impact further development in the District due to the fact that development has been approved by a Development Agreement, and the project has all discretionary approvals and the measure only applies to projects which require further discretionary approval. Hypothetical Conditions 1. The market value estimated herein is based on a hypothetical condition. USPAP defines a hypothetical condition as a condition, directly related to a specific assignment, which is contrary to what is known by the appraiser to exist on the effective date of the assignment results, but is used for the purpose of the analysis. The estimate of market value is subject to the hypothetical condition the El Dorado County Community Facilities District No Bonds (Series 2005) have been refunded by the El Dorado County Community Facilities District No Refunding Bonds (Series 2016). Seevers Jordan Ziegenmeyer 7

115 GENERAL ASSUMPTIONS AND LIMITING CONDITIONS 1. No responsibility is assumed for the legal description provided or for matters pertaining to legal or title considerations. Title to the property is assumed to be good and marketable unless otherwise stated. 2. No responsibility is assumed for matters of law or legal interpretation. 3. The property is appraised free and clear of any or all liens or encumbrances unless otherwise stated. 4. The information and data furnished by others in preparation of this report is believed to be reliable, but no warranty is given for its accuracy. 5. It is assumed there are no hidden or unapparent conditions of the property, subsoil, or structures that render it more or less valuable. No responsibility is assumed for such conditions or for obtaining the engineering studies that may be required to discover them. 6. It is assumed the property is in full compliance with all applicable federal, state, and local environmental regulations and laws unless the lack of compliance is stated, described, and considered in the appraisal report. 7. It is assumed the property conforms to all applicable zoning and use regulations and restrictions unless nonconformity has been identified, described and considered in the appraisal report. 8. It is assumed all required licenses, certificates of occupancy, consents, and other legislative or administrative authority from any local, state, or national government or private entity or organization have been or can be obtained or renewed for any use on which the value estimate contained in this report is based. 9. It is assumed the use of the land and improvements is confined within the boundaries or property lines of the property described and there is no encroachment or trespass unless noted in the report. 10. Unless otherwise stated in this report, the existence of hazardous materials, which may or may not be present on the property, was not observed by the appraiser. The appraiser has no knowledge of the existence of such materials on or in the property. The appraiser, however, is not qualified to detect such substances. The presence of substances such as asbestos, ureaformaldehyde foam insulation and other potentially hazardous materials may affect the value of the property. The value estimated is predicated on the assumption there is no such material on or in the property that would cause a loss in value. No responsibility is assumed for such conditions or for any expertise or engineering knowledge required to discover them. The intended user of this report is urged to retain an expert in this field, if desired. 11. The Americans with Disabilities Act (ADA) became effective January 26, I (we) have not made a specific survey or analysis of this property to determine whether the physical aspects of the improvements meet the ADA accessibility guidelines. Since compliance matches each owner s financial ability with the cost-to cure the property s potential physical characteristics, Seevers Jordan Ziegenmeyer 8

116 the real estate appraiser cannot comment on compliance with ADA. A brief summary of the subjects physical aspects is included in this report. It in no way suggests ADA compliance by the current owner. Given that compliance can change with each owner s financial ability to cure non-accessibility, the value of the subject does not consider possible non-compliance. Specific study of both the owner s financial ability and the cost-to-cure any deficiencies would be needed for the Department of Justice to determine compliance. 12. The appraisal is to be considered in its entirety and use of only a portion thereof will render the appraisal invalid. 13. Possession of this report or a copy thereof does not carry with it the right of publication nor may it be used for any purpose by anyone other than the client without the previous written consent of Seevers Jordan Ziegenmeyer. 14. Neither all nor any part of the contents of this report (especially any conclusions as to value, the identity of the appraiser, or the firm with which the appraiser is connected) shall be disseminated to the public through advertising, public relations, news, sales, or any other media without the prior written consent and approval of Seevers Jordan Ziegenmeyer. Seevers Jordan Ziegenmeyer authorizes the reproduction of this document to aid in bond underwriting and in the issuance of Bonds. 15. Acceptance and/or use of the appraisal report constitutes acceptance of all assumptions and limiting conditions stated in this report. 16. An inspection of the appraised properties revealed no apparent adverse easements, encroachments or other conditions, which currently impact the subject. The appraiser is not a surveyor nor qualified to determine the exact location of easements. It is assumed typical easements do not have an impact on the opinion (s) of value as provided in this report. If, at some future date, these easements are determined to have a detrimental impact on value, the appraiser reserves the right to amend the opinion (s) of value. 17. This appraisal report is prepared for the exclusive use of the appraiser s client. No third parties are authorized to rely upon this report without the express consent of the appraiser. Seevers Jordan Ziegenmeyer authorizes the reproduction of this document to aid in bond underwriting and in the issuance of Bonds. Seevers Jordan Ziegenmeyer 9

117 CERTIFICATION STATEMENT I certify that, to the best of my knowledge and belief: The statements of fact contained in this report are true and correct. The reported analyses, opinions, and conclusions are limited only by the reported assumptions and limiting conditions and are my personal, impartial, and unbiased professional analyses, opinions, and conclusions. I have no present or prospective interest in the property that is the subject of this report and no personal interest with respect to the parties involved. I have performed no services, as an appraiser or in any other capacity, regarding the property that is the subject of this report within the three-year period immediately preceding acceptance of this assignment. I have no bias with respect to the property that is the subject of this report or to the parties involved with this assignment. My engagement in this assignment was not contingent upon developing or reporting predetermined results. My compensation for completing this assignment is not contingent upon the development or reporting of a predetermined value or direction in value that favors the cause of the client, the amount of the value opinion, the attainment of a stipulated result, or the occurrence of a subsequent event directly related to the intended use of this appraisal. My analyses, opinions, and conclusions were developed, and this report has been prepared, in conformity with the Uniform Standards of Professional Appraisal Practice. The reported analyses, opinions, and conclusions were developed, and this report has been prepared, in conformity with the Code of Professional Ethics and Standards of Professional Appraisal Practice of the Appraisal Institute. I have made an inspection of the properties that are the subject of this report. Justin E. Kobilis, MAI, provided significant real property appraisal assistance to the person signing this certification. The use of this report is subject to the requirements of the Appraisal Institute relating to review by its duly authorized representatives. I certify that my State of California real estate appraiser license has never been revoked, suspended, cancelled, or restricted. I have the knowledge and experience to complete this appraisal assignment. Please see the Qualifications of Appraiser(s) portion of the Appendix to this report for additional information. As of the date of this report, I have completed the continuing education program for Designated Members of the Appraisal Institute. Kevin K. Ziegenmeyer, MAI State Certification No.: AG (Expires June 4, 2017) July 6, 2016 DATE Seevers Jordan Ziegenmeyer 10

118 CERTIFICATION STATEMENT I certify that, to the best of my knowledge and belief: The statements of fact contained in this report are true and correct. The reported analyses, opinions, and conclusions are limited only by the reported assumptions and limiting conditions and are my personal, impartial, and unbiased professional analyses, opinions, and conclusions. I have no present or prospective interest in the property that is the subject of this report and no personal interest with respect to the parties involved. I have performed services as an appraiser regarding portions of the property that is the subject of this report within the three-year period immediately preceding acceptance of this assignment. I have no bias with respect to the property that is the subject of this report or to the parties involved with this assignment. My engagement in this assignment was not contingent upon developing or reporting predetermined results. My compensation for completing this assignment is not contingent upon the development or reporting of a predetermined value or direction in value that favors the cause of the client, the amount of the value opinion, the attainment of a stipulated result, or the occurrence of a subsequent event directly related to the intended use of this appraisal. My analyses, opinions, and conclusions were developed, and this report has been prepared, in conformity with the Uniform Standards of Professional Appraisal Practice. The reported analyses, opinions, and conclusions were developed, and this report has been prepared, in conformity with the Code of Professional Ethics and Standards of Professional Appraisal Practice of the Appraisal Institute. I have made an inspection of the properties that are the subject of this report. Kevin Ziegenmeyer, MAI, and Sara A. Gilbertson, Appraiser, provided significant real property appraisal assistance to the person signing this certification. I certify that my State of California real estate appraiser license has never been revoked, suspended, cancelled, or restricted. I have the knowledge and experience to complete this appraisal assignment. Please see the Qualifications of Appraiser(s) portion of the Appendix to this report for additional information. As of the date of this report, I have completed the continuing education program for Designated Members of the Appraisal Institute. Eric A. Segal, MAI State Certification No.: AG (February 18, 2017) July 6, 2016 DATE Seevers Jordan Ziegenmeyer 11

119 CERTIFICATION STATEMENT I certify that, to the best of my knowledge and belief: The statements of fact contained in this report are true and correct. The reported analyses, opinions, and conclusions are limited only by the reported assumptions and limiting conditions and are my personal, impartial, and unbiased professional analyses, opinions, and conclusions. I have no present or prospective interest in the property that is the subject of this report and no personal interest with respect to the parties involved. I have performed no services, as an appraiser or in any other capacity, regarding the property that is the subject of this report within the three-year period immediately preceding acceptance of this assignment. I have no bias with respect to the property that is the subject of this report or to the parties involved with this assignment. My engagement in this assignment was not contingent upon developing or reporting predetermined results. My compensation for completing this assignment is not contingent upon the development or reporting of a predetermined value or direction in value that favors the cause of the client, the amount of the value opinion, the attainment of a stipulated result, or the occurrence of a subsequent event directly related to the intended use of this appraisal. My analyses, opinions, and conclusions were developed, and this report has been prepared, in conformity with the Uniform Standards of Professional Appraisal Practice. The reported analyses, opinions, and conclusions were developed, and this report has been prepared, in conformity with the Code of Professional Ethics and Standards of Professional Appraisal Practice of the Appraisal Institute. I have made an inspection of the property that is the subject of this report. Kevin Ziegenmeyer, MAI, reviewed this report. I certify that my State of California real estate appraiser license has never been revoked, suspended, cancelled, or restricted. As of the date of this report, I have completed the continuing education program for Designated Members of the Appraisal Institute. Justin E. Kobilis, MAI State Certification No.: AG (June 16, 2016) July 6, 2016 DATE Seevers Jordan Ziegenmeyer 12

120 Valley View Specific Plan PROPERTY OWNERSHIP AND HISTORY The appraised properties are located within the Valley View Specific Plan of El Dorado County. The Valley View Specific Plan contains approximately 2,037 acres and covers an area within the southeast portion of the unincorporated community of El Dorado Hills. The concept for development of Valley View follows the traditional concept of villages established in the original planning in the community. In fact, Valley View is composed of three villages: 1) West Valley Village (of which the subject is a part), East Ridge Village and White Rock Village. Major land uses within the Specific Plan include single and multifamily residential, school sites and open space/recreation. A more detailed discussion of the Specific Plan can be found in the Neighborhood section later in this report. The appraised properties represent portions of the Valley View Specific Plan and a discussion of the appraised properties begins below. Appraised Properties Description The appraised properties represent a portion of the El Dorado County CFD No (Blackstone), within the Valley View Specific Plan. More specifically, the appraised properties comprise the improved, partially improved and unimproved residential lots within the boundaries of the CFD not improved and assessed with a single-family residence. In addition, those residential lots with completed single-family homes without an assessed value for vertical improvements were included in the scope of this appraisal assignment. There are 255 completed single-family homes within the boundaries of the CFD not currently assessed for an improvement value by the El Dorado County Assessor; as such, a not-less-than estimate of market value for the smallest floor plan constructed within each subdivision was appraised and assigned to each respective Assessor s parcel within the CFD of this appraisal. The subject properties represent a portion of the Blackstone master planned community, which consists of several single-family residential projects being built-out by various regionally and/or nationally recognized homebuilders, in addition to three park sites, an elementary school and a main clubhouse/recreation area. A map of the Blackstone project and the location of the various active residential projects, according to the Blackstone community website, is shown on the next page. Seevers Jordan Ziegenmeyer 13

121 In total, the Blackstone project either contains or is proposed for a total of 1,466 lots, segregated into various villages. A map of the various villages is shown on the next page, as provided by the master developer. It should be noted Villages 1, 2, 4, 8 and 18 are closed out. With the exception of eight homes, the appraised properties generally represent portions of the other villages that have not closed out. Seevers Jordan Ziegenmeyer 14

122 Seevers Jordan Ziegenmeyer 15

123 Sales History The appraisal report has been conducted in accordance with appraisal standards and guidelines found in the Uniform Standards of Professional Appraisal Practice (USPAP) for Mass Appraisals, insomuch this appraisal report does not provide a discussion of the sales history for each parcel appraised herein during the past three years. The scope of work outlined in this report is based on the specific intended use of this appraisal report. As will be shown and detailed herein, the appraised properties have been the subject of previous, recent and pending transactions as either unimproved or improved single-family residential lots and completed single-family homes currently being marketed for sale by merchant builders within the CFD. Strengths, Weaknesses, Opportunities, Threats Strengths: Appeal to both first time and (predominantly) move-up homebuyers Good condition of surrounding homes and immediate path of growth Good transportation linkages with proximity to U.S. Highway 50 The housing market is in a state of expansion Weaknesses: With a large number of lots, sell-off is anticipated to take several years Opportunities: Strengthening residential sector signals the local economy is in an expansionary cycle Threats: Macroeconomic factors, and the possibility the economy becomes stagnant and the residential sector loses steam Unforeseen delays Seevers Jordan Ziegenmeyer 16

124 PROPERTY LEGAL DATA Assessor s Parcel Number(s) The appraised properties consist of 29 unimproved custom lots, 109 partially improved production lots, 407 finished production lots, and 62 partially completed homes, which are identified within the 2015/16 Tax Roll appended hereto. There are also 255 completed single-family homes within the boundaries of the CFD not currently assessed for an improvement value by the El Dorado County Assessor; as such, a not-less-than estimate of market value for the smallest floor plan constructed within each subdivision was appraised and assigned to each respective Assessor s parcel within the CFD. Location The appraised properties are located within the Blackstone master planned development, which is located east of Latrobe Road, south of White Rock Road, within the unincorporated community of El Dorado Hills, El Dorado County, California. Owner(s) of Record A summary of the various ownership group holdings is provided in the next table. Unimproved Custom Lots Partially Improved Production Lots Finished Production Lots Partially Completed Homes Completed Homes w/o Avs Totals Individual Homeowners Lennar Standard Pacific Homes K. Hovnanian Homes KB Home Meritage Homes The New Home Company AKT Danny and Sheralyn Di Re Totals Seevers Jordan Ziegenmeyer 17

125 It should be noted the ownership information reflects that shown on the tax roll. The Assessor s Office records are not current as to ownership and most of the completed homes, with the exception of model homes, are actually currently owned by individuals. Legal Description A complete legal description, which would typically be included in a preliminary title report, was not provided to the appraiser. Assessment and Tax Information Ad Valorem Taxes The property tax system in California was amended in 1978 by Article XIII to the State Constitution, commonly referred to as Proposition 13. It provides for a limitation on property taxes and for a procedure to establish the current taxable value of real property by reference to a base year value, which is then modified annually to reflect inflation (if any). Annual inflationary increases cannot exceed 2% per year. The base year was set at or any year thereafter in which the property is substantially improved or changes ownership. When either of these two conditions occurs, the property is to be re-appraised at market value, which becomes the new base year assessed value. Proposition 13 also limits the maximum tax rate to 1% of the value of the property, exclusive of bonds and supplemental assessments. Bonded indebtedness approved prior to 1978, and any bonds subsequently approved by a two-thirds vote of the political jurisdiction in which the property is located, can be added to the 1% tax rate. The existing ad valorem taxes are of nominal consequence in this appraisal, primarily due to the fact these taxes will be adjusted substantially as the remaining property improvements are completed and in consideration of the definition of market value employed in this appraisal, which assumes a sale of the appraised properties. According to the El Dorado County Treasurer-Tax Collector s Office, the subject parcels have a cumulative annual tax rate of % based on assessed value. Special Taxes and Assessments El Dorado County CFD No As referenced, the appraised properties are located within the boundaries of El Dorado County CFD No (Blackstone). The CFD includes single-family residential land use components, and undeveloped parcels. Each of these land uses are encumbered by Bonds associated with the CFD. Special tax levy information for the CFD, from information provided by NBS, is summarized in the table on the following page. Seevers Jordan Ziegenmeyer 18

126 El Dorado County CFD (Blackstone) Special Tax Levy by Land Use Table El Dorado County CFD No (Blackstone) Special Tax Levy by Land Use Expected Composite Values (4) FY15-16 Special Tax Category Lots (2) Lots (3) Total Tax Levy % of Levy Completed homes as of June 1, 2016 (1) $428,807,319 $1,404, % Single Family Lots Under Development Village 6 - K Hovnanian Blackstone Ca ,060, , % Village 6 - KB Homes Sacramento Inc ,395,000 60, % Village 5A, 7, X, Y and Z - Lennar Homes of Ca Inc ,033, , % Village 5B - Meritage Homes of Ca Inc ,880,000 58, % Lot W - New Home Co Nor Ca A De LL ,000,000 12, % Village 3 - Standard Pacific A De Corp ,229, , % Unimproved Custom Lots Lot Y and Z - AKT West Vlly Investors Ca ,619 4, % Village 3 and 7 - AKT West Vlly Investors Ca ,381 11, % Village 5A - Di Re Danny D & Sheralyn ,000 9, % Undeveloped Parcels Lot V - Lennar Homes ,570,000 11, % Total 1,381 1,466 $564,534,876 $2,244, % (1) Developed with completed homes. All parcels with a structure value of $40,000 or more are considered complete. (2) Current active lots. (3) Lots expected at buildout. (4) Values based on a combination of secured roll assessed values and May 2016 appraisal values. Source: NBS Based upon our review of the tax roll provided by NBS, the max tax figures per final mapped lot or completed home are generally either $1,585 or $1,950 per lot /year, depending on the village. The following Villages reflect per-lot max tax amounts of $1,585 per year: 1A, 1B, 2, 4, 6A, 6B, 6C and 18. The following Villages reflect per-lot max tax amounts of $1,950 per year: 3A, 3B, 3C, 5A, 5B, 5C, 7A, 7B, 7C, 8, Lot Y, and Lot Z. Escalations are 2% per year. Lot X, which is being developed by Lennar as the Palisades community, was recently subdivided into 61 developable parcels and 3 public/quasi-public parcels. The maximum special tax for the base year 2005/2006 was $84,384, escalating by 2% per year. As such, for the 2015/2016 tax year, the maximum special tax equates to $102,864. Dividing this figure by 61 single-family home lots equates to approximately $1,686 per lot. Lots W1 and W2, which are being developed by the New Home Company as the Chaparral community, were recently subdivided into 38 and 34 developable lots, respectively, for a total of 72 lots. The maximum special tax for the base year 2005/2006 was $59,150 for Lot W, escalating by 2% per year. As such, for the 2015/2016 tax year, the maximum special tax equates to $72,104. Dividing this figure by 72 single-family home lots equates to approximately $1,001 per lot. Seevers Jordan Ziegenmeyer 19

127 Lot V, being developed by Lennar (yet-to-be-named project), has a tentative map for 70 lots. The maximum special tax for the base year 2005/2006 was $51,240, escalating by 2% per year. As such, for the 2015/2016 tax year, the maximum special tax equates to $62,461. Dividing this figure by 70 single-family home lots equates to approximately $892 per lot. With regard to the parcels with tentative maps for custom lots (APNs and -02; through -33; and 03; and -02; and through -03), each one of these parcels currently has annual tax payments (CFD ) of $1,950 per parcel, and each new lot created at final map recordation will also be encumbered by the same tax payment. Buckeye Elementary CFD In addition to the CFD , the subject parcels are encumbered by an additional bond, Buckeye Elementary CFD , which is a school district bond. According to a representative with Wildan Financial Services, the bond administrator, this bond district is expected to be in existence through the tax year, but parcels can only be assessed the bond debt for a maximum of 30 years. Based upon our review of various lots within the Blackstone project (of various stages of development), this direct levy has an annual payment obligation of $1,040 per lot. It should also be noted the subject parcels are encumbered by various other direct levies that represent relatively nominal charges that cannot be paid off. Conditions of Title A preliminary title report was not provided for this appraisal. As a result, the appraiser assumes no negative title restrictions or easements affect the appraised properties. The client is advised to obtain a title report to determine any possible conditions of title affecting the properties appraised. The appraiser accepts no responsibility for matters pertaining to title, and the opinion(s) of value stated herein could be negatively impacted by title restrictions. Zoning According to the El Dorado County Planning Department, the appraised properties are located within the Valley View Specific Plan. For the reader s reference, a map of the Specific Plan with designated land uses within the Plan is shown on the next page. Seevers Jordan Ziegenmeyer 20

128 Source: El Dorado County Planning Department A description of each of the allowable land use designations within the Specific Plan is presented in the following table. Seevers Jordan Ziegenmeyer 21

129 LAND USE PLAN SUMMARY VALLEY VIEW SPECIFIC PLAN Source: El Dorado County Planning Department The Blackstone master planned community of which the subject is a part is essentially represented by the West Valley Village subcomponent of the Valley View Specific Plan. As shown by the map on the previous page, the land use designations within West Valley Village (Blackstone) are ER-2 (Estate Residential, 2 units/acre), SFR (Single-Family Residential), CR (Core Residential), MOS (Multi-Use Open Space), OS (Open Space) and SCH (School Site). A summary of each land use designation that affects the appraised properties is presented as follows, according to information from the Valley View Specific Plan of El Dorado County: Seevers Jordan Ziegenmeyer 22

130 Estate Residential District (ER): This is the lowest density residential classification in the Plan, and makes up approximately 50% of the Plan area. It is intended to be developed at densities averaging between 0.25 and 2 units per gross acre. More specifically, the ER-2 land use designation that affects some of the appraised properties allows average densities not to exceed 2 units per acre. The minimum lot size within the ER-2 area shall be 12,000 square feet. Single-Family Residential (SFR): This is a detached single-family residential land use designation. The average gross density throughout all SFR areas, including local street right-of-ways, shall not exceed an average of 4 dwelling units per acre. Residential parcels shall not be created less than 6,200 square feet in area. Core Residential (CR): It is intended that this district will be developed with a mix of moderate density residential products including single-family detached homes on parcels up to 6,200 square feet in area; high density single-family detached homes such as patio homes or zero lot line units; attached single-family homes including half-plexes, condominiums or townhouses; and multifamily homes including apartments. Multi-Use Open Space (MOS): This classification encompasses all active used open spaces including parks, school sites and those open spaces which fulfill a complementary public utility function such as providing for drainage or storm water detention. Open Space (OS): This designation is used primarily for passive open spaces, buffers and environmentally sensitive natural areas intended for permanent protection from development and incompatible use. School Site (SCH): This is the site of the Valley View Elementary School. According to the Buckeye School District website, the Valley View Elementary School is not yet listed (as of June 2016) as an active (open) school. Item of Note At the June 2016 general election, voters in the County passed Measure E, a growth-control initiative, which reversed a law, passed by voters in 2008 (Measure Y), that gave the County Board of Supervisors authority to authorize construction of new county roads for major residential developments that contribute to traffic congestion. The County and the Developer expect that the impacts of the passage of Measure E will not impact further development in the District due to the fact that development has been approved by a Development Agreement, and the project has all discretionary approvals and the measure only applies to projects which require further discretionary approval. Seevers Jordan Ziegenmeyer 23

131 Entitlements A summary of the current legal (entitlements) and physical status of the appraised properties is shown in the next table. Description No. Homes/Lots Improved Single-Family Lots Completed Single-Family Homes without A.V.'s 255 Partially completed Single-Family Homes (Under Construction) 62 Finished Single-Family Lots 407 Partially Improved Single-Family Lots Unimproved Single-Family Lots Custom Home Lots (APNs , -02; , -31, -32, -33; , -03; , -02; , -02, Total 862 All improved single-family residential homes and lots (724 in total) have final maps in place. Additionally, 39 partially improved lots owned by K. Hovnanian (Village 6C) have a final map in place. The remaining 70 partially improved lots are contained within APN , which represents a acre parcel with a tentative map for 70 single-family residential lots. The lots are owned by Lennar and are identified as Lot V. The final map is expected to record by late Third Quarter or early Fourth Quarter of 2016, according to a representative of the Master Developer (Ryan Fong). There are also 29 custom home lots with approved tentative maps, as shown in the table. These are further described as follows: APNs and -02: These parcels are owned by AKT, and are referred to as Village 7C. While currently configured as two Assessor s parcels, there is a tentative map in place for six custom residential lots. The tentative map was approved in September 2010 and expires in September Improvement plans are expected to be completed by Fall 2016, and the final map is expected to be recorded by late 2016/early APNs through -33: These parcels are also owned by AKT, and are referred to as Village 3C. While currently configured as four lots, there is a tentative map in place for eight single-family residential lots. The tentative map was approved in May 2013 and expires in May Similar to Seevers Jordan Ziegenmeyer 24

132 the other parcels owned by AKT, improvement plans are expected to be completed by Fall 2016, with final map recordation by late 2016/early APNs and -03: These two parcels are owned by AKT, and are portions of Lot Y and Lot Z. While the tentative map for all of Lot Y and Lot Z was approved in December 2008, that map was revised by the Planning Commission in November 2014 to reflect the currently planned number of lots. There are currently three residential lots approved for APNs and -03 (previous approval was for 9 lots). Improvement plans are expected to be completed in Fall 2016, with final map prepared but not recorded until the rough grading of the adjacent segment of Valley View Parkway is completed. APNs , -02; , -02, -03: These parcels are owned by Danny and Sheralyn Di Re, who are investors that purchased the parcels from AKT in These are referred to as Village 5C. These investors reportedly planned to sell the lots to developers at some future point, but had no plans to develop the lots themselves. The tentative map subdividing the parcels into 12 custom lots was approved in June 2013, and expires in June Improvement plans are expected by Fall The final map is expected to be ready for recordation by late 2016/early 2017, as the final map will likely be recorded by the buyer of these parcels from the current ownership. It should be noted that some properties without vertical improvements are excluded from the table. These properties include those not subject to the Lien of the Special Tax securing the Bonds (public and quasi-public land use sites). Additionally, the appraised properties, or any property within Blackstone, are not subject to affordable housing requirements. Flood Zone Source: Flood Zone: Map Panel: Federal Emergency Management Agency (FEMA) Zone X Areas outside of the 0.2% annual chance floodplain 06017C-0950E and 06017C-0725E Panel Date: September 26, 2008 Flood Insurance: Earthquake Zone Not required According to the Seismic Safety Commission, the appraised properties are located within Zone 3, which is considered to be the lowest risk zone in California. There are only two zones in California: Zone 4, which is assigned to areas near major faults; and Zone 3, which is assigned to all other areas of more moderate seismic activity. In addition, the subject is not located in a Fault-Rupture Hazard Zone Seevers Jordan Ziegenmeyer 25

133 (formerly referred to as an Alquist-Priolo Special Study Zone), as defined by Special Publication 42 (revised January 1994) of the California Department of Conservation, Division of Mines and Geology. Easements An inspection of the subject properties revealed no apparent adverse easements, encroachments or other conditions currently impacting the subject. However, the exact locations of typical roadway and utility easements, or any additional easements, which would be referenced in a preliminary title report, were not provided to the appraiser. The appraiser is not a surveyor nor qualified to determine the exact location of easements. It is assumed any easements noted in a current preliminary title report do not have an impact on the opinion(s) of value as provided in this report. If, at some future date, any easements are determined to have a detrimental impact on value, the appraiser reserves the right to amend the opinion(s) of value contained herein. Assessor s Parcel Maps Assessor s parcel maps can be found in the Appendix to this report. Seevers Jordan Ziegenmeyer 26

134 SITE DESCRIPTION The appraised properties represent a portion of the El Dorado County CFD No (Blackstone). The appraised properties consist of 29 unimproved custom lots, 109 partially improved production lots, 407 finished production lots and 62 partially completed homes. There are also 255 completed single-family homes within the boundaries of the CFD not currently assessed for an improvement value by the El Dorado County Assessor; as such, a not-less-than estimate of market value for the smallest floor plan constructed within each subdivision was appraised and assigned to each respective Assessor s parcel within the CFD. It should also be noted that the Blackstone master planned community of which the subject is a part (the lots of which are within the boundaries of the District) contains a number of other single-family residential homes that have assessed improvement value, in addition to public/quasi-public uses such as parks, a school, roads, etc.; all of these parcels are NOT considered part of the appraised properties that are the subject of this appraisal report. The appraised properties are further discussed below and on the following pages. Size and Shape: Topography: Views: Soils: Adjacent Uses: North East South West Drainage: The subject land areas are primarily irregular in shape, yet functional for development under their respective land use and zoning designations. Generally rolling A number of the lots within the Blackstone community have local or more distant views, a desirable feature for residential product. A soils report was not provided for this analysis. However, based on the existence of structures situated within the subjects immediate area, it appears the appraised properties possess adequate load bearing capacity for development. Multifamily residential development, vacant land Vacant land Vacant land El Dorado Hills Business Park Based on the development plan, a physical inspection of the appraised properties, and assuming typical grading and paving work will be completed, it is expected the appraised properties will have adequate drainage once developed. Seevers Jordan Ziegenmeyer 27

135 Access, Frontage, Visibility: Utilities: Utility and Public Service Providers: Fire Police Elementary and Middle Schools High School Recreation and Parks Water and Sewer Electricity and Gas Environmental Issues: Improved Lots: Primary surface streets that serve the Blackstone project include Latrobe Road (main access road to Blackstone), Blackstone Parkway, and Royal Oaks Drive. A number of other surface streets are also existing or proposed within the community. Overall access is considered good for a master planned community. All public utilities (electricity, gas, water, sewer, telephone) are generally available to each of the subject lots/parcels, and have been stubbed to the individual lots. One notable exception is APN , which represents a partially improved parcel with a tentative map in place for 70 production lots. Utilities must be extended to each of the individual lots during the development process. Additionally, the 29 unimproved custom lots also require individual utility connections. El Dorado Hills Fire District El Dorado County Sheriff s Department Rescue Union /Buckeye Union El Dorado Union El Dorado Hills Community S District El Dorado Irrigation District Pacific Gas and Electric At the time of inspection, the appraiser did not observe the existence of hazardous material, which may or may not be present on the properties. The appraiser has no knowledge of the existence of such materials on the properties. However, the appraiser is not qualified to detect such substances. The presence of potentially hazardous materials could affect the value of the properties. The value estimate is predicated on the assumption there is no such material on or in the properties that would cause a loss in value. No responsibility is assumed for any such conditions, or for any expertise or engineering knowledge required to discover them. The client is urged to retain an expert in the field if desired. The subject portion of El Dorado County Community Facilities District No includes 724 fully improved single family lots (curbs, gutters, sidewalks, street lighting, utilities stubbed, etc.), which includes completed single-family homes (without an assessed value for vertical improvements), partially completed single-family homes (under construction), and improved single-family lots. Seevers Jordan Ziegenmeyer 28

136 Unimproved Lots: The subject portion of El Dorado County Community Facilities District No includes 29 unimproved custom lots, which will require all in-tract site work to be completed during the development process. These lots are owned by AKT and Danny/Sheralyn Di Re. AKT has provided site cost estimates, which will be incorporated in the analysis later in this report. Partially Improved Lots: Village 6C lots (39 lots in total), owned by K. Hovnanian Homes, represent partially improved lots. According to a representative with K. Hovnanian, remaining in-tract work to these lots includes new curbs, gutters and sidewalks, Brentford Way paving (currently gravel in portions), and building retaining walls and driveway approaches. All utilities are stubbed. Work is expected to be completed by Summer While requested, costs to complete these items were not provided. There are also 70 partially improved production lots, currently identified as Lot V, or APN According to Mr. Ryan Fong, representative of the Master Developer, this project is being developed by Lennar Homes and will offer a similar product line as their Palisades project in Blackstone. Underground site work began in late April 2016, and all in-tract development is will be completed by July 2016, when the final map is expected to record. The builder estimates that total in-tract costs are expected to be about $44,250 per lot. Conclusion: The configuration and size of the appraised properties are considered adequate for development. The ongoing demand for residential development bodes well for this project. We expect the appraised properties to be competitive with the other local developments, as well as projects located elsewhere throughout the Sacramento region. Seevers Jordan Ziegenmeyer 29

137 SUBJECT PHOTOGRAPHS Entrance to Blackstone Model homes Chaparral Finished lots along Aldridge Way Foundation - Laurelton Completed home Laurelton Model homes and finished lots - Laurelton Seevers Jordan Ziegenmeyer 30

138 Finished lots Laurelton Homes and lots along Wycliffe Way Finished lots along Blackstone Parkway View along Brentford Way APN (tentatively mapped parcel) View from Seacrest Court Seevers Jordan Ziegenmeyer 31

139 View from Blackhawk Drive View along Eagle Creek Court Completed homes along Terra Drive K. Hovnanian lots along Brentford Way Looking south along Latrobe Road Looking north along Latrobe Road Seevers Jordan Ziegenmeyer 32

140 El DORADO COUNTY Introduction El Dorado County comprises approximately 1,805 square miles of land that includes foothills, valleys and mountain peaks. Its western border is adjacent to California s Central Valley, and its eastern border meets the State of Nevada in the Sierra Nevada Mountains, overlooking Lake Tahoe. The county has two incorporated cities, Placerville and South Lake Tahoe. Placerville, the County Seat, is located 42 miles east of Sacramento and 145 miles northeast of San Francisco. South Lake Tahoe is located 60 miles east of Placerville and is the hub of the popular Tahoe recreation area. Since the early 1980s, the western portion of El Dorado County has been included in the Sacramento Metropolitan Statistical Area. Over 80% of El Dorado County s residents live in unincorporated areas outside of the two incorporated city limits. The main residential communities in western El Dorado County are El Dorado Hills, Cameron Park and Shingle Springs. These communities serve as suburban areas to the Sacramento Metropolitan Area. Population El Dorado County s quality of life and proximity to Sacramento have resulted in rapid growth over the past two decades. Studies show over three-fourths of population growth since 1980 is due to inmigration to the region, with the majority of growth occurring in the communities of El Dorado Hills and Cameron Park. Seevers Jordan Ziegenmeyer 33

141 El Dorado County has a population of nearly 185,000, and has experienced relatively slow growth over the past few years, with an average growth rate of 0.5% per year. The following table illustrates population trends for areas within the county over the past several years. POPULATION TRENDS City %/Yr Placerville 10,365 10,308 10,322 10,425 10,607 10, % South Lake Tahoe 21,407 21,328 21,234 21,448 21,555 21, % Unincorporated 148, , , , , , % Total 180, , , , , , % Source: California Department of Finance Transportation U.S. Highway 50 is the main highway in the county, connecting with Sacramento to the west and South Lake Tahoe to the east. State Highway 89 provides access to Interstate 80 to the north. U.S. Highway 395 also allows access from the east. Additionally, State Highway 49 provides access to El Dorado County from north to south in the western portion of the county. The Tahoe Basin in El Dorado County is served by Lake Tahoe Airport in South Lake Tahoe, for small private aircraft. In addition, El Dorado County has three private airfields in Placerville, Georgetown and Cameron Park. El Dorado Transit provides bus service within the county. El Dorado County s proximity to the Sacramento Metropolitan Area allows access to Sacramento International Airport, Amtrak, the Union Pacific Railroad, the Port of Sacramento, Greyhound Bus Lines, and Sacramento s Regional Transit system. Employment & Economy The California Employment Development Department has reported the following employment data for El Dorado County over the past several years. EMPLOYMENT TRENDS Labor Force 91,100 89,700 89,200 88,800 88,400 89,100 Employment 80,000 79,200 80,100 81,300 82,300 84,100 Job Growth (1,700) (800) 900 1,200 1,000 1,800 Unemployment Rate 12.2% 11.7% 10.2% 8.4% 6.9% 5.6% Source: California Employment Development Department Seevers Jordan Ziegenmeyer 34

142 The unemployment rate in El Dorado County was 5.4% in March 2016, which compares to rates of 5.4% for California and 5.0% for the U.S. Most areas within the state and nation, including El Dorado County, saw declining unemployment rates in 2004 through 2006, increases from 2007 to 2010, and declines during The labor force of El Dorado County shows a markedly high degree of mobility. Census studies show that about 79% of El Dorado Hills residents and 55% of Cameron Park residents commute to out-of-county jobs. Employers in El Dorado County can offer shorter travel times for these local commuters and will be able to capitalize on the reverse commute from Sacramento to attract workers. El Dorado County has a diverse economy, with no one sector accounting for a majority of the employment in the region. The following chart indicates the percentage of total employment for each sector within the county. Government Leisure/Hospitality Educational/Health Services Trade/Transportation/Utilities Professional/Business Services Financial Activities Construction Other Services Manufacturing Information Agriculture Mining/Logging EMPLOYMENT BY SECTOR 0.0% 5.0% 10.0% 15.0% 20.0% 25.0% Source: California Employment Development Department As can be seen in the chart above, the area s largest employment sectors are Government (20.4%); Leisure and Hospitality (16.7%); and Educational and Health Services (14.9%). Decades ago, El Dorado County relied on agriculture, mining, logging and tourism for its economic base. In the late 1970s the county began a diversification trend that continues today. Population growth and increasing personal income have combined to create new demand for goods and services, particularly in the areas of services and retail trade. Business from the urban areas of San Francisco, Los Angeles and Sacramento are utilizing El Dorado County s advantages to establish operations there. Seevers Jordan Ziegenmeyer 35

143 Although agriculture represents a relatively small share of employment in the county, its importance is growing as El Dorado County gains recognition for its wineries and grape production. According to information posted on the El Dorado Winery Association website, El Dorado County currently has more than 2,000 acres of vineyards, and his home to approximately 50 wineries. El Dorado was designated an American Viticultural Area (AVA) in The following table lists the largest employers in the region. LARGEST EMPLOYERS Employer Industry Employees 1 Blue Shield of California Health insurance 2,069 2 El Dorado County Government 1,859 3 Red Hawk Casino Casino 1,250 4 Marshall Medical Center Healthcare 1,154 5 DST Output Communications Barton Health Healthcare State of California Government Safeway Inc. Grocery Stores El Dorado Union High School Dist. Education El Dorado Co. Office of Education Education 664 Source: Sacramento Business Journal, Book of Lists 2015 Household Income Median household income represents a broad statistical measure of well-being or standard of living in a community. The median income level divides households into two equal segments with one half of households earning less than the median and the other half earning more. The median income is considered to be a better indicator than the average household income as it is not dramatically affected by unusually high or low values. In the year 2014 (most recent data available from the U.S. Census Bureau), El Dorado County s median household income was $70,235, which was higher than the state of California s median income of $61,927. Generally speaking, income levels are much higher in the western part of the county, particularly the community of El Dorado Hills, when compared to the eastern mountainous areas of the county. Growth & Development The El Dorado Hills area in western El Dorado County has seen considerable growth in recent years. The El Dorado Hills Business Park and El Dorado Hills Town Center represent the area s most significant commercial developments and largest employment centers. The Town Center includes retail stores, offices, restaurants, a movie theater, a Target department store and a Mercedes Benz dealership. Commercial development is also concentrated along Green Valley Road. Seevers Jordan Ziegenmeyer 36

144 At the June 2016 general election, voters in the County passed Measure E, a growth-control initiative, which reversed a law, passed by voters in 2008 (Measure Y), that gave the County Board of Supervisors authority to authorize construction of new county roads for major residential developments that contribute to traffic congestion. The County and the Developer expect that the impacts of the passage of Measure E will not impact further development in the District due to the fact that development has been approved by a Development Agreement, and the project has all discretionary approvals and the measure only applies to projects which require further discretionary approval. Recreation & Community Services El Dorado County offers an abundance of recreational and cultural opportunities. Just eight miles north of Placerville is the site of the Coloma gold strike, which started the famous California Gold Rush of A variety of attractions and events celebrate the history of the area, some of which include the El Dorado County Museum, Marshall Park and Hangtown Jubilee. A few miles east of Placerville, Apple Hill is a popular tourist destination featuring numerous orchards. In terms of cultural amenities, Theater El Dorado productions offer art shows and concerts. Antique shops and art galleries offer unique opportunities to the visitors that come to the area. Top name entertainers appear nightly at the cabarets and showrooms of the Tahoe area casinos. Additionally, the Sacramento area offers cultural, entertainment, sports and recreation opportunities. During the winter, recreational sports abound in El Dorado County. Many of California s alpine ski resorts are located in the county, notably Heavenly Valley in South Lake Tahoe. Thousands of acres of national forest provide an ideal location for cross-country skiing enthusiasts. In the summer, the American, Rubicon and Cosumnes Rivers provide rafting challenges and fishing opportunities, while the Tahoe and El Dorado National Forests offer hiking and mountain biking. The Desolation Wilderness Area, located at the crest of the Sierra Nevada Mountains above Lake Tahoe, is a controlled access hiking area, unspoiled by motor vehicles. The mild, sunny climate makes golf a year round sport in El Dorado County. Seevers Jordan Ziegenmeyer 37

145 Conclusion El Dorado County has grown over the past two decades, with much of the expansion occurring on the county s western slope in the community of El Dorado Hills. Employment centers, such as the El Dorado Hills Business Park, are adding more local employment opportunities. Like most of the state and nation, the county experienced high unemployment and real estate market declines during the period of roughly However, employment conditions have been improving since 2011 and most real estate sectors are showing signs of recovery or expansion. As the economy continues to improve, the long-term outlook for the region is good. Seevers Jordan Ziegenmeyer 38

146 NEIGHBORHOOD Introduction This section of the report provides an analysis of the observable data that indicate patterns of growth, structure and/or change that may enhance or detract from property values. For the purpose of this analysis, a neighborhood is defined as a group of complementary land uses; a congruous grouping of inhabitants, buildings, or business enterprises. 4 The boundaries of a neighborhood identify the physical area that influences the value of the appraised properties. These boundaries may coincide with observable changes in prevailing land use or occupant characteristics. Physical features such as the type of development, street patterns, terrain, vegetation and parcel size tend to identify neighborhoods. Roadways, waterways and changing elevations can also create neighborhood boundaries. 4 The Dictionary of Real Estate Appraisal, 6th ed. (Chicago: Appraisal Institute, 2015), 156. Seevers Jordan Ziegenmeyer 39

147 The appraised properties are located within the unincorporated community of El Dorado Hills, El Dorado County. The neighborhood boundaries are generally considered to be consistent with the El Dorado Hills community. Demographics According to reports prepared by Esri Business Analyst Online (Esri), the population of the El Dorado Hills Census Designated Place (CDP) is 44,065 persons, which is projected to increase to 45,710 persons by The median age in the neighborhood is 42 years. There are approximately 15,024 households in El Dorado Hills, indicating an average household size of 2.93 persons. The median annual household income in the neighborhood is $118,260, while the average annual household income is $155,730. These are some of the highest figures in the Sacramento MSA. Of the 15,681 housing units in the area, approximately 80% are owner-occupied, 16% are renteroccupied and the remainder are vacant. Transportation U.S. Highway 50, located about two miles north of the Blackstone master planned community, is the major freeway in El Dorado County and links the area to the Sacramento Central Business District (CBD) to the west, and various El Dorado County communities to the east. Latrobe Road is a major local arterial that provides direct access to U.S. Highway 50 and connects the subjects with El Dorado Hills primary residential areas located north of the highway. To accommodate anticipated residential growth, El Dorado Hills Boulevard was widened to four lanes several years ago. El Dorado Hills has traditionally been considered a suburb of Sacramento with convenient access to employment centers located along the U.S. Highway 50 corridor. A typical commute to the Sacramento CBD takes approximately 30 to 40 minutes during peak periods. Other major neighborhood thoroughfares include White Rock Road, which spans from Rancho Cordova to El Dorado Hills, as well as Golden Foothill Parkway and Hillsdale Circle, which provide interior access within the El Dorado Hills Business Park. Land Uses The prominent land uses within the El Dorado Hills area include residential (predominantly singlefamily, with some multifamily), office/flex and retail development, as well as vacant land and community land uses. Immediately surrounding land uses to the Blackstone master planned community of which the subject is a part include multifamily residential development and vacant land to the north, vacant land to the east and south and the El Dorado Hills Business Park to the west. Seevers Jordan Ziegenmeyer 40

148 El Dorado Hills Business Park, just to the west of Blackstone, comprises 900 acres. The entire business park is zoned R&D (Research and Development) to allow for flexible combinations of office, tech and warehouse development. There are currently more than 200 companies located within the El Dorado Hills Business Park. Additionally, the Carson Creek Specific Plan is located to the west of the Business Park, and is further described in the Other Residential Developments section that follows. Retail development in the area can be found primarily along Latrobe Road. The most prominent retail center in the area is Town Center East located just south of U.S. Highway 50, along the east side of Latrobe Road. This commercial area encompasses nearly 100 acres, with a portion designed to resemble a Mediterranean village. Businesses in this area include several boutiques, bank branches, a hotel, Nugget Supermarket, CVS, Starbucks, Target, several restaurants, a movie theatre and a Mercedes Benz Dealership. In addition to Town Center East, retail development in the area includes a Raley s-anchored shopping center identified as El Dorado Hills Village. This project is located just north of U.S. Highway 50 and east of El Dorado Hills Boulevard. Just north of El Dorado Hills Village is La Borgata at Serrano, an upscale retail development. North of U.S. Highway 50 is some of the most prestigious residential development found in the Sacramento region. Among the residential developments in this area is Serrano El Dorado, a 3,500- acre project located at the northeast quadrant of El Dorado Hills Boulevard and U.S. Highway 50, in an area of rolling topography and wooded trees. The site includes 800 acres of open space and 50 acres of parklands. This master planned community includes custom homes, move-up tract housing and a private golf course and clubhouse. Community Uses Major community uses are found primarily north of U.S. Highway 50. Facilities include a large park at the intersection of El Dorado Hills Boulevard and Governor Drive. This property, managed by the El Dorado Hills Community Services District, includes several athletic fields, an aquatics center, gymnasium and two maintenance buildings. Other community land uses include Oak Ridge High School, located along Harvard Way, and Rolling Hills middle school, situated at the terminus of Harvard Way, east of Silva Valley Parkway. Primary recreational facilities in the area include the Folsom Lake State Recreation Area and Serrano Country Club and Golf Course. Valley View Specific Plan The appraised properties are located within the Valley View Specific Plan of El Dorado County. According to Specific Plan documents, the Valley View Specific Plan provides for the orderly and unified development on approximately 2,037 acres of land. It covers an area located at the southeast section of the community of El Dorado Hills and is the last large area of the community to be Seevers Jordan Ziegenmeyer 41

149 planned. The concept for development of the Plan follows the traditional concept of villages established in the original planning of El Dorado Hills. There are three villages within Valley View: West Valley Village (Blackstone), East Ridge Village and White Rock Village. For the reader s reference, a map of the Specific Plan with designated land uses within the Plan is shown below: Source: El Dorado County Planning Department Seevers Jordan Ziegenmeyer 42

150 A description of each of the allowable land use designations within the Specific Plan is presented in the table below: LAND USE PLAN SUMMARY VALLEY VIEW SPECIFIC PLAN Source: El Dorado County Planning Department The Blackstone master planned community of which the subject is a part is essentially represented by the West Valley Village subcomponent of the Valley View Specific Plan. As shown by the map on the previous page, the land use designations within West Valley Village (Blackstone) are ER-2 (Estate Residential, 2 units/acre), SFR (Single-Family Residential), CR (Core Residential), MOS (Multi-Use Open Space), OS (Open Space) and SCH (School Site). Seevers Jordan Ziegenmeyer 43

151 Blackstone Master Planned Community The appraised properties represent a portion of the Blackstone Master Planned Community. According to marketing information obtained from the main website for the community (blackstoneeldorado.com), the Blackstone community consists of approximately 990 acres. A map of the project is shown below: Source: blackstoneeldorado.com The community currently offers eight for-sale single-family residential projects being developed by six different regionally or nationally recognized homebuilders. In addition, Blackstone offers three park sites (including a sports park), an elementary school and a clubhouse/recreation area. The clubhouse/recreation area offers three swimming pools, a spa, an exercise facility, an aerobics room, locker rooms, a massage room, a children s play room with outdoor play yard, a multipurpose gathering area with adjoining kitchen and living room, a tot playground, and an outdoor fireplace. Approximately 350 acres of Blackstone are dedicated to open space, with an abundance of walking trails. The Blackstone project has a homeowner s association (HOA) that provides maintenance of all common areas and private streets (those behind gates). There are reportedly no planned commercial (retail, office, etc.) or multifamily projects proposed within Blackstone, as it is exclusively designated for single-family residential development. Seevers Jordan Ziegenmeyer 44

152 Other Residential Developments There are a few other notable residential developments in the El Dorado Hills area that are generally considered to compete for prospective homebuyers for the Blackstone master planned community. As noted previously, the Serrano master planned community, located north of Highway 50, encompasses approximately 3,500 acres and was originally developed by Parker Development Company. This project features an 18-hole/Par 72 golf course and clubhouse. Serrano offers a mix of move-up and executive level housing product, in addition to custom lots ranging from about 1/3 acre to over an acre. Active new home communities within Serrano include Pinnacle at Serrano, Fiori and Serenity. Another area of note in the El Dorado Hills area is the Promontory Specific Plan, which encompasses approximately 1,000 acres and is proposed for the build-out of single-family residential uses with open space and a smaller commercial component. This Plan is located north of Highway 50, west of El Dorado Hills Boulevard and is bounded on the west by the Folsom city limits. The Plan consists of multiple residential villages plus a village center that will include higher density residential product and commercial uses. The Plan reportedly has approvals for 1,100 residential units, of which 127 are classified as high density. Approximately half of the proposed lots within the Plan have been improved with single-family residential uses. Both production housing and custom lots exist and/or are proposed within this area. Lastly, the Carson Creek Specific Plan is located along the south line of White Rock Road, near the El Dorado/Sacramento County border, west of the appraised properties. At build-out, Carson Creek is expected to include about 710 acres of residential, R&D/industrial, commercial and public uses. Over half of the Plan area is proposed for residential use. It should also be noted that a wide range of housing types will be geared toward the senior (55+ years) community. Up to 1,700 housing units are proposed in Carson Creek. A senior housing facility is currently under construction, and a Specific Plan Amendment was recently processed to allow an assisted living on a commercially zoned parcel. Conclusion In conclusion, the appraised properties are located in an expanding, well-balanced neighborhood that has experienced significant residential and commercial growth in recent years. Residential and commercial development continues in the subjects immediate vicinity with several active home projects and proposed commercial sites. The characteristics of the neighborhood relative to other locales in the region are desirable, and steady demand for residential development is projected over the near and long term. Seevers Jordan Ziegenmeyer 45 Industrial Development

153 RESIDENTIAL MARKET Market Definition The appraised properties are located within the Blackstone master planned community, in the unincorporated community of El Dorado Hills. The neighborhood is characterized as a growing suburban area. Based on existing surrounding homes and new projects under development, the subject characteristics best support projects designed for move-up homebuyers. In this analysis of the housing market, we will analyze market trends within the community of El Dorado Hills. Building Permits Single-family building permits for El Dorado County over the last 10 years are summarized in the table below. The community of El Dorado Hills is not specifically profiled * Percentage Change: % -52.5% -51.6% -15.1% 19.5% 29.1% 28.0% -30.5% 261.1% - * through March As shown by the table, building permit activity was at its highest point during the studied time period in 2006, followed by a dramatic decline during the recessionary period through 2010, when it resumed a modest upward climb. While permit activity fell in 2014, it spiked in 2015 by over 250%. The 2016 permit figures are through March; extrapolating the data for the entire year yields an estimated figure of 660 permits for the year. New Home Pricing and Sales The Gregory Group surveys active new home projects in California and Nevada. The following tables depict average sale prices for active single-family residential projects in the market area for the past three years. The data represents all detached projects, as there have been no attached home communities in El Dorado Hills in recent years. Seevers Jordan Ziegenmeyer 46

154 % Change Average Average Sold Per Time Average Average Home Size Price/Avg % Change Quarter Number of Project Period Price Price (SF) SF Price/SF Sold Projects Per Month 1Q 2013 $517,001-3,044 $ Q 2013 $513, % 2,999 $ % Q 2013 $505, % 2,806 $ % Q 2013 $515, % 2,941 $ % Q 2014 $547, % 2,966 $ % Q 2014 $542, % 2,966 $ % Q 2014 $539, % 3,002 $ % Q 2014 $571, % 3,083 $ % Q 2015 $605, % 3,309 $ % Q 2015 $630, % 3,336 $ % Q 2015 $614, % 3,212 $ % Q 2015 $613, % 3,191 $ % Q 2016 $640, % 3,226 $ % Source: The Gregory Group The following graph plots new home pricing in El Dorado Hills over the same time period, with information from the previous table: NEW HOME PRICING EL DORADO HILLS $700,000 $680,000 $660,000 $640,000 $620,000 $600,000 $580,000 $560,000 $540,000 $520,000 $500,000 1Q Q Q Q Q Q Q Q Q Q Q Q Q 2016 Source: The Gregory Group Seevers Jordan Ziegenmeyer 47

155 The next graph plots new home pricing per square foot of living area, in El Dorado Hills, again with information furnished by the previous table: NEW HOME PRICING PER SQUARE FOOT EL DORADO HILLS $ $ $ $ $ $ $ $ $ Q Q Q Q Q Q Q Q Q Q Q Q Q 2016 Source: The Gregory Group As shown by the table and the graphics, new home pricing in the El Dorado Hills community has generally been increasing over the past three years, albeit with some fluctuations, and the most recent (First Quarter 2016) average new home price of $640,260 is the highest data point during the observed time period. Additionally, the average price per square foot of living area has also been in an upward trend, and the most recent data point of $ is again the highest in the data set. With regard to absorption of product, the range of the number of home sales per project per month over the last three years is 1.08 (Third Quarter 2015) to 4.00 (First Quarter 2013), with no particular noticeable pattern in the data set. Over the past year, absorption rates have ranged from 1.08 to 1.93 sales per month, with most of the data lying toward the high end of this range, and the average absorption over the past year has been 1.81 sales per month. Assuming an approximate 4.2 weeks per standard month, this average absorption rate equates to about 7.6 sales per quarter. Active Projects El Dorado Hills According to the Gregory Group, there are currently 20 active projects in the El Dorado Hills community. The projects are summarized in the next table. Seevers Jordan Ziegenmeyer 48

156 Active Projects Summary First Quarter 2016 Master Avg. Avg. Home Average Units Units Units Units Project Plan Builder Price Size (SF) Price/SF Planned Offered Sold Unsold Chaparral Blackstone The New Home Company $447,567 2,203 $ Fiora at Blackstone Blackstone KB Home $510,500 2,804 $ Laurelton Blackstone Standard Pacific Homes $688,000 3,469 $ Palisades Blackstone Lennar Homes $445,240 2,097 $ Solstice Blackstone Meritage Homes $635,325 2,678 $ Summit View Blackstone Lennar Homes $656,750 3,604 $ The Estates at Blackstone Blackstone K. Hovnanian Homes $563,157 3,217 $ The Ridge Blackstone Lennar Homes $660,800 3,583 $ Estates at Heritage Heritage Lennar Homes $585,190 2,762 $ Legands at Heritage Heritage Lennar Homes $485,990 2,106 $ Mosaic at Heritage Heritage Lennar Homes $418,240 1,542 $ Willows at Treviso None Renasci Homes $543,750 2,714 $ Fiori Serrano Taylor Morrison Homes $697,500 3,156 $ Pinnacle Serrano Toll Brothers $739,995 3,907 $ Serenity Serrano Premier United Communities $979,990 4,700 $ Vintage 38 Serrano Taylor Morrison Homes $843,000 3,823 $ The Elms The Promontory Renasci Homes $755,167 3,231 $ The Oaks The Promontory Renasci Homes $984,450 4,551 $ Villa Lago The Promontory Toll Brothers $735,995 4,056 $ Villagio The Promontory Standard Pacific Homes $478,500 2,467 $ Minimum $418,240 1,542 $ Maximum $984,450 4,700 $ Average $642,755 3,134 $ Median $646,038 3,187 $ Source: The Gregory Group A map of the Blackstone projects is shown below: Source: blackstoneeldorado.com Seevers Jordan Ziegenmeyer 49

157 The locations of the master planned communities outside of the Blackstone communtiy are shown on the following map. Note that Willows at Treviso is not within a master planned community. Active Projects - Blackstone As noted in the previous table, there are currently eight active residential projects in the Blackstone master planned community, being developed by six regionally or nationally recognized homebuilders. Additionally, while not shown in the table, Lennar has tentative map approval for a 70-lot subdivision (yet to be named). Absorption information for projects specifically within the Blackstone community over the last few years is shown in the next table. Seevers Jordan Ziegenmeyer 50

158 New Home Projects in Blackstone Recent Absorption Open 1Q 4Q 3Q 2Q 1Q 4Q 3Q 2Q 1Q Project Developer Date Chaparral The New Home Co. Jun Fiora KB Home Oct Laurelton Standard Pacific Homes Jan Solstice Meritage Homes Dec Summit View Lennar Homes Nov The Estates K. Hovnanian Aug The Ridge Lennar Homes Nov Palisades Lennar Homes Jun Del Sol Meritage Homes Jul Sagewood Standard Pacific Homes Oct Shenandoah Lennar Homes Nov Sales per Project per Quarter Sales per Project per Month Total No. Projects Source: The Gregory Group As shown by the data, absorption rates for new homes within the Blackstone master planned community have ranged from 1.3 to 3.9 sales per month over the last two years, with an average of 2.3 sales per month. Over the past year, absorption rates have ranged from 1.4 to 2.8 sales per month, with an average of 2.2 sales per month. The projects most similar to the subject are those eight projects located in the Blackstone master planned community. On the following pages, we provide more detailed information on these projects. The tabular data have been extracted directly from The Gregory Group s website, showing the most recent two years of quarterly data. Seevers Jordan Ziegenmeyer 51

159 Chaparral by The New Home Company Seevers Jordan Ziegenmeyer 52

160 Fiora by KB Home Seevers Jordan Ziegenmeyer 53

161 Laurelton by Standard Pacific Homes Seevers Jordan Ziegenmeyer 54

162 Solstice by Meritage Homes Seevers Jordan Ziegenmeyer 55

163 Summit View by Lennar Homes Seevers Jordan Ziegenmeyer 56

164 The Estates by K. Hovnanian Seevers Jordan Ziegenmeyer 57

165 The Ridge by Lennar Homes Seevers Jordan Ziegenmeyer 58

166 Palisades by Lennar Homes Seevers Jordan Ziegenmeyer 59

167 Resale Market In addition to the preceding analysis, we have analyzed recent trends in the resale market for newer home product in El Dorado Hills. Based on data from the local multiple listing service, the following table shows resale activity since the start of 2016 for detached homes located within the Blackstone master planned community. Source: MetroList MLS Re-Sales, Blackstone January 2016 to Present Living Sale Last List Year Days on Lot Size Address Sale Date Area (SF) Price Sale Price/SF Price Sale/List Built Market (SF) 3029 Copperwood Way 1/4/2016 2,316 $472,000 $ $479, % , Acorn Glen Way 4/29/2016 2,317 $505,000 $ $495, % , Rosecrest Circle 4/14/2016 2,961 $510,000 $ $510, % , Dana Loop 2/19/2016 2,768 $510,000 $ $505, % , Copperwood Court 3/7/2016 3,117 $534,000 $ $549, % , Aldridge Way 4/8/2016 3,458 $565,000 $ $580, % ,534 As shown by the data, MLS reports that there have been six re-sales within Blackstone since the beginning of the year. Most homes have closed at or near the asking price, and the time on the market has, for the most part, been less than one month (with the exception of two sales). The next table and graph show historical resale data for more recently built homes (2005 and newer) in the community of El Dorado Hills. While our initial focus for this data was the Blackstone community itself, the relatively low numbers of re-sales within the community for each time period generally created data that was statistically insignificant to be able to draw meaningful conclusions. As such, we expanded our search to include the entire El Dorado Hills community. Additionally, we restricted our search to lot sizes less than ½ acre, to avoid capturing estate/custom lot sales in this analysis. Seevers Jordan Ziegenmeyer 60

168 Resale History El Dorado Hills (Newer Homes) Avg. Period Total Home Avg. Avg. Price/ Avg. Days Ending Sales Size (SF) Price Avg. SF on Market Mar ,921 $490,021 $ Jun ,094 $600,431 $ Sep ,041 $576,189 $ Dec ,184 $598,570 $ Mar ,215 $619,362 $ Jun ,275 $626,584 $ Sep ,161 $615,770 $ Dec ,824 $557,951 $ Mar ,071 $586,361 $ Jun ,925 $586,281 $ Sep ,147 $618,367 $ Dec ,039 $625,682 $ Mar ,170 $689,358 $ Source: MetroList MLS The following graph plots the average price per square foot over time, based on the information presented in the table above. $ $ $ $ $ $ $ Oct-12 May-13 Nov-13 Jun-14 Dec-14 Jul-15 Jan-16 Aug-16 Source: MetroList MLS Seevers Jordan Ziegenmeyer 61

169 As shown by the MLS data, re-sale pricing for newer homes in El Dorado Hills has generally been in an upward trend over the past three years. The most recent period (First Quarter 2016) indicates the highest data point over the studied time period, at an average sale price of $689,358. With regard to the sale price per square foot of living area, this figure spiked from First Quarter 2013 to Second Quarter 2013, then was in a fairly steady range through Third Quarter 2015, followed by noticeable increases over the last few quarters. The most recent (First Quarter 2016) time period had the highest price per square foot in the data set, at $ Ability to Pay According to the Gregory Group, of the eight active projects in the Blackstone master planned community, new home price points are generally between $420,990 (1,429 square foot plan within Palisades) to $757,450 (4,575 square foot plan within Solstice). In this section, we will examine the ability to pay among prospective buyers for representative price points of $420,000 and $760,000. First, we will estimate the required annual household income based on typical mortgage parameters in the subjects market area. Specifically, we will employ a loan-to-value ratio of 80% (down payment of 20%), mortgage interest rate of 4.250% and 4.375% (respectively), 360 monthly payments, and a 40% ratio for the housing costs as a percent of monthly income (inclusive of principal, interest, all taxes and surance). As alluded to above, property tax payments are accounted for in the analysis. Ad valorem taxes are % of assessed value. The most significant direct levy payments are related to the two CFD bonds in the area: 1) El Dorado Community Facilities District , and 2) Buckeye Elementary Community Facilities District The El Dorado CFD payments are generally either $1,585 or $1,950 per parcel per year. As such, for purposes of analysis, we will utilize the average payment of $1,768. The Buckeye Elementary CFD payments are $1,040 per parcel per year. Given the discussion above, the following tables show the estimate of the annual household income that would be required to afford homes priced between $420,000 and $760,000: Seevers Jordan Ziegenmeyer 62

170 Home Price $420,000 Loan % of Price (LTV) 80% Loan Amount $336,000 Interest Rate 4.250% Mortgage Payment $1,653 Ad Valorem Taxes $367 Bond Payments CFD $147 Buckeye Elem. $87 Subtotal $234 Property Insurance $60 Total PITI $2,314 PITI as % of Income 40% Monthly Income $5,785 Annual Income $69,418 Home Price $760,000 Loan % of Price (LTV) 80% Loan Amount $608,000 Interest Rate 4.375% Mortgage Payment $3,036 Ad Valorem Taxes $664 Bond Payments CFD $147 Buckeye Elem. $87 Subtotal $234 Property Insurance $60 Total PITI $3,994 Mortgage Payment % of Income 40% Monthly Income $9,984 Annual Income $119,813 We have obtained income data from Esri Business Analyst Online (Esri), formerly STDB Online, for a 25-mile radius surrounding the appraised properties, which is considered representative of typical buyers for the appraised properties. It is noted this geographic area is wider than the immediate neighborhood profiled previously in the Neighborhood section of this report, which focuses on the subjects immediate location. The following map shows the boundaries of the 25-mile radius around Blackstone. It is expected that the Blackstone project, in addition to other projects in El Dorado Hills, could draw buyers from a larger geographic region beyond the more immediate areas. Seevers Jordan Ziegenmeyer 63

171 In following tables we show the income brackets within a 25-mile radius, along with estimates of the percentage of households able to afford homes priced between $420,000 and $760,000 within each income bracket. Ability to Pay - $420,000 Home Household Percent of Percent Households Income Households Able to Pay Able to Pay <$15, % 0.0% 0.0% $15,000 - $24, % 0.0% 0.0% $25,000 - $34, % 0.0% 0.0% $35,000 - $49, % 0.0% 0.0% $50,000 - $74, % 22.0% 3.8% $75,000 - $99, % 100.0% 13.1% $100,000 - $149, % 100.0% 14.5% $150,000 - $199, % 100.0% 6.6% $200, % 100.0% 5.5% 100.0% 43.5% Seevers Jordan Ziegenmeyer 64

172 Ability to Pay - $760,000 Home Household Percent of Percent Households Income Households Able to Pay Able to Pay <$15, % 0.0% 0.0% $15,000 - $24, % 0.0% 0.0% $25,000 - $34, % 0.0% 0.0% $35,000 - $49, % 0.0% 0.0% $50,000 - $74, % 0.0% 0.0% $75,000 - $99, % 0.0% 0.0% $100,000 - $149, % 40.0% 5.8% $150,000 - $199, % 100.0% 6.6% $200, % 100.0% 5.5% 100.0% 17.9% The preceding analysis indicates that approximately 44% of households within a 25-mile radius of the appraised properties would be able to pay for a home priced at $420,000, while about 18% of households within a 25-mile radius could afford a $760,000 home. As there are 623,374 households in the 25-mile radius area, the data implies that about 274,285 households could afford a $420,000 home, and 112,207 households could afford a $760,000 home. Conclusion We have summarized some of the key points from this section as follows: Building permit activity for single-family residences in El Dorado County reached a peak about 10 years ago, then fell precipitously during the recessionary period, but has been increasing in more recent years. New home pricing in El Dorado Hills has been in a general increasing pattern over the last three years, albeit with a few quarterly dips. The most recent period indicates the highest new home pricing observed over the last three years. New home pricing per square foot of living area in El Dorado Hills has also been in an increasing pattern over the last three years. Additionally, the most recent period indicates the highest new home pricing per square foot over the last three years. There are currently 20 active new home projects in El Dorado Hills, including eight in Blackstone. This is one of the highest levels of active projects observed since the past expansionary period. Absorption rates within Blackstone have ranged from 1.4 to 2.8 sales per month over the past year, with an average of 2.2 sales per month. Seevers Jordan Ziegenmeyer 65

173 Re-sale homes in Blackstone are transferring at or near the asking price, and the exposure period for most sales is one month or less, both indicators of a strong market. Re-sale pricing in El Dorado Hills as a whole has been in a general upward trend over the past three years. The average sale price, as well as the average sale price per square foot of living area, are currently at their highest levels over the past three years. Approximately 44% of the likely buyer pool for Blackstone home product can afford the lowest priced home, while about 18% of the likely buyer pool can afford the highest price home. Overall, demand for new homes in the subjects market area is improving. The housing market is considered to be in a stage of expansion. Seevers Jordan Ziegenmeyer 66

174 HIGHEST AND BEST USE The term highest and best use, as used in this report, is defined as follows: The reasonably probable use of property that results in the highest value. The four criteria that the highest and best use must meet are legal permissibility, physical possibility, financial feasibility, and maximum productivity. 5 Two analyses are typically required for highest and best use. The first analysis is highest and best use of the land as though vacant, and the second analysis is the highest and best use as improved. Definitions of these terms are provided in the Glossary of Terms in the Appendix to this report. Highest and Best Use as Vacant In accordance with the definition of highest and best use, it is appropriate to analyze the appraised properties as though vacant as it relates to legal permissibility, physical possibility, financial feasibility and maximum productivity. Legal Permissibility The legal factors influencing the highest and best use of the appraised properties are primarily government regulations, such as zoning and building codes. The appraised properties are zoned and approved for single-family residential use. The legally permissible uses are to develop the appraised properties in accordance with the existing entitlements and land use designations, which have undergone extensive planning and review. A rezone to any other land use is highly unlikely. Additionally, single-family residential use is consistent with the El Dorado County General Plan and the Valley View Specific Plan. Physical Possibility The physical characteristics of a site that affect its possible use(s) include, but are not limited to, location, street frontage, visibility, access, size, shape, topography, availability of utilities, off-site improvements, easements and soil and subsoil conditions. The legally permissible test has resulted in uses consistent with the existing entitlements (single-family residential); at this point the physical characteristics are examined to see if they are suited for the legally permissible use. The physical characteristics of the appraised properties support development. The Blackstone project has good access and project roadways connect all of the various lots within the development. 5 The Dictionary of Real Estate Appraisal, 6th ed. (Chicago: Appraisal Institute, 2015), 109. Seevers Jordan Ziegenmeyer 67

175 Public utilities are also in place to support development. The subject is not located in an adverse earthquake or flood zone. Surrounding land uses are compatible and/or similar to the legally permissible use. Existing development in Blackstone provides support that soils are adequate for development. In summary, single-family residential use is considered physically possible. As noted throughout this report, a few of the parcels/lots have some remaining in-tract work required during the development process. For example, APN currently represents a parcel tentatively mapped for 70 lots, but requires significant in-tract work (interior road access, stubbed utilities, etc.) prior to vertical construction. Additionally, various lots owned by K. Hovnanian along Brentford Way (a gravel road in this area of the project) still require additional site development. Finally, various parcels owned by AKT and the private investors Danny and Sheralyn Di Re require additional in-tract site work to create custom lots. Financial Feasibility Financial feasibility depends on supply and demand influences. With respect to financial feasibility of single-family residential development, in recent months merchant builders have acquired unimproved lots in the Sacramento region for near term construction, and there are multiple active projects in the subjects immediate area that demonstrate demand for new homes. Finished lots are transferring for prices that exceed the sum of unimproved lots and site development costs, which indicates completion of site development is financially feasible. Strong land speculation by merchant builders has led to appreciation in land prices that have outpaced current home price appreciation, which reflects that builders, when making land purchase decisions, are speculating that home prices will continue to increase. In summary, single-family residential development is determined to be financially feasible. Maximum Productivity Legal, physical and market conditions have been analyzed to evaluate the highest and best use of the appraised properties as vacant. The analysis is presented to evaluate the type of use(s) that will generate the greatest level of future benefits possible to the properties. Based on the factors previously discussed, the maximally productive use of the appraised properties, and its highest and best use as vacant, is for near term single-family residential development. The probable buyers of the appraised properties (as vacant) are multiple land developers/production homebuilders. Highest and Best Use as Improved Highest and best use of the property as improved pertains to the use that should be made in light of its current improvements. Seevers Jordan Ziegenmeyer 68

176 In the case of undeveloped land under development, consideration must be given to whether it makes sense to demolish existing improvements (either on-site or off-site improvements) for replacement with another use. The time and expense to demolish existing improvements, re-grade, reroute utilities or re-map must be weighed against alternative uses. If the existing or proposed improvements are not performing well, then it may produce a higher return to demolish existing improvements, if any, and re-grade the site for development of an alternative use. Based on the current condition, the improvements completed contribute to the overall property value. The value of the subject as improved exceeds its value as vacant less demolition. The highest and best use of the subject as improved is for near term single-family development of the lots, and continuation of single-family residential use of the existing homes. Additionally, partially completed homes should be completed as planned. The probable buyers of the production residential lots and the partially completed homes would be production homebuilders. The probable buyers of the custom lots would be individual homeowners. The probable buyers of the completed singlefamily homes would also be individual homeowners. Seevers Jordan Ziegenmeyer 69

177 APPROACHES TO VALUE The valuation process is a systematic set of procedures an appraiser follows to provide answers to a client s questions about real property value. 6 This process involves the investigation, organization and analysis of pertinent market data and other related factors that affect the market value of real estate. The market data is analyzed in terms of any one or all of the three traditional approaches to estimating real estate value. These are the cost, sales comparison and income capitalization approaches. An additional approach discounted cash flow analysis is also applicable. Each approach to value is briefly discussed and defined as follows: Cost Approach The cost approach is based on the premise that no prudent buyer would pay more for a particular property than the cost to acquire a similar site and construct improvements of equivalent desirability and utility. Thus, this approach to value relates directly to the economic principle of substitution, as well as supply and demand. The cost approach is most applicable when valuing properties where the improvements are new or suffer only a minor amount of accrued depreciation, and is especially persuasive when the site value is well supported. The cost approach is also highly relevant when valuing special-purpose or specialty properties and other properties that are not frequently exchanged in the market. The definition of the cost approach is offered as follows: A set of procedures through which a value indication is derived for the fee simple estate by estimating the current cost to construct a reproduction of (or replacement for) the existing structure, including an entrepreneurial incentive or profit; deducting depreciation from the total cost; and adding the estimated land value. Adjustments may then be made to the indicated value of the fee simple estate in the appraised properties to reflect the value of the property interest being appraised. 7 Sales Comparison Approach The sales comparison approach is based on the premise that the value of a property is directly related to the prices being generated for comparable, competitive properties in the marketplace. Similar to the cost approach, the economic principles of substitution, as well as supply and demand are basic to the sales comparison approach. This approach has broad applicability and is particularly persuasive when there has been an adequate volume of recent, reliable transactions of similar properties that indicate value patterns or trends in the market. When sufficient data are available, this approach is the most direct and systematic approach to value estimation. Typically, the sales comparison approach is most pertinent when valuing land, single-family homes and small, owner-occupied commercial and office properties. The definition of the sales comparison approach is offered as follows: 6 The Dictionary of Real Estate Appraisal, 6th ed. (Chicago: Appraisal Institute, 2015), The Dictionary of Real Estate Appraisal, 54. Seevers Jordan Ziegenmeyer 70

178 The process of deriving a value indication for the appraised properties by comparing sales of similar properties to the property being appraised, identifying appropriate units of comparison, and making adjustments to the sale prices (or unit prices, as appropriate) of the comparable properties based on relevant, market-derived elements of comparison. 8 Income Capitalization Approach The income capitalization approach is based on the premise that income-producing real estate is typically purchased as an investment. From an investor s point of view, the potential earning power of a property is the critical element affecting value. The concepts of anticipation and change, as they relate to supply and demand issues and substitution, are fundamental to this valuation approach. These concepts are important because the value of income-producing real estate is created by the expectation of benefits (income) to be derived in the future, which is subject to changes in market conditions. Value may be defined as the present worth of the rights to these future benefits. The validity of the income capitalization approach hinges upon the accuracy of which the income expectancy of a property can be measured. Within the income capitalization approach there are two basic techniques that can be utilized to estimate market value. These techniques of valuation are direct capitalization and yield capitalization. Direct Capitalization: A method used to convert an estimate of a single year s income expectancy into an indication of value in one direct step, either by dividing the net income estimate by an appropriate capitalization rate or by multiplying the income estimate by an appropriate factor. Direct capitalization employs capitalization rates and multipliers extracted or developed from market data. Only one year s income is used. Yield and value changes are implied, but not explicitly identified. 9 Yield Capitalization: A method used to convert future benefits into present value by 1) discounting each future benefit at an appropriate yield rate, or 2) developing an overall rate that explicitly reflects the investment s income pattern, holding period, value change, and yield rate. 10 The definition of the income capitalization approach is offered as follows: Specific appraisal techniques applied to develop a value indication for a property based on its earning capability and calculated by the capitalization of property income The Dictionary of Real Estate Appraisal, 6th ed. (Chicago: Appraisal Institute, 2015), The Dictionary of Real Estate Appraisal, The Dictionary of Real Estate Appraisal, The Dictionary of Real Estate Appraisal, 115. Seevers Jordan Ziegenmeyer 71

179 Discounted Cash Flow (DCF) Analysis A discounted cash flow analysis is a procedure in which a discount rate is applied to a projected revenue stream generated from the sale of individual components of a project. In this method of valuation, the appraiser/analyst specifies the quantity, variability, timing and duration of the revenue streams and discounts each to its present value at a specified yield rate. One discounted cash flow analysis will be presented in this appraisal: the Subdivision Development Method, which is defined below. Subdivision Development Method: A method of estimating land value when subdividing and developing a parcel of land is the highest and best use of that land. When all direct and indirect costs and entrepreneurial incentive are deducted from an estimate of the anticipated gross sales price of the finished lots (or the completed improvements on those lots), the resultant net sales proceeds are then discounted to present value at a market-derived rate over the development and absorption period to indicate the value of the land The Dictionary of Real Estate Appraisal, 6 th ed. (Chicago: Appraisal Institute, 2015), 223. Seevers Jordan Ziegenmeyer 72

180 FLOOR PLAN VALUATION COMPLETED HOMES We begin the valuation by analyzing the market values of the smallest floor plan within each community, for which there are completed homes without assessed values (A.V. s). To do so, we will employ the sales comparison approach to value. The underlying premise of the sales comparison approach is the market value of a property is directly related to the price of comparable, competitive properties in the marketplace. In the sales comparison approach, the market value of the subject lots will be estimated by a comparison to similar properties that have recently sold, are listed for sale or are under contract. This approach is based on the economic principle of substitution. According to The Appraisal of Real Estate, 14 th Edition (Chicago: Appraisal Institute, 2013), The principle of substitution holds that the value of property tends to be set by the cost of acquiring a substitute or alternative property of similar utility and desirability within a reasonable amount of time. The sales comparison approach is applicable when there are sufficient recent, reliable transactions to indicate value patterns or trends in the market. The proper application of this approach requires obtaining recent sales data for comparison with the appraised properties. In order to assemble the comparable sales, we searched public records and other data sources for leads, then confirmed the raw data obtained with parties directly related to the transactions (primarily brokers, buyers and sellers). As requested, we will estimate the market value of the smallest floor plan offered within each subdivision in the CFD, as of the date of value, May 11, 2016, to apply to those lots with completed single-family homes without an assigned assessed value. The objective of the analyses is to estimate the base price of the smallest floor plan, net of incentives, upgrades and lot premiums. Base price pertains to the typical (median) lot size within the subject. The sales comparison approach to value is employed in order to establish the market values for each floor plan. The residential lots with completed single-family homes without assessed values are located in the eight active projects within Blackstone, as well as within two projects no longer actively selling homes: Shenandoah by Lennar (one home to be appraised) and Del Sol by Meritage Homes (seven homes to be appraised). A summary of the projects is provided on the following page. Seevers Jordan Ziegenmeyer 73

181 CHAPARRAL BY THE NEW HOME COMPANY Plan Living Area (SF) Stories Bedrooms Bathrooms Garage Size Listing Price Residence 1 1,994 Two car $436,900 Residence 2 2,194 Two car $453,900 Residence 3 2,422 Two car $460,900 THE RIDGE BY LENNAR Plan Living Area (SF) Stories Bedrooms Bathrooms Garage Size Listing Price Residence ,861 One 3 w/den or car tandem $642,000 Residence ,943 One car split N/Av Residence ,108 One 3 w/den or car split $646,000 Residence ,653 Two car tandem $657,000 Residence ,845 Two car tandem N/Av Residence ,041 Two 4 w/ den or car tandem $682,000 Residence ,253 Two car split $701,000 SUMMIT VIEW BY LENNAR Plan Living Area (SF) Stories Bedrooms Bathrooms Garage Size Listing Price Residence ,442 One 3 w/office or car tandem $599,000 Residence ,707 One car split $610,000 Residence ,943 One car split N/Av Residence ,415 Two car tandem $645,000 Residence ,845 Two car tandem N/Av Residence ,041 Two 4 w/office or car tandem $680,000 Residence ,253 Two car split $692,000 PALISADES BY LENNAR Plan Living Area (SF) Stories Bedrooms Bathrooms Garage Size Listing Price The Jade 1,429 One car N/Av The Grayson 2,198 Two 4 w/loft or car $460,990 The Sophia 2,336 Two 4 w/loft or car $458,990 - $462,280 The Logan 2,426 Two 4 w/loft or car $460,990 - $480,990 Seevers Jordan Ziegenmeyer 74

182 SOLSTICE BY MERITAGE HOMES Plan Living Area (SF) Stories Bedrooms Bathrooms Garage Size Listing Price The Alcott 3,632 Two car tandem $611,450 - $618,450 The Taylor 4,126 Two car $731,450 - $745,450 The Anderson 4,575 Two car $757,450 - $769,450 THE ESTATES BY K. HOVNANIAN HOMES Plan Living Area (SF) Stories Bedrooms Bathrooms Garage Size Listing Price Bluestone 2,385 One car tandem $537,990 Briarstone 2,500 One car tandem $538,990 Cornerstone 3,326 Two car tandem $568,990 Hearthstone 3,474 Two car tandem $642,108 - $677,390 Rockwood 3,740 Two car tandem $618,501 - $794,990 Stonecrest 3,878 Two car tandem $661,650 FIORA BY KB HOME Plan Living Area (SF) Stories Bedrooms Bathrooms Garage Size Listing Price The Sherwood 2,533 Two 3 or or 3 $488,500 The Oliver 2,612 One 3 or car $524,500 The Alexa 2,645 Two 4 or or 3 $495,500 The Serena 2,734 Two 4 or or 3 $497,500 The Angelo 2,891 Two 3 to or 3 $513,500 The Aiden 3,413 Two 4 to car tandem $543,500 LAURELTON BY STANDARD PACIFIC Plan Living Area (SF) Stories Bedrooms Bathrooms Garage Size Listing Price Residence Four 2,828 One 3 or car $655,000 - $665,000 Residence One 2,954 One 3 or car tandem $670,000 - $680,000 Residence Two 3,248 One 3 or car $680,000 - $688,000 Residence Two X 4,159 Two 4 to car $735,000 - $745,000 Residence Three 4,157 Two 4 to car $725,000 - $735,000 Seevers Jordan Ziegenmeyer 75

183 SHENANDOAH BY LENNAR HOMES (SOLD OUT) Plan Living Area (SF) Stories Bedrooms Bathrooms Garage Size Listing Price Residence One 2,128 One car Sold out Residence Two 2,361 One car Sold out Residence Three 2,768 Two car Sold out Residence Four 3,485 Two car Sold out Residence Five 3,491 Two car Sold out Residence Six 4,054 Two car Sold out DEL SOL BY MERITAGE HOMES (SOLD OUT) Plan Living Area (SF) Stories Bedrooms Bathrooms Garage Size Listing Price Residence One 2,347 One car Sold out Residence Two 2,630 Two car Sold out Residence Three 2,660 One car Sold out Residence Four 3,085 Two car Sold out Residence Five 3,222 Two car Sold out Our survey included new home sales in Blackstone for each active project. Specifically, we were provided with new home sales within the active projects, as sales in the subjects subdivision are deemed to provide the best estimate of market value for the subjects floor plans. Discussion of Adjustments In order to estimate the market values for the subjects smallest floor plans, the comparable transactions were adjusted to reflect the subject with regard to categories that affect market value. If a comparable has an attribute considered superior to that of the subject, it is adjusted downward to negate the effect the item has on the price of the comparable. The opposite is true of categories that are considered inferior to the subject and are adjusted upward. In order to isolate and quantify the adjustments on the comparable sales data, percentage or dollar adjustments are considered appropriate. At a minimum, the appraiser considers the need to make adjustments for the following items: Property rights conveyed Financing terms Conditions of sale (motivation) Market conditions Location Physical features Seevers Jordan Ziegenmeyer 76

184 A paired sales analysis is performed in a meaningful way when the quantity and quality of data are available. Even so, many of the adjustments require the appraiser s experience and knowledge of the market and information obtained from those knowledgeable and active in the marketplace. A detailed analysis involving each of these factors and the value conclusion for each unit follows. Total Consideration The appraised properties are analyzed based on the total consideration of home price and the assumption of bonds, if any. Bond debt has a direct impact on the amount for which the end product will sell. In an effort to account for the impact of bond indebtedness on the sales price, we establish a present value amount for the bond encumbrance based on the annual assessment. The present value amount is based on the annual special tax, an interest rate of 6.0% and the remaining term from the date of sale. All of the comparables are encumbered by bonds; thus, the present value of the bonds is considered in this analysis to determine the total consideration with each sale. Upgrades and Incentives The objective of the analysis is to estimate the base price per floor plan, net of incentives. Incentives can take the form of direct price reductions or non-price incentives such as upgrades or non-recurring closing costs. Incentives and upgrades provided by the sales offices have been considered and adjusted for in this analysis. Property Rights Conveyed In transactions of real property, the rights being conveyed vary widely and have a significant impact on the sales price. As previously noted, the opinion of value in this report is based on a fee simple estate, subject only to the limitations imposed by the governmental powers of taxation, eminent domain, police power and escheat, as well as non-detrimental easements, community facility districts and conditions, covenants and restrictions (CC&Rs). All of the comparables represent fee simple estate transactions. Therefore, adjustments for this factor are not necessary. Financing Terms In analyzing the comparables, it is necessary to adjust for financing terms that differ from market terms. If the seller provides incentives in the form of paying for closing costs or an interest rate buy down, a discount has been obtained by the buyer for financing terms. This discount price must then be adjusted to a cash equivalent basis. Also, any incentives applicable toward closing costs would have been reflected in the incentives adjustments previously considered. No adjustments were required for this factor. Seevers Jordan Ziegenmeyer 77

185 Conditions of Sale Adverse conditions of sale can account for a significant discrepancy from the sales price actually paid compared to that of the market. This discrepancy in price is generally attributed to the motivations of the buyer and the seller. Certain conditions of sale are considered to be non-market and may include the following: a seller acting under duress, a lack of exposure to the open market, an inter-family or inter-business transaction for the sake of family or business interest, an unusual tax consideration, a premium paid for site assemblage, a sale at legal auction, or an eminent domain proceeding The comparables did not involve any non-market or atypical conditions of sale. Adjustments for this factor do not apply. Market Conditions (Date of Sale, Phase Adjustment) The market conditions vary over time, but the date of this appraisal is for a specific point in time. In a dynamic economy one that is undergoing changes in the value of the dollar, interest rates and economic growth or decline extra attention needs to be paid to assess changing market conditions. Significant monthly changes in price levels can occur in several areas of a neighborhood, while prices in other areas remain relatively stable. Although the adjustment for market conditions is often referred to as a time adjustment, time is not the cause of the adjustment. According to information published by The Gregory Group, and as shown previously within the Housing Market Overview section of this appraisal, new home pricing has been in an upward trend in the El Dorado Hills area in recent periods. For example, in Third Quarter 2015, the average sale price per square foot was $191.19, while in First Quarter 2016 (latest data available), the average sale price per square foot was $ This represents an increase of approximately 3.81% over a six-month timeframe, or about 0.63% per month. In the analysis that follows, we will apply an appreciation rate of 0.50% per month from the date of contract to the current date of value. There are some projects, however, for which we were unable to obtain the contract dates, only the closing dates and, as such, we utilize the closing dates for the basis of the adjustment in these cases. Location Location is a very important factor to consider when making comparisons. The comparables need not be in the same neighborhood but should be in neighborhoods that offer the same advantage and Seevers Jordan Ziegenmeyer 78

186 have, in general, the same overall desirability to the most probable buyer or user. The comparables are located in the same location (Blackstone master planned community) as the subject; location adjustments are not necessary. Lot Size The lot size adjustment pertains to the differences between the subjects median lot sizes for each community, and comparables with either larger or smaller lots. It does not include any lot premium adjustments, which are adjusted for separately. The amount of the adjustment used in the comparison of the base lot sizes comes from a survey of premiums paid for larger lots. Considering the average lot size adjustments factors indicated by the comparable sales utilized in this analysis, a lot size adjustment factor of $5.00/SF is considered reasonable for the subjects residential lots. Using this estimated lot size adjustment factor, adjustments are applied to the comparables, accordingly. Lot Premiums Properties sometimes achieve premiums for corner or cul-de-sac positioning, or proximity to open space or views. Adjustments for lot position premiums would be in addition to lot size adjustments previously considered. Appropriate adjustments are applied based upon information provided by the on-site sales agents with regard to lot premiums on specific sales. Design and Appeal/Quality of Construction Design and appeal of a floor plan is consumer specific. One exterior may appeal to one buyer, while another appeals to a different buyer. These types of features for new homes with similar functional utility are not typically noted in the base sales prices. The comparables are similar to the subject in regard to design and appeal. Construction quality can differ from slightly to substantially between projects and is noted in the exterior and interior materials and design features of a standard unit. In terms of quality of construction, the subject represents good construction quality. All of the comparable sales feature similar construction quality and do not require adjustments. Age/Condition All of the comparables represent sales of new homes; therefore, an adjustment for age/condition is not warranted. Seevers Jordan Ziegenmeyer 79

187 Functional Utility The appraised properties and comparables represent traditional detached single-family residential construction on standard lots for the area. Adjustments for this factor do not apply. Room Count For similar size units the differences between room count is a buyer preference. One buyer might prefer two bedrooms and a den versus a three-bedroom unit. Extra rooms typically result in additional building area and are accounted for in the size adjustment. Therefore, no adjustments are made for number of total rooms or bedrooms. Because bathrooms are a functional item for each floor plan and add substantial cost due to the number of plumbing fixtures, an adjustment is made for the difference in the number of fixtures between the subject and the comparable sales. The adjustment is based on an amount of $5,000 per fixture (or half-bath) and is supported by cost estimates for a good quality home in the Residential Cost Handbook, published by the Marshall and Swift Corporation. Considering the fact that plumbing upgrades for existing bathrooms generally range from $5,000 to over $25,000 for the various fixtures, the $5,000 per fixture, or half-bath, is supported. Consequently, a factor of $10,000 per full bath is also applied in our analysis. Unit Size/Living Area Units similar (in the same development), except for size, were compared to derive the applicable adjustment for unit size. Those used for comparison purposes, are units within similar projects. Units within the same project were used since they have a high degree of similarity in quality, workmanship, design and appeal. Other items such as a single level or two-story designs, number of bathrooms and number of garage spaces were generally similar in these comparisons, in order to avoid other influences in price per square foot. Where differences exist, they are minor and do not impact the overall range or average concluded. The typical range indicated by the paired units in this analysis generally demonstrated a value range from approximately $5 to upwards of $100 per square foot. Considering the information cited above, a factor of $75 per square foot is concluded to be appropriate and reasonable for the difference in living area between the subject and the comparables, given the quality of the product. Number of Stories For similar size units, the differences between the number of stories is a buyer preference. One buyer might prefer a single-story versus a two-story unit. Typically, more stories result in additional building area and are accounted for in the size adjustment. Therefore, no adjustments are made for number of stories. Seevers Jordan Ziegenmeyer 80

188 Parking/Garage Our survey of local real estate professionals indicates a premium value of approximately $10,000 for a full garage space, and about $5,000 for a tandem garage space. Appropriate adjustments are applied where warranted. Other The comparable sales and the appraised properties are generally similar in the other elements of comparison noted in the adjustment grids, including HVAC, front yard landscaping, site amenities (e.g., pool, patios/decks, fencing), in-home amenities and solar systems (appear to be standard for new homes in Blackstone). No other adjustments are warranted in our analyses. Adjustment Grids The following pages include grids reflecting the aforementioned adjustments. It is noted that our conclusions of value place most emphasis on the sales within each respective community in which the floor plan is located. Seevers Jordan Ziegenmeyer 81

189 Project Information: Subject Property Comparable No. 1 Comparable No. 2 Comparable 3 Project Name Chaparral Chaparral by New Home Co. Chaparral by New Home Co. Palisades by Lennar Plan Residence One Residence One Residence One The Grayson Address/Lot Number N/Ap 537 Coppice Court 540 Coppice Court 8069 Ryland Drive City/Area El Dorado Hills El Dorado Hills El Dorado Hills El Dorado Hills Price N/Ap $430,900 $541,131 $439,990 Price Per SF N/Ap $ $ $ Data Source Sales Office Sales Office Sales Office Incentives N/Ap No No Yes ($3,000) Upgrades Base No Yes ($104,231) No Effective Base Sales Price $430,900 $436,900 $436,990 Adjustments: Factor Description +/(-) Description +/(-) Description +/(-) Property Rights Fee Simple Similar Similar Similar Financing Terms Cash Equivelant Similar Similar Similar Conditions of Sale Market Market Market Market Market Conditions Sale Date/Close Date N/Ap 01/16 / 03/16 1/16 pending 5/16 COE Market Conditions Adj. N/Ap 2% $8,618 2% $8,738 New Incentive Adjustment N/Ap Project Location EDH/Blackstone El Dorado Hills El Dorado Hills El Dorado Hills Special Taxes (PV at 6% over Remaining Term) $1,001 $11,481 $1,001 $11,481 $1,686 $19,338 Lot Size $5.00 3,441 3,528 ($434) 3,746 ($1,524) 3,326 $576 Lot Premium None - Base Lot No No No Design and Appeal Good Similar Similar Similar Quality of Construction Good Similar Similar Similar Effective Age New Similar Similar Similar Condition Excellent Similar Similar Similar Functional Utility Good Similar Similar Similar Room Count Bedrooms /5 Baths $10, ($5,000) Living Area (SF) $75 1,994 1,994 $0 1,994 $0 2,198 ($15,300) Number of Stories Two Two Two Two Heating/Cooling Central/Forced Similar Similar Similar Garage 2 car 2 car 2 car 2 car Landscaping Front Similar Similar Similar Pool/Spa None Similar Similar Similar Patios/Decks None Similar Similar Similar Fencing Rear Similar Similar Similar Fireplace(s) No Similar Similar Similar Kitchen Equipment Range/Oven, Diswasher, Microwave Similar Similar Similar Community Appeal Good Similar Similar Similar Other Solar Similar Similar Similar Gross Adjustments $20,533 $21,743 $40,214 Net Adjustments $19,666 $18,696 -$386 Adjusted Base Retail Value $450,566 $455,596 $436,604 Concluded Base Retail Value $450,000 Indicated Value Per SF $ ,994 SF - Minimum Home Size of Chaparral by The New Home Company Seevers Jordan Ziegenmeyer 82

190 Project Information: Subject Property Comparable 1 Comparable 2 Comparable 3 Project Name The Ridge The Ridge by Lennar The Ridge by Lennar Summit View by Lennar Plan Residence 2,861 Residence 2,861 Residence 2,861 Residence 2,861 Address/Lot Number N/Ap 1227 Cornerstone Drive 1763 Brandywood Way 117 Keystone Court City/Area El Dorado Hills El Dorado Hills El Dorado Hills El Dorado Hills Price N/Ap $707,432 $665,752 $694,866 Price Per SF N/Ap $ $ $ Data Source Sales Office Sales Office Sales Office Incentives N/Ap No No No Upgrades Base Yes ($47,432) Yes ($35,752) Yes ($29,866) Effective Base Sales Price $660,000 $630,000 $665,000 Adjustments: Factor Description +/(-) Description +/(-) Description +/(-) Property Rights Fee Simple Similar Similar Similar Financing Terms Cash Equivelant Similar Similar Similar Conditions of Sale Market Market Market Market Market Conditions Sale Date/Close Date N/Ap 10/15 / 02/16 12/15 / 4/16 10/15 / 3/16 Market Conditions Adj. N/Ap 3.5% $23, % $15, % $23,275 New Incentive Adjustment N/Ap Project Location EDH/Blackstone El Dorado Hills El Dorado Hills El Dorado Hills Special Taxes (PV at 6% over Remaining Term) $1,950 $22,366 $1,950 $22,366 $1,950 $22,366 Lot Size $ ,939 20,255 ($31,580) 15,177 ($6,190) 16,081 ($10,710) Lot Premium None - Base Lot No No Yes ($30,000) Design and Appeal Good Similar Similar Similar Quality of Construction Good Similar Similar Similar Effective Age New Similar Similar Similar Condition Excellent Similar Similar Similar Functional Utility Good Similar Similar Similar Room Count Bedrooms Baths $10, Living Area (SF) $75 2,861 2,861 $0 2,861 $0 2,861 $0 Number of Stories One One One One Heating/Cooling Central/Forced Similar Similar Similar Garage 3 car tandem 3 car tandem 3 car tandem 3 car tandem Landscaping Front Similar Similar Similar Pool/Spa None Similar Similar Similar Patios/Decks None Similar Similar Similar Fencing Rear Similar Similar Similar Fireplace(s) No Similar Similar Similar Kitchen Equipment Range/Oven, Diswasher, Microwave Similar Similar Similar Community Appeal Good Similar Similar Similar Other Solar Similar Similar Similar Gross Adjustments $77,046 $44,306 $86,351 Net Adjustments $13,886 $31,926 $4,931 Adjusted Base Retail Value $673,886 $661,926 $669,931 Concluded Base Retail Value $670,000 Indicated Value Per SF $ ,861 SF - Minimum Home Size of The Ridge by Lennar Seevers Jordan Ziegenmeyer 83

191 Project Information: Subject Property Comparable 1 Comparable 2 Comparable 3 Project Name Summit View Summit View by Lennar Summit View by Lennar The Ridge by Lennar Plan Residence 2,442 Residence 2,442 Residence 2,442 Residence 2,861 Address/Lot Number N/Ap 168 Keystone Court 141 Keystone Court 1763 Brandywood Way City/Area El Dorado Hills El Dorado Hills El Dorado Hills El Dorado Hills Price N/Ap $593,388 $619,247 $665,752 Price Per SF N/Ap $ $ $ Data Source Sales Office Sales Office Sales Office Incentives N/Ap No No No Upgrades Base No $0 Yes ($4,247) Yes ($35,752) Effective Base Sales Price $593,388 $615,000 $630,000 Adjustments: Factor Description +/(-) Description +/(-) Description +/(-) Property Rights Fee Simple Similar Similar Similar Financing Terms Cash Equivelant Similar Similar Similar Conditions of Sale Market Market Market Market Market Conditions Sale Date/Close Date N/Ap 01/16 / 02/16 03/16 / 04/16 12/15 / 4/16 Market Conditions Adj. N/Ap 2% $11,868 1% $6, % $15,750 New Incentive Adjustment N/Ap Project Location EDH/Blackstone El Dorado Hills El Dorado Hills El Dorado Hills Special Taxes (PV at 6% over Remaining Term) $1,950 $22,366 $1,950 $22,366 $1,950 $22,366 Lot Size $ ,448 17,194 $6,268 12,549 $29,493 15,177 $16,353 Lot Premium None - Base Lot No Yes ($20,000) No Design and Appeal Good Similar Similar Similar Quality of Construction Good Similar Similar Similar Effective Age New Similar Similar Similar Condition Excellent Similar Similar Similar Functional Utility Good Similar Similar Similar Room Count Bedrooms Baths $10, Living Area (SF) $75 2,442 2,442 $0 2,442 $0 2,861 ($31,425) Number of Stories One One One One Heating/Cooling Central/Forced Similar Similar Similar Garage 3 car tandem 3 car tandem 3 car tandem 3 car tandem Landscaping Front Similar Similar Similar Pool/Spa None Similar Similar Similar Patios/Decks None Similar Similar Similar Fencing Rear Similar Similar Similar Fireplace(s) No Similar Similar Similar Kitchen Equipment Range/Oven, Diswasher, Microwave Similar Similar Similar Community Appeal Good Similar Similar Similar Other Solar Similar Similar Similar Gross Adjustments $40,502 $78,009 $85,894 Net Adjustments $40,502 $38,009 $23,044 Adjusted Base Retail Value $633,890 $653,009 $653,044 Concluded Base Retail Value $640,000 Indicated Value Per SF $ ,442 SF - Minimum Home Size of Summit View by Lennar Seevers Jordan Ziegenmeyer 84

192 Project Information: Subject Property Comparable 1 Comparable No. 2 Comparable No. 3 Project Name Palisades Palisades by Lennar Palisades by Lennar Palisades by Lennar Plan The Jade The Jade The Jade The Jade Address/Lot Number N/Ap 6016 Terra Lane 6020 Terra Lane 8042 Ryland Drive City/Area El Dorado Hills El Dorado Hills El Dorado Hills El Dorado Hills Price N/Ap $418,316 $424,959 $418,773 Price Per SF N/Ap $ $ $ Data Source Sales Office Sales Office Sales Office Incentives N/Ap No Yes ($6,000) No Upgrades Base Yes ($4,326) Yes ($5,969) Yes ($4,783) Effective Base Sales Price $413,990 $412,990 $413,990 Adjustments: Factor Description +/(-) Description +/(-) Description +/(-) Property Rights Fee Simple Similar Similar Similar Financing Terms Cash Equivelant Similar Similar Similar Conditions of Sale Market Market Market Market Market Conditions Sale Date/Close Date N/Ap 4/16 COE 4/16 COE 3/16 COE Market Conditions Adj. N/Ap 0.50% $2, % $2,065 1% $4,140 New Incentive Adjustment N/Ap Project Location EDH/Blackstone El Dorado Hills El Dorado Hills El Dorado Hills Special Taxes (PV at 6% over Remaining Term) $1,686 $19,338 $1,686 $19,338 $1,686 $19,338 Lot Size $5.00 3,528 6,142 ($13,068) 5,619 ($10,454) 3,659 ($653) Lot Premium None - Base Lot No No No Design and Appeal Good Similar Similar Similar Quality of Construction Good Similar Similar Similar Effective Age New Similar Similar Similar Condition Excellent Similar Similar Similar Functional Utility Good Similar Similar Similar Room Count Bedrooms Baths $10, Living Area (SF) $75 1,429 1,429 $0 1,429 $0 1,429 $0 Number of Stories One One One One Heating/Cooling Central/Forced Similar Similar Similar Garage 2 car 2 car 2 car 2 car Landscaping Front Similar Similar Similar Pool/Spa None Similar Similar Similar Patios/Decks None Similar Similar Similar Fencing Rear Similar Similar Similar Fireplace(s) No Similar Similar Similar Kitchen Equipment Range/Oven, Diswasher, Microwave Similar Similar Similar Community Appeal Good Similar Similar Similar Other Solar Similar Similar Similar Gross Adjustments $34,476 $31,858 $24,132 Net Adjustments $8,340 $10,949 $22,825 Adjusted Base Retail Value $422,330 $423,939 $436,815 Concluded Base Retail Value $425,000 Indicated Value Per SF $ ,429 SF - Minimum Home Size of Palisades by Lennar Seevers Jordan Ziegenmeyer 85

193 Project Information: Subject Property Comparable 1 Comparable 2 Comparable No. 3 Project Name Solstice Solstice by Meritage Solstice by Meritage Laurelton by Standard Pacific Plan The Alcott The Alcott The Alcott Residence Two Address/Lot Number N/Ap 5577 Aspen Meadows Drive 1800 Brandywood Way 864 Candlewood Drive City/Area El Dorado Hills El Dorado Hills El Dorado Hills El Dorado Hills Price N/Ap $789,950 $699,468 $677,000 Price Per SF N/Ap $ $ $ Data Source Sales Office Sales Office Sales Office Incentives N/Ap Yes ($32,150) Yes ($54,734) No Upgrades Base Yes ($111,350) Yes ($36,284) Yes ($61,532) Total Price $646,450 $608,450 $615,468 Adjustments: Factor Description +/(-) Description +/(-) Description +/(-) Property Rights Fee Simple Similar Similar Similar Financing Terms Cash Equivelant Similar Similar Similar Conditions of Sale Market Market Market Market Market Conditions Sale Date/Close Date N/Ap 04/16 Pending 04/16 / 04/16 3/16 COE Market Conditions Adj. N/Ap 0.50% $3, % $3,042 1% $6,155 New Incentive Adjustment N/Ap Project Location EDH/Blackstone El Dorado Hills El Dorado Hills El Dorado Hills Special Taxes (PV at 6% over Remaining Term) $1,950 $22,366 $1,950 $22,366 $1,950 $22,366 Lot Size $ ,117 17,768 ($8,255) 12,942 $15,875 13,079 $15,190 Lot Premium None - Base Lot Yes, Net Prem. ($35,000) Yes, Net Prem. ($2,000) No Design and Appeal Good Similar Similar Similar Quality of Construction Good Similar Similar Similar Effective Age New Similar Similar Similar Condition Excellent Similar Similar Similar Functional Utility Good Similar Similar Similar Room Count Bedrooms Baths $10, ($10,000) Living Area (SF) $75 3,632 3,632 $0 3,632 $0 3,248 $28,800 Number of Stories Two Two Two One Heating/Cooling Central/Forced Similar Similar Similar Garage 4 car tandem 4 car tandem 4 car tandem 3 car $5,000 Landscaping Front Similar Similar Similar Pool/Spa None Similar Similar Similar Patios/Decks None Similar Similar Similar Fencing Rear Similar Similar Similar Fireplace(s) No Similar Similar Similar Kitchen Equipment Range/Oven, Diswasher, Microwave Similar Similar Similar Community Appeal Good Similar Similar Similar Other Solar Similar Similar Similar Gross Adjustments $68,854 $43,284 $87,511 Net Adjustments -$17,656 $39,284 $67,511 Adjusted Base Retail Value $628,794 $647,734 $682,979 Concluded Base Retail Value $640,000 Indicated Value Per SF $ ,632 SF - Minimum Home Size of Solstice by Meritage Seevers Jordan Ziegenmeyer 86

194 Project Information: Subject Property Comparable 1 Comparable 2 Comparable No. 3 Project Name The Estates The Estates by K. Hovnanian The Estates by K. Hovnanian Laurelton by Standard Pacific Plan Bluestone Bluestone Briarstone Residence One Address/Lot Number N/Ap 2237 Aiken Way 2241 Aiken Way 667 Idlewood Place City/Area El Dorado Hills El Dorado Hills El Dorado Hills El Dorado Hills Price N/Ap $516,245 $560,943 $679,000 Price Per SF N/Ap $ $ $ Data Source Sales Office Sales Office Sales Office Incentives N/Ap No $0 No $0 No Upgrades Base Yes ($46,265) Yes ($57,963) Yes ($77,814) Effective Base Sales Price $469,980 $502,980 $601,186 Adjustments: Factor Description +/(-) Description +/(-) Description +/(-) Property Rights Fee Simple Similar Similar Similar Financing Terms Cash Equivelant Similar Similar Similar Conditions of Sale Market Market Market Market Market Conditions Sale Date/Close Date N/Ap 09/15 / 02/16 09/15 / 03/16 04/16 COE Market Conditions Adj. N/Ap 4% $18,799 4% $20, % $3,006 New Incentive Adjustment N/Ap Project Location EDH/Blackstone El Dorado Hills El Dorado Hills El Dorado Hills Special Taxes (PV at 6% over Remaining Term) $1,585 $18,180 $1,585 $18,180 $1,950 $22,366 Lot Size $ ,476 8,106 $11,850 8,399 $10,385 13,085 ($13,045) Lot Premium None - Base Lot No No No Design and Appeal Good Similar Similar Similar Quality of Construction Good Similar Similar Similar Effective Age New Similar Similar Similar Condition Excellent Similar Similar Similar Functional Utility Good Similar Similar Similar Room Count Bedrooms Baths $10, Living Area (SF) $75 2,385 2,385 $0 2,500 ($8,625) 2,954 ($42,675) Number of Stories One One One One Heating/Cooling Central/Forced Similar Similar Similar Garage 3 car tandem 3 car tandem 3 car tandem 3 car tandem Landscaping Front Similar Similar Similar Pool/Spa None Similar Similar Similar Patios/Decks None Similar Similar Similar Fencing Rear Similar Similar Similar Fireplace(s) No Similar Similar Similar Kitchen Equipment Range/Oven, Diswasher, Microwave Similar Similar Similar Community Appeal Good Similar Similar Similar Other Solar Similar Similar Similar Gross Adjustments $48,829 $57,309 $81,092 Net Adjustments $48,829 $40,059 -$30,348 Adjusted Base Retail Value $518,809 $543,039 $570,838 Concluded Base Retail Value $530,000 Indicated Value Per SF $ ,385 SF - Minimum Home Size of The Estates by K. Hovnanian Seevers Jordan Ziegenmeyer 87

195 Project Information: Subject Property Comparable 1 Comparable 2 Comparable 3 Project Name Fiora Fiora by KB Home Fiora by KB Home The Estates by K. Hovnanian Plan The Sherwood The Sherwood The Alexa Briarstone Address/Lot Number N/Ap 3538 Landsdale Way 3522 Landsdale Way 2241 Aiken Way City/Area El Dorado Hills El Dorado Hills El Dorado Hills El Dorado Hills Price N/Ap $492,000 $529,427 $560,943 Price Per SF N/Ap $ $ $ Data Source Sales Office Sales Office Sales Office Incentives N/Ap No No No $0 Upgrades Base Yes ($4,500) Yes ($37,927) Yes ($57,963) Effective Base Sales Price $487,500 $491,500 $502,980 Adjustments: Factor Description +/(-) Description +/(-) Description +/(-) Property Rights Fee Simple Similar Similar Similar Financing Terms Cash Equivelant Similar Similar Similar Conditions of Sale Market Market Market Market Market Conditions Sale Date/Close Date N/Ap 01/16 / 02/16 12/15 Pending 09/15 / 03/16 Market Conditions Adj. N/Ap 2.0% $9, % $12,288 4% $20,119 New Incentive Adjustment N/Ap Project Location EDH/Blackstone El Dorado Hills El Dorado Hills El Dorado Hills Special Taxes (PV at 6% over Remaining Term) $1,585 $18,180 $1,585 $18,180 $1,585 $18,180 Lot Size $5.00 7,187 6,440 $3,735 7,081 $530 8,399 ($6,060) Lot Premium None - Base Lot No No No Design and Appeal Good Similar Similar Similar Quality of Construction Good Similar Similar Similar Effective Age New Similar Similar Similar Condition Excellent Similar Similar Similar Functional Utility Good Similar Similar Similar Room Count Bedrooms Baths $10, Living Area (SF) $75 2,533 2,533 $0 2,645 ($8,400) 2,500 $2,475 Number of Stories Two Two Two One Heating/Cooling Central/Forced Similar Similar Similar Garage 2 Car 2 Car 2 Car 3 car tandem ($5,000) Landscaping Front Similar Similar Similar Pool/Spa None Similar Similar Similar Patios/Decks None Similar Similar Similar Fencing Rear Similar Similar Similar Fireplace(s) No Similar Similar Similar Kitchen Equipment Range/Oven, Diswasher, Microwave Similar Similar Similar Community Appeal Good Similar Similar Similar Other Solar Similar Similar Similar Gross Adjustments $31,665 $39,397 $51,834 Net Adjustments $31,665 $22,597 $29,714 Adjusted Base Retail Value $519,165 $514,097 $532,694 Concluded Base Retail Value $515,000 Indicated Value Per SF $ ,533 SF - Minimum Home Size of Fiora by KB Home Seevers Jordan Ziegenmeyer 88

196 Project Information: Subject Property Comparable No. 1 Comparable No. 2 Comparable 3 Project Name Laurelton Laurelton by Standard Pacific Laurelton by Standard Pacific The Ridge by Lennar Plan Residence Four Residence Four Residence One Residence 2,861 Address/Lot Number N/Ap 640 Idlewood Place 667 Idlewood Place 1763 Brandywood Way City/Area El Dorado Hills El Dorado Hills El Dorado Hills El Dorado Hills Price N/Ap $699,000 $679,000 $665,752 Price Per SF N/Ap $ $ $ Data Source Sales Office Sales Office Sales Office Incentives N/Ap No No No Upgrades Base Yes ($73,797) Yes ($77,814) Yes ($35,752) Effective Base Sales Price $625,203 $601,186 $630,000 Adjustments: Factor Description +/(-) Description +/(-) Description +/(-) Property Rights Fee Simple Similar Similar Similar Financing Terms Cash Equivelant Similar Similar Similar Conditions of Sale Market Market Market Market Market Conditions Sale Date/Close Date N/Ap 05/16 COE 04/16 COE 04/16 COE Market Conditions Adj. N/Ap 0.50% $3, % $3,150 New Incentive Adjustment N/Ap Project Location EDH/Blackstone El Dorado Hills El Dorado Hills El Dorado Hills Special Taxes (PV at 6% over Remaining Term) $1,950 $22,366 $1,950 $22,366 $1,950 $22,366 Lot Size $ ,988 16,785 $1,015 13,085 $19,515 15,177 $9,055 Lot Premium None - Base Lot Yes ($20,000) No No Design and Appeal Good Similar Similar Similar Quality of Construction Good Similar Similar Similar Effective Age New Similar Similar Similar Condition Excellent Similar Similar Similar Functional Utility Good Similar Similar Similar Room Count Bedrooms Baths $10, Living Area (SF) $75 2,828 2,828 $0 2,954 ($9,450) 2,861 ($2,475) Number of Stories One One One One Heating/Cooling Central/Forced Similar Similar Similar Garage 2 Car 2 Car 3 car tandem ($5,000) 3 car tandem ($5,000) Landscaping Front Similar Similar Similar Pool/Spa None Similar Similar Similar Patios/Decks None Similar Similar Similar Fencing Rear Similar Similar Similar Fireplace(s) No Similar Similar Similar Kitchen Equipment Range/Oven, Diswasher, Microwave Similar Similar Similar Community Appeal Good Similar Similar Similar Other Solar Similar Similar Similar Gross Adjustments $43,381 $59,337 $42,046 Net Adjustments $3,381 $30,437 $27,096 Adjusted Base Retail Value $628,584 $631,623 $657,096 Concluded Base Retail Value $630,000 Indicated Value Per SF $ ,828 SF - Minimum Home Size of Laurelton by Standard Pacific Seevers Jordan Ziegenmeyer 89

197 Project Information: Subject Property Comparable 1 Comparable 2 Comparable 3 Project Name Shenandoah The Estates by K. Hovanian The Estates by K. Hovnanian Fiora by KB Home Plan The Syrah Bluestone Briarstone The Sherwood Address/Lot Number N/Ap 2237 Aiken Way 2241 Aiken Way 3538 Landsdale Way City/Area El Dorado Hills El Dorado Hills El Dorado Hills El Dorado Hills Price N/Ap $516,245 $560,943 $492,000 Price Per SF N/Ap $ $ $ Data Source Sales Office Sales Office Sales Office Incentives N/Ap No $0 No $0 No Upgrades Base Yes ($46,265) Yes ($57,963) Yes ($4,500) Effective Base Sales Price $469,980 $502,980 $487,500 Adjustments: Factor Description +/(-) Description +/(-) Description +/(-) Property Rights Fee Simple Similar Similar Similar Financing Terms Cash Equivelant Similar Similar Similar Conditions of Sale Market Market Market Market Market Conditions Sale Date/Close Date N/Ap 09/15 / 02/16 09/15 / 03/16 01/16 / 02/16 Market Conditions Adj. N/Ap 4% $18,799 4% $20, % $9,750 New Incentive Adjustment N/Ap Project Location EDH/Blackstone El Dorado Hills El Dorado Hills El Dorado Hills Special Taxes (PV at 6% over Remaining Term) $1,585 $18,180 $1,585 $18,180 $1,585 $18,180 Lot Size $5.00 9,540 8,106 $7,170 8,399 $5,705 6,440 $15,500 Lot Premium None - Base Lot No No No Design and Appeal Good Similar Similar Similar Quality of Construction Good Similar Similar Similar Effective Age New Similar Similar Similar Condition Excellent Similar Similar Similar Functional Utility Good Similar Similar Similar Room Count Bedrooms Baths $10, Living Area (SF) $75 2,128 2,385 ($19,275) 2,500 ($27,900) 2,533 ($30,375) Number of Stories One One One Two Heating/Cooling Central/Forced Similar Similar Similar Garage 2 car 3 car tandem ($5,000) 3 car tandem ($5,000) 2 Car Landscaping Front Similar Similar Similar Pool/Spa None Similar Similar Similar Patios/Decks None Similar Similar Similar Fencing Rear Similar Similar Similar Fireplace(s) No Similar Similar Similar Kitchen Equipment Range/Oven, Diswasher, Microwave Similar Similar Similar Community Appeal Good Similar Similar Similar Other Solar Similar Similar Similar Gross Adjustments $68,424 $76,904 $73,805 Net Adjustments $19,874 $11,104 $13,055 Adjusted Base Retail Value $489,854 $514,084 $500,555 Concluded Base Retail Value $500,000 Indicated Value Per SF $ ,128 SF - Minimum Home Size of Shenandoah by Lennar Seevers Jordan Ziegenmeyer 90

198 Project Information: Subject Property Comparable 1 Comparable 2 Comparable No. 3 Project Name Del Sol The Estates by K. Hovanian The Estates by K. Hovnanian Laurelton by Standard Pacific Plan Plan 2,347 Bluestone Briarstone Residence One Address/Lot Number N/Ap 2237 Aiken Way 2241 Aiken Way 667 Idlewood Place City/Area El Dorado Hills El Dorado Hills El Dorado Hills El Dorado Hills Price N/Ap $516,245 $560,943 $679,000 Price Per SF N/Ap $ $ $ Data Source Sales Office Sales Office Sales Office Incentives N/Ap No $0 No $0 No Upgrades Base Yes ($46,265) Yes ($57,963) Yes ($77,814) Effective Base Sales Price $469,980 $502,980 $601,186 Adjustments: Factor Description +/(-) Description +/(-) Description +/(-) Property Rights Fee Simple Similar Similar Similar Financing Terms Cash Equivelant Similar Similar Similar Conditions of Sale Market Market Market Market Market Conditions Date of Sale Sale Date/Close Date 09/15 / 02/16 09/15 / 03/16 04/16 COE Market Conditions Adj. N/Ap 4% $18,799 4% $20, % $3,006 New Incentive Adjustment N/Ap Project Location EDH/Blackstone El Dorado Hills El Dorado Hills El Dorado Hills Special Taxes (PV at 6% over Remaining Term) $1,585 $18,180 $1,585 $18,180 $1,950 $22,366 Lot Size $ ,369 8,106 $16,315 8,399 $14,850 13,085 ($8,580) Lot Premium None - Base Lot No No No Design and Appeal Good Similar Similar Similar Quality of Construction Good Similar Similar Similar Effective Age New Similar Similar Similar Condition Excellent Similar Similar Similar Functional Utility Good Similar Similar Similar Room Count Bedrooms Baths $10, Living Area (SF) $75 2,347 2,385 ($2,850) 2,500 ($11,475) 2,954 ($45,525) Number of Stories One One One One Heating/Cooling Central/Forced Similar Similar Similar Garage 2 Car 3 car tandem ($5,000) 3 car tandem ($5,000) 3 car tandem ($5,000) Landscaping Front Similar Similar Similar Pool/Spa None Similar Similar Similar Patios/Decks None Similar Similar Similar Fencing Rear Similar Similar Similar Fireplace(s) No Similar Similar Similar Kitchen Equipment Range/Oven, Diswasher, Microwave Similar Similar Similar Community Appeal Good Similar Similar Similar Other Solar Similar Similar Similar Gross Adjustments $61,144 $69,624 $84,477 Net Adjustments $45,444 $36,674 -$33,733 Adjusted Base Retail Value $515,424 $539,654 $567,453 Concluded Base Retail Value $540,000 Indicated Value Per SF $ ,347 SF - Minimum Home Size of Del Sol by Meritage Homes Seevers Jordan Ziegenmeyer 91

199 Conclusion of Floor Plan Values Based on the analysis herein, the market value conclusions for the smallest floor plans offered within each of the eight active projects and two sold out projects are summarized in the table below. Living Median Conclusion of Project Developer/Builder Area (SF) Lot (SF) Base Value* Chaparral The New Home Company 1,994 3,441 $450,000 The Ridge Lennar 2,861 13,939 $670,000 Summit View Lennar 2,442 18,448 $640,000 Palisades Lennar 1,429 3,528 $425,000 Solstice Meritage Homes 3,632 16,117 $640,000 The Estates K. Hovnanian Homes 2,385 10,476 $530,000 Fiora KB Home 2,533 7,187 $515,000 Laurelton Standard Pacific Homes 2,828 16,988 $630,000 Shenandoah Lennar 2,128 9,540 $500,000 Del Sol Meritage Homes 2,347 11,369 $540,000 * Includes present value of bond obligation Seevers Jordan Ziegenmeyer 92

200 PRODUCTION (BULK) LOT VALUATION The following table depicts the various lot size groupings comprising the single-family residential lots within the CFD, exclusive of completed homes: Lot/ Project Partially Imp. Finished Homes Under Total Village Name Developer Lots Lots Construction Lots Min Max Mean Median Mode Lot V TBD Lennar ,988 4,290 3,382 3,292 3,085 5A The Ridge Lennar ,761 46,609 17,975 13,939 12,197 7A/7B Summit View Lennar , ,968 22,663 18,448 16,988 Lot Y/Z Enclave Lennar ,023 30,666 15,808 14,636 12,066 Lot X Palisades Lennar ,006 6,142 3,685 3,528 3,006 3A/3B Laurelton Standard Pacific ,761 43,124 19,990 16,988 13,068 6A/6C The Estates K. Hovnanian ,752 23,914 10,598 10,476 11,935 6B Fiora KB Home ,360 17,119 9,024 7,187 6,447 5B Solstice Meritage ,066 41,251 20,808 16,117 12,066 W Chaparral New Home Co ,095 6,142 3,734 3,441 3,267 Totals As previously discussed, at the time of inspection construction of the vertical improvements was in progress on 62 lots as of the date of inspection; these lots are appraised herein as a finished singlefamily residential lots. Additionally, the partially improved lots (Lot V and Village 6C owned by K. Hovnanian, which contains 39 lots) will be appraised in this section of the valuation, taking into consideration estimates for remaining site work to deliver finished lots. In the collection of data for analysis, 13 comparable sales have been identified as being representative of the market and it is believed the sales data collected is sufficient for comparison to the appraised properties and pertinent to the valuation herein. The data from the comparable sales is summarized in the table on the next page, along with a location map, followed by detailed sales sheets and a discussion of adjustments necessary for comparison with the appraised properties. It is noted three lot size categories will be analyzed, based upon the median lot sizes of each respective Lot/Village that comprise the appraised properties. The smallest lots are represented by Lot V, Lot X and Village W (median lot sizes range from 3,292 to 3,528 square feet). Next, Village 6B (Fiora by KB Home) has a median lot size of 7,187 square feet, and will be analyzed separately. Finally, the largest lots are represented by Village 5A, Village 7A/7B, Lot Y/Z, Village 3A/3B, Village 6A/6C and Village 5B and the median lot sizes of these Villages range from 10,476 to 18,448 square feet. Seevers Jordan Ziegenmeyer 93

201 COMPARABLE BULK LOT SALES SUMMARY Buyer/ Sale Sale No. of Typical Lot Sale Price No. Location Developer Date Price Lots Size (SF) Per Lot Small Lot Category 1 Whitney Ranch (por.) JMC Homes Aug-15 $11,500, ,500 $115,000 N/O Whitney Ranch Pkwy., E/O Wildcat Blvd. Finished Lot Rocklin 2 Evergreen Woodside Homes Jan-15 $11,880, ,150 $54,000 S/S Whitney Ranch Pkwy., B/T Wildcat Blvd. & Hwy. 65 Unimproved Lot Rocklin 3 Parkshore Woodside Homes May-14 $16,170, ,500 $110,000 S/S Parkshore Dr., E/O Folsom Blvd. Unimproved Lot Folsom 4 Willow Bridge D.R. Horton Jul-12 $5,800, ,500 $50,435 S/S Iron Point Rd., E/O Prairie City Rd. Unimproved Lot Folsom Middle Lot Category 5 Whitney Ranch (por.) Standard Pacific Sep-15 $11,020, ,050 $145,000 N/O Whitney Ranch Pkwy., E/O Wildcat Blvd. Finished Lot Rocklin 6 Whitney Ranch (por.) Taylor Morrison Jun-15 $8,400, ,500 $140,000 N/O Whitney Ranch Pkwy., E/O Wildcat Blvd. Finished Lot Rocklin 7 Harvest Subdivision Lewis Land Developers Jun-15 $8,300, ,200 $71,552 E/S E. Natoma St., S/O Haddington Dr. Unimproved Lot Folsom 8 Fiora KB Home Dec-13 $10,412, ,187 $144,611 E/O Latrobe Rd., S/O White Rock Rd. Rough Graded El Dorado Hills Large Lot Category 9 The Overlook (Wilson Estates) Renasci Wilson Estates Aug-15 $2,985, ,178 $106,607 N/L Green Valley Rd., S/O Malcom Dixon Rd. Unimproved Lot El Dorado Hills 10 Summit View and The Ridge Lennar 2014 $26,631, ,939 - $132,494 E/O Latrobe Rd., S/O White Rock Rd. 18,448 Partially Improved El Dorado Hills 11 Serrano (portion) Serrano Land LP Jul-14 $9,625, ,000 $213,889 E/O Greenview Drive, N/O Bass Lake Road Finished Lot El Dorado Hills 12 The Estates K. Hovnanian Homes Dec-13 $15,357, ,476 $134,711 E/O Latrobe Rd., S/O White Rock Rd. Varies El Dorado Hills 13 Serrano (portion) Taylor Morrison Dec-13 $11,500, ,000 $230,000 W/O Greenview Dr., N/O Serrano Pkwy. Finished Lot El Dorado Hills Seevers Jordan Ziegenmeyer 94

202 COMPARABLE BULK LOT SALES MAP Seevers Jordan Ziegenmeyer 95

203 BULK LOT COMPARABLE 1 Property Identification Project Name Whitney Ranch (portion) Location North of Whitney Ranch Parkway, east of Wildcat Boulevard APN , -036, -037 City Rocklin County Placer Sale Data Grantor Sunset Ranchos Investors LLC Grantee JMC Homes Sale Date 08/27/2015 Deed Book Page Property Rights Conveyed Fee Simple Conditions of Sale Market Financing Terms Cash equivalent Sale Price $11,500,000 Annual Special Taxes per Lot $1,800 to $1,900 Land Data Zoning Single-family residential Topography Generally level to slightly rolling Utilities All available Number of Lots 100 Development Status at Sale Finished lots Typical Lot Size (SF) 4,500 Indicators (per Lot) Sale Price $115,000 PV of Bonds $25,465 Total Consideration $140,465 Site Development Costs $0 Permits and Fees $42,398 (average) Remarks This comparable sale represents 100 single-family residential lots in Whitney Ranch Phase 2A and 2B (Position 1). The lots were delivered in finished condition. Seevers Jordan Ziegenmeyer 96

204 BULK LOT COMPARABLE 2 Property Identification Project Name Evergreen Lots Location South side of Whitney Ranch Parkway, between Wildcat Boulevard and Highway 65 APN , -059 (portion) City Rocklin County Placer Sale Data Grantor Evergreen of Rocklin Land Joint Venture Grantee Woodside Homes Sale Date January 2015 Deed Book Page N/Av Property Rights Conveyed Fee Simple Conditions of Sale Market Financing Terms Cash equivalent Sale Price $11,880,000 Annual Special Taxes per Lot $0 Land Data Zoning Single-family residential Topography Generally level Utilities All available Number of Lots 220 Development Status at Sale Unimproved lots Typical Lot Size (SF) 3,150 (average) Indicators (per Lot) Sale Price $54,000 PV of Bonds $0 Total Consideration $54,000 Site Development Costs $50,000 Permits and Fees $64,000 Remarks These lots are relatively small at 40x70 feet (2,800 SF) and 45x75 feet (3,375 SF). While development costs are expected to be higher than other local projects, due to rocky soil, Woodside expected to be into the finished lots at a basis of about $95,000 to $100,000 per lot. It is noted this transaction was verified with multiple sources with minor discrepancies between each source; the information reflected above is considered to be reliable. Seevers Jordan Ziegenmeyer 97

205 BULK LOT COMPARABLE 3 Property Identification Project Name Parkshore Location South side of Parkshore Drive, east of Folsom Boulevard APN City Folsom County Sacramento Sale Data Grantor Lewis Land Developers, LLC Grantee Woodside 05N lp Closing Date 05/01/2014 Deed Book Page Property Rights Conveyed Fee Simple Conditions of Sale Buyer Motivation Financing Terms Cash Equivalent Sale Price $16,170,000 Annual Special Assessments per Lot $1,829 Land Data Zoning Single-family residential Topography Generally level Utilities All available Number of Lots 147 Development Status at Sale Unimproved lots Typical Lot Size (SF) 2,500 SF Indicators (per Lot) Sale Price $110,000 PV of Bonds $25,176 Total Consideration $135,176 Site Development Costs $35,000 Permits and Fees $40,000 Remarks This comparable represents a tentatively mapped subdivision known as Parkshore. The buyer acquired 147 lots with a typical lot size of 2,500 square feet. A degree of buyer motivation was concluded related to the sale as a party to the transaction noted that the buyer s offer was aggressive and believed to be slightly above the market value. Seevers Jordan Ziegenmeyer 98

206 BULK LOT COMPARABLE 4 Property Identification Project Name Willow Bridge Location South side of Iron Point Road, east of Prairie City Road APN , -030 City Folsom County Sacramento Sale Data Grantor Iron Point Associates I Grantee D.R. Horton Bay Inc. Closing Date 07/26/2012 Deed Book Page Property Rights Conveyed Fee Simple Conditions of Sale Market Financing Terms Cash Equivalent Sale Price $5,800,000 Annual Special Assessments per Lot $1,600 Land Data Zoning Single-family residential Topography Generally level Utilities All available Number of Lots 115 Development Status at Sale Unimproved lots Typical Lot Size (SF) 3,500 Indicators (per Lot) Sale Price $50,435 PV of Bonds $16,764 Total Consideration $67,199 Site Development Costs $50,000 Permits and Fees $64,000 Remarks This comparable represents a tentatively mapped subdivision known as Willow Bridge. The buyer acquired 115 lots with a typical lot size of 3,500 square feet. The lots were unimproved at the time of sale. Seevers Jordan Ziegenmeyer 99

207 BULK LOT COMPARABLE 5 Property Identification Project Name Whitney Ranch (portion) Location North of Whitney Ranch Parkway, east of Wildcat Boulevard APN through -029 City Rocklin County Placer Sale Data Grantor Sunset Ranchos Investors LLC Grantee Standard Pacific Corp. Closing Date 09/10/2015 Deed Book Page Property Rights Conveyed Fee Simple Conditions of Sale Market Financing Terms Cash Equivalent Sale Price $11,020,000 Annual Special Assessments per Lot $1,850 Land Data Zoning Single-family residential Topography Generally level to slightly rolling Utilities All available Number of Lots 76 Development Status at Sale Finished lots Typical Lot Size (SF) 6,050 SF Indicators (per Lot) Sale Price $145,000 PV of Bonds $25,465 Total Consideration $170,465 Site Development Costs $0 Permits and Fees $42,398 (average) Remarks This comparable represents the sale of 76 single-family residential lots in Whitney Ranch Phase 2A and 2B (Position 3). The lots were delivered in finished condition. Seevers Jordan Ziegenmeyer 100

208 BULK LOT COMPARABLE 6 Property Identification Project Name Whitney Ranch (portion) Location North of Whitney Ranch Parkway, east of Wildcat Boulevard APN (portion) City Rocklin County Placer Sale Data Grantor Sunset Ranchos Investors LLC Grantee Taylor Morrison of California LLC Closing Date 06/12/2015 Deed Book Page Property Rights Conveyed Fee Simple Conditions of Sale Market Financing Terms Cash Equivalent Sale Price $8,400,000 Annual Special Assessments per Lot $1,850 Land Data Zoning Single-family residential Topography Generally level to slightly rolling Utilities All available Number of Lots 60 Development Status at Sale Finished lots Typical Lot Size (SF) 5,500 Indicators (per Lot) Sale Price $140,000 PV of Bonds $25,465 Total Consideration $164,465 Site Development Costs $0 Permits and Fees $42,398 (average) Remarks This represents the sale of 60 lots in Whitney Ranch (Phase 2A and 2B, Position 2) at $140,000 per lot to Taylor Morrison, a nationally recognized homebuilder. Seevers Jordan Ziegenmeyer 101

209 BULK LOT COMPARABLE 7 Property Identification Project Name Harvest Subdivision Location East side of East Natoma Street, south of Haddington Drive APN City Folsom County Sacramento Sale Data Grantor Vera Silberstein Gift Trust Grantee Lewis Land Developers LLC Closing Date 06/17/2015 Deed Book Page N/Av Property Rights Conveyed Fee Simple Conditions of Sale Market Financing Terms Cash Equivalent Sale Price $8,300,000 Annual Special Assessments per Lot $1,200 (estimated) Land Data Zoning Single-family residential Topography Generally rolling Utilities All available Number of Lots 116 Development Status at Sale Unimproved lots Typical Lot Size (SF) 8,200 SF Indicators (per Lot) Sale Price $71,552 PV of Bonds $16,518 Total Consideration $88,070 Site Development Costs $99,000 Permits and Fees $52,000 Remarks This transaction represents the sale of 116 single-family residential lots with an approved tentative map known as the Harvest subdivision. The site is an infill location adjacent to the Empire Ranch Golf Club. Although the sale was confirmed with a party to the transaction, at the time of our analysis the recorded document number was not available from the County Recorder s office. The relatively higher site development costs reflect the rolling topography that is typical of the Folsom/El Dorado Hills corridor. Seevers Jordan Ziegenmeyer 102

210 BULK LOT COMPARABLE 8 Property Identification Project Name Fiora (Blackstone) Location East of Latrobe Road, south of White Rock Road APN through -76 City El Dorado Hills County El Dorado Sale Data Grantor Landsource Holding Co. LLC Grantee KB Home Closing Date 12/06/2013 Deed Book Page Property Rights Conveyed Fee Simple Conditions of Sale Market Financing Terms Cash Equivalent Sale Price $10,412,000 Annual Special Assessments per Lot $1,585 Land Data Zoning Single-family residential Topography Generally level to slightly rolling Utilities All available Number of Lots 72 Development Status at Sale Rough graded (blue top) Typical Lot Size (SF) 7,187 (median) Indicators (per Lot) Sale Price $144,611 PV of Bonds $19,086 Total Consideration $163,697 Site Development Costs $52,000 Permits and Fees $26,000 Remarks These lots are located in Blackstone, El Dorado Hills. The purchase price reportedly included some pre-paid fees. Remaining permits and fees were estimated at about $26,000 per lot. The lots were reportedly purchased in blue-top condition and remaining site improvement costs were estimated at $52,000 per lot. Seevers Jordan Ziegenmeyer 103

211 BULK LOT COMPARABLE 9 Property Identification Project Name The Overlook (Wilson Estates) Location North line of Green Valley Road, south of Malcom Dixon Road APN , -23, -30 City El Dorado Hills County El Dorado Sale Data Grantor Julie Ryan Grantee Renasci Wilson Estates LLC Closing Date 08/14/2015 Deed Book Page Property Rights Conveyed Fee Simple Conditions of Sale Market Financing Terms Cash Equivalent Sale Price $2,985,000 Annual Special Assessments per Lot $0 Land Data Zoning Single-family residential Topography Generally level to slightly rolling Utilities Major dry utilities are at or adjacent to the site; water and sewer unavailable at time of sale Number of Lots 28 Development Status at Sale Unimproved lots Typical Lot Size (SF) 25,178 Indicators (per Lot) Sale Price $106,607 PV of Bonds $0 Total Consideration $106,607 Site Development Costs $108,742 Permits and Fees $59,517 Remarks This comparable has a tentative map for 28 lots. The project was to feature three floor plans ranging in size from 2,711 to 3,800 square feet, with lot sizes ranging from 20,006 to 43,576 square feet, with an average of 25,178 square feet. Additionally, as part of the development, approximately 3.64 acres on the east side and 4.75 acres on the south side would be designated as open space. Seevers Jordan Ziegenmeyer 104

212 BULK LOT COMPARABLE 10 Property Identification Project Name Summit View and The Ridge (Blackstone) Location East of Latrobe Road, south of White Rock Road APN et. al. City El Dorado Hills County El Dorado Sale Data Grantor Landsource Holding Co. LLC Grantee Lennar Homes of California Closing Date December 2014 Deed Book Page , , Property Rights Conveyed Fee Simple Conditions of Sale Market Financing Terms Cash Equivalent Sale Price $26,631,250 Annual Special Assessments per Lot $1,950 Land Data Zoning Single-family residential Topography Generally level to rolling Utilities All available Number of Lots 201 Development Status at Sale Partially improved Typical Lot Size (SF) 13,939 18,448 Indicators (per Lot) Sale Price $132,494 PV of Bonds $22,940 Total Consideration $155,434 Site Development Costs $54,354 Permits and Fees $52,000 Remarks This sale involved the purchase of 201 lots within three takedowns in The first occurred in March 2014 for $9,500,000, the second in June 2014 for $7,631,250 and the third in December 2014 for $9,500,000. The lots were partially finished at the time of sale, and the remaining site costs were estimated at $54,354 per lot. The lots are located within The Ridge and Summit View projects in Blackstone. Seevers Jordan Ziegenmeyer 105

213 BULK LOT COMPARABLE 11 Property Identification Project Name Serrano (portion) Location East of Greenview Drive, north of Bass Lake Road APN et. al. City El Dorado Hills County El Dorado Sale Data Grantor GHC Company 5 LLC Grantee Serrano Land LP Closing Date 07/16/2014 Deed Book Page Property Rights Conveyed Fee Simple Conditions of Sale Market Financing Terms Cash Equivalent Sale Price $9,625,000 Annual Special Assessments per Lot $2,838 Land Data Zoning Single-family residential Topography Generally level to rolling Utilities All available Number of Lots 45 Development Status at Sale Finished lots Typical Lot Size (SF) 15,000 Indicators (per Lot) Sale Price $213,889 PV of Bonds $15,843 Total Consideration $229,732 Site Development Costs $0 Permits and Fees $50,000 Remarks This comparable sale is located in the Serrano community in El Dorado Hills, an exclusive residential master planned community. At the time of sale the lots were finished and included initial foundation work on six lots, which reportedly did not contribute to value. Seevers Jordan Ziegenmeyer 106

214 BULK LOT COMPARABLE 12 Property Identification Project Name The Estates (Blackstone) Location East of Latrobe Road, south of White Rock Road APN et. al. City El Dorado Hills County El Dorado Sale Data Grantor Landsource Holding Co. LLC Grantee K. Hovnanian Enterprises Inc. Closing Date 12/20/2013 Deed Book Page Property Rights Conveyed Fee Simple Conditions of Sale Market Financing Terms Cash Equivalent Sale Price $15,357,091 Annual Special Assessments per Lot $1,585 Land Data Zoning Single-family residential Topography Generally level to slightly rolling Utilities All available Number of Lots 114 Development Status at Sale Varies Typical Lot Size (SF) 10,476 (median) Indicators (per Lot) Sale Price $134,711 PV of Bonds $19,086 Total Consideration $153,797 Site Development Costs $77,000 Permits and Fees $52,000 Remarks This sale, located in Blackstone, consisted of 21 finished lots, 54 lots that needed topside improvements and 39 lots that needed topside improvements and some additional grading. K. Hovnanian is currently marketing homes within Blackstone within a community known as The Estates. Seevers Jordan Ziegenmeyer 107

215 BULK LOT COMPARABLE 13 Property Identification Project Name Serrano (portion) Location West of Greenview Drive, north of Serrano Parkway APN , -30 (por.) City El Dorado Hills County El Dorado Sale Data Grantor Parker Development Company Grantee Taylor Morrison Closing Date 12/27/2013 Deed Book Page Property Rights Conveyed Fee Simple Conditions of Sale Market Financing Terms Cash Equivalent Sale Price $11,500,000 Annual Special Assessments per Lot $2,838 Land Data Zoning Single-family residential Topography Generally level to slightly rolling Utilities All available Number of Lots 50 Development Status at Sale Finished lots Typical Lot Size (SF) 10,000 Indicators (per Lot) Sale Price $230,000 PV of Bonds $17,623 Total Consideration $247,623 Site Development Costs $0 Permits and Fees $42,000 Remarks This property is located in the master planned community of Serrano. The transaction was reportedly all-cash. The buyer is a production homebuilder seeking to construct high-end production housing. The lots included in the purchase are located within Village K-5 in Serrano. The buyer closed on the property when the lots were in a paper lot (unimproved lot) condition at the end of The seller then installed the in-tract improvements and the buyer reimbursed the seller for the cost of the in-tracts in The purchase price of $11,500,000 indicated above reflects the entire purchase price for 50 finished lots. Seevers Jordan Ziegenmeyer 108

216 Discussion of Adjustments The comparable transactions are adjusted based on the profile of the subject properties with regard to categories that affect market value. For certain adjustments such as site development cost, permits and fees and special taxes, adjustments are made using actual or estimated (present value) dollar amounts. Other adjustments may be categories as either superior or inferior, with percentage adjustments applied accordingly. If a comparable has an attribute considered superior to that of the subject, it is adjusted downward to negate the effect the item has on the price of the comparable. The opposite is true of categories considered inferior to the subject. The adjustments are made in consideration of paired sales, the appraiser s experience and knowledge and interviews with market participants. At a minimum, the appraiser considers the need to make adjustments for the following items: Expenditures after Sale (i.e. site development costs (if any), permits and fees, bond encumbrance and atypical carrying costs Property rights conveyed Financing terms Conditions of sale (motivation) Market conditions Location Physical features A detailed analysis involving the adjustment factors is presented below. It is noted that the analysis will rely upon qualitative, rather than quantitative, adjustments. Loaded Lot Analysis Since each comparable has the same highest and best use as the subject properties near term single-family residential development we apply adjustments for remaining site development costs (if any) and permits and fees on a dollar-for-dollar basis. That is, the comparables are analyzed on a loaded-lot-basis, where any remaining site development costs and permits and fees due at building permit are added to the lot price to yield a price that reflects the total consideration. We consider the special taxes of the comparables and their remaining bond terms to estimate a remaining principal bond balance. While bond interest rates may vary somewhat, for approximation purposes, we utilize a 6% discount rate. The estimated bond encumbrances are added to the loaded lot prices on a dollar-for-dollar basis. As HOA fees are associated with intrinsic benefits, such as community pools, services, etc., no adjustments for this item are applicable. Seevers Jordan Ziegenmeyer 109

217 Property Rights Conveyed In transactions of real property, the rights being conveyed vary widely and have a significant impact on the sales price. As previously noted, the opinion of value in this report is based on a fee simple estate, subject only to the limitations imposed by the governmental powers of taxation, eminent domain, police power and escheat, as well as non-detrimental easements, community facility districts and conditions, covenants and restrictions (CC&Rs). All the comparables represent fee simple estate transactions. Therefore, adjustments for property rights are not necessary. Financing Terms In analyzing the comparables, it is necessary to adjust for financing terms that differ from market terms. Typically, if the buyer retained third party financing (other than the seller) for the purpose of purchasing the property, a cash price is presumed and no adjustment is required. However, in instances where the seller provides financing as a debt instrument, a premium may have been paid by the buyer for below-market financing terms or a discount may have been demanded by the buyer if the financing terms were above market. The premium or discounted price must then be adjusted to a cash equivalent basis. The comparable sales were cash to the seller transactions and do not require adjustments. Conditions of Sale Adverse conditions of sale can account for a significant discrepancy from the sales price actually paid compared to that of the market. This discrepancy in price is generally attributed to the motivations of the buyer and the seller. Certain conditions of sale are considered to be non-market and may include the following: a seller acting under duress, a lack of exposure to the open market, an inter-family or inter-business transaction for the sake of family or business interest, an unusual tax consideration, a premium paid for site assemblage, a sale at legal auction, or an eminent domain proceeding. To the best of our knowledge most of the comparable sales represent typical market transactions. Sale 3 involved an atypical level of buyer motivation and is adjusted downward for conditions of sale. No other adjustments are warranted in this category. Seevers Jordan Ziegenmeyer 110

218 Market Conditions Market conditions vary over time, but the date of this appraisal is for a specific point in time. In a dynamic economy one that is undergoing changes in the value of the dollar, interest rates and economic growth or decline extra attention needs to be paid to assess changing market conditions. Significant monthly changes in price levels can occur in several areas of a city, while prices in other areas remain relatively stable. Although the adjustment for market conditions is often referred to as a time adjustment, time is not the cause of the adjustment. In 2013 and early 2014, bulk land transaction pricing increased considerably, partly due to over projections of continuing appreciation in home prices by builders. However, there was a pullback in mid For these reasons, we have applied downward adjustments to the comparable sales which occurred in the first half of 2014, as well as all of 2013 (Sales 3, 8, 12 and 13), but upward adjustments to those sales that occurred in the latter half of 2014 and the first few months of 2015 (Sales 2, 10 and 11). Additionally, Sale 4, which occurred in July 2012, is adjusted upward to account for the improvement in market conditions since the date of this transaction. No other adjustments are warranted for market conditions. Physical Characteristics The physical characteristics of a property can impact the selling price. Those that may impact value include the following: Location/Community Appeal Location adjustments are applied in consideration of area home prices, household income and other characteristics. The appraised properties are located within the Blackstone master planned community of El Dorado Hills, which is considered a well-planned and designed project in a desirable submarket for single-family residences. The area benefits from strong demographic characteristics (median income levels, etc.) and good access to employment centers and public services. Additionally, the Blackstone community has a main clubhouse/recreation area and an elementary school, which is particularly desirable for families with smaller children. Given the subject s good location, we focused our search for comparable properties within similarly desirable communities of the Sacramento MSA, notably, El Dorado Hills, Folsom and Rocklin (Placer County). Sales 11 and 13 are located in the exclusive master planned community of Serrano, which is considered somewhat superior to Blackstone. These sales are adjusted downward in this category. Conversely, Sales 1, 2, 5 and 6, located in or near the Whitney Ranch master planned community of Rocklin, are adjusted slightly upward in this category. No other adjustments are applied. Seevers Jordan Ziegenmeyer 111

219 Number of Lots Generally, there is an inverse relationship between the number of lots and price per lot such that larger projects (with a greater number of lots) achieve a lower price per lot. Comparables 1 and 6 contain significantly fewer lots and require downward adjustments. Appropriate adjustments are applied where warranted. Lot Size Differences in lot size between comparables and the subject are applied when differences are substantially large and would be recognized by the market as superior or inferior when compared to the subject. Smaller lot sizes are considered inferior and are adjusted upwards while larger lot sizes are considered superior and are adjusted downwards. It is noted the median lot sizes of each lot category of the appraised properties are considered in this section of the analysis. Site Utility Differences in contour, drainage, soil conditions, as well as project design, can affect the utility and, therefore, the market value of the properties. The subject properties and comparables exhibit similar site utility. Adjustments for this factor do not apply. Adjustment Grids The grids on the following pages reflect the afore-discussed adjustments. Seevers Jordan Ziegenmeyer 112

220 SMALL LOT CATEGORY Site Characteristics: Subject Lot Price $115,000 $54,000 $110,000 $50,435 Remaining Site Development Costs $0 $0 $50,000 $35,000 $50,000 Permits and Fees $52,000 $42,398 $64,000 $40,000 $64,000 Loaded Lot Price before Bonds $157,398 $168,000 $185,000 $164,435 Special Taxes $1,850 $0 $1,829 $1,600 Approx. Remaining Term (Years Until Maturity) Bond Encumbrance (Present Value at 6%) $25,465 $0 $25,176 $16,764 Loaded Lot Price after Bonds $182,863 $168,000 $210,176 $181,199 Elements of Comparison: Property Rights Conveyed Fee Simple Fee Simple Fee Simple Fee Simple Fee Simple Adjustment Adjusted Price $182,863 $168,000 $210,176 $181,199 Financing Terms Cash Equiv. Similar Similar Similar Similar Adjustment Adjusted Price $182,863 $168,000 $210,176 $181,199 Sale Conditions Market Similar Similar Buyer Motv. Similar Adjustment Adjusted Price $182,863 $168,000 $210,176 $181,199 Market Conditions May-16 Aug-15 Jan-15 May-14 Jul-12 Adjustment (Appraisal) Adjusted Price $182,863 $168,000 $210,176 $181,199 Physical Characteristics: Location/Community Appeal EDH/Blackstone/ Rocklin Rocklin Folsom Folsom Adjustment Good Number of Lots Adjustment Lot Size (Typical) 3,292-3,528 4,500 3,150 2,500 3,500 Adjustment (approx.) Site Utility Average Similar Similar Similar Similar Adjustment Net Adjustments Upward Upward Downward Upward Adjusted Loaded Lot Value >$182,863 >$168,000 <$210,176 >$181,199 Seevers Jordan Ziegenmeyer 113

221 MIDDLE LOT CATEGORY Site Characteristics: Subject Lot Price $145,000 $140,000 $71,552 $144,611 Remaining Site Development Costs $0 $0 $0 $99,000 $52,000 Permits and Fees $52,000 $42,398 $42,398 $52,000 $26,000 Loaded Lot Price before Bonds $187,398 $182,398 $222,552 $222,611 Special Taxes $1,850 $1,850 $1,200 $1,585 Approx. Remaining Term (Years Until Maturity) Bond Encumbrance (Present Value at 6%) $25,465 $25,465 $16,518 $19,086 Loaded Lot Price after Bonds $212,863 $207,863 $239,070 $241,697 Elements of Comparison: Property Rights Conveyed Fee Simple Fee Simple Fee Simple Fee Simple Fee Simple Adjustment Adjusted Price $212,863 $207,863 $239,070 $241,697 Financing Terms Cash Equiv. Similar Similar Similar Similar Adjustment Adjusted Price $212,863 $207,863 $239,070 $241,697 Sale Conditions Market Market Similar Similar Similar Adjustment Adjusted Price $212,863 $207,863 $239,070 $241,697 Market Conditions May-16 Sep-15 Jun-15 Jun-15 Dec-13 Adjustment (Appraisal) Adjusted Price $212,863 $207,863 $239,070 $241,697 Physical Characteristics: Location/Community Appeal EDH/Blackstone/ Rocklin Rocklin Folsom EDH/Blackstone Adjustment Good Number of Lots Adjustment Lot Size (Typical) 7,187 6,050 5,500 8,200 7,187 Adjustment (approx.) Site Utility Average Similar Similar Similar Similar Adjustment Net Adjustments for Physical Characteristics Upward Upward Similar Downward Adjusted Loaded Lot Value >$212,863 >$207,863 $239,070 <$241,697 Seevers Jordan Ziegenmeyer 114

222 LARGE LOT CATEGORY Site Characteristics: Subject Lot Price $106,607 $132,494 $213,889 $134,711 $230,000 Remaining Site Development Costs $0 $108,742 $54,354 $0 $77,000 $0 Permits and Fees $52,000 $59,517 $52,000 $50,000 $52,000 $42,000 Loaded Lot Price before Bonds $274,866 $238,848 $263,889 $263,711 $272,000 Special Taxes $0 $1,950 $2,838 $1,585 $2,838 Approx. Remaining Term (Years Until Maturity) Bond Encumbrance (Present Value at 6%) $0 $22,940 $15,843 $19,086 $17,623 Loaded Lot Price after Bonds $274,866 $261,788 $279,732 $282,797 $289,623 Elements of Comparison: Property Rights Conveyed Fee Simple Fee Simple Fee Simple Fee Simple Fee Simple Fee Simple Adjustment Adjusted Price $274,866 $261,788 $279,732 $282,797 $289,623 Financing Terms Cash Equiv. Similar Similar Similar Similar Similar Adjustment Adjusted Price $274,866 $261,788 $279,732 $282,797 $289,623 Sale Conditions Market Similar Similar Similar Similar Similar Adjustment Adjusted Price $274,866 $261,788 $279,732 $282,797 $289,623 Market Conditions May-16 Aug Jul-14 Dec-13 Dec-13 Adjustment (Appraisal) Adjusted Price $274,866 $261,788 $279,732 $282,797 $289,623 Physical Characteristics: Location/Community Appeal EDH/Blackstone/ El Dorado Hills EDH/Blackstone EDH/Serrano EDH/Blackstone EDH/Serrano Adjustment Good Number of Lots Adjustment Lot Size (Typical) 10,476-18,448 25,178 13,939-18,448 15,000 10,476 10,000 Adjustment (approx.) Site Utility Average Similar Similar Similar Similar Similar Adjustment Net Adjustments for Physical Characteristics Downward Upward Downward Downward Downward Adjusted Loaded Lot Value <$274,866 >$261,788 <$279,732 <$282,797 <$289,623 Seevers Jordan Ziegenmeyer 115

223 Conclusions of Lot Value Small Lot Category The appraised properties within the small lot category include the following: 1) Lot V, 70 partially improved lots with a tentative map in place (owned by Lennar); 2) Lot X, also known as Palisades by Lennar, which consists of 14 finished lots and 14 homes under construction to be valued as finished lots, for a total of 28 lots; and 3) Lot W, also known as Chaparral by The New Home Company, which consists of 56 finished lots and 4 homes under construction to be valued as finished lots, for a total of 60 lots. After adjusting for bond debt, the range of the comparable sales for the small lot category was $168,000 to $210,176 for a loaded lot. Given the analysis, it is reasonable to conclude loaded lot values for the appraised properties at higher than the loaded lot indicators of Sales 1, 2 and 4, and lower than the indicator of Sale 3. As such, our conclusion of loaded lot value for the small lot component of the appraised properties is $200,000 per lot. Lot V currently represents 70 tentatively mapped lots that are partially improved. A representative with Lennar indicated that total in-tract costs for this community are $44,250 per lot. Additionally, site work reportedly began in April 2016 and is expected to be completed by July 2016, at which point the final map is expected to record. As such, as of our date of inspection/date of value, May 11, 2016, site work was estimated to be approximately 1/3 complete, given that about one month has passed since the date of commencement of site work and about two months remain. As such, the remaining site work is estimated to be about 2/3 of $44,250 per lot, or approximately $29,205 per lot. This estimate will be deducted in the analysis of Lot V in the table that follows. Additionally, as Lot V is representative of tentatively mapped lots, there are remaining fees due at final map. According to a representative with Lennar, final map fees are expected to be about $1,914,010, or about $27,343 per lot for 70 lots. These fees will also be deducted in our analysis of Lot V. The remaining Villages/Lots within the small lot category (Palisades by Lennar and Chaparral by The New Home Company) already have final maps in place and have no remaining site work. Lastly, all of the components within the small lot category require deductions for remaining fees due at building permit. Based upon information provided by Lennar, it appears that typical fees due at building permit within the Blackstone community average about $25,000 per lot. As such, these fees are deducted for each of the lots that do not yet have building permit fees paid. There are two communities within the small lot category, Palisades by Lennar and Chaparral by The New Home Company, that have homes under construction. Since fees due at building permit have already been paid for these partially completed homes, no deductions are necessary for these homes. Seevers Jordan Ziegenmeyer 116

224 Middle Lot Category The middle lot category in the analysis is solely Village 6B, also known as Fiora by KB Home. This component includes 26 finished lots and 5 homes under construction, to be valued as finished lots, for a total of 31 lots. After adjusting for bond indebtedness, the range of comparable data for the middle lot category was $207,863 to $241,697 per loaded lot. Given the analysis, it is reasonable to conclude a loaded lot value higher than the loaded lot indicators of Sales 5 and 6, lower than the indicator of Sale 8 and generally similar to the indicator of Sale 7. As such, a loaded lot indicator of $240,000 per lot is concluded. Additionally, 26 lots within the KB Home community are finished lots (no home construction started) and require an additional deduction for fees due at building permit, again estimated at $25,000 per lot. There are five homes under construction for which building permits have already been pulled and, therefore, do not require this deduction. Large Lot Category The large lot category includes Village 5A (The Ridge by Lennar), Village 7A/7B (Summit View by Lennar), Lot Y/Z (Enclave by Lennar), Village 3A/3B (Laurelton by Standard Pacific), Village 6A/6C (The Estates by K. Hovnanian) and Village 5B (Solstice by Meritage Homes). After adjusting for bonds, the range of the comparable sales was $261,788 to $289,623 per loaded lot. Given the unique characteristics of each community within this category, we conclude the following loaded lot values: 1. The Estates by K. Hovnanian: This community exhibits the smallest median lot size of the group, and does not have the view premiums associated with other communities. As such, a loaded lot indicator of $265,000 per lot is concluded for these lots. 2. The Ridge by Lennar and Enclave by Lennar: These communities exhibit the next tier of median lot size, and also benefit from several view lots. As such, a loaded lot indicator of $275,000 per lot is concluded for these lots. 3. Laurelton by Standard Pacific and Solstice by Meritage: These communities contain the next tier of median lot size, and also benefit from several view lots. As such, a loaded lot indicator of $280,000 per lot is concluded for these lots. 4. Summit View by Lennar: Lastly, this community has the largest median lot size, and also benefits from several view lots. As such, a loaded lot indicator of $285,000 per lot is concluded for these lots. Seevers Jordan Ziegenmeyer 117

225 All communities within the larger lot category have final maps already in place. Similar to the previous analyses, deductions for remaining fees due at building permit are made where necessary (lots where home construction has not yet commenced). Finally, there are 39 lots within the K. Hovnanian Estates project that require additional site development work prior to final map. While an estimate to complete the work was not provided by K. Hovnanian, Bulk Lot Sale 8 in our analysis, which represented 72 rough graded lots in Blackstone (sold to KB Home), is determined to be at a generally similar development status as the K. Hovnanian lots. This sale had a remaining site cost estimate of $52,000 per lot. As such, we have applied a similar site cost estimate to the K. Hovnanian lots in our analysis. Our final conclusions of market value for the lots within each community (exclusive of completed homes and exclusive of the custom lots, which will be analyzed later in this report) are shown on the next page. Seevers Jordan Ziegenmeyer 118

226 Lot/ Project Partially Finished Homes Under Median Loaded Lot Less Less FM Less Fees As-Is Total Total Village Name Developer Imp. Lots Lots Construction Size (SF) Value In-Tracts Bld. Per. Value/Lot Value Value (Rd.) Lot V None Lennar ,286 $200,000 ($29,205) ($27,343) ($25,000) $118,452 $8,291,640 $8,290,000 Lot X Palisades Lennar 0 3, $200, ($25,000) $175,000 $2,450,000 $2,450, $200, $0 $200,000 $2,800,000 $2,800,000 Total $5,250,000 W Chaparral New Home 0 3,441 Company 56 $200, ($25,000) $175,000 $9,800,000 $9,800,000 4 $200, $0 $200,000 $800,000 $800,000 Total $10,600,000 6B Fiora KB Home 0 7, $240, ($25,000) $215,000 $5,590,000 $5,590,000 5 $240, $0 $240,000 $1,200,000 $1,200,000 Total $6,790,000 5A The Ridge Lennar 0 13, $275, ($25,000) $250,000 $12,000,000 $12,000,000 7 $275, $0 $275,000 $1,925,000 $1,930,000 Total $13,930,000 7A/7B Summit View Lennar 0 18, $285, ($25,000) $260,000 $16,120,000 $16,120,000 2 $285, $0 $285,000 $570,000 $570,000 Total $16,690,000 Lot Y/Z Enclave Lennar ,636 $275, ($25,000) $250,000 $25,500,000 $25,500,000 3A/3B Laurelton Standard 0 16,988 Pacific 56 $280, ($25,000) $255,000 $14,280,000 $14,280,000 8 $280, $0 $280,000 $2,240,000 $2,240,000 Total $16,520,000 6A/6C The Estates K. Hovnanian 10, $265,000 ($52,000) - ($25,000) $188,000 $7,332,000 $7,330, $265, ($25,000) $240,000 $5,280,000 $5,280, $265, $0 $265,000 $3,445,000 $3,450,000 Total $16,060,000 5B Solstice Meritage 0 16, $280, ($25,000) $255,000 $5,355,000 $5,360,000 9 $280, $0 $280,000 $2,520,000 $2,520,000 Total $7,880,000 Seevers Jordan Ziegenmeyer 119

227 CUSTOM LOT VALUATION The appraised properties contain 29 custom home lots with approved tentative maps, further described as follows: APNs and -02: These parcels are owned by AKT, and are referred to as Village 7C. While currently configured as two Assessor s parcels, there is a tentative map in place for six custom residential lots. The tentative map was approved in September 2010 and expires in September Improvement plans are expected to be completed by Fall 2016, and the final map is expected to be recorded by late 2016/early APNs through -33: These parcels are also owned by AKT, and are referred to as Village 3C. While currently configured as four lots, there is a tentative map in place for eight single-family residential lots. The tentative map was approved in May 2013 and expires in May Similar to the other parcels owned by AKT, improvement plans are expected to be completed by Fall 2016, with final map recordation by late 2016/early APNs and -03: These two parcels are owned by AKT, and are portions of Lot Y and Lot Z. While the tentative map for all of Lot Y and Lot Z was approved in December 2008, that map was revised by the Planning Commission in November 2014 to reflect the currently planned number of lots. There are currently three residential lots approved for APNs and -03 (previous approval was for 9 lots). Improvement plans are expected to be completed in Fall 2016, with final map prepared but not recorded until the rough grading of the adjacent segment of Valley View Parkway is completed. APNs , -02; , -02, -03: These parcels are owned by Danny and Sheralyn Di Re, who are investors that purchased the parcels from AKT in These are referred to as Village 5C. These investors reportedly planned to sell the lots to developers at some future point, but had no plans to develop the lots themselves. The tentative map subdividing the parcels into 12 custom lots was approved in June 2013, and expires in June Improvement plans are expected by Fall The final map is expected to be ready for recordation by late 2016/early 2017, as the final map will likely be recorded by the buyer of these parcels from the current ownership. The custom lot component of the appraised properties is summarized in the table on the following page. Seevers Jordan Ziegenmeyer 120

228 Parcels/ Land Land Lots Ownership Area (SF) Area (Acres) and -02 (Village 7C) Lot 1 AKT 162, Lot 2 " 117, Lot 3 " 85, Lot 4 " 117, Lot 5 " 58, Lot 6 " 50, , -31, -32, -33 (Village 3C) Lot 1 AKT 45, Lot 2 " 53, Lot 3 " 62, Lot 4 " 36, Lot 5 " 37, Lot 6 " 39, Lot 7 " 50, Lot 8 " 50, APN , -03 (Por. of Lot Y and Lot Z) Lot 6 AKT 92, Lot 7 " 29, Lot 8 " 119, APN , -02 and , -02, -03 (Village 5C) Lot 1 Danny and Sheralyn Di Re 71, Lot 2 " 77, Lot 3 " 50, Lot 4 " 30, Lot 5 " 32, Lot 6 " 44, Lot 7 " 39, Lot 8 " 42, Lot 9 " 45, Lot 10 " 55, Lot 11 " 55, Lot 12 " 61, The valuation of the custom lot component first involves estimates of the aggregate retail value of the lots, by ownership, which will serve as the revenue components of the discounted cash flow analyses. Seevers Jordan Ziegenmeyer 121

229 AGGREGATE RETAIL VALUATION In this section of the report, we will employ the sales comparison approach to estimate the market values of the individual lots, assuming final map recordation and completion of in-tract site development. The sum of the market values is an aggregate, or cumulative, value of the subject, which is not equivalent to the market value of the appraised properties as a whole (in bulk). Later in the discounted cash flow analysis, we will deduct fees due at final map as well as estimates for remaining site costs. Sales Comparison Approach Using the sales comparison approach, the market value of the subject will be estimated by a comparison to similar parcels that have recently sold, are listed for sale, or are under contract. The underlying premise of the sales comparison approach is the market value of a property is directly related to the price of comparable, competitive properties in the marketplace. This approach is based on the economic principle of substitution. According to The Appraisal of Real Estate, 14 th Edition (Chicago: Appraisal Institute, 2013), The principle of substitution holds that the value of property tends to be set by the cost of acquiring a substitute or alternative property of similar utility and desirability within a reasonable amount of time. The sales comparison approach is applicable when there are sufficient recent, reliable transactions to indicate value patterns or trends in the market. The proper application of this approach requires obtaining sales data for comparison with the subject. In order to assemble the comparable sales, we searched public records and other data sources for leads, and then confirmed the raw data obtained with parties directly related to the transactions (primarily brokers, buyers and sellers). The survey of market transactions revealed several comparables throughout the subject s market area that are considered good indicators of retail lot value. We will begin by presenting a summary tabulation along with a location map. Additionally, a discussion of each comparable is located in the detailed sales sheets following the summary table. Seevers Jordan Ziegenmeyer 122

230 CUSTOM LOT SALES SUMMARY Sale Sale Lot Size No. Location Date Price (Acres) Subdivision Piazza Place Apr-16 $225, Montecito El Dorado Hills APN: Shoreview Drive Apr-16 $299, Southpointe El Dorado Hills APN: Shelby Circle Mar-16 $210, Stoneridge Village El Dorado Hills APN: Da Vinci Court Jan-16 $275, Serrano El Dorado Hills APN: Jordan Court Dec-15 $250, Watermark El Dorado Hills APN: Lakehills Drive Nov-15 $400, None El Dorado Hills APN: Opus One Court Dec-14 $240, Watermark El Dorado Hills APN: Seevers Jordan Ziegenmeyer 123

231 LOT SALES MAP Seevers Jordan Ziegenmeyer 124

232 LOT COMPARABLE 1 Property Identification Project Name Montecito Address 5000 Piazza Place APN City El Dorado Hills County El Dorado Sale Data Grantor Kelly Sipes Grantee Philip Jones Closing Date 04/29/2016 Deed Book Page Property Rights Conveyed Fee Simple Conditions of Sale Market Financing Terms Cash Equivalent Sale Price $225,000 Present Value of Bonds $21,649 Land Data Zoning Single-family residential Topography Level to rolling Utilities All available Lot Size (acres) 0.79 Remarks This lot is located within Montecito, within the larger Promontory project, an upscale, gated community with a number of custom homes. The property has distance views of Folsom Lake. The building pad is graded and ready for vertical development. Seevers Jordan Ziegenmeyer 125

233 LOT COMPARABLE 2 Property Identification Project Name Southpointe Address 1986 Shoreview Drive APN City El Dorado Hills County El Dorado Sale Data Grantor Boudjakdji Trust Grantee Kyle Close Closing Date 04/05/2016 Deed Book Page Property Rights Conveyed Fee Simple Conditions of Sale Market Financing Terms Cash Equivalent Sale Price $299,000 Present Value of Bonds $0 Land Data Zoning Single-family residential Topography Level to rolling Utilities All available Lot Size (acres) 1.05 Remarks This parcel is located within the Southpointe development, a gated community of custom homes. HOA fees are reportedly $169 per month. All utilities are available to the site. Seevers Jordan Ziegenmeyer 126

234 LOT COMPARABLE 3 Property Identification Project Name Stoneridge Village Address 2027 Shelby Circle APN City El Dorado Hills County El Dorado Sale Data Grantor Tommy and Evelyn Steadman Grantee James and Heidi McGrath Closing Date 03/21/2016 Deed Book Page 1150 Property Rights Conveyed Fee Simple Conditions of Sale Market Financing Terms Cash Equivalent Sale Price $210,000 Present Value of Bonds $0 Land Data Zoning Single-family residential Topography Level to rolling Utilities All available Lot Size (acres) 0.51 Remarks This lot is located in Stoneridge Village, and is surrounded by higher end custom homes. Public water and sewer are available to the lot. The lot reportedly has views of the Serrano master planned community. Seevers Jordan Ziegenmeyer 127

235 LOT COMPARABLE 4 Property Identification Project Name Serrano Address 730 Da Vinci Court APN City El Dorado Hills County El Dorado Sale Data Grantor David and Charlene Eddie Grantee Jack and Renee Bosley Closing Date 01/13/2016 Deed Book Page 1160 Property Rights Conveyed Fee Simple Conditions of Sale Market Financing Terms Cash Equivalent Sale Price $275,000 Present Value of Bonds $6,097 Land Data Zoning Single-family residential Topography Level to rolling Utilities All available Lot Size (acres) 0.75 Remarks This lot is located in the Serrano master planned community of El Dorado Hills. The listing price at the time of sale was $279,000. Seevers Jordan Ziegenmeyer 128

236 LOT COMPARABLE 5 Property Identification Project Name Watermark Address 427 Jordan Court APN City El Dorado Hills County El Dorado Sale Data Grantor Travis Hammond Grantee 427 Jordan Court Trust Closing Date 12/01/2015 Deed Book Page Property Rights Conveyed Fee Simple Conditions of Sale Market Financing Terms Cash Equivalent Sale Price $250,000 Present Value of Bonds $0 Land Data Zoning Single-family residential Topography Level to rolling Utilities No sewer or septic Lot Size (acres) 2.00 Remarks This lot has good views of Folsom Lake and is located in a cul-de-sac. It is located in the Watermark community of El Dorado Hills. Seevers Jordan Ziegenmeyer 129

237 LOT COMPARABLE 6 Property Identification Project Name None Address 1 Lakehills Drive APN City El Dorado Hills County El Dorado Sale Data Grantor CTL Trust Grantee Michael Andrews/Daniel Schubert Closing Date 11/04/2015 Deed Book Page Property Rights Conveyed Fee Simple Conditions of Sale Market Financing Terms Cash Equivalent Sale Price $400,000 Present Value of Bonds $0 Land Data Zoning Single-family residential Topography Level to rolling Utilities All available Lot Size (acres) 4.10 Remarks This property reportedly has all utilities available. The asking price at the time of sale was $425,000. Seevers Jordan Ziegenmeyer 130

238 LOT COMPARABLE 7 Property Identification Project Name Watermark Address 130 Opus One Court APN City El Dorado Hills County El Dorado Sale Data Grantor Scott and Anthea Adair Grantee Anthony and Cristina Nole Closing Date 12/15/2014 Deed Book Page Property Rights Conveyed Fee Simple Conditions of Sale Market Financing Terms Cash Equivalent Sale Price $240,000 Present Value of Bonds $0 Land Data Zoning Single-family residential Topography Level to rolling Utilities No sewer or septic Lot Size (acres) 2.92 Remarks This lot is located within the gated community of Watermark in El Dorado Hills, and has views of the south fork of the American River, as well as the surrounding foothills. Water and electricity are available to the site, but there is no sewer/septic. Seevers Jordan Ziegenmeyer 131

239 Adjustments The comparable transactions are adjusted based on the profile of the subject properties with regard to categories that affect market value. If a comparable has an attribute considered superior to that of the subject, it is adjusted downward to negate the effect the item has on the price of the comparable. The opposite is true of categories considered inferior to the subject. The adjustments are made in consideration of paired sales, the appraiser s experience and knowledge and interviews with market participants. At a minimum, the appraiser considers the need to make adjustments for the following items: Expenditures after Sale Property rights conveyed Financing terms Conditions of sale (motivation) Market conditions Location Physical features A detailed analysis involving the adjustment factors is presented below. It is noted that the analysis will rely upon qualitative, rather than quantitative, adjustments. Present Value of Bonds Sales 1 and 4 are encumbered by bond debt, and receive upward adjustments to account for the present value of bond indebtedness, inputting an interest rate of 6% and the remaining terms of the bonds. No other adjustments are applied. Property Rights Conveyed In transactions of real property, the rights being conveyed vary widely and have a significant impact on the sales price. As previously noted, the opinion of value in this report is based on a fee simple estate, subject only to the limitations imposed by the governmental powers of taxation, eminent domain, police power and escheat, as well as non-detrimental easements, community facility districts and conditions, covenants and restrictions (CC&Rs). All the comparables represent fee simple estate transactions. Therefore, adjustments for property rights are not necessary. Financing Terms In analyzing the comparables, it is necessary to adjust for financing terms that differ from market terms. Typically, if the buyer retained third party financing (other than the seller) for the purpose of Seevers Jordan Ziegenmeyer 132

240 purchasing the property, a cash price is presumed and no adjustment is required. However, in instances where the seller provides financing as a debt instrument, a premium may have been paid by the buyer for below-market financing terms or a discount may have been demanded by the buyer if the financing terms were above market. The premium or discounted price must then be adjusted to a cash equivalent basis. The comparable sales were cash to the seller transactions and do not require adjustments. Conditions of Sale Adverse conditions of sale can account for a significant discrepancy from the sales price actually paid compared to that of the market. This discrepancy in price is generally attributed to the motivations of the buyer and the seller. Certain conditions of sale are considered to be non-market and may include the following: a seller acting under duress, a lack of exposure to the open market, an inter-family or inter-business transaction for the sake of family or business interest, an unusual tax consideration, a premium paid for site assemblage, a sale at legal auction, or an eminent domain proceeding. To the best of our knowledge all of the comparable sales represent typical market transactions. No adjustments are warranted. Expenditures After Sale This category includes all costs required after the transaction. None of the comparables have expenditures after sale. Thus, no adjustments are necessary for this factor. Market Conditions Market conditions vary over time, but the date of this appraisal is for a specific point in time. In a dynamic economy one that is undergoing changes in the value of the dollar, interest rates and economic growth or decline extra attention needs to be paid to assess changing market conditions. Significant monthly changes in price levels can occur in several areas of a city, while prices in other areas remain relatively stable. Although the adjustment for market conditions is often referred to as a time adjustment, time is not the cause of the adjustment. Most of the comparable sales represent recent transactions for which market conditions adjustments would not apply. Sale 7, which occurred in 2014, is adjusted upward to account for the improvement in market conditions for custom residential lots since the date of this sale. No other adjustments are warranted. Seevers Jordan Ziegenmeyer 133

241 Physical Characteristics The physical characteristics of a property can impact the selling price. Those that may impact value are detailed below: Location/Appeal The appraised properties is located in the Blackstone master planned community of El Dorado Hills, generally considered a desirable area for residential product. Most of the comparable sales are located within upscale, gated communities exclusively or nearly exclusively devoted to higher end custom homes, and are adjusted downward in this category for their superior locations. Average Lot Size The average lot size of the custom lot component of the appraised properties is 1.44 acres. Those comparable sales that are smaller than the subject are adjusted upward, while those sales that are larger than the subject are adjusted downward. Site Utility Like the appraised properties, all of the comparable sales have generally similar levels of overall site utility for a custom home site in El Dorado County. No adjustments are applied. Utilities In this portion of the analysis, the appraised properties are analyzed as if all utilities are currently in place to each of the lots. In-tract cost estimates will be deducted in a later section. Sales 5 and 7 lack sewer or septic, and are adjusted upward in this category. No other adjustments are applied. Adjustment Grid During our investigation, we identified several custom lot sales located in the subject s market area that were analyzed to estimate the finished lot value for the subject s average lot (1.44 acres). The adjustment grid on the following page details the unadjusted and adjusted value ranges presented by the comparable sales. Seevers Jordan Ziegenmeyer 134

242 LOT SALES ADJUSTMENT GRID Elements of Comparison Subject Sale 1 Sale 2 Sale 3 Sale 4 Sale 5 Sale 6 Sale 7 Price per Lot (Unadjusted) $225,000 $299,000 $210,000 $275,000 $250,000 $400,000 $240,000 Present Value of Bonds $21,649 $0 $0 $6,097 $0 $0 $0 Adjustment $21,649 $0 $0 $6,097 $0 $0 $0 Adjusted Price $246,649 $299,000 $210,000 $281,097 $250,000 $400,000 $240,000 Property Rights Fee Simple Fee Simple Fee Simple Fee Simple Fee Simple Fee Simple Fee Simple Fee Simple Adjustment Adjusted Price $246,649 $299,000 $210,000 $281,097 $250,000 $400,000 $240,000 Financing Cash Equiv. Cash Equiv. Cash Equiv. Cash Equiv. Cash Equiv. Cash Equiv. Cash Equiv. Cash Equiv. Adjustment Adjusted Price $246,649 $299,000 $210,000 $281,097 $250,000 $400,000 $240,000 Conditions of Sale Market Market Market Market Market Market Market Market Adjustment Adjusted Price $246,649 $299,000 $210,000 $281,097 $250,000 $400,000 $240,000 Expenditures After Sale None Similar Similar Similar Similar Similar Similar Similar Adjustment Adjusted Price $246,649 $299,000 $210,000 $281,097 $250,000 $400,000 $240,000 Market Conditions May-16 Apr-16 Apr-16 Mar-16 Jan-16 Dec-15 Nov-15 Dec-14 Adjustment (Appraisal) Adjusted Price $246,649 $299,000 $210,000 $281,097 $250,000 $400,000 $240,000 Physical Characteristics: Location/Appeal EDH/Blackstone/ Montecito Southpointe Stoneridge Serrano Watermark Similar Watermark Adjustment Good Avg. Lot Size Adjustment Site Utility Average Similar Similar Similar Similar Similar Similar Similar Adjustment Utilities All available Similar Similar Similar Similar No Sewer Similar No Sewer Adjustment Net Adjustments Similar Downward Upward Downward Similar Downward Similar $246,649 <$299,000 >$210,000 <$281,097 $250,000 <$400,000 $240,000 Seevers Jordan Ziegenmeyer 135

243 Conclusions of Value Sales Comparison Approach The market data set includes several custom lot sales considered to be reasonable indicators of market value for the appraised properties. After adjusting for bonds, the range of lot values was $210,000 to $400,000. Given the analysis of economic and physical characteristics, it is reasonable to estimate the market value of an average sized lot within the appraised properties (about 1.4 to 1.5 acres) at about $250,000. This value, however, assumes a final map is in place and all in-tract work has been completed. Larger lots within the appraised properties would be expected to sell for prices toward the higher end of the range of data, while smaller lots would be expected to sell for lower prices. The lots are generally similar with regard to other physical attributes, such as location within the project, good views, etc. Given this discussion, our conclusions of finished lot values (final map complete, site development complete) for each of the lots are shown on the next page. Our conclusions of value generally fall in line with the following criteria: 6.5 acres and larger = $375, to 3.5 acres = $350, to 3.0 acres = $325, to 2.5 acres = $300, to 2.0 acres = $275, to 1.5 acres = $250, to 1.0 acres = $225,000 There are two notable exceptions to the above value conclusions. According to the conditions of approval, Lot 6 and Lot 8 within APNs and -03, which are located adjacent to Valley View Parkway, cannot be developed until the East Ridge project to the northeast rough grades approximately 2,100 feet of roadway from Blackstone Parkway. According to Ryan Fong, AKT does not plan to do this work, but rather will wait until the East Ridge developer(s) constructs these improvements. There are no cost estimates at this time, or any indication of the timeline of grading for this section of roadway. As such, a minor deduction to the lot values for Lots 6 and 8 are applied in our analysis. Specifically, Lot 6, which contains 2.13 acres, has a concluded lot value of $275,000 instead of its size tier value above of $300,000. Similarly, Lot 8, which contains 2.75 acres, has a concluded lot value of $300,000, instead of its size tier value above of $325,000. Seevers Jordan Ziegenmeyer 136

244 Finished Lot Parcels/Lots Ownership Land Area (SF) Land Area (Acres) Value and -02 Lot 1 AKT 162, $375,000 Lot 2 " 117, $325,000 Lot 3 " 85, $275,000 Lot 4 " 117, $325,000 Lot 5 " 58, $250,000 Lot 6 " 50, $250, , -31, -32, -33 Lot 1 AKT 45, $250,000 Lot 2 " 53, $250,000 Lot 3 " 62, $250,000 Lot 4 " 36, $225,000 Lot 5 " 37, $225,000 Lot 6 " 39, $225,000 Lot 7 " 50, $250,000 Lot 8 " 50, $250, , -03 Lot 6 AKT 92, $275,000 Lot 7 " 29, $225,000 Lot 8 " 119, $300,000 Total - AKT Lots $4,525, , -02 and , -02, -03 Lot 1 Danny and Sheralyn Di Re 71, $275,000 Lot 2 " 77, $275,000 Lot 3 " 50, $250,000 Lot 4 " 30, $225,000 Lot 5 " 32, $225,000 Lot 6 " 44, $250,000 Lot 7 " 39, $225,000 Lot 8 " 42, $225,000 Lot 9 " 45, $250,000 Lot 10 " 55, $250,000 Lot 11 " 55, $250,000 Lot 12 " 61, $250,000 Total - Di Re Lots $2,950,000 Seevers Jordan Ziegenmeyer 137

245 BULK MARKET VALUE CUSTOM LOT COMPONENT In this section, we will estimate the market value of the custom lot component of appraised properties in bulk, by ownership. This value estimate assumes the lots would sell in bulk, or on a wholesale basis. That is, they would transfer in one transaction, to a single buyer. We will employ the discounted cash flow analysis, as follows: Discounted Cash Flow Analysis A discounted cash flow analysis is a procedure in which a discount rate is applied to a projected revenue stream generated from the sale of individual components of a project. In this method of valuation, the appraiser/analyst specifies the quantity, variability, timing and duration of the revenue streams and discounts each to its present value at a specified yield rate. In the case of subdivision land, there is no reversion. The four main components of a discounted cash flow analysis are as follows: Revenue the total gross income derived from the disposition of the subject components. Absorption Analysis the time frame required to sell-off the components. Of primary importance in this analysis is the allocation of the revenue over the absorption period including the estimation of an appreciation factor (if any). Expenses the expenses associated with the sell-off of the components are calculated in this section including administration, marketing and commission costs and property taxes. Discount Rate the appropriate discount rate is derived in this portion of the analysis employing a variety of data. Our discussion of these four components begins below, with the discounted cash flow analysis offered at the end of this section. Revenue The revenue portion of this analysis consists of the sum of the individual retail lot values that were calculated in the previous section of this report. The total revenue amounts to $4,525,000 for the lots owned by AKT, and $2,950,000 for the lots owned by Danny and Sheralyn Di Re. The revenues will be spread evenly over the projected absorption periods. Seevers Jordan Ziegenmeyer 138

246 Absorption Analysis In attempting to estimate the marketing time that would be required for the disposition of the lots, we have looked at both the historical marketing times of a number of sales, as well as current and projected economic conditions. The marketing times for the comparable lot sales analyzed in the previous section are as follows (according to MLS): Sale Sale Lot Size Exposure Time No. Location Date Price (Acres) Subdivision (Days) Piazza Place Apr-16 $225, Montecito 249 El Dorado Hills APN: Shoreview Drive Apr-16 $299, Southpointe 1,355 El Dorado Hills APN: Shelby Circle Mar-16 $210, Stoneridge Village 11 El Dorado Hills APN: Da Vinci Court Jan-16 $275, Serrano 134 El Dorado Hills APN: Jordan Court Dec-15 $250, Watermark 293 El Dorado Hills APN: Lakehills Drive Nov-15 $400, None 187 El Dorado Hills APN: Opus One Court Dec-14 $240, Watermark 238 El Dorado Hills APN: Average 352 Median 238 As shown, the marketing times for the comparable lots sales range from 11 to 1,355 days, a fairly wide range, with an average of 352 days and a median of 238 days. As additional support, we ran a search in MLS for all residential lot sales in El Dorado County ranging in size from 0.25 to 5.00 acres, from January 2015 to the present. The search resulted in a total of 142 properties, with an average marketing time of 242 days. AKT owns 17 custom lots, while Danny and Sheralyn Di Re own 12 custom lots. We estimate the AKT lots could sell out in approximately 18 months, while the lots owned by Sheralyn Di Re could Seevers Jordan Ziegenmeyer 139

247 sell out in approximately 12 months. The absorption projections take into consideration the competitive pricing concluded for the lots and the absence of price trending. Additionally, we presume the lots are marketed concurrently, and that sales would not begin until site work is completed. Expenses General and Administrative General and administrative expenses consist of management fees, liability, insurance, inspection fees, appraisal fees, legal and accounting fees, and copying or publication costs. This expense category typically ranges from 2.5% to 4.0% of revenue, depending on the specifics of the development. Based on industry surveys, we have used 3.0% for general and administrative expenses. This expense category is calculated as a percent of revenue and is spread evenly over the entire sellout period. Marketing Costs/Commissions/Closing Costs/Administrative Commissions and closing costs relative to the disposition of the lots are estimated at 6% of the total retail value. Although this rate is somewhat negotiable, it is considered to be consistent with current industry trends, and includes closing costs. Marketing costs are higher under current market conditions than under stabilized market conditions. Administrative expense covers the various costs associated with managing the overall development. This would include management, legal and accounting fees and other professional services common to a land development. For purposes of this analysis we have estimated this expense at 2% of the gross sale proceeds. Thus, a total allowance of 6% for marketing costs, commissions, closing costs, and administrative expenses is included. Property Taxes As indicated in the Property Identification and Legal Data section, the appraised properties have an annual tax rate of % based on assessed value. Interim taxes are estimated based on the anticipated assessment at market value. As lots are sold, taxes are reduced on a pro-rata basis in the analysis. Seevers Jordan Ziegenmeyer 140

248 Additionally, it is expected that the custom lots will be encumbered by direct levy charges of $1,950 per lot for El Dorado County CFD , and $1,040 per lot for Buckeye Elementary CFD , for a total of $2,990 per lot per year. Site Development Costs Site development costs were provided by AKT, as follows. It is noted AKT also provided site cost estimates for the lots owned by Danny and Sheralyn Di Re. No. of Total Site Cost APNs Village Ownership Lots Site Costs Per Lot and -02 7C AKT 6 $720,968 $120, , -31, -32, -33 3C AKT 8 $991,844 $123, , -03 Portion of Lot Y and Lot Z AKT 3 $414,655 $138,218 Total/Average 17 $2,127,467 $125, , -02 and , -02, -03 5C Danny and Sheralyn Di Re 12 $1,553,726 $129,477 The site cost estimates appear to be reasonable and will be incorporated in our analyses. Additionally, it is expected that site work could be completed within a six-month timeframe (the first two periods of the analysis), which is consistent with our observations of other custom lot developments in the region. It is also anticipated that the first set of sales could occur during the second period of the analysis, as some site work would be expected to be completed during the sales process (not all site work would need to be completed prior to sale commencement). Final Map Fees As the custom lots are currently in the tentative map stage, there are additional fees due at final map. Based upon the final map fees for Lot V owned by Lennar, which were reportedly $27,343 per lot, we will utilize an average final map fee of $27,000 per custom lot in the analysis that follows. This equates to total figures of $459,000 for the AKT lots (17 lots x $27,000 per lot), and $324,000 for the Sheralyn/Danny Di Re lots (12 lots x $27,000 per lot). It is expected final map fees for the custom lots will be similar to those of the production lots within Blackstone, given that they are primarily related to public utilities. Final map recordation is presumed to occur in the first period of the analysis. Seevers Jordan Ziegenmeyer 141

249 Discount Rate The project yield rate is the rate of return on the total un-leveraged investment in a development, including both equity and debt. The leveraged yield rate is the rate of return to the base equity position when a portion of the development is financed. The base equity position represents the total equity contribution. The developer/builder may have funded all of the equity contribution, or a consortium of investors/builders as in a joint venture may fund it. Most surveys indicate that the threshold project yield requirement is about 20% to 30% for production home type projects. Instances in which project yields may be less than 20% often involve profit participation arrangements in master planned communities where the master developer limits the number of competing tracts. According to a leading publication within the appraisal industry, the PwC Real Estate Investor Survey 13, discount rates for land development projects ranged from 10.00% to 20.00%, with an average of 15.50% during the Fourth Quarter 2015, which is down slightly from the average from the Second Quarter 2015 (land survey completed every six months), of 15.90%, and down 125 basis points below last year s average (Fourth Quarter 2014). These rates are free-and-clear of financing, are inclusive of developer s profit, and assume entitlements are in place. Without entitlements in place, the PwC survey has indicated certain investors increase the discount rate between 100 and 800 basis points (an average increase of 400 basis points). According to the data presented in the survey prepared by PwC, the majority of those respondents who use the discounted cash flow (DCF) method do so free and clear of financing. Additionally, the participants reflect a preference in including the developer s profit in the discount rate, versus a separate line item for this factor. As such, the range of rates presented above is inclusive of the developer s profit projection. The discount rates are based on a survey that includes residential, office, retail and industrial developments. Participants in the survey indicate the highest expected returns are on large-scale, unapproved developments. The low end of the range was extracted from projects where certain development risks had been lessened or eliminated. Several respondents indicate they expect slightly lower returns when approvals/entitlements are already in place. 13 PwC Real Estate Investor Survey, PricewaterhouseCoopers, 4 th Quarter 2015, Volume 28, Number 4. Seevers Jordan Ziegenmeyer 142

250 Excerpts from recent PwC surveys are copied below. First, investors and developers are increasingly looking for development opportunities throughout the commercial real estate (CRE) industry in both established sectors, like apartments, as well as in niche sectors, like data centers housing. And second, rising construction and land costs will likely keep the development cycle in check, helping sustain the industry s recovery. Even though development ranks as the second preferred investment category/ strategy only three of the five main CRE property types reported development prospects ratings higher than last year s report retail, office and industrial. The apartment sector s score slipped slightly this year, while the hotel sector s rating decreased the most. Outside the traditional CRE property sectors respondents felt that development prospects in 2016 were best for 1) urban mixed-use properties, 2) data centers, 3) master-planned communities, 4) selfstorage, and 5) infrastructure. (Fourth Quarter 2015) Of the four main property types covered in our Survey, three of them are expected to positively move along the real estate cycle, shifting mainly into either expansion or recovery, which will provide development opportunities. The one exception is the national multifamily sector, where many metros are expected to move into contraction by year-end 2015 Over the next 12 months, all investor participants expect one foresee development land values to increase. Appreciation ranges up to 15.0% and averages 5.2%. (Second Quarter 2015) Looking ahead over the next 12 months, surveyed investors unanimously forecast property values in the national development land market to increase. Expected appreciation ranges up to 15.0% and average 5.0%. (Fourth Quarter 2014) As both the U.S. economy and the commercial real estate (CRE) industry s fundamentals show continued signs of improvement, interest in CRE development has picked up across each main property sector office, retail, industrial, apartments, and lodging. As a result, certain investors in the national development land market are looking to acquire new parcels, finish entitling owned tracts, and/or convert parcels into readied sites For the first time in quite a while, our surveyed investors are unanimous in their expectations that values for development land will increase over the next 12 months Appreciation ranges up to 10.0% and averages 3.6% up quite a bit from six months ago when the average was 2.6%. (Second Quarter 2014) Survey results suggest that investors anticipate commercial real estate (CRE) fundamentals to continue to improve, opening up diverse development land opportunities across all property types The outlook for development improved for the second straight year. In addition, and perhaps more importantly, the average outlook for development is considered fair an improvement from two years ago when the average outlook was modestly poor The improvement in the development outlook does not mean that the CRE industry will be flooded with new supply in the near future and that vast opportunities exist for development land investors. Some markets still have a significant inventory of land with entitlements and some with partial infrastructure that will move forward with development first, so we still need to be patient, says an investor, who suggests looking for opportunities in metros where sustainable job growth exists. Another strategizes to find the right land location and then wait for buyers to show up. (Fourth Quarter 2013) Seevers Jordan Ziegenmeyer 143

251 Information for a developing in-house database of project yield rates is presented in the following table: Data Source PwC Real Estate Investor Survey - Fourth Quarter 2015 (updated semi-annually) Josh Roden - Meritage (2013) Jeb Elmore - Lewis Operating Corp (2013) Greg Ackerman - Pulte (2010) Chris Downey - Hon Development Gary Gorian - Dale Poe Development David Pitts - Newhall Land and Farming Mark Palkowitsh - MSP California, LLC Rick Nieman - GFC Lin Stinson - Providence Realty Group Dan Boyd - ESE Land Company Tulare Windmill Ventures, LLC David Jacobsen - Ridgecrest Homes Mike Grant - Premier Homes Lyle McCullogh - California Pacific Homes Roy Robertson - Ekotec Gordon MacKenzie - Brookfield Development Yield / IRR Expectations (Inclusive of Profit) Range of 10.0% to 20.0%, with an average of 15.50%, inclusive of profit and assuming entitlements in place, for land development (national average) 20% to 25% for entitled lots 18% to 25%. Longer term, higher risk projects on higher side of the range, shorter term, lower risk projects on the lower side of the range. Long term speculation properties (10 to 20 years out) often closer to 30%. 18% minimum, 20% target Minimum IRR of 20-25%; for an 8 to 10 year cash flow, mid to upper 20% range 25% IRR for land development is typical (no entitlements); slightly higher for properties with significant infrastructure costs 20% to 30% IRR for land development deals on an unleveraged basis 35% for large land deals from raw unentitled to tentative map stage, unleveraged or leveraged. 25% to 30% from tentative map to pad sales to merchant builders, unleveraged 18% to 22% for land with some entitlements, unleveraged. 30% for raw unentitled Low 20% range yield rate required to attract capital to longer-term land holdings Merchant builder yield requirements in the 20% range for traditionally financed tract developments. Larger land holdings would require 25% to 30%. Environmentally challenged or politically risky development could well run in 10% discount rate excluding profit for single-family subdivisions 10% to 40% for single-family residential subdivisions with 1-2 year development timelines 15% to 20% IRR No less than 20% IRR for land development, either entitled or unentitled 20% to 30% for an unentitled property; the lower end of the range would reflect those properties close to tentative maps No less than 30% when typical entitlement risk exists It is noted the preceding survey related to production home developments at the land stage. Even so, the respondents reflect the expectations of market participants in the residential sector. Even though much of the entitlement risk has been mitigated, there is risk associated with estimating the timing that the lots will be sold off. In addition, there is risk associated with unforeseen factors such as broad economic declines. Considering these factors, and the positive and negative characteristics previously described, an internal rate of return of 15%, inclusive of profit, is considered reasonable under current market conditions. Conclusion The tables on the following pages incorporates the preceding factors in estimating the as-is market values (in bulk) of the custom lot components of the appraised properties, by ownership. The discounted cash flow analyses are calculated on a quarterly basis. Seevers Jordan Ziegenmeyer 144

252 AS-IS BULK MARKET VALUE - AKT LOTS No. of Market Description Lots Value/Lot Revenue General and Administrative 3.0% Aggregate Retail Value 17 $266,176 $4,525,000 Marketing and Commissions 6.0% Ad Valorem Taxes per Lot/Year $623 Direct Levy Taxes per Lot/Year $2,990 REVENUE AND SALES SUMMARY Quarterly Period: Total Sales Inventory Total Revenue $0 $798,529 $798,529 $798,529 $798,529 $798,529 $532,353 $4,525,000 EXPENSES AND CASH FLOW SUMMARY Quarterly Period: Total General and Administrative ($19,393) ($19,393) ($19,393) ($19,393) ($19,393) ($19,393) ($19,393) ($135,750) Marketing and Sales $0 ($47,912) ($47,912) ($47,912) ($47,912) ($47,912) ($31,941) ($271,500) Ad Valorem Taxes ($2,648) ($2,180) ($1,713) ($1,246) ($779) ($311) $0 ($8,878) Direct Levies ($12,708) ($10,465) ($8,223) ($5,980) ($3,738) ($1,495) $0 ($42,608) Site Development Costs ($1,063,734) ($1,063,734) $0 $0 $0 $0 $0 ($2,127,467) Final Map Fees ($459,000) $0 $0 $0 $0 $0 $0 ($459,000) Total Expenses ($1,557,482) ($1,143,684) ($77,240) ($74,531) ($71,821) ($69,111) ($51,334) ($3,045,202) NET INCOME ($1,557,482) ($345,154) $721,289 $723,999 $726,709 $729,418 $481,019 $1,479,798 Present Value Factor Discount Rate (IRR) 15.00% Discounted Cash Flow ($1,501,187) ($320,654) $645,870 $624,864 $604,533 $584,855 $371,745 $1,010,025 Net Present Value $1,010,025 CONCLUSION OF VALUE BY DISCOUNTED CASH FLOW ANALYSIS (RD) Rd. $1,010,000 Seevers Jordan Ziegenmeyer 145

253 AS-IS BULK MARKET VALUE - DANNY AND SHERALYN DI RE LOTS No. of Market Description Lots Value/Lot Revenue General and Administrative 3.0% Aggregate Retail Value 12 $245,833 $2,950,000 Marketing and Commissions 6.0% Ad Valorem Taxes per Lot/Year $481 Direct Levy Taxes per Lot/Year $2,990 REVENUE AND SALES SUMMARY Quarterly Period: Total Sales Inventory Total Revenue $0 $737,500 $737,500 $737,500 $737,500 $2,950,000 EXPENSES AND CASH FLOW SUMMARY Quarterly Period: Total General and Administrative ($17,700) ($17,700) ($17,700) ($17,700) ($17,700) ($88,500) Marketing and Sales $0 ($44,250) ($44,250) ($44,250) ($44,250) ($177,000) Ad Valorem Taxes ($1,442) ($1,081) ($721) ($360) $0 ($3,605) Direct Levies ($8,970) ($6,728) ($4,485) ($2,243) $0 ($22,425) Site Development Costs ($776,863) ($776,863) $0 $0 $0 ($1,553,726) Final Map Fees ($324,000) $0 $0 $0 $0 ($324,000) Total Expenses ($1,128,975) ($846,622) ($67,156) ($64,553) ($61,950) ($2,169,256) NET INCOME ($1,128,975) ($109,122) $670,344 $672,947 $675,550 $780,744 Present Value Factor Discount Rate (IRR) 15.00% Discounted Cash Flow ($1,088,169) ($101,376) $600,252 $580,802 $561,975 $553,485 Net Present Value $553,485 CONCLUSION OF VALUE BY DISCOUNTED CASH FLOW ANALYSIS (RD) Rd. $550,000 It should be noted our conclusions of per-lot value via the bulk analyses are $59,412 and $45,833 for the AKT and Danny and Sheralyn Di Re holdings, respectively. While these figures are lower than typical (bulk) paper lot pricing for production subdivisions in the region, the values are reasonable since 1) there are typically higher site development costs associated with the custom lots, 2) there is limited to no economies of scale achieved by custom home builders, and given the higher persquare-foot costs for custom homes, this equates to a value influence on the lots and 3) the production lot market has been in a state of expansion and has a more favorable supply/demand balance relative to the custom lot market. Seevers Jordan Ziegenmeyer 146

254 MARKET VALUATION BY OWNERSHIP Introduction The appraised properties represent certain components of the Blackstone master planned community. The appraised properties consist of 29 unimproved custom lots, 109 partially improved production lots, 407 finished production lots and 62 partially completed homes. There are also 255 completed homes within the boundaries of the CFD not currently assessed for an improvement value by the El Dorado County Assessor; as such, a not-less-than estimate of market value for the smallest floor plan constructed within each subdivision was appraised and assigned to each respective Assessor s parcel within the CFD. In this section, the previously concluded market values will be allocated to each ownership group comprising the appraised properties in order to provide a market value of the appraised properties by ownership and parcel. A summary of the various ownership group holdings is provided in the following table. Unimproved Custom Lots Partially Improved Production Lots Finished Production Lots Partially Completed Homes Completed Homes w/o Avs Totals Individual Homeowners Lennar Standard Pacific Homes K. Hovnanian Homes KB Home Meritage Homes The New Home Company AKT Danny and Sheralyn Di Re Totals Seevers Jordan Ziegenmeyer 147

255 In light of the fact several of the property owners have a number of lot(s) that could sell in bulk to one buyer within 12 months, no discounting is necessary. Therefore, the previously concluded market values by component are assigned to the respective properties owned by Standard Pacific Homes, K. Hovnanian Homes, KB Home, Meritage Homes, The New Home Company, AKT and Danny and Sheralyn Di Re, as well as the aggregate market value of the 92 completed homes without assessed improvement values owned by individual homeowners. It is also worth noting, while the Assessor s Tax Roll identifies 163 completed single-family homes held under the ownership of merchant builders, based on an inspection and inventory of the subject parcels, most of the these homes appear to have, in fact, sold to individual homeowners. Therefore, these completed homes are not included in the determination of bulk discounting. Lennar Holdings One of the ownership groups, Lennar, owns a substantial number of homes/lots (402 in total) and, as such, their land holdings require bulk discounting. The completed home component is NOT discounted, as a number of the homes are likely owned by individuals (the tax roll likely does not reflect actual current ownership). In order to estimate the bulk market value of the Lennar holdings, a discounted cash flow analysis will be employed; whereby, the expected revenue, absorption period, expenses and discount rate associated with the sell-off of the holdings will be taken into account. A discounted cash flow analysis is a procedure in which a discount rate is applied to a projected revenue stream generated from the sale of individual components of a project. In this method of valuation, the appraiser/analyst specifies the quantity, variability, timing and duration of the revenue streams and discounts each to its present value at a specified yield rate. The four main items of the discounted cash flow analysis are summarized as follows: Revenue the gross income is based on the individual component values. Absorption Analysis the time frame required for sell off. Of primary importance in this analysis is the allocation of the revenue over the absorption period including the estimation of an appreciation factor (if any). Expenses the expenses associated with the sell-off are calculated in this section including administration, marketing and commission costs, as well as taxes and special assessments. Discount Rate an appropriate discount rate is derived employing a variety of data. Discussions of these four concepts begin below, with the discounted cash flow analysis offered at the end of this section. Seevers Jordan Ziegenmeyer 148

256 Revenue The revenue component associated with the Lennar lot holdings (exclusive of completed homes) is summarized as follows: Lennar Lot Holdings (Exclusive of Completed Homes) 70 Partially Improved Production Lots $ 8,290,000 Finished Lots 14 Palisades $ 2,450, The Ridge $ 12,000, Summit View $ 16,120, Enclave $ 25,500, Total $ 56,070,000 Partially Completed Homes 14 Palisades $ 2,800,000 7 The Ridge $ 1,930,000 2 Summit View $ 570, Total $ 5,300, Totals $ 69,660,000 Absorption Analysis Absorption rates are best measured by looking at historic absorption rates for similar properties in the region. In developing an appropriate absorption period for the disposition of the parcels, we have considered historic absorption rates for similar properties and also attempted to consider the impacts of present market conditions, as well as the anticipated changes in the market. Real estate is cyclical in nature, and it is difficult to accurately forecast specific demand over a projected absorption period. In attempting to estimate the exposure time that would be required for the disposition of the lots comprising the subject, both the historical exposure times and projected economic conditions have been considered. A number of assumptions are made in the discounted cash flow analysis, not the least of which is the forecast of absorption, or disposition, of the various land use components comprising the subject properties. It is common for surveys of market participants to reveal different estimations of anticipated absorption periods for the sell-off of multiple components comprising a master planned Seevers Jordan Ziegenmeyer 149

257 development, or large land holding, with some developers preferring to hasten the holding period in favor of mitigating exposures to fluctuations in market conditions; whereas, other developers prefer to manage the sell-off of the property over an extended period of time so as to minimize direct competition of product within the master planned project most often associated with large residential developments. In the analysis that follows, we estimate a total absorption (sell-off) period of 18 months, or six quarters, for the Lennar holdings (partially improved and finished lots and homes under construction that are appraised as finished lots). The revenue will be evenly distributed over the sell-off period. Expenses General and Administrative The general and administrative expense category covers the various administrative costs associated with managing the overall development. This would include management, legal and accounting fees and other professional services common to a development project. For purposes of this analysis, we have estimated this expense at 3% of the total gross sale proceeds. This expense is spread evenly over the entire sellout period. Marketing and Sales The costs associated with marketing, commissions and closing costs relative to the disposition of the subjects components are estimated at 5% of the total gross sale proceeds. Although this rate is somewhat negotiable, it is consistent with current industry trends. Additionally, this figure is lower than that inputted in the previous discounted cash flow analysis of the custom lot sell-off, as larger transactions (like the Lennar holdings) typically have a lower sales commission as a percentage of sale price. Ad Valorem Taxes This appraisal is predicated on, and assumes, a sale of the appraised property in bulk. Interim ad valorem real estate taxes are based on a tax rate of %. This rate is applied to the estimated market value (in bulk) and divided by the total number of lots to yield an estimate of ad valorem taxes/lot/year. The total tax expense is gradually reduced over the absorption period, as the land components are sold off. Special Assessments (Bonds) Properties within the Blackstone development, including the lots owned by Lennar, are encumbered by direct levy charges for El Dorado County CFD Based upon our review of the tax roll and the Rate and Method of Apportionment, the 70 partially improved production lots (Lot V) are Seevers Jordan Ziegenmeyer 150

258 encumbered by annual payments of $892 per lot for this particular bond. Additionally, lots within the Palisades project have a per-lot bond encumbrance of $1,686 per year. Finally, lots within The Ridge, Summit View and Enclave (Lot Y/Z) have bond payments of $1,950 per year. The weighted average of all of these payments, taking into consideration the number of lots (including partially completed homes), is estimated at $1,695 per lot/year. It is also noted the annual per-lot payment for the Buckeye Elementary CFD will be incorporated in our analysis ($1,040 per lot per year). As parcels are sold off, the Special Tax obligations will be assumed by the buyer. The purpose of this analysis is to estimate the market value of the underlying land, which serves as the collateral to the Bond issuance. As components of the appraised properties are sold off in this analysis, the balance of the Special Tax obligations necessary to service the debt associated with the bonds are presumed to be collected from the new owners (buyers of the various land parcels) in the CFD. Discount Rate The project yield rate is the rate of return on the total un-leveraged investment in a development, including both equity and debt. The leveraged yield rate is the rate of return to the base equity position when a portion of the development is financed. The base equity position represents the total equity contribution. The developer/builder may have funded all of the equity contribution, or a consortium of investors/builders as in a joint venture may fund it. Most surveys indicate that the threshold project yield requirement is about 20% to 30% for production home type projects. Instances in which project yields may be less than 20% often involve profit participation arrangements in master planned communities where the master developer limits the number of competing tracts. According to a leading publication within the appraisal industry, the PwC Real Estate Investor Survey 14, discount rates for land development projects ranged from 10.00% to 20.00%, with an average of 15.50% during the Fourth Quarter 2015, which is down slightly from the average from the Second Quarter 2015 (land survey completed every six months), of 15.90%, and down 125 basis points below last year s average (Fourth Quarter 2014). These rates are free-and-clear of financing, are inclusive of developer s profit, and assume entitlements are in place. Without entitlements in place, the PwC survey has indicated certain investors increase the discount rate between 100 and 800 basis points (an average increase of 400 basis points). According to the data presented in the survey prepared by PwC, the majority of those respondents who use the discounted cash flow (DCF) method do so free and clear of financing. Additionally, the 14 PwC Real Estate Investor Survey, PricewaterhouseCoopers, 4 th Quarter 2015, Volume 28, Number 4. Seevers Jordan Ziegenmeyer 151

259 participants reflect a preference in including the developer s profit in the discount rate, versus a separate line item for this factor. As such, the range of rates presented above is inclusive of the developer s profit projection. The discount rates are based on a survey that includes residential, office, retail and industrial developments. Participants in the survey indicate the highest expected returns are on large-scale, unapproved developments. The low end of the range was extracted from projects where certain development risks had been lessened or eliminated. Several respondents indicate they expect slightly lower returns when approvals/entitlements are already in place. Excerpts from recent PwC surveys are copied below. First, investors and developers are increasingly looking for development opportunities throughout the commercial real estate (CRE) industry in both established sectors, like apartments, as well as in niche sectors, like data centers housing. And second, rising construction and land costs will likely keep the development cycle in check, helping sustain the industry s recovery. Even though development ranks as the second preferred investment category/strategy only three of the five main CRE property types reported development prospects ratings higher than last year s report retail, office and industrial. The apartment sector s score slipped slightly this year, while the hotel sector s rating decreased the most. Outside the traditional CRE property sectors respondents felt that development prospects in 2016 were best for 1) urban mixed-use properties, 2) data centers, 3) master-planned communities, 4) self-storage, and 5) infrastructure. (Fourth Quarter 2015) Of the four main property types covered in our Survey, three of them are expected to positively move along the real estate cycle, shifting mainly into either expansion or recovery, which will provide development opportunities. The one exception is the national multifamily sector, where many metros are expected to move into contraction by year-end 2015 Over the next 12 months, all investor participants expect one foresee development land values to increase. Appreciation ranges up to 15.0% and averages 5.2%. (Second Quarter 2015) Looking ahead over the next 12 months, surveyed investors unanimously forecast property values in the national development land market to increase. Expected appreciation ranges up to 15.0% and average 5.0%. (Fourth Quarter 2014) As both the U.S. economy and the commercial real estate (CRE) industry s fundamentals show continued signs of improvement, interest in CRE development has picked up across each main property sector office, retail, industrial, apartments, and lodging. As a result, certain investors in the national development land market are looking to acquire new parcels, finish entitling owned tracts, and/or convert parcels into readied sites For the first time in quite a while, our surveyed investors are unanimous in their expectations that values for development land will increase over the next 12 months Appreciation ranges up to 10.0% and averages 3.6% up quite a bit from six months ago when the average was 2.6%. (Second Quarter 2014) Survey results suggest that investors anticipate commercial real estate (CRE) fundamentals to continue to improve, opening up diverse development land opportunities across all property types The outlook for development improved for the second straight year. In addition, and perhaps more importantly, the average outlook for development is considered fair an Seevers Jordan Ziegenmeyer 152

260 improvement from two years ago when the average outlook was modestly poor The improvement in the development outlook does not mean that the CRE industry will be flooded with new supply in the near future and that vast opportunities exist for development land investors. Some markets still have a significant inventory of land with entitlements and some with partial infrastructure that will move forward with development first, so we still need to be patient, says an investor, who suggests looking for opportunities in metros where sustainable job growth exists. Another strategizes to find the right land location and then wait for buyers to show up. (Fourth Quarter 2013) Information for a developing in-house database of project yield rates is presented in the following table: Data Source PwC Real Estate Investor Survey - Fourth Quarter 2015 (updated semi-annually) Josh Roden - Meritage (2013) Jeb Elmore - Lewis Operating Corp (2013) Greg Ackerman - Pulte (2010) Chris Downey - Hon Development Gary Gorian - Dale Poe Development David Pitts - Newhall Land and Farming Mark Palkowitsh - MSP California, LLC Rick Nieman - GFC Lin Stinson - Providence Realty Group Dan Boyd - ESE Land Company Tulare Windmill Ventures, LLC David Jacobsen - Ridgecrest Homes Mike Grant - Premier Homes Lyle McCullogh - California Pacific Homes Roy Robertson - Ekotec Gordon MacKenzie - Brookfield Development Yield / IRR Expectations (Inclusive of Profit) Range of 10.0% to 20.0%, with an average of 15.50%, inclusive of profit and assuming entitlements in place, for land development (national average) 20% to 25% for entitled lots 18% to 25%. Longer term, higher risk projects on higher side of the range, shorter term, lower risk projects on the lower side of the range. Long term speculation properties (10 to 20 years out) often closer to 30%. 18% minimum, 20% target Minimum IRR of 20-25%; for an 8 to 10 year cash flow, mid to upper 20% range 25% IRR for land development is typical (no entitlements); slightly higher for properties with significant infrastructure costs 20% to 30% IRR for land development deals on an unleveraged basis 35% for large land deals from raw unentitled to tentative map stage, unleveraged or leveraged. 25% to 30% from tentative map to pad sales to merchant builders, unleveraged 18% to 22% for land with some entitlements, unleveraged. 30% for raw unentitled Low 20% range yield rate required to attract capital to longer-term land holdings Merchant builder yield requirements in the 20% range for traditionally financed tract developments. Larger land holdings would require 25% to 30%. Environmentally challenged or politically risky development could well run in 10% discount rate excluding profit for single-family subdivisions 10% to 40% for single-family residential subdivisions with 1-2 year development timelines 15% to 20% IRR No less than 20% IRR for land development, either entitled or unentitled 20% to 30% for an unentitled property; the lower end of the range would reflect those properties close to tentative maps No less than 30% when typical entitlement risk exists It is noted the preceding survey related to production home developments at the land stage. Even so, the respondents reflect the expectations of market participants in the residential sector. Even though much of the entitlement risk has been mitigated, there is risk associated with estimating the timing that the parcels will be sold off. In addition, there is risk associated with unforeseen factors such as broad economic declines. Considering these factors, and the positive and negative characteristics previously described, an internal rate of return of 15%, inclusive of profit, is considered reasonable under current market conditions. Seevers Jordan Ziegenmeyer 153

261 Conclusion of Value Lennar Holdings The table below presents a discounted cash flow analysis for the Lennar lot holdings (exclusive of completed homes): MARKET VALUE IN BULK - LENNAR LOT HOLDINGS No. of Market Description Lots Value/Lot Revenue General and Administrative 3.0% Partially Improved Lots 70 $118,429 $8,290,000 Marketing and Commissions 5.0% Fin. Lots and Homes Und. Con. 249 $246,466 $61,370,000 Ad Valorem Taxes per Lot/Year $8,154 Totals/Averages 319 $218,370 $69,660,000 El Dorado Cty. CFD $1,695 Buckeye Elementary CFD $1,040 REVENUE AND SALES SUMMARY Quarterly Period: Total Sales (Lots) Inventory Total Revenue $11,573,605 $11,573,605 $11,573,605 $11,573,605 $11,573,605 $11,791,975 $69,660,000 EXPENSES AND CASH FLOW SUMMARY Quarterly Period: Total General and Administrative ($348,300) ($348,300) ($348,300) ($348,300) ($348,300) ($348,300) ($2,089,800) Marketing and Sales ($578,680) ($578,680) ($578,680) ($578,680) ($578,680) ($589,599) ($3,483,000) Ad Valorem Taxes ($542,215) ($434,180) ($326,145) ($218,109) ($110,074) $0 ($1,630,723) El Dorado County CFD Bond ($112,718) ($90,259) ($67,800) ($45,341) ($22,883) $0 ($339,000) Buckeye Elementary CFD Bond ($69,160) ($55,380) ($41,600) ($27,820) ($14,040) $0 ($208,000) Total Expenses ($1,651,073) ($1,506,799) ($1,362,525) ($1,218,251) ($1,073,977) ($937,899) ($7,750,523) NET INCOME $9,922,532 $10,066,806 $10,211,080 $10,355,354 $10,499,628 $10,854,076 $61,909,477 Present Value Factor Discount Rate (IRR) 15.00% Discounted Cash Flow $9,563,886 $9,352,237 $9,143,393 $8,937,428 $8,734,407 $8,702,905 $54,434,255 Net Present Value $54,434,255 CONCLUSION OF VALUE BY DISCOUNTED CASH FLOW ANALYSIS (RD) Rd. $54,430,000 In addition to the partially improved lots, finished lots and homes under construction, Lennar also owns (per the tax roll) 83 completed homes without assessed values. The valuation of these homes is shown in the following table. Seevers Jordan Ziegenmeyer 154

262 Lennar Homes w/o AV's 33 Palisades $ 14,025, The Ridge $ 16,080, Summit View $ 16,640, Total $ 46,745,000 Rd. $ 46,750,000 Given the preceding analyses, the following table summarizes the total value of ALL Lennar holdings within the appraised properties: Lots and Partially Competed Homes $ 54,430,000 Completed Homes w/o AV's $ 46,750,000 Total Value $ 101,180,000 Remaining Ownership Groups Individual Homeowners In this subsection, we summarize the market values, by ownership, of the remaining ownership groups associated with the appraised properties. First, the homes owned by individual homeowners require a slightly different presentation, as they are located within eight different projects, each with a unique base floor plan value (note that there are no homes within Chaparral or Palisades owned by individual homeowners as of the tax roll). As such, the value of the completed homes owned by individuals is presented first, as follows: Seevers Jordan Ziegenmeyer 155

263 VALUE OF HOMES OWNED BY INDIVIDUAL HOMEOWNERS # Homes Owned Conc. Of Value Total Community by Individuals Smallest Plan Value Chaparral 0 N/Ap N/Ap The Ridge 20 $670,000 $13,400,000 Summit View 12 $640,000 $7,680,000 Palisades 0 $425,000 N/Ap Solstice 25 $640,000 $16,000,000 The Estates 6 $530,000 $3,180,000 Fiora 16 $515,000 $8,240,000 Laurelton 5 $630,000 $3,150,000 Shenandoah 1 $500,000 $500,000 Del Sol 7 $540,000 $3,780,000 Total 92 $55,930,000 Final Conclusions of Value, by Ownership Based on the previous analysis, the estimates of market value (in bulk), by ownership, subject to the impact of the Lien of the Special Tax securing the El Dorado County Community Facilities District No Bonds, as of the date of value, May 11, 2016, are estimated in the table on the next page. Seevers Jordan Ziegenmeyer 156

264 Individual Homeowners 92 Finished Homes w/o AV's $ 55,930,000 Lennar 319 Lots and Homes Under Construction $ 54,430, Finished Homes w/o AVs $ 46,750, Finished Homes w/o AVs $ 101,180,000 Standard Pacific Homes 56 Finished Lots $ 14,280,000 8 Homes Under Construction $ 2,240, Finished Homes w/o AVs $ 11,970, $ 28,490,000 K. Hovnanian Homes 39 Partially Improved Production Lots $ 7,330, Finished Lots $ 5,280, Homes Under Construction $ 3,450, Finished Homes w/o AVs $ 9,540, $ 25,600,000 KB Home 26 Finished Lots $ 5,590,000 5 Homes Under Construction $ 1,200, Finished Homes w/o AVs $ 8,240, $ 15,030,000 Meritage Homes 21 Finished Lots $ 5,360,000 9 Homes Under Construction $ 2,520, Finished Homes w/o AVs $ 9,600, $ 17,480,000 The New Home Company 56 Finished Lots $ 9,800,000 4 Homes Under Construction $ 800, Finished Homes w/o AVs $ 5,400, $ 16,000,000 AKT 17 Unimproved Custom Lots $ 1,010,000 Danny and Sheralyn Di Re 12 Unimproved Custom Lots $ 550,000 Aggregate Value of Appraised Properties $ 261,270,000 Seevers Jordan Ziegenmeyer 157

265 SUMMARY AND CONCLUSION The purpose of this appraisal is to provide a market value of the appraised properties by ownership and Assessor s parcel, as well as an aggregate, or cumulative value of the appraised properties, subject to the Lien of the Special Tax securing the El Dorado County Community Facilities District No Bonds (fee simple estate), as of May 11, The appraised properties comprise the improved and unimproved residential lots within the boundaries of the El Dorado County Community Facilities District No (Blackstone) not improved with a single-family residence. In addition, those residential lots with completed single-family homes without an assessed value for vertical improvements were included in the scope of this appraisal assignment. As a result of our analysis, it is our opinions the cumulative, or aggregate, values, in accordance with the assumptions and conditions set forth in the attached document (please refer to pages 6 and 7), are: Aggregate Value of Appraised Properties $ 261,270,000 Aggregate Retail Value of Existing Homes $ 302,109,876 Based on Assessed Value* Total Aggregate Value of Appraised and $ 563,379,876 Assessed Properties in the District *Provided by the Assessor's Office The estimate of value above represents a not-less-than value due to the fact we were requested to provide a market value of the smallest floor plan (by project) on each single-family residential lot improved with a completed home without an assessed value assigned. The estimate of market value is subject to the hypothetical condition the El Dorado County Community Facilities District No Bonds (Series 2005) have been refunded by the El Dorado County Community Facilities District No Refunding Bonds (Series 2016). Any properties within the appraised portion of the District not subject to the Lien of the Special Tax securing the Bonds (public and quasi-public land use sites), are not a part of this appraisal and, therefore, are not included in the table above. We were requested to include the assigned assessed value for both land and improvements for the existing single-family homes (that have assessed values) to provide the total aggregate value of the appraised and assessed properties. Seevers Jordan Ziegenmeyer 158

266 Please note the aggregate value noted above is not the market value of the appraised properties in bulk. As defined by The Dictionary of Real Estate Appraisal, an aggregate value is the total of multiple market value conclusions. For purposes of this report, market value is estimated by ownership. The estimates of market value account for the impact of the Lien of the Special Taxes securing the Bonds. The market value of the appraised properties by Assessor s parcel can be found in the Appendix of this appraisal report. The estimates of market value, by ownership, estimated herein specifically assume the appraised properties within the boundaries of the CFD are not marketed concurrently, which would suggest a market under duress. Seevers Jordan Ziegenmeyer 159

267 EXPOSURE TIME & MARKETING TIME Exposure time and marketing time may or may not be similar depending on whether market activity in the immediate future continues in the same manner as in the immediate past. Indications of the exposure time associated with the market value estimate are provided by the marketing times of sale comparables, interviews with participants in the market and analysis of general economic conditions. Estimation of a future marketing time is more difficult, requiring forecasting and analysis of trends. Exposure Time Exposure time is the period a property interest would have been offered on the market prior to the hypothetical consummation of a sale at market value on the effective date of the appraisal. For a complete definition of exposure time, please reference the Glossary of Terms in the Appendix. In attempting to estimate a reasonable exposure time for the appraised properties, we looked at both the historical exposure times of a number of sales, as well as current and past economic conditions. The housing market has entered a growth stage for the past few years. A transfer of residential land in the region has typically occurred within 12 months of exposure. It is estimated the exposure time for the appraised properties, if appropriately priced, would be within 12 months. Marketing Time Marketing time is an estimate of the time to sell a property interest in real estate at the estimated market value during the period immediately after the effective date of value. A reasonable marketing time is estimated by comparing the recent exposure time of similar properties, and then taking into consideration current and future economic conditions and how they may impact marketing of the appraised properties. The marketing time for the appraised properties is not anticipated to vary significantly from the exposure time. Thus, the marketing time is estimated at 12 months or less. Seevers Jordan Ziegenmeyer 160

268 APPENDIX

269 A TAX ROLL VALUE BY ASSESSOR S PARCEL

270 Actual APN Owner Name Site Address Acreage Lot Sqft Bldg Sqft Value Land GrandMaxTax Village Allocated Value LENNAR HOMES OF CA INC CA ,867 0 $440,898 $62,461 Lot V $6,570, LENNAR HOMES OF CA INC CA 5360 BRENTFORD WAY ,375 0 $118,750 $1,950 7A $640, LENNAR HOMES OF CA INC CA 5321 BRENTFORD WAY ,939 0 $118,750 $1,950 7A $640, LENNAR HOMES OF CA INC CA 5289 BRENTFORD WAY ,988 0 $189,846 $1,950 7A $640, LENNAR HOMES OF CA INC CA 5273 BRENTFORD WAY ,632 0 $189,846 $1,950 7A $208, LENNAR HOMES OF CA INC CA 5249 BRENTFORD WAY ,197 0 $189,846 $1,950 7A $640, LENNAR HOMES OF CA INC CA 5241 BRENTFORD WAY ,504 0 $189,846 $1,950 7A $640, LENNAR HOMES OF CA INC CA 5225 BRENTFORD WAY ,640 0 $189,846 $1,950 7A $640, LENNAR HOMES OF CA INC CA 181 KEYSTONE CT ,077 0 $189,846 $1,950 7A $640, LENNAR HOMES OF CA INC CA 165 KEYSTONE CT ,344 0 $189,846 $1,950 7A $640, LENNAR HOMES OF CA INC CA 153 KEYSTONE CT ,988 0 $189,846 $1,950 7A $640, LENNAR HOMES OF CA INC CA 149 KEYSTONE CT ,119 0 $189,846 $1,950 7A $640, LENNAR HOMES OF CA INC CA 141 KEYSTONE CT ,850 0 $189,846 $1,950 7A $640, LENNAR HOMES OF CA INC CA 135 KEYSTONE CT ,720 0 $189,846 $1,950 7A $640, LENNAR HOMES OF CA INC CA 129 KEYSTONE CT ,024 0 $189,846 $1,950 7A $640, LENNAR HOMES OF CA INC CA 125 KEYSTONE CT ,159 0 $189,846 $1,950 7A $640, LENNAR HOMES OF CA INC CA 117 KEYSTONE CT ,074 0 $189,846 $1,950 7A $640, LENNAR HOMES OF CA INC CA 109 KEYSTONE CT ,988 0 $189,846 $1,950 7A $640, LENNAR HOMES OF CA INC CA 101 KEYSTONE CT ,443 0 $189,846 $1,950 7A $640, LENNAR HOMES OF CA INC CA 100 KEYSTONE CT ,183 0 $189,846 $1,950 7A $208, LENNAR HOMES OF CA INC CA 108 KEYSTONE CT ,933 0 $189,848 $1,950 7A $208, LENNAR HOMES OF CA INC CA 116 KEYSTONE CT ,145 0 $189,846 $1,950 7A $640, LENNAR HOMES OF CA INC CA 124 KEYSTONE CT ,621 0 $189,846 $1,950 7A $640, LENNAR HOMES OF CA INC CA 132 KEYSTONE CT ,448 0 $189,846 $1,950 7A $640, LENNAR HOMES OF CA INC CA 140 KEYSTONE CT ,055 0 $189,846 $1,950 7A $640, LENNAR HOMES OF CA INC CA 148 KEYSTONE CT ,433 0 $189,846 $1,950 7A $640, LENNAR HOMES OF CA INC CA 152 KEYSTONE CT ,602 0 $189,846 $1,950 7A $640, LENNAR HOMES OF CA INC CA 160 KEYSTONE CT ,246 0 $189,846 $1,950 7A $640, LENNAR HOMES OF CA INC CA 168 KEYSTONE CT ,424 0 $189,846 $1,950 7A $640, LENNAR HOMES OF CA INC CA 176 KEYSTONE CT ,988 0 $189,846 $1,950 7A $640, LENNAR HOMES OF CA INC CA 164 TEAKWOOD CT ,731 0 $121,122 $1,950 5A $202, LENNAR HOMES OF CA INC CA 156 TEAKWOOD CT ,117 0 $121,122 $1,950 5A $202, LENNAR HOMES OF CA INC CA 148 TEAKWOOD CT ,117 0 $121,122 $1,950 5A $202, LENNAR HOMES OF CA INC CA 140 TEAKWOOD CT ,117 0 $121,122 $1,950 5A $202, LENNAR HOMES OF CA INC CA 132 TEAKWOOD CT ,117 0 $121,122 $1,950 5A $202, LENNAR HOMES OF CA INC CA 124 TEAKWOOD CT ,117 0 $121,122 $1,950 5A $202, LENNAR HOMES OF CA INC CA 116 TEAKWOOD CT ,265 0 $121,122 $1,950 5A $202, LENNAR HOMES OF CA INC CA 108 TEAKWOOD CT ,087 0 $121,122 $1,950 5A $202, LENNAR HOMES OF CA INC CA 100 TEAKWOOD CT ,780 0 $121,122 $1,950 5A $202, LENNAR HOMES OF CA INC CA 101 TEAKWOOD CT ,234 0 $121,122 $1,950 5A $202, LENNAR HOMES OF CA INC CA 111 TEAKWOOD CT ,878 0 $121,122 $1,950 5A $202, LENNAR HOMES OF CA INC CA 127 TEAKWOOD CT ,056 0 $121,122 $1,950 5A $202, LENNAR HOMES OF CA INC CA 145 TEAKWOOD CT ,541 0 $121,122 $1,950 5A $202, LENNAR HOMES OF CA INC CA 151 TEAKWOOD CT ,106 0 $121,122 $1,950 5A $202, LENNAR HOMES OF CA INC CA 167 TEAKWOOD CT ,492 0 $121,122 $1,950 5A $202, LENNAR HOMES OF CA INC CA 175 TEAKWOOD CT ,621 0 $121,122 $1,950 5A $202, LENNAR HOMES OF CA INC CA 193 TEAKWOOD CT ,640 0 $121,122 $1,950 5A $202, LENNAR HOMES OF CA INC CA 200 TEAKWOOD CT ,810 0 $121,122 $1,950 5A $670, LENNAR HOMES OF CA INC CA 1235 CORNERSTONE DR ,246 0 $121,122 $1,950 5A $670, LENNAR HOMES OF CA INC CA 1227 CORNERSTONE DR ,473 0 $121,122 $1,950 5A $670, LENNAR HOMES OF CA INC CA 1219 CORNERSTONE DR ,553 0 $121,122 $1,950 5A $670, LENNAR HOMES OF CA INC CA 1211 CORNERSTONE DR ,344 0 $121,122 $1,950 5A $202, LENNAR HOMES OF CA INC CA 1210 CORNERSTONE DR ,810 0 $121,122 $1,950 5A $202, LENNAR HOMES OF CA INC CA 1712 BRANDYWOOD WAY ,632 0 $121,122 $1,950 5A $202, LENNAR HOMES OF CA INC CA 1722 BRANDYWOOD WAY ,939 0 $121,122 $1,950 5A $202, LENNAR HOMES OF CA INC CA 1730 BRANDYWOOD WAY ,504 0 $121,122 $1,950 5A $202, LENNAR HOMES OF CA INC CA 1736 BRANDYWOOD WAY ,068 0 $121,122 $1,950 5A $202, LENNAR HOMES OF CA INC CA 1740 BRANDYWOOD WAY ,197 0 $121,122 $1,950 5A $202, LENNAR HOMES OF CA INC CA 1748 BRANDYWOOD WAY ,197 0 $121,122 $1,950 5A $670, LENNAR HOMES OF CA INC CA 1762 BRANDYWOOD WAY ,344 0 $121,122 $1,950 5A $202, LENNAR HOMES OF CA INC CA 1780 BRANDYWOOD WAY ,682 0 $121,122 $1,950 5A $202, LENNAR HOMES OF CA INC CA 1781 BRANDYWOOD WAY ,504 0 $121,122 $1,950 5A $202, LENNAR HOMES OF CA INC CA 1771 BRANDYWOOD WAY ,988 0 $121,122 $1,950 5A $670, LENNAR HOMES OF CA INC CA 1763 BRANDYWOOD WAY ,246 0 $121,122 $1,950 5A $670, LENNAR HOMES OF CA INC CA 1755 BRANDYWOOD WAY ,632 0 $121,122 $1,950 5A $202, LENNAR HOMES OF CA INC CA 1747 BRANDYWOOD WAY ,197 0 $121,122 $1,950 5A $202, LENNAR HOMES OF CA INC CA 1739 BRANDYWOOD WAY ,632 0 $121,122 $1,950 5A $202, LENNAR HOMES OF CA INC CA 1731 BRANDYWOOD WAY ,068 0 $121,122 $1,950 5A $202, LENNAR HOMES OF CA INC CA 1723 BRANDYWOOD WAY ,068 0 $121,122 $1,950 5A $202, LENNAR HOMES OF CA INC CA 1715 BRANDYWOOD WAY ,761 0 $121,122 $1,950 5A $202, LENNAR HOMES OF CA INC CA 1705 BRANDYWOOD WAY ,632 0 $121,122 $1,950 5A $202, LENNAR HOMES OF CA INC CA 1924 KEYSTONE DR ,504 0 $121,122 $1,950 5A $670, LENNAR HOMES OF CA INC CA 1932 KEYSTONE DR ,761 0 $121,122 $1,950 5A $670, LENNAR HOMES OF CA INC CA 1938 KEYSTONE DR ,632 0 $121,122 $1,950 5A $670, LENNAR HOMES OF CA INC CA 1944 KEYSTONE DR ,197 0 $121,122 $1,950 5A $670, LENNAR HOMES OF CA INC CA 1970 KEYSTONE DR ,761 0 $121,122 $1,950 5A $670, LENNAR HOMES OF CA INC CA 1975 KEYSTONE DR ,068 0 $121,122 $1,950 5A $670, LENNAR HOMES OF CA INC CA 1959 KEYSTONE DR ,197 0 $121,122 $1,950 5A $670, LENNAR HOMES OF CA INC CA 1947 KEYSTONE DR ,761 0 $121,122 $1,950 5A $670, LENNAR HOMES OF CA INC CA 1937 KEYSTONE DR ,197 0 $121,122 $1,950 5A $670, LENNAR HOMES OF CA INC CA 1929 KEYSTONE DR ,939 0 $121,122 $1,950 5A $670, LENNAR HOMES OF CA INC CA 1262 CORNERSTONE DR ,246 0 $121,122 $1,950 5A $670, LENNAR HOMES OF CA INC CA 1270 CORNERSTONE DR ,197 0 $121,122 $1,950 5A $670, LENNAR HOMES OF CA INC CA 1300 CORNERSTONE DR ,197 0 $121,122 $1,950 5A $670, LENNAR HOMES OF CA INC CA 2538 COBBLE ROCK WAY ,106 0 $121,122 $1,950 5A $202, LENNAR HOMES OF CA INC CA 2544 COBBLE ROCK WAY ,590 0 $121,122 $1,950 5A $202,364

271 APN Owner Name Site Address Acreage Lot Sqft Bldg Sqft Value Land GrandMaxTax Actual Village Allocated Value LENNAR HOMES OF CA INC CA 2548 COBBLE ROCK WAY ,609 0 $121,122 $1,950 5A $202, LENNAR HOMES OF CA INC CA 2552 COBBLE ROCK WAY ,541 0 $121,122 $1,950 5A $202, LENNAR HOMES OF CA INC CA 2564 COBBLE ROCK WAY ,572 0 $121,122 $1,950 5A $202, LENNAR HOMES OF CA INC CA 2576 COBBLE ROCK WAY ,056 0 $121,122 $1,950 5A $202, LENNAR HOMES OF CA INC CA 5238 ASPEN MEADOWS DR ,087 0 $118,750 $1,950 5A $202, LENNAR HOMES OF CA INC CA 5246 ASPEN MEADOWS DR ,670 0 $118,750 $1,950 5A $202, LENNAR HOMES OF CA INC CA 2800 ROYAL OAKS DR ,246 0 $118,750 $1,950 5A $202, LENNAR HOMES OF CA INC CA 2806 ROYAL OAKS DR ,632 0 $118,750 $1,950 5A $202, LENNAR HOMES OF CA INC CA 2812 ROYAL OAKS DR ,068 0 $118,750 $1,950 5A $202, LENNAR HOMES OF CA INC CA 2818 ROYAL OAKS DR ,068 0 $118,750 $1,950 5A $202, LENNAR HOMES OF CA INC CA 2824 ROYAL OAKS DR ,761 0 $118,750 $1,950 5A $202, LENNAR HOMES OF CA INC CA 2830 ROYAL OAKS DR ,761 0 $118,750 $1,950 5A $202, LENNAR HOMES OF CA INC CA 2836 ROYAL OAKS DR ,197 0 $118,750 $1,950 5A $202, LENNAR HOMES OF CA INC CA 2842 ROYAL OAKS DR ,197 0 $118,750 $1,950 5A $202, LENNAR HOMES OF CA INC CA 2848 ROYAL OAKS DR ,068 0 $118,750 $1,950 5A $202, LENNAR HOMES OF CA INC CA 2852 ROYAL OAKS DR ,197 0 $118,750 $1,950 5A $202, LENNAR HOMES OF CA INC CA 2858 ROYAL OAKS DR ,632 0 $189,846 $1,950 5A $202, LENNAR HOMES OF CA INC CA 2864 ROYAL OAKS DR ,761 4,253 $189,846 $1,950 5A $670, LENNAR HOMES OF CA INC CA 2870 ROYAL OAKS DR ,761 4,041 $189,846 $1,950 5A $670, LENNAR HOMES OF CA INC CA 2876 ROYAL OAKS DR ,632 3,108 $189,846 $1,950 5A $670, LENNAR HOMES OF CA INC CA 2882 ROYAL OAKS DR ,068 2,861 $189,846 $1,950 5A $670, LENNAR HOMES OF CA INC CA 2888 ROYAL OAKS DR ,632 0 $189,846 $1,950 5A $202, LENNAR HOMES OF CA INC CA 2904 ROYAL OAKS DR ,939 0 $189,846 $1,950 5A $202, LENNAR HOMES OF CA INC CA 2167 KEYSTONE DR ,765 0 $118,750 $1,950 7B $208, LENNAR HOMES OF CA INC CA 2185 KEYSTONE DR ,017 0 $118,750 $1,950 7B $208, LENNAR HOMES OF CA INC CA 2205 KEYSTONE DR ,316 0 $118,750 $1,950 7B $208, LENNAR HOMES OF CA INC CA 2212 KEYSTONE DR ,916 0 $118,750 $1,950 7B $208, LENNAR HOMES OF CA INC CA 2204 KEYSTONE DR ,134 0 $118,750 $1,950 7B $208, LENNAR HOMES OF CA INC CA 2196 KEYSTONE DR ,255 0 $118,750 $1,950 7B $208, LENNAR HOMES OF CA INC CA 2188 KEYSTONE DR ,861 0 $118,750 $1,950 7B $208, LENNAR HOMES OF CA INC CA 2180 KEYSTONE DR ,513 0 $118,750 $1,950 7B $208, LENNAR HOMES OF CA INC CA 2172 KEYSTONE DR ,606 0 $118,750 $1,950 7B $208, LENNAR HOMES OF CA INC CA 2162 KEYSTONE DR ,128 0 $118,750 $1,950 7B $208, LENNAR HOMES OF CA INC CA 2154 KEYSTONE DR ,216 0 $118,750 $1,950 7B $208, LENNAR HOMES OF CA INC CA 2146 KEYSTONE DR ,911 0 $118,750 $1,950 7B $208, LENNAR HOMES OF CA INC CA 2138 KEYSTONE DR ,714 0 $118,750 $1,950 7B $208, LENNAR HOMES OF CA INC CA 2137 KEYSTONE DR ,816 0 $118,750 $1,950 7B $208, LENNAR HOMES OF CA INC CA 601 PLUNKETT CREEK CT ,632 0 $118,750 $1,950 7B $208, LENNAR HOMES OF CA INC CA 610 PLUNKETT CREEK CT ,592 0 $118,750 $1,950 7B $208, LENNAR HOMES OF CA INC CA 600 PLUNKETT CREEK CT ,505 0 $118,750 $1,950 7B $208, LENNAR HOMES OF CA INC CA 501 CHESTERBROOK CT ,418 0 $118,750 $1,950 7B $208, LENNAR HOMES OF CA INC CA 510 CHESTERBROOK CT ,213 0 $118,750 $1,950 7B $208, LENNAR HOMES OF CA INC CA 500 CHESTERBROOK CT ,112 0 $118,750 $1,950 7B $208, LENNAR HOMES OF CA INC CA 401 CANYON BROOK CT ,329 0 $118,750 $1,950 7B $208, LENNAR HOMES OF CA INC CA 410 CANYON BROOK CT ,636 0 $118,750 $1,950 7B $208, LENNAR HOMES OF CA INC CA 400 CANYON BROOK CT ,424 0 $118,750 $1,950 7B $208, LENNAR HOMES OF CA INC CA 301 BLOSSOM RIDGE CT ,769 0 $118,750 $1,950 7B $208, LENNAR HOMES OF CA INC CA 310 BLOSSOM RIDGE CT ,732 0 $118,750 $1,950 7B $208, LENNAR HOMES OF CA INC CA 300 BLOSSOM RIDGE CT ,424 0 $118,750 $1,950 7B $208, LENNAR HOMES OF CA INC CA 201 CAMERON CREEK CT ,246 0 $118,750 $1,950 7B $208, LENNAR HOMES OF CA INC CA 210 CAMERON CREEK CT ,854 0 $118,750 $1,950 7B $208, LENNAR HOMES OF CA INC CA 200 CAMERON CREEK CT ,202 0 $118,750 $1,950 7B $208, LENNAR HOMES OF CA INC CA 101 BADGER CREEK CT ,339 0 $118,750 $1,950 7B $208, LENNAR HOMES OF CA INC CA 110 BADGER CREEK CT ,255 0 $118,750 $1,950 7B $208, LENNAR HOMES OF CA INC CA 100 BADGER CREEK CT ,420 0 $118,750 $1,950 7B $208, LENNAR HOMES OF CA INC CA 1850 BLACKSTONE PKWY ,778 0 $118,750 $1,950 7B $208, LENNAR HOMES OF CA INC CA 2340 KEYSTONE DR ,505 0 $118,750 $1,950 7B $208, LENNAR HOMES OF CA INC CA 2334 KEYSTONE DR ,165 0 $118,750 $1,950 7B $208, LENNAR HOMES OF CA INC CA 2328 KEYSTONE DR ,477 0 $118,750 $1,950 7B $208, LENNAR HOMES OF CA INC CA 2322 KEYSTONE DR ,600 0 $118,750 $1,950 7B $208, LENNAR HOMES OF CA INC CA 2316 KEYSTONE DR ,636 0 $118,750 $1,950 7B $208, LENNAR HOMES OF CA INC CA 2310 KEYSTONE DR ,996 0 $118,750 $1,950 7B $208, LENNAR HOMES OF CA INC CA 2283 KEYSTONE DR ,683 0 $118,750 $1,950 7B $208, LENNAR HOMES OF CA INC CA 2291 KEYSTONE DR ,812 0 $118,750 $1,950 7B $208, LENNAR HOMES OF CA INC CA 2297 KEYSTONE DR ,076 0 $118,750 $1,950 7B $208, LENNAR HOMES OF CA INC CA 171 BLACKSTONE CT ,884 0 $118,750 $1,950 7B $208, LENNAR HOMES OF CA INC CA 179 BLACKSTONE CT ,441 0 $118,750 $1,950 7B $208, LENNAR HOMES OF CA INC CA 187 BLACKSTONE CT ,702 0 $118,750 $1,950 7B $208, LENNAR HOMES OF CA INC CA 199 BLACKSTONE CT ,496 0 $118,750 $1,950 7B $208, LENNAR HOMES OF CA INC CA 198 BLACKSTONE CT ,346 0 $118,750 $1,950 7B $208, LENNAR HOMES OF CA INC CA 186 BLACKSTONE CT ,644 0 $118,750 $1,950 7B $208, LENNAR HOMES OF CA INC CA 184 BLACKSTONE CT ,382 0 $118,750 $1,950 7B $208, LENNAR HOMES OF CA INC CA 2546 MANDRAKE LN ,683 0 $118,750 $1,950 7B $208, LENNAR HOMES OF CA INC CA 2536 MANDRAKE LN ,549 0 $118,750 $1,950 7B $208, LENNAR HOMES OF CA INC CA 2528 MANDRAKE LN ,968 0 $118,750 $1,950 7B $208, LENNAR HOMES OF CA INC CA 2520 MANDRAKE LN ,655 0 $118,750 $1,950 7B $208, LENNAR HOMES OF CA INC CA 2510 MANDRAKE LN ,555 0 $118,750 $1,950 7B $208, LENNAR HOMES OF CA INC CA 2504 MANDRAKE LN ,165 0 $118,750 $1,950 7B $208, LENNAR HOMES OF CA INC CA 2509 MANDRAKE LN ,291 0 $118,750 $1,950 7B $208, LENNAR HOMES OF CA INC CA 2515 MANDRAKE LN ,988 0 $118,750 $1,950 7B $208, LENNAR HOMES OF CA INC CA 2535 MANDRAKE LN ,176 0 $118,750 $1,950 7B $208, LENNAR HOMES OF CA INC CA 2549 MANDRAKE LN ,950 0 $118,750 $1,950 7B $208, LENNAR HOMES OF CA INC CA 2309 KEYSTONE DR ,812 0 $118,750 $1,950 7B $208, LENNAR HOMES OF CA INC CA 2319 KEYSTONE DR ,824 0 $118,750 $1,950 7B $208, LENNAR HOMES OF CA INC CA 319 EAGLE CREEK CT ,769 0 $16,376 $1,950 Lot Z $199,706

272 APN Owner Name Site Address Acreage Lot Sqft Bldg Sqft Value Land GrandMaxTax Actual Village Allocated Value LENNAR HOMES OF CA INC CA 325 EAGLE CREEK CT ,163 0 $16,376 $1,950 Lot Z $199, LENNAR HOMES OF CA INC CA 331 EAGLE CREEK CT ,113 0 $16,376 $1,950 Lot Z $199, LENNAR HOMES OF CA INC CA 339 EAGLE CREEK CT ,070 0 $16,376 $1,950 Lot Z $199, LENNAR HOMES OF CA INC CA 345 EAGLE CREEK CT ,509 0 $16,376 $1,950 Lot Z $199, LENNAR HOMES OF CA INC CA 342 EAGLE CREEK CT ,634 0 $16,376 $1,950 Lot Z $199, LENNAR HOMES OF CA INC CA 334 EAGLE CREEK CT ,678 0 $16,376 $1,950 Lot Z $199, LENNAR HOMES OF CA INC CA 326 EAGLE CREEK CT ,894 0 $16,376 $1,950 Lot Z $199, LENNAR HOMES OF CA INC CA 318 EAGLE CREEK CT ,596 0 $16,376 $1,950 Lot Z $199, LENNAR HOMES OF CA INC CA 312 EAGLE CREEK CT ,475 0 $16,376 $1,950 Lot Z $199, LENNAR HOMES OF CA INC CA 7023 BLACK HAWK DR ,066 0 $16,376 $1,950 Lot Y $199, LENNAR HOMES OF CA INC CA 7031 BLACK HAWK DR ,981 0 $16,376 $1,950 Lot Y $199, LENNAR HOMES OF CA INC CA 7039 BLACK HAWK DR ,329 0 $16,376 $1,950 Lot Y $199, LENNAR HOMES OF CA INC CA 7047 BLACK HAWK DR ,551 0 $16,376 $1,950 Lot Y $199, LENNAR HOMES OF CA INC CA 7055 BLACK HAWK DR ,636 0 $16,376 $1,950 Lot Y $199, LENNAR HOMES OF CA INC CA 7061 BLACK HAWK DR ,422 0 $16,376 $1,950 Lot Y $199, LENNAR HOMES OF CA INC CA 7069 BLACK HAWK DR ,030 0 $16,376 $1,950 Lot Y $199, LENNAR HOMES OF CA INC CA 7079 BLACK HAWK DR ,250 0 $16,376 $1,950 Lot Y $199, LENNAR HOMES OF CA INC CA 7089 BLACK HAWK DR ,081 0 $16,376 $1,950 Lot Y $199, LENNAR HOMES OF CA INC CA 7101 BLACK HAWK DR ,032 0 $16,376 $1,950 Lot Y $199, LENNAR HOMES OF CA INC CA 7127 BLACK HAWK DR ,269 0 $24,564 $1,950 Lot Y $199, LENNAR HOMES OF CA INC CA 7135 BLACK HAWK DR ,666 0 $24,564 $1,950 Lot Y $199, LENNAR HOMES OF CA INC CA 7120 BLACK HAWK DR ,557 0 $16,376 $1,950 Lot Y $199, LENNAR HOMES OF CA INC CA 7112 BLACK HAWK DR ,604 0 $16,376 $1,950 Lot Y $199, LENNAR HOMES OF CA INC CA 7104 BLACK HAWK DR ,911 0 $24,525 $1,950 Lot Y $199, LENNAR HOMES OF CA INC CA 7094 BLACK HAWK DR ,519 0 $16,376 $1,950 Lot Y $199, LENNAR HOMES OF CA INC CA 7078 BLACK HAWK DR ,163 0 $16,376 $1,950 Lot Y $199, LENNAR HOMES OF CA INC CA 621 VALLEY BROOK CT ,113 0 $16,376 $1,950 Lot Y $199, LENNAR HOMES OF CA INC CA 629 VALLEY BROOK CT ,288 0 $16,376 $1,950 Lot Y $199, LENNAR HOMES OF CA INC CA 639 VALLEY BROOK CT ,513 0 $16,376 $1,950 Lot Y $199, LENNAR HOMES OF CA INC CA 638 VALLEY BROOK CT ,119 0 $16,376 $1,950 Lot Y $199, LENNAR HOMES OF CA INC CA 628 VALLEY BROOK CT ,941 0 $16,376 $1,950 Lot Y $199, LENNAR HOMES OF CA INC CA 622 VALLEY BROOK CT ,284 0 $16,376 $1,950 Lot Y $199, LENNAR HOMES OF CA INC CA 616 VALLEY BROOK CT ,066 0 $16,376 $1,950 Lot Y $199, LENNAR HOMES OF CA INC CA 610 VALLEY BROOK CT ,327 0 $16,376 $1,950 Lot Y $199, LENNAR HOMES OF CA INC CA 7054 BLACK HAWK DR ,683 0 $16,376 $1,950 Lot Y $199, LENNAR HOMES OF CA INC CA 407 ORANGE BLOSSOM CT ,159 0 $16,376 $1,950 Lot Y $199, LENNAR HOMES OF CA INC CA 415 ORANGE BLOSSOM CT ,023 0 $16,376 $1,950 Lot Y $199, LENNAR HOMES OF CA INC CA 421 ORANGE BLOSSOM CT ,023 0 $16,376 $1,950 Lot Y $199, LENNAR HOMES OF CA INC CA 429 ORANGE BLOSSOM CT ,023 0 $16,376 $1,950 Lot Y $199, LENNAR HOMES OF CA INC CA 437 ORANGE BLOSSOM CT ,023 0 $16,376 $1,950 Lot Y $199, LENNAR HOMES OF CA INC CA 455 ORANGE BLOSSOM CT ,738 0 $24,564 $1,950 Lot Y $199, LENNAR HOMES OF CA INC CA 460 ORANGE BLOSSOM CT ,952 0 $16,376 $1,950 Lot Y $199, LENNAR HOMES OF CA INC CA 452 ORANGE BLOSSOM CT ,023 0 $16,376 $1,950 Lot Y $199, LENNAR HOMES OF CA INC CA 444 ORANGE BLOSSOM CT ,066 0 $16,376 $1,950 Lot Y $199, LENNAR HOMES OF CA INC CA 436 ORANGE BLOSSOM CT ,066 0 $16,376 $1,950 Lot Y $199, LENNAR HOMES OF CA INC CA 430 ORANGE BLOSSOM CT ,066 0 $16,376 $1,950 Lot Y $199, LENNAR HOMES OF CA INC CA 422 ORANGE BLOSSOM CT ,066 0 $16,376 $1,950 Lot Y $199, LENNAR HOMES OF CA INC CA 416 ORANGE BLOSSOM CT ,066 0 $16,376 $1,950 Lot Y $199, LENNAR HOMES OF CA INC CA 408 ORANGE BLOSSOM CT ,638 0 $16,376 $1,950 Lot Y $199, LENNAR HOMES OF CA INC CA 7143 BLACK HAWK DR ,185 0 $24,564 $1,950 Lot Y $199, LENNAR HOMES OF CA INC CA 7149 BLACK HAWK DR ,880 0 $24,564 $1,950 Lot Y $199, LENNAR HOMES OF CA INC CA 7161 BLACK HAWK DR ,483 0 $24,564 $1,950 Lot Y $199, LENNAR HOMES OF CA INC CA 7169 BLACK HAWK DR ,861 0 $16,376 $1,950 Lot Y $199, LENNAR HOMES OF CA INC CA 7179 BLACK HAWK DR ,339 0 $16,376 $1,950 Lot Y $199, LENNAR HOMES OF CA INC CA 7187 BLACK HAWK DR ,023 0 $16,376 $1,950 Lot Y $199, LENNAR HOMES OF CA INC CA 7195 BLACK HAWK DR ,636 0 $16,376 $1,950 Lot Y $199, LENNAR HOMES OF CA INC CA 7212 BLACK HAWK DR ,769 0 $16,376 $1,950 Lot Y $199, LENNAR HOMES OF CA INC CA 7208 BLACK HAWK DR ,066 0 $16,376 $1,950 Lot Y $199, LENNAR HOMES OF CA INC CA 5112 TRAILSIDE DR ,985 0 $16,376 $1,950 Lot Y $199, LENNAR HOMES OF CA INC CA 5096 TRAILSIDE DR ,202 0 $16,376 $1,950 Lot Y $199, LENNAR HOMES OF CA INC CA 5076 TRAILSIDE DR ,375 0 $16,376 $1,950 Lot Y $199, LENNAR HOMES OF CA INC CA 5068 TRAILSIDE DR ,545 0 $16,376 $1,950 Lot Y $199, LENNAR HOMES OF CA INC CA 5073 TRAILSIDE DR ,153 0 $16,376 $1,950 Lot Y $199, LENNAR HOMES OF CA INC CA 5077 TRAILSIDE DR ,850 0 $16,376 $1,950 Lot Y $199, LENNAR HOMES OF CA INC CA 5081 TRAILSIDE DR ,460 0 $16,376 $1,950 Lot Y $199, LENNAR HOMES OF CA INC CA 5087 TRAILSIDE DR ,293 0 $16,376 $1,950 Lot Y $199, LENNAR HOMES OF CA INC CA 5093 TRAILSIDE DR ,464 0 $16,376 $1,950 Lot Y $199, LENNAR HOMES OF CA INC CA 5099 TRAILSIDE DR ,030 0 $16,376 $1,950 Lot Y $199, LENNAR HOMES OF CA INC CA 5105 TRAILSIDE DR ,596 0 $16,376 $1,950 Lot Y $199, LENNAR HOMES OF CA INC CA 322 FAIRFAX CT ,568 0 $24,564 $1,950 Lot Y $199, LENNAR HOMES OF CA INC CA 316 FAIRFAX CT ,240 0 $16,376 $1,950 Lot Y $199, LENNAR HOMES OF CA INC CA 312 FAIRFAX CT ,284 0 $16,376 $1,950 Lot Y $199, LENNAR HOMES OF CA INC CA 306 FAIRFAX CT ,333 0 $16,376 $1,950 Lot Y $199, LENNAR HOMES OF CA INC CA 5125 TRAILSIDE DR ,854 0 $16,376 $1,950 Lot Y $199, LENNAR HOMES OF CA INC CA 7194 BLACK HAWK DR ,371 0 $16,376 $1,950 Lot Y $199, LENNAR HOMES OF CA INC CA 7188 BLACK HAWK DR ,066 0 $16,376 $1,950 Lot Y $199, LENNAR HOMES OF CA INC CA 7180 BLACK HAWK DR ,769 0 $16,376 $1,950 Lot Y $199, LENNAR HOMES OF CA INC CA 7168 BLACK HAWK DR ,290 0 $16,376 $1,950 Lot Y $199, LENNAR HOMES OF CA INC CA 7152 BLACK HAWK DR ,615 0 $24,564 $1,950 Lot Y $199, LENNAR HOMES OF CA INC CA 7203 BLACK HAWK DR ,242 0 $16,376 $1,950 Lot Y $199, LENNAR HOMES OF CA INC CA 7209 BLACK HAWK DR ,809 0 $16,376 $1,950 Lot Y $199, LENNAR HOMES OF CA INC CA 7215 BLACK HAWK DR ,949 0 $16,376 $1,950 Lot Y $199, LENNAR HOMES OF CA INC CA 7219 BLACK HAWK DR ,341 0 $16,376 $1,950 Lot Y $199, LENNAR HOMES OF CA INC CA 7218 BLACK HAWK DR ,682 0 $16,376 $1,950 Lot Y $199, LENNAR HOMES OF CA INC CA 5062 TRAILSIDE DR ,066 0 $16,376 $1,950 Lot Y $199, LENNAR HOMES OF CA INC CA 5054 TRAILSIDE DR ,066 0 $16,376 $1,950 Lot Y $199, LENNAR HOMES OF CA INC CA 5048 TRAILSIDE DR ,284 0 $16,376 $1,950 Lot Y $199,706

273 APN Owner Name Site Address Acreage Lot Sqft Bldg Sqft Value Land GrandMaxTax Actual Village Allocated Value LENNAR HOMES OF CA INC CA 211 SEACREST CT ,987 0 $16,376 $1,950 Lot Y $199, LENNAR HOMES OF CA INC CA 219 SEACREST CT ,458 0 $16,376 $1,950 Lot Y $199, LENNAR HOMES OF CA INC CA 225 SEACREST CT ,070 0 $16,376 $1,950 Lot Y $199, LENNAR HOMES OF CA INC CA 218 SEACREST CT ,685 0 $16,376 $1,950 Lot Y $199, LENNAR HOMES OF CA INC CA 206 SEACREST CT ,636 0 $24,564 $1,950 Lot Y $199, LENNAR HOMES OF CA INC CA 5010 TRAILSIDE DR ,286 0 $16,376 $1,950 Lot Y $199, LENNAR HOMES OF CA INC CA 5011 TRAILSIDE DR ,180 0 $16,376 $1,950 Lot Y $199, LENNAR HOMES OF CA INC CA 5017 TRAILSIDE DR ,937 0 $16,376 $1,950 Lot Y $199, LENNAR HOMES OF CA INC CA 5031 TRAILSIDE DR ,240 0 $16,376 $1,950 Lot Y $199, LENNAR HOMES OF CA INC CA 5039 TRAILSIDE DR ,110 0 $16,376 $1,950 Lot Y $199, LENNAR HOMES OF CA INC CA 5045 TRAILSIDE DR ,415 0 $16,376 $1,950 Lot Y $199, LENNAR HOMES OF CA INC CA 5051 TRAILSIDE DR ,458 0 $16,376 $1,950 Lot Y $199, LENNAR HOMES OF CA INC CA 5059 TRAILSIDE DR ,632 0 $16,376 $1,950 Lot Y $199, LENNAR HOMES OF CA INC CA 5065 TRAILSIDE DR ,066 0 $16,376 $1,950 Lot Y $199, LENNAR HOMES OF CA INC CA , $1,686 Lot X $425, LENNAR HOMES OF CA INC CA , $1,686 Lot X $425, LENNAR HOMES OF CA INC CA , $1,686 Lot X $425, LENNAR HOMES OF CA INC CA , $1,686 Lot X $425, LENNAR HOMES OF CA INC CA , $1,686 Lot X $425, LENNAR HOMES OF CA INC CA , $1,686 Lot X $425, LENNAR HOMES OF CA INC CA , $1,686 Lot X $425, LENNAR HOMES OF CA INC CA , $1,686 Lot X $425, LENNAR HOMES OF CA INC CA , $1,686 Lot X $149, LENNAR HOMES OF CA INC CA , $1,686 Lot X $149, LENNAR HOMES OF CA INC CA , $1,686 Lot X $149, LENNAR HOMES OF CA INC CA , $1,686 Lot X $149, LENNAR HOMES OF CA INC CA , $1,686 Lot X $149, LENNAR HOMES OF CA INC CA , $1,686 Lot X $149, LENNAR HOMES OF CA INC CA , $1,686 Lot X $149, LENNAR HOMES OF CA INC CA , $1,686 Lot X $149, LENNAR HOMES OF CA INC CA , $1,686 Lot X $149, LENNAR HOMES OF CA INC CA , $1,686 Lot X $149, LENNAR HOMES OF CA INC CA , $1,686 Lot X $149, LENNAR HOMES OF CA INC CA , $1,686 Lot X $149, LENNAR HOMES OF CA INC CA , $1,686 Lot X $149, LENNAR HOMES OF CA INC CA , $1,686 Lot X $149, LENNAR HOMES OF CA INC CA , $1,686 Lot X $149, LENNAR HOMES OF CA INC CA , $1,686 Lot X $425, LENNAR HOMES OF CA INC CA , $1,686 Lot X $425, LENNAR HOMES OF CA INC CA , $1,686 Lot X $425, LENNAR HOMES OF CA INC CA , $1,686 Lot X $149, LENNAR HOMES OF CA INC CA , $1,686 Lot X $149, LENNAR HOMES OF CA INC CA , $1,686 Lot X $425, LENNAR HOMES OF CA INC CA , $1,686 Lot X $425, LENNAR HOMES OF CA INC CA , $1,686 Lot X $425, LENNAR HOMES OF CA INC CA , $1,686 Lot X $425, LENNAR HOMES OF CA INC CA , $1,686 Lot X $425, LENNAR HOMES OF CA INC CA , $1,686 Lot X $425, LENNAR HOMES OF CA INC CA , $1,686 Lot X $425, LENNAR HOMES OF CA INC CA , $1,686 Lot X $425, LENNAR HOMES OF CA INC CA , $1,686 Lot X $425, LENNAR HOMES OF CA INC CA , $1,686 Lot X $425, LENNAR HOMES OF CA INC CA , $1,686 Lot X $425, LENNAR HOMES OF CA INC CA , $1,686 Lot X $149, LENNAR HOMES OF CA INC CA , $1,686 Lot X $149, LENNAR HOMES OF CA INC CA , $1,686 Lot X $149, LENNAR HOMES OF CA INC CA , $1,686 Lot X $425, LENNAR HOMES OF CA INC CA , $1,686 Lot X $425, LENNAR HOMES OF CA INC CA , $1,686 Lot X $149, LENNAR HOMES OF CA INC CA , $1,686 Lot X $149, LENNAR HOMES OF CA INC CA , $1,686 Lot X $425, LENNAR HOMES OF CA INC CA , $1,686 Lot X $425, LENNAR HOMES OF CA INC CA , $1,686 Lot X $425, LENNAR HOMES OF CA INC CA , $1,686 Lot X $149, LENNAR HOMES OF CA INC CA , $1,686 Lot X $149, LENNAR HOMES OF CA INC CA , $1,686 Lot X $425, LENNAR HOMES OF CA INC CA , $1,686 Lot X $425, LENNAR HOMES OF CA INC CA , $1,686 Lot X $425, LENNAR HOMES OF CA INC CA , $1,686 Lot X $425, LENNAR HOMES OF CA INC CA , $1,686 Lot X $425, LENNAR HOMES OF CA INC CA , $1,686 Lot X $425, LENNAR HOMES OF CA INC CA , $1,686 Lot X $149, LENNAR HOMES OF CA INC CA , $1,686 Lot X $149, LENNAR HOMES OF CA INC CA , $1,686 Lot X $149, LENNAR HOMES OF CA INC CA , $1,686 Lot X $149, LENNAR HOMES OF CA INC CA , Lot X LENNAR HOMES OF CA INC CA Lot X LENNAR HOMES OF CA INC CA , Lot X STANDARD PACIFIC A DE CORP ,375 0 $76,844 $1,950 3A $258, STANDARD PACIFIC A DE CORP 609 IDLEWOOD PL ,504 0 $76,844 $1,950 3A $258, STANDARD PACIFIC A DE CORP 615 IDLEWOOD PL ,375 0 $76,844 $1,950 3A $258, STANDARD PACIFIC A DE CORP 621 IDLEWOOD PL ,909 0 $76,844 $1,950 3A $630, STANDARD PACIFIC A DE CORP 635 IDLEWOOD PL ,375 0 $76,844 $1,950 3A $630, STANDARD PACIFIC A DE CORP 909 LYNWOOD CT ,185 0 $76,844 $1,950 3A $630, STANDARD PACIFIC A DE CORP 910 LYNWOOD CT ,124 0 $76,844 $1,950 3A $258, STANDARD PACIFIC A DE CORP ,719 0 $76,844 $1,950 3A $258, STANDARD PACIFIC A DE CORP 804 CANDLEWOOD DR ,829 0 $76,844 $1,950 3A $630,000

274 APN Owner Name Site Address Acreage Lot Sqft Bldg Sqft Value Land GrandMaxTax Actual Village Allocated Value STANDARD PACIFIC A DE CORP 786 CANDLEWOOD DR ,572 0 $76,844 $1,950 3A $258, STANDARD PACIFIC A DE CORP 774 CANDLEWOOD DR ,719 0 $76,844 $1,950 3A $258, STANDARD PACIFIC A DE CORP 760 CANDLEWOOD DR ,878 0 $76,844 $1,950 3A $258, STANDARD PACIFIC A DE CORP 752 CANDLEWOOD DR ,750 0 $76,844 $1,950 3A $258, STANDARD PACIFIC A DE CORP 748 CANDLEWOOD DR ,204 0 $76,844 $1,950 3A $258, STANDARD PACIFIC A DE CORP 744 CANDLEWOOD DR ,848 0 $76,844 $1,950 3A $258, STANDARD PACIFIC A DE CORP 740 CANDLEWOOD DR ,056 0 $76,844 $1,950 3A $258, STANDARD PACIFIC A DE CORP ,860 0 $76,844 $1,950 3A $258, STANDARD PACIFIC A DE CORP 561 IDLEWOOD CT ,988 0 $76,844 $1,950 3A $258, STANDARD PACIFIC A DE CORP 567 IDLEWOOD CT ,731 0 $76,844 $1,950 3A $258, STANDARD PACIFIC A DE CORP 562 IDLEWOOD CT ,246 0 $76,844 $1,950 3A $258, STANDARD PACIFIC A DE CORP 556 IDLEWOOD CT ,810 0 $76,844 $1,950 3A $258, STANDARD PACIFIC A DE CORP ,810 0 $76,844 $1,950 3A $258, STANDARD PACIFIC A DE CORP 612 IDLEWOOD PL ,246 0 $76,844 $1,950 3A $630, STANDARD PACIFIC A DE CORP 626 IDLEWOOD PL ,216 0 $76,844 $1,950 3A $630, STANDARD PACIFIC A DE CORP 640 IDLEWOOD PL ,988 0 $76,844 $1,950 3A $630, STANDARD PACIFIC A DE CORP 777 CANDLEWOOD DR ,038 0 $76,844 $1,950 3A $630, STANDARD PACIFIC A DE CORP 765 CANDLEWOOD DR ,682 0 $76,844 $1,950 3A $630, STANDARD PACIFIC A DE CORP 753 CANDLEWOOD DR ,988 0 $76,844 $1,950 3A $258, STANDARD PACIFIC A DE CORP 745 CANDLEWOOD DR ,651 0 $76,844 $1,950 3A $258, STANDARD PACIFIC A DE CORP ,776 0 $87,669 $1,950 3A $258, STANDARD PACIFIC A DE CORP 735 CANDLEWOOD DR ,505 0 $66,024 $1,950 3A $258, STANDARD PACIFIC A DE CORP 863 CANDLEWOOD DR ,632 0 $76,844 $1,950 3B $630, STANDARD PACIFIC A DE CORP 883 CANDLEWOOD DR ,632 0 $76,844 $1,950 3B $258, STANDARD PACIFIC A DE CORP 891 CANDLEWOOD DR ,068 0 $76,844 $1,950 3B $258, STANDARD PACIFIC A DE CORP 903 CANDLEWOOD DR ,068 0 $76,844 $1,950 3B $258, STANDARD PACIFIC A DE CORP 909 CANDLEWOOD DR ,068 0 $76,844 $1,950 3B $258, STANDARD PACIFIC A DE CORP 915 CANDLEWOOD DR ,504 0 $76,844 $1,950 3B $258, STANDARD PACIFIC A DE CORP 921 CANDLEWOOD DR ,988 0 $76,844 $1,950 3B $630, STANDARD PACIFIC A DE CORP 933 CANDLEWOOD DR ,860 0 $76,844 $1,950 3B $630, STANDARD PACIFIC A DE CORP 930 CANDLEWOOD DR ,504 0 $76,844 $1,950 3B $258, STANDARD PACIFIC A DE CORP 922 CANDLEWOOD DR ,117 0 $76,844 $1,950 3B $258, STANDARD PACIFIC A DE CORP 912 CANDLEWOOD DR ,553 0 $76,844 $1,950 3B $258, STANDARD PACIFIC A DE CORP 904 CANDLEWOOD DR ,068 0 $76,844 $1,950 3B $258, STANDARD PACIFIC A DE CORP 896 CANDLEWOOD DR ,632 0 $76,844 $1,950 3B $258, STANDARD PACIFIC A DE CORP 890 CANDLEWOOD DR ,068 0 $76,844 $1,950 3B $258, STANDARD PACIFIC A DE CORP 882 CANDLEWOOD DR ,068 0 $76,844 $1,950 3B $258, STANDARD PACIFIC A DE CORP 876 CANDLEWOOD DR ,504 0 $76,844 $1,950 3B $258, STANDARD PACIFIC A DE CORP 870 CANDLEWOOD DR ,632 0 $76,844 $1,950 3B $630, STANDARD PACIFIC A DE CORP 864 CANDLEWOOD DR ,068 0 $76,844 $1,950 3B $630, STANDARD PACIFIC A DE CORP 434 LOGANBERRY CT ,136 0 $76,844 $1,950 3B $258, STANDARD PACIFIC A DE CORP 422 LOGANBERRY CT ,333 0 $76,844 $1,950 3B $258, STANDARD PACIFIC A DE CORP 406 LOGANBERRY CT ,075 0 $76,844 $1,950 3B $258, STANDARD PACIFIC A DE CORP 937 CANDLEWOOD DR ,007 0 $76,844 $1,950 3B $630, STANDARD PACIFIC A DE CORP 965 CANDLEWOOD DR ,939 0 $76,844 $1,950 3B $258, STANDARD PACIFIC A DE CORP 115 LOCKWOOD CT ,424 0 $76,844 $1,950 3B $258, STANDARD PACIFIC A DE CORP 121 LOCKWOOD CT ,216 0 $76,844 $1,950 3B $258, STANDARD PACIFIC A DE CORP 125 LOCKWOOD CT ,246 0 $76,844 $1,950 3B $258, STANDARD PACIFIC A DE CORP 213 CANDLEWOOD CT ,761 0 $76,844 $1,950 3B $258, STANDARD PACIFIC A DE CORP 219 CANDLEWOOD CT ,068 0 $76,844 $1,950 3B $258, STANDARD PACIFIC A DE CORP 231 CANDLEWOOD CT ,939 0 $76,844 $1,950 3B $258, STANDARD PACIFIC A DE CORP 239 CANDLEWOOD CT ,780 0 $76,844 $1,950 3B $258, STANDARD PACIFIC A DE CORP 242 CANDLEWOOD CT ,909 0 $76,844 $1,950 3B $258, STANDARD PACIFIC A DE CORP 240 CANDLEWOOD CT ,492 0 $76,844 $1,950 3B $630, STANDARD PACIFIC A DE CORP 232 CANDLEWOOD CT ,106 0 $76,844 $1,950 3B $258, STANDARD PACIFIC A DE CORP 224 CANDLEWOOD CT ,136 0 $76,844 $1,950 3B $258, STANDARD PACIFIC A DE CORP 214 CANDLEWOOD CT ,909 0 $76,844 $1,950 3B $258, STANDARD PACIFIC A DE CORP 206 CANDLEWOOD CT ,473 0 $76,844 $1,950 3B $258, STANDARD PACIFIC A DE CORP 990 CANDLEWOOD DR ,651 0 $76,844 $1,950 3B $258, STANDARD PACIFIC A DE CORP 980 CANDLEWOOD DR ,909 0 $76,844 $1,950 3B $258, STANDARD PACIFIC A DE CORP 968 CANDLEWOOD DR ,136 0 $76,844 $1,950 3B $258, STANDARD PACIFIC A DE CORP 958 CANDLEWOOD DR ,314 0 $76,844 $1,950 3B $258, STANDARD PACIFIC A DE CORP 959 CANDLEWOOD DR ,509 0 $76,844 $1,950 3B $258, STANDARD PACIFIC A DE CORP 971 CANDLEWOOD DR ,983 0 $76,844 $1,950 3B $258, STANDARD PACIFIC A DE CORP 3012 SAGEBERRY LN ,475 0 $76,844 $1,950 3B $630, STANDARD PACIFIC A DE CORP 940 CANDLEWOOD DR ,416 0 $76,844 $1,950 3B $630, STANDARD PACIFIC A DE CORP 3011 SAGEBERRY LN ,824 0 $76,844 $1,950 3B $630, STANDARD PACIFIC A DE CORP 981 CANDLEWOOD DR ,547 0 $76,844 $1,950 3B $258, STANDARD PACIFIC A DE CORP 989 CANDLEWOOD DR ,939 0 $76,844 $1,950 3B $258, STANDARD PACIFIC A DE CORP 133 LOCKWOOD CT ,507 0 $76,844 $1,950 3B $258, STANDARD PACIFIC A DE CORP 135 LOCKWOOD CT ,466 0 $76,844 $1,950 3B $258, STANDARD PACIFIC A DE CORP 141 LOCKWOOD CT ,521 0 $76,844 $1,950 3B $258, STANDARD PACIFIC A DE CORP 130 LOCKWOOD CT ,430 0 $76,844 $1,950 3B $258, STANDARD PACIFIC A DE CORP 207 CANDLEWOOD CT ,589 0 $76,844 $1,950 3B $258, K HOVNANIAN BLACKSTONE CA 2655 WAGNER PL ,362 0 $98,372 $1,585 6A $530, K HOVNANIAN BLACKSTONE CA 2659 WAGNER PL ,100 0 $94,880 $1,585 6A $530, K HOVNANIAN BLACKSTONE CA 2663 WAGNER PL ,100 0 $111,760 $1,585 6A $530, K HOVNANIAN BLACKSTONE CA 2220 AIKEN WAY ,364 0 $111,760 $1,585 6A $530, K HOVNANIAN BLACKSTONE CA 2191 AIKEN WAY ,797 0 $104,193 $1,585 6A $530, K HOVNANIAN BLACKSTONE CA 2197 AIKEN WAY ,668 0 $115,835 $1,585 6A $530, K HOVNANIAN BLACKSTONE CA 2215 AIKEN WAY ,451 0 $112,924 $1,585 6A $530, K HOVNANIAN BLACKSTONE CA 2221 AIKEN WAY ,144 0 $95,462 $1,585 6A $530, K HOVNANIAN BLACKSTONE CA 2225 AIKEN WAY ,928 0 $105,939 $1,585 6A $530, K HOVNANIAN BLACKSTONE CA 2229 AIKEN WAY ,579 0 $101,281 $1,585 6A $530, K HOVNANIAN BLACKSTONE CA 2233 AIKEN WAY ,492 0 $100,118 $1,585 6A $530, K HOVNANIAN BLACKSTONE CA 2237 AIKEN WAY ,102 0 $108,267 $1,585 6A $530, K HOVNANIAN BLACKSTONE CA 2241 AIKEN WAY ,407 0 $112,341 $1,585 6A $530,000

275 APN Owner Name Site Address Acreage Lot Sqft Bldg Sqft Value Land GrandMaxTax Actual Village Allocated Value K HOVNANIAN BLACKSTONE CA 2245 AIKEN WAY ,191 0 $122,820 $1,585 6A $530, K HOVNANIAN BLACKSTONE CA ,458 0 $166,476 $1,585 6A $249, K HOVNANIAN BLACKSTONE CA 3046 BRIDGEFORD WAY ,545 0 $167,641 $1,585 6A $249, K HOVNANIAN BLACKSTONE CA 3038 BRIDGEFORD WAY ,718 0 $156,581 $1,585 6A $249, K HOVNANIAN BLACKSTONE CA 3030 BRIDGEFORD WAY ,935 0 $159,491 $1,585 6A $249, K HOVNANIAN BLACKSTONE CA 3024 BRIDGEFORD WAY ,890 0 $145,522 $1,585 6A $249, K HOVNANIAN BLACKSTONE CA 3018 BRIDGEFORD WAY ,237 0 $136,790 $1,585 6A $249, K HOVNANIAN BLACKSTONE CA 3012 BRIDGEFORD WAY ,282 0 $150,760 $1,585 6A $249, K HOVNANIAN BLACKSTONE CA 3006 BRIDGEFORD WAY ,763 0 $170,551 $1,585 6A $249, K HOVNANIAN BLACKSTONE CA 3000 BRIDGEFORD WAY ,763 0 $170,551 $1,585 6A $249, K HOVNANIAN BLACKSTONE CA 5114 BRENTFORD WAY ,367 0 $138,536 $1,585 6A $249, K HOVNANIAN BLACKSTONE CA 5108 BRENTFORD WAY ,803 0 $144,357 $1,585 6A $249, K HOVNANIAN BLACKSTONE CA 5102 BRENTFORD WAY ,932 0 $132,715 $1,585 6A $249, K HOVNANIAN BLACKSTONE CA 5096 BRENTFORD WAY ,587 0 $154,835 $1,585 6A $249, K HOVNANIAN BLACKSTONE CA 5058 BRENTFORD WAY ,062 0 $134,462 $1,585 6A $530, K HOVNANIAN BLACKSTONE CA 5052 BRENTFORD WAY ,244 0 $190,342 $1,585 6A $530, K HOVNANIAN BLACKSTONE CA 5057 BRENTFORD WAY ,752 0 $90,223 $1,585 6A $249, K HOVNANIAN BLACKSTONE CA 5023 BRENTFORD WAY ,449 0 $99,536 $1,585 6A $249, K HOVNANIAN BLACKSTONE CA 2500 WYCLIFFE WAY ,102 0 $108,267 $1,585 6A $249, K HOVNANIAN BLACKSTONE CA 2506 WYCLIFFE WAY ,106 0 $135,043 $1,585 6A $249, K HOVNANIAN BLACKSTONE CA 2512 WYCLIFFE WAY ,024 0 $174,043 $1,585 6A $249, K HOVNANIAN BLACKSTONE CA 2518 WYCLIFFE WAY ,720 0 $169,968 $1,585 6A $249, K HOVNANIAN BLACKSTONE CA 2524 WYCLIFFE WAY ,850 0 $171,715 $1,585 6A $249, K HOVNANIAN BLACKSTONE CA 2530 WYCLIFFE WAY ,935 0 $159,491 $1,585 6A $249, K HOVNANIAN BLACKSTONE CA 2536 WYCLIFFE WAY ,718 0 $156,581 $1,585 6A $249, K HOVNANIAN BLACKSTONE CA 2542 WYCLIFFE WAY ,500 0 $153,670 $1,585 6A $249, K HOVNANIAN BLACKSTONE CA 2548 WYCLIFFE WAY ,021 0 $147,268 $1,585 6A $249, K HOVNANIAN BLACKSTONE CA 2554 WYCLIFFE WAY ,369 0 $151,923 $1,585 6A $249, K HOVNANIAN BLACKSTONE CA 2560 WYCLIFFE WAY ,235 0 $123,401 $1,585 6A $249, K HOVNANIAN BLACKSTONE CA 2566 WYCLIFFE WAY ,367 0 $138,536 $1,585 6A $530, K HOVNANIAN BLACKSTONE CA 2572 WYCLIFFE WAY ,589 0 $168,222 $1,585 6A $530, K HOVNANIAN BLACKSTONE CA ,146 0 $108,849 $1,585 6A $249, K HOVNANIAN BLACKSTONE CA 2545 WYCLIFFE WAY ,275 0 $97,209 $1,585 6A $249, K HOVNANIAN BLACKSTONE CA 2539 WYCLIFFE WAY ,189 0 $109,431 $1,585 6A $249, K HOVNANIAN BLACKSTONE CA 2535 WYCLIFFE WAY ,275 0 $97,209 $1,585 6A $249, K HOVNANIAN BLACKSTONE CA 2529 WYCLIFFE WAY ,928 0 $105,939 $1,585 6A $249, K HOVNANIAN BLACKSTONE CA 2523 WYCLIFFE WAY ,538 0 $114,089 $1,585 6A $249, K HOVNANIAN BLACKSTONE CA 2515 WYCLIFFE WAY ,322 0 $124,566 $1,585 6A $249, K HOVNANIAN BLACKSTONE CA 2507 WYCLIFFE WAY ,625 0 $115,252 $1,585 6A $249, K HOVNANIAN BLACKSTONE CA 2501 WYCLIFFE WAY ,583 0 $128,059 $1,585 6A $249, K HOVNANIAN BLACKSTONE CA 3007 BRIDGEFORD WAY ,977 0 $146,686 $1,585 6C $187, K HOVNANIAN BLACKSTONE CA 3013 BRIDGEFORD WAY ,106 0 $135,043 $1,585 6C $187, K HOVNANIAN BLACKSTONE CA 3019 BRIDGEFORD WAY ,756 0 $116,999 $1,585 6C $187, K HOVNANIAN BLACKSTONE CA 3023 BRIDGEFORD WAY ,886 0 $118,745 $1,585 6C $187, K HOVNANIAN BLACKSTONE CA 3027 BRIDGEFORD WAY ,538 0 $114,089 $1,585 6C $187, K HOVNANIAN BLACKSTONE CA 3031 BRIDGEFORD WAY ,407 0 $112,341 $1,585 6C $187, K HOVNANIAN BLACKSTONE CA 3037 BRIDGEFORD WAY ,585 0 $141,447 $1,585 6C $187, K HOVNANIAN BLACKSTONE CA 3041 BRIDGEFORD WAY ,937 0 $172,879 $1,585 6C $187, K HOVNANIAN BLACKSTONE CA 3045 BRIDGEFORD WAY ,935 0 $159,491 $1,585 6C $187, K HOVNANIAN BLACKSTONE CA 3049 BRIDGEFORD WAY ,805 0 $157,745 $1,585 6C $187, K HOVNANIAN BLACKSTONE CA 3055 BRIDGEFORD WAY ,549 0 $194,417 $1,585 6C $187, K HOVNANIAN BLACKSTONE CA 5125 BRENTFORD WAY ,456 0 $153,087 $1,585 6C $187, K HOVNANIAN BLACKSTONE CA 5129 BRENTFORD WAY ,670 0 $129,222 $1,585 6C $187, K HOVNANIAN BLACKSTONE CA 5130 BRENTFORD WAY ,761 0 $157,162 $1,585 6C $187, K HOVNANIAN BLACKSTONE CA 5122 BRENTFORD WAY ,935 0 $159,491 $1,585 6C $187, K HOVNANIAN BLACKSTONE CA 5135 BRENTFORD WAY ,237 0 $136,790 $1,585 6C $187, K HOVNANIAN BLACKSTONE CA 5139 BRENTFORD WAY ,062 0 $134,462 $1,585 6C $187, K HOVNANIAN BLACKSTONE CA 5143 BRENTFORD WAY ,021 0 $147,268 $1,585 6C $187, K HOVNANIAN BLACKSTONE CA 5149 BRENTFORD WAY ,454 0 $139,701 $1,585 6C $187, K HOVNANIAN BLACKSTONE CA 5153 BRENTFORD WAY ,587 0 $154,835 $1,585 6C $187, K HOVNANIAN BLACKSTONE CA 5159 BRENTFORD WAY ,676 0 $169,387 $1,585 6C $187, K HOVNANIAN BLACKSTONE CA 5165 BRENTFORD WAY ,810 0 $197,909 $1,585 6C $187, K HOVNANIAN BLACKSTONE CA 5173 BRENTFORD WAY ,803 0 $144,357 $1,585 6C $187, K HOVNANIAN BLACKSTONE CA 5185 BRENTFORD WAY ,914 0 $319,566 $1,585 6C $187, K HOVNANIAN BLACKSTONE CA 5187 BRENTFORD WAY ,515 0 $260,774 $1,585 6C $187, K HOVNANIAN BLACKSTONE CA 5189 BRENTFORD WAY ,647 0 $275,909 $1,585 6C $187, K HOVNANIAN BLACKSTONE CA 5202 BRENTFORD WAY ,540 0 $127,476 $1,585 6C $187, K HOVNANIAN BLACKSTONE CA 5198 BRENTFORD WAY ,320 0 $111,178 $1,585 6C $187, K HOVNANIAN BLACKSTONE CA 5192 BRENTFORD WAY ,846 0 $144,940 $1,585 6C $187, K HOVNANIAN BLACKSTONE CA 5180 BRENTFORD WAY ,108 0 $116,812 $1,585 6C $187, K HOVNANIAN BLACKSTONE CA 5176 BRENTFORD WAY ,890 0 $145,522 $1,585 6C $187, K HOVNANIAN BLACKSTONE CA 5172 BRENTFORD WAY ,498 0 $140,282 $1,585 6C $187, K HOVNANIAN BLACKSTONE CA 5168 BRENTFORD WAY ,282 0 $150,760 $1,585 6C $187, K HOVNANIAN BLACKSTONE CA 5164 BRENTFORD WAY ,326 0 $151,341 $1,585 6C $187, K HOVNANIAN BLACKSTONE CA 5160 BRENTFORD WAY ,892 0 $158,908 $1,585 6C $187, K HOVNANIAN BLACKSTONE CA 5156 BRENTFORD WAY ,062 0 $134,462 $1,585 6C $187, K HOVNANIAN BLACKSTONE CA 5150 BRENTFORD WAY ,757 0 $130,387 $1,585 6C $187, K HOVNANIAN BLACKSTONE CA 5144 BRENTFORD WAY ,716 0 $143,193 $1,585 6C $187, K HOVNANIAN BLACKSTONE CA 5138 BRENTFORD WAY ,890 0 $145,522 $1,585 6C $187, KB HOME SACRAMENTO INC CA ,375 0 $170,789 $1,585 6B $219, KB HOME SACRAMENTO INC CA 3505 LANDSDALE WAY ,937 0 $153,711 $1,585 6B $219, KB HOME SACRAMENTO INC CA 3509 LANDSDALE WAY ,284 0 $145,948 $1,585 6B $219, KB HOME SACRAMENTO INC CA 3513 LANDSDALE WAY ,282 0 $134,044 $1,585 6B $219, KB HOME SACRAMENTO INC CA 3517 LANDSDALE WAY ,803 0 $128,351 $1,585 6B $219, KB HOME SACRAMENTO INC CA 3521 LANDSDALE WAY ,892 0 $141,290 $1,585 6B $219,032

276 APN Owner Name Site Address Acreage Lot Sqft Bldg Sqft Value Land GrandMaxTax Actual Village Allocated Value KB HOME SACRAMENTO INC CA 3525 LANDSDALE WAY ,979 0 $142,325 $1,585 6B $515, KB HOME SACRAMENTO INC CA 3529 LANDSDALE WAY ,458 0 $148,018 $1,585 6B $515, KB HOME SACRAMENTO INC CA 3533 LANDSDALE WAY ,935 0 $141,807 $1,585 6B $219, KB HOME SACRAMENTO INC CA 3537 LANDSDALE WAY ,284 0 $145,948 $1,585 6B $515, KB HOME SACRAMENTO INC CA 3541 LANDSDALE WAY ,545 0 $149,053 $1,585 6B $515, KB HOME SACRAMENTO INC CA 3545 LANDSDALE WAY ,676 0 $150,605 $1,585 6B $219, KB HOME SACRAMENTO INC CA 3549 LANDSDALE WAY ,119 0 $203,395 $1,585 6B $515, KB HOME SACRAMENTO INC CA 3567 LANDSDALE WAY ,896 0 $165,097 $1,585 6B $515, KB HOME SACRAMENTO INC CA 3573 LANDSDALE WAY ,070 0 $167,166 $1,585 6B $515, KB HOME SACRAMENTO INC CA 700 KILWOOD CT ,587 0 $137,667 $1,585 6B $219, KB HOME SACRAMENTO INC CA 706 KILWOOD CT ,708 0 $79,701 $1,585 6B $219, KB HOME SACRAMENTO INC CA ,579 0 $90,052 $1,585 6B $219, KB HOME SACRAMENTO INC CA ,492 0 $89,018 $1,585 6B $219, KB HOME SACRAMENTO INC CA 707 KILWOOD CT ,534 0 $77,632 $1,585 6B $219, KB HOME SACRAMENTO INC CA 701 KILWOOD CT ,411 0 $123,693 $1,585 6B $219, KB HOME SACRAMENTO INC CA 606 COLBY CT ,578 0 $78,149 $1,585 6B $219, KB HOME SACRAMENTO INC CA ,579 0 $90,052 $1,585 6B $219, KB HOME SACRAMENTO INC CA 3211 HASKELL WAY ,754 0 $92,123 $1,585 6B $219, KB HOME SACRAMENTO INC CA 3215 HASKELL WAY ,970 0 $82,807 $1,585 6B $219, KB HOME SACRAMENTO INC CA 3219 HASKELL WAY ,534 0 $77,632 $1,585 6B $219, KB HOME SACRAMENTO INC CA 3223 HASKELL WAY ,665 0 $79,184 $1,585 6B $219, KB HOME SACRAMENTO INC CA 3227 HASKELL WAY ,403 0 $76,078 $1,585 6B $219, KB HOME SACRAMENTO INC CA 3231 HASKELL WAY ,318 0 $86,947 $1,585 6B $219, KB HOME SACRAMENTO INC CA 3237 HASKELL WAY ,447 0 $76,596 $1,585 6B $219, KB HOME SACRAMENTO INC CA 3243 HASKELL WAY ,665 0 $79,180 $1,585 6B $219, KB HOME SACRAMENTO INC CA 3249 HASKELL WAY ,752 0 $80,219 $1,585 6B $219, KB HOME SACRAMENTO INC CA 3261 HASKELL WAY ,970 0 $82,807 $1,585 6B $219, KB HOME SACRAMENTO INC CA 3267 HASKELL WAY ,057 0 $83,842 $1,585 6B $219, KB HOME SACRAMENTO INC CA 3560 LANDSDALE WAY ,326 0 $134,562 $1,585 6B $515, KB HOME SACRAMENTO INC CA 3546 LANDSDALE WAY ,447 0 $76,596 $1,585 6B $515, KB HOME SACRAMENTO INC CA 3542 LANDSDALE WAY ,360 0 $75,561 $1,585 6B $515, KB HOME SACRAMENTO INC CA 3538 LANDSDALE WAY ,447 0 $76,596 $1,585 6B $515, KB HOME SACRAMENTO INC CA 3534 LANDSDALE WAY ,403 0 $76,078 $1,585 6B $515, KB HOME SACRAMENTO INC CA 3530 LANDSDALE WAY ,534 0 $77,632 $1,585 6B $515, KB HOME SACRAMENTO INC CA 3526 LANDSDALE WAY ,447 0 $76,596 $1,585 6B $515, KB HOME SACRAMENTO INC CA 3522 LANDSDALE WAY ,100 0 $84,360 $1,585 6B $515, KB HOME SACRAMENTO INC CA 3518 LANDSDALE WAY ,665 0 $79,184 $1,585 6B $219, KB HOME SACRAMENTO INC CA 3514 LANDSDALE WAY ,970 0 $82,807 $1,585 6B $515, KB HOME SACRAMENTO INC CA 3510 LANDSDALE WAY ,795 0 $80,737 $1,585 6B $219, KB HOME SACRAMENTO INC CA 3506 LANDSDALE WAY ,187 0 $85,395 $1,585 6B $219, KB HOME SACRAMENTO INC CA 3500 LANDSDALE WAY ,926 0 $82,289 $1,585 6B $219, MERITAGE HOMES OF CA INC C 5565 ASPEN MEADOWS DR ,460 0 $12,543 $1,950 5B1 $262, MERITAGE HOMES OF CA INC C 2086 KEYSTONE DR ,153 0 $12,543 $1,950 5B1 $262, MERITAGE HOMES OF CA INC C 2592 COBBLE ROCK WAY ,144 0 $21,510 $1,950 5B2 $262, MERITAGE HOMES OF CA INC C 2604 COBBLE ROCK WAY ,272 0 $21,510 $1,950 5B2 $262, MERITAGE HOMES OF CA INC C 2616 COBBLE ROCK WAY ,490 0 $21,521 $1,950 5B2 $262, MERITAGE HOMES OF CA INC C 2626 COBBLE ROCK WAY ,447 0 $21,521 $1,950 5B2 $262, MERITAGE HOMES OF CA INC C 2638 COBBLE ROCK WAY ,678 0 $21,521 $1,950 5B2 $262, MERITAGE HOMES OF CA INC C 2650 COBBLE ROCK WAY ,392 0 $21,521 $1,950 5B2 $640, MERITAGE HOMES OF CA INC C 2658 COBBLE ROCK WAY ,136 0 $21,521 $1,950 5B2 $640, MERITAGE HOMES OF CA INC C 5581 ASPEN MEADOWS DR ,066 0 $21,521 $1,950 5B2 $262, MERITAGE HOMES OF CA INC C 5589 ASPEN MEADOWS DR ,720 0 $21,521 $1,950 5B2 $262, MERITAGE HOMES OF CA INC C 5597 ASPEN MEADOWS DR ,502 0 $21,521 $1,950 5B2 $262, MERITAGE HOMES OF CA INC C 5607 ASPEN MEADOWS DR ,981 0 $21,521 $1,950 5B2 $262, MERITAGE HOMES OF CA INC C 2930 ROYAL OAKS DR ,534 0 $21,521 $1,950 5B2 $262, MERITAGE HOMES OF CA INC C 2920 ROYAL OAKS DR ,053 0 $21,521 $1,950 5B2 $262, MERITAGE HOMES OF CA INC C 1800 BRANDYWOOD WAY ,937 0 $21,521 $1,950 5B2 $640, MERITAGE HOMES OF CA INC C 5549 ASPEN MEADOWS DR ,117 0 $21,522 $1,950 5B2 $640, MERITAGE HOMES OF CA INC C 5559 ASPEN MEADOWS DR ,415 0 $21,522 $1,950 5B2 $262, MERITAGE HOMES OF CA INC C 1880 BRANDYWOOD WAY ,763 0 $21,522 $1,950 5B2 $640, MERITAGE HOMES OF CA INC C 1868 BRANDYWOOD WAY ,373 0 $21,522 $1,950 5B2 $640, MERITAGE HOMES OF CA INC C 1864 BRANDYWOOD WAY ,458 0 $21,522 $1,950 5B2 $640, MERITAGE HOMES OF CA INC C 1858 BRANDYWOOD WAY ,589 0 $21,522 $1,950 5B2 $640, MERITAGE HOMES OF CA INC C 1852 BRANDYWOOD WAY ,197 0 $21,522 $1,950 5B2 $262, MERITAGE HOMES OF CA INC C 1846 BRANDYWOOD WAY ,327 0 $21,522 $1,950 5B2 $262, MERITAGE HOMES OF CA INC C 1840 BRANDYWOOD WAY ,502 0 $21,522 $1,950 5B2 $262, MERITAGE HOMES OF CA INC C 1834 BRANDYWOOD WAY ,632 0 $21,522 $1,950 5B2 $640, MERITAGE HOMES OF CA INC C 1826 BRANDYWOOD WAY ,415 0 $21,522 $1,950 5B2 $640, MERITAGE HOMES OF CA INC C 1818 BRANDYWOOD WAY ,066 0 $21,522 $1,950 5B2 $640, MERITAGE HOMES OF CA INC C 1855 BRANDYWOOD WAY ,240 0 $21,521 $1,950 5B2 $640, MERITAGE HOMES OF CA INC C 1863 BRANDYWOOD WAY ,197 0 $21,521 $1,950 5B2 $640, MERITAGE HOMES OF CA INC C 1873 BRANDYWOOD WAY ,720 0 $21,521 $1,950 5B2 $640, MERITAGE HOMES OF CA INC C 1879 BRANDYWOOD WAY ,242 0 $21,521 $1,950 5B2 $640, MERITAGE HOMES OF CA INC C 5477 ASPEN MEADOWS DR ,163 0 $21,522 $1,950 5B2 $262, MERITAGE HOMES OF CA INC C 5437 ASPEN MEADOWS DR ,007 0 $21,522 $1,950 5B2 $262, MERITAGE HOMES OF CA INC C 5421 ASPEN MEADOWS DR ,837 0 $21,522 $1,950 5B2 $262, MERITAGE HOMES OF CA INC C 5407 ASPEN MEADOWS DR ,926 0 $21,522 $1,950 5B2 $262, MERITAGE HOMES OF CA INC C 5397 ASPEN MEADOWS DR ,409 0 $21,522 $1,950 5B2 $262, MERITAGE HOMES OF CA INC C 1329 CORNERSTONE DR ,536 0 $21,522 $1,950 5B2 $262, MERITAGE HOMES OF CA INC C 1315 CORNERSTONE DR ,964 0 $21,522 $1,950 5B2 $262, MERITAGE HOMES OF CA INC C 1303 CORNERSTONE DR ,750 0 $21,522 $1,950 5B2 $262, MERITAGE HOMES OF CA INC C 1291 CORNERSTONE DR ,532 0 $21,522 $1,950 5B2 $262, MERITAGE HOMES OF CA INC C 1281 CORNERSTONE DR ,104 0 $21,522 $1,950 5B2 $262, MERITAGE HOMES OF CA INC C 1273 CORNERSTONE DR ,251 0 $21,522 $1,950 5B2 $262,667

277 APN Owner Name Site Address Acreage Lot Sqft Bldg Sqft Value Land GrandMaxTax Actual Village Allocated Value MERITAGE HOMES OF CA INC C 1267 CORNERSTONE DR ,630 0 $21,522 $1,950 5B2 $262, MERITAGE HOMES OF CA INC C 1261 CORNERSTONE DR ,043 0 $21,522 $1,950 5B2 $262, NEW HOME CO NOR CA A DE LL ,441?? $1,001 Lot W1 $176, NEW HOME CO NOR CA A DE LL ,746?? $1,001 Lot W1 $176, NEW HOME CO NOR CA A DE LL ,398?? $1,001 Lot W1 $450, NEW HOME CO NOR CA A DE LL ,398?? $1,001 Lot W1 $450, NEW HOME CO NOR CA A DE LL ,095?? $1,001 Lot W1 $450, NEW HOME CO NOR CA A DE LL ,142?? $1,001 Lot W1 $176, NEW HOME CO NOR CA A DE LL ,142?? $1,001 Lot W1 $176, NEW HOME CO NOR CA A DE LL ,009?? $1,001 Lot W1 $176, NEW HOME CO NOR CA A DE LL ,661?? $1,001 Lot W1 $176, NEW HOME CO NOR CA A DE LL ,485?? $1,001 Lot W1 $176, NEW HOME CO NOR CA A DE LL ,441?? $1,001 Lot W1 $176, NEW HOME CO NOR CA A DE LL ,528?? $1,001 Lot W1 $176, NEW HOME CO NOR CA A DE LL ,441?? $1,001 Lot W1 $176, NEW HOME CO NOR CA A DE LL ,138?? $1,001 Lot W1 $176, NEW HOME CO NOR CA A DE LL ,008?? $1,001 Lot W1 $450, NEW HOME CO NOR CA A DE LL ,441?? $1,001 Lot W1 $450, NEW HOME CO NOR CA A DE LL ,528?? $1,001 Lot W1 $450, NEW HOME CO NOR CA A DE LL ,441?? $1,001 Lot W1 $176, NEW HOME CO NOR CA A DE LL ,441?? $1,001 Lot W1 $176, NEW HOME CO NOR CA A DE LL ,182?? $1,001 Lot W1 $176, NEW HOME CO NOR CA A DE LL ,746?? $1,001 Lot W1 $176, NEW HOME CO NOR CA A DE LL ,615?? $1,001 Lot W1 $450, NEW HOME CO NOR CA A DE LL ,528?? $1,001 Lot W1 $450, NEW HOME CO NOR CA A DE LL ,920?? $1,001 Lot W1 $450, NEW HOME CO NOR CA A DE LL ,136?? $1,001 Lot W1 $176, NEW HOME CO NOR CA A DE LL ,136?? $1,001 Lot W1 $176, NEW HOME CO NOR CA A DE LL ,441?? $1,001 Lot W1 $176, NEW HOME CO NOR CA A DE LL ,964?? $1,001 Lot W1 $176, NEW HOME CO NOR CA A DE LL ,267?? $1,001 Lot W1 $176, NEW HOME CO NOR CA A DE LL ,267?? $1,001 Lot W1 $176, NEW HOME CO NOR CA A DE LL ,267?? $1,001 Lot W1 $176, NEW HOME CO NOR CA A DE LL ,267?? $1,001 Lot W1 $176, NEW HOME CO NOR CA A DE LL ,267?? $1,001 Lot W1 $176, NEW HOME CO NOR CA A DE LL ,267?? $1,001 Lot W1 $450, NEW HOME CO NOR CA A DE LL ,267?? $1,001 Lot W1 $450, NEW HOME CO NOR CA A DE LL ,267?? $1,001 Lot W1 $450, NEW HOME CO NOR CA A DE LL ,267?? $1,001 Lot W1 $176, NEW HOME CO NOR CA A DE LL ,267?? $1,001 Lot W1 $176, NEW HOME CO NOR CA A DE LL , Lot W NEW HOME CO NOR CA A DE LL , Lot W NEW HOME CO NOR CA A DE LL , Lot W NEW HOME CO NOR CA A DE LL , Lot W NEW HOME CO NOR CA A DE LL , Lot W NEW HOME CO NOR CA A DE LL , Lot W NEW HOME CO NOR CA A DE LL , $1,001 Lot W2 $176, NEW HOME CO NOR CA A DE LL , $1,001 Lot W2 $176, NEW HOME CO NOR CA A DE LL , $1,001 Lot W2 $176, NEW HOME CO NOR CA A DE LL , $1,001 Lot W2 $176, NEW HOME CO NOR CA A DE LL , $1,001 Lot W2 $176, NEW HOME CO NOR CA A DE LL , $1,001 Lot W2 $176, NEW HOME CO NOR CA A DE LL , $1,001 Lot W2 $176, NEW HOME CO NOR CA A DE LL , $1,001 Lot W2 $176, NEW HOME CO NOR CA A DE LL , $1,001 Lot W2 $176, NEW HOME CO NOR CA A DE LL , $1,001 Lot W2 $176, NEW HOME CO NOR CA A DE LL , $1,001 Lot W2 $176, NEW HOME CO NOR CA A DE LL , $1,001 Lot W2 $176, NEW HOME CO NOR CA A DE LL , $1,001 Lot W2 $176, NEW HOME CO NOR CA A DE LL , $1,001 Lot W2 $176, NEW HOME CO NOR CA A DE LL , $1,001 Lot W2 $176, NEW HOME CO NOR CA A DE LL , $1,001 Lot W2 $176, NEW HOME CO NOR CA A DE LL , $1,001 Lot W2 $176, NEW HOME CO NOR CA A DE LL , $1,001 Lot W2 $176, NEW HOME CO NOR CA A DE LL , $1,001 Lot W2 $176, NEW HOME CO NOR CA A DE LL , $1,001 Lot W2 $176, NEW HOME CO NOR CA A DE LL , $1,001 Lot W2 $176, NEW HOME CO NOR CA A DE LL , $1,001 Lot W2 $176, NEW HOME CO NOR CA A DE LL , $1,001 Lot W2 $176, NEW HOME CO NOR CA A DE LL , $1,001 Lot W2 $176, NEW HOME CO NOR CA A DE LL , $1,001 Lot W2 $176, NEW HOME CO NOR CA A DE LL , $1,001 Lot W2 $176, NEW HOME CO NOR CA A DE LL , $1,001 Lot W2 $176, NEW HOME CO NOR CA A DE LL , $1,001 Lot W2 $176, NEW HOME CO NOR CA A DE LL , $1,001 Lot W2 $176, NEW HOME CO NOR CA A DE LL , $1,001 Lot W2 $176, NEW HOME CO NOR CA A DE LL , $1,001 Lot W2 $176, NEW HOME CO NOR CA A DE LL , $1,001 Lot W2 $176, NEW HOME CO NOR CA A DE LL , $1,001 Lot W2 $176, NEW HOME CO NOR CA A DE LL , $1,001 Lot W2 $176, NEW HOME CO NOR CA A DE LL Lot W NEW HOME CO NOR CA A DE LL Lot W NEW HOME CO NOR CA A DE LL Lot W AKT WEST VLLY INVESTORS CA 164 KEYSTONE CT ,522 0 $57,561 $1,950 7C $268, AKT WEST VLLY INVESTORS CA 5364 BRENTFORD WAY ,894 0 $57,561 $1,950 7C $221,705

278 APN Owner Name Site Address Acreage Lot Sqft Bldg Sqft Value Land GrandMaxTax Actual Village Allocated Value AKT WEST VLLY INVESTORS CA 405 LOGANBERRY CT ,984 0 $28,779 $1,950 3B $50, AKT WEST VLLY INVESTORS CA 395 LOGANBERRY CT ,783 0 $28,779 $1,950 3B $76, AKT WEST VLLY INVESTORS CA 394 LOGANBERRY CT ,310 0 $28,779 $1,950 3B $59, AKT WEST VLLY INVESTORS CA 919 LYNWOOD CT ,846 0 $28,779 $1,950 3B $124, AKT WEST VLLY INVESTORS CA ,422 0 $107,582 $11,702 Lot Z $109, AKT WEST VLLY INVESTORS CA ,659 0 $97,337 $5,851 Lot Y $99, DI RE DANNY D & SHERALYN ,975 0 $85,279 $1,950 5C $124, DI RE DANNY D & SHERALYN ,422 0 $77,283 $1,950 5C $110, DI RE DANNY D & SHERALYN ,839 0 $69,288 $1,950 5C $102, DI RE DANNY D & SHERALYN ,294 0 $77,283 $1,950 5C $111, DI RE DANNY D & SHERALYN ,661 0 $69,288 $1,950 5C $100, QUEENAN MICHAEL JOHN & BEULAH JANE 3021 ALDRIDGE WAY ,540 2,361 $79,948 $1,585 1A $500, WILLIAMS JAMES & PAMELA 798 CANDLEWOOD DR ,958 2,954 $76,844 $1,950 3A $630, BAI GUANG & LI RONG 2109 AIKEN WAY ,854 2,660 $117,552 $1,585 4 $540, KALRA GAURAV BOBBY 2113 AIKEN WAY ,848 2,347 $115,780 $1,585 4 $540, LUTZO MARK & DANA 2127 AIKEN WAY ,369 2,347 $115,780 $1,585 4 $540, GANAPATHY VIJAYAKUMAR & AMIRTHALINGAM KAMAL 2126 AIKEN WAY ,932 3,085 $115,780 $1,585 4 $540, MAHESWARAN KARTHIKEYAN & KARTHIKEYAN SHABITH 2612 WAGNER PL ,407 3,649 $116,370 $1,585 4 $540, PATTERSON SEAN & RENEE 2608 WAGNER PL ,932 3,085 $116,370 $1,585 4 $540, NEER ROBIN & NATHAN 2600 WAGNER PL ,549 3,085 $116,369 $1,585 4 $540, MUZZI VINCENT ANTHONY & MELISSA 5340 BRENTFORD WAY ,087 2,453 $118,750 $1,950 7A $640, HERNANDEZ ALLEN JOHN & CHRYSTELLE JOY 5370 BRENTFORD WAY ,553 0 $118,750 $1,950 7A $640, AGUERO JOHN C & JOANNE M 5329 BRENTFORD WAY ,424 2,701 $118,750 $1,950 7A $640, RODRIGUEZ MADELINE & OH PHILIP SE 5313 BRENTFORD WAY ,068 4,041 $118,750 $1,950 7A $640, MARSH FRANK E & CAROL 5305 BRENTFORD WAY ,810 3,415 $118,750 $1,950 7A $640, PEREZ CARLOS G & MARISA T 5297 BRENTFORD WAY ,553 4,041 $189,846 $1,950 7A $640, GRASS THOMAS LESLIE & SUSAN JANE 5281 BRENTFORD WAY ,988 2,453 $189,846 $1,950 7A $640, OLIVER CLINTON 5265 BRENTFORD WAY ,068 4,041 $189,846 $1,950 7A $640, MILLER GARY CHRISTOPHER & MARGARET THERESA 5257 BRENTFORD WAY ,375 2,701 $189,846 $1,950 7A $640, DIGIOIA VINCENT J & ANITA 5233 BRENTFORD WAY ,504 0 $189,846 $1,950 7A $640, LEE JOHN C TR & LEE J C REV TRUST 12/23/ KEYSTONE DR ,424 0 $189,846 $1,950 7A $640, LINDEN MARCUS H & JENNIFER A 184 KEYSTONE CT ,682 0 $189,846 $1,950 7A $640, MURRAY CAROL LEE 2212 AIKEN WAY ,716 2,385 $143,193 $1,585 6A $530, EASTMAN SHAWN & LYSSA 2200 AIKEN WAY ,670 0 $129,222 $1,585 6A $530, RODRIGUEZ ROY PHILLIP & ROSEMARY PANDO 2203 AIKEN WAY ,322 2,500 $124,566 $1,585 6A $530, EVERHART RYAN & AMY 2209 AIKEN WAY ,062 0 $134,462 $1,585 6A $530, JEPPESEN BRUCE LEON & AMY J 5080 BRENTFORD WAY ,759 3,474 $143,776 $1,585 6A $530, TALWAI MURALI & CHETANA 5063 BRENTFORD WAY ,882 3,878 $91,969 $1,585 6A $530, SIMSON STANLEY C & VALSENE R 869 CANDLEWOOD DR ,504 0 $76,844 $1,950 3B $630, WERTH DUANE C & CHERI H 877 CANDLEWOOD DR ,632 0 $76,844 $1,950 3B $630, ROSFELD RODNEY R TR & ROSFELD R R REV TRUST 1/17/0 897 CANDLEWOOD DR ,068 0 $76,844 $1,950 3B $630, ROSENBLATT BARRY & EUGENIA N 939 CANDLEWOOD DR ,710 0 $76,844 $1,950 3B $630, BEARD JERRY RICHARD & KIMBERLY JO 1950 KEYSTONE DR ,632 0 $121,122 $1,950 5A $670, ARACE DANIEL JOHN & TONYA RENEE 1956 KEYSTONE DR ,761 0 $121,122 $1,950 5A $670, MCCARTHY KATHRYN MEIER & KEVIN ALLEN 1962 KEYSTONE DR ,197 3,108 $121,122 $1,950 5A $670, DIVINE ERIC JAMES & AMANDA NUGENT 1978 KEYSTONE DR ,197 0 $121,122 $1,950 5A $670, BALTAO NICOLAI C & TESSARRAH G 1986 KEYSTONE DR ,326 4,041 $121,122 $1,950 5A $670, RACE PAMELA RUTH & JACK DAVID 1994 KEYSTONE DR ,375 2,861 $121,122 $1,950 5A $670, CHATFIELD GEORGE A & TERI LYNN 2000 KEYSTONE DR ,246 3,108 $121,122 $1,950 5A $670, GILLIS SARA A & BLUME DAVID M 2003 KEYSTONE DR ,375 4,041 $121,122 $1,950 5A $670, HONG HENRY K & ANGELA M 1993 KEYSTONE DR ,632 3,108 $121,122 $1,950 5A $670, ANCHETA EFREN & IMEE I 1989 KEYSTONE DR ,068 2,861 $121,122 $1,950 5A $670, PIAZZA JAMES N & LINDA D 1983 KEYSTONE DR ,504 3,108 $121,122 $1,950 5A $670, ILLIMAN JAMES PAUL & MORALEZ MILLIMAN ERICA ELE 1967 KEYSTONE DR ,197 4,253 $121,122 $1,950 5A $670, ANDERSON ROBERT MICHAEL & SPARKS ANDERSON LENA 1953 KEYSTONE DR ,632 0 $121,122 $1,950 5A $670, BERRIER DONNA J & ANDERSON DAVID KEITH 1278 CORNERSTONE DR ,197 0 $121,122 $1,950 5A $670, EMERY BURROWS & ELAINE 1286 CORNERSTONE DR ,197 0 $121,122 $1,950 5A $670, SCHULTZ WARREN & RANDI 1292 CORNERSTONE DR ,197 0 $121,122 $1,950 5A $670, GEORGE JAYA & JOSEN 1310 CORNERSTONE DR ,197 0 $121,122 $1,950 5A $670, MEHTA ANAND & LEENA 1320 CORNERSTONE DR ,632 0 $121,122 $1,950 5A $670, POKORNY DOUGLAS R & LAURA R 1330 CORNERSTONE DR ,632 4,253 $121,122 $1,950 5A $670, SKIKOS MICHAEL P & MONG YIN 5390 ASPEN MEADOWS DR ,117 3,653 $121,122 $1,950 5A $670, SHIELDS NICOLE MARIE & DOWNES JONATHAN ROBERT 3555 LANDSDALE WAY ,647 0 $245,317 $1,585 6B $515, BRENT LETICIA CHERI & STINNETT KEVIN LEON 3561 LANDSDALE WAY ,380 0 $206,501 $1,585 6B $515, ALDRED SAMUEL K & JENNIFER 3579 LANDSDALE WAY ,030 2,891 $190,457 $1,585 6B $515, GHILARDUCCI COLE ANTHONY & JOHANNA JACINTO 3585 LANDSDALE WAY ,117 3,413 $191,492 $1,585 6B $515, MORRIS MARK L 118 HASKELL CT ,441 3,413 $314,150 $1,585 6B $515, LAFOUNTAIN PANDORA & DEGALLERY ANTHONY 114 HASKELL CT ,197 3,413 $144,913 $1,585 6B $515, PINE JOANNA & JEREMY 900 LANDSDALE CT ,502 2,891 $148,536 $1,585 6B $515, BINION MICHAEL JR & KENDRA 906 LANDSDALE CT ,839 2,533 $81,254 $1,585 6B $515, MILLER MARK & BRITNI 912 LANDSDALE CT ,884 3,413 $93,675 $1,585 6B $515, WOOD ELLEN C & JAMES D 913 LANDSDALE CT ,581 2,645 $101,956 $1,585 6B $515, MATHEW SUNUP SAM & GEORGE ASHA 907 LANDSDALE CT ,536 2,891 $89,535 $1,585 6B $515, KANU JOHN & ISHA Y 901 LANDSDALE CT ,718 2,891 $139,219 $1,585 6B $515, CARVER JOHN S & CHRISTINA 812 VALENCIA CT ,579 2,734 $90,052 $1,585 6B $515,000

279 APN Owner Name Site Address Acreage Lot Sqft Bldg Sqft Value Land GrandMaxTax Actual Village Allocated Value KLEIN MICHAEL S & LEAH 807 VALENCIA CT ,839 0 $81,254 $1,585 6B $515, SCHLEIERMACHER KARR & VILLARAZA MARYANNE 3273 HASKELL WAY ,231 2,612 $85,912 $1,585 6B $515, BEAN KEVIN & LAUREN 3279 HASKELL WAY ,108 2,891 $131,974 $1,585 6B $515, WILLIS JOHN & LONGWELL WILLIS LISA 2055 KEYSTONE DR ,023 2,762 $12,543 $1,950 5B2 $640, PFEIFER MAUREEN P TR & PFEIFER FAM TRUST 7/3/ ASPEN MEADOWS DR ,284 3,104 $12,543 $1,950 5B3 $640, TINSLEY CHARLES & GENIE 5444 ASPEN MEADOWS DR ,284 2,762 $12,543 $1,950 5B4 $640, PIRIO LORETTE 5456 ASPEN MEADOWS DR ,026 3,104 $12,543 $1,950 5B5 $640, SIU ERIC KWUN WAI & CHOW CHERYL WING SHIN 1806 BRANDYWOOD WAY ,678 0 $21,521 $1,950 5B2 $640, HEMINGTON MICHAEL S & LINDSEY M 1794 BRANDYWOOD WAY ,502 0 $21,521 $1,950 5B2 $640, PITTO RONALD A & NANCY K 1786 BRANDYWOOD WAY ,327 0 $21,521 $1,950 5B2 $640, JIGOUR ROBIN JOHN 2670 COBBLE ROCK WAY ,759 0 $21,522 $1,950 5B2 $640, ALSAMARIAE COREY & SHARIF RANA VANESSA 2678 COBBLE ROCK WAY ,643 0 $21,522 $1,950 5B2 $640, ENGELMAN ELIZABETH & FRANK 2686 COBBLE ROCK WAY ,810 0 $21,522 $1,950 5B2 $640, NIZAR PUTHIYA & SHIRIN 5541 ASPEN MEADOWS DR ,373 0 $21,522 $1,950 5B2 $640, HAMERSKI DENNIS MICHAEL & SANDRA M 5553 ASPEN MEADOWS DR ,028 2,762 $21,522 $1,950 5B2 $640, PEREZ JOANNE PANGILINAN 1812 BRANDYWOOD WAY ,502 0 $21,522 $1,950 5B2 $640, GURANTZ MICHAEL & MIRIAM 1793 BRANDYWOOD WAY ,023 0 $21,522 $1,950 5B2 $640, CHILDS MATTHEW & CANCHOLA ROBERTO 1799 BRANDYWOOD WAY ,240 0 $21,521 $1,950 5B2 $640, REALI LIA & BLETH MARK 1809 BRANDYWOOD WAY ,066 0 $21,521 $1,950 5B2 $640, MICCO JEAN PATRICK & PANKEY LESLIE 1815 BRANDYWOOD WAY ,023 0 $21,521 $1,950 5B2 $640, CARRENO JULIEN & VERONICA 1823 BRANDYWOOD WAY ,371 0 $21,521 $1,950 5B2 $640, DEVINE MICHAEL E & BRENDA L 1829 BRANDYWOOD WAY ,023 0 $21,521 $1,950 5B2 $640, NEER SUSAN MICHELLE & MARK THOMAS 1835 BRANDYWOOD WAY ,110 0 $21,521 $1,950 5B2 $640, POWERS KEVIN & LYNN 1843 BRANDYWOOD WAY ,110 0 $21,521 $1,950 5B2 $640, DIETRICH CHRISTIAN ERIC & SANDRA LYNN 1849 BRANDYWOOD WAY ,110 0 $21,521 $1,950 5B2 $640, LUCCHESI DAVID P & KATHLEEN 5471 ASPEN MEADOWS DR ,642 4,202 $21,522 $1,950 5B2 $640, LE VINE DEBORAH A TR & LE VINE D A TRUST 4/20/ ASPEN MEADOWS DR ,390 0 $21,522 $1,950 5B2 $640, JAMES JOHN BARLOW & MARCELLA JORDAN 5459 ASPEN MEADOWS DR ,096 0 $21,522 $1,950 5B2 $640,000

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320 D - READDRESSING/REASSIGNING APPRAISAL REPORTS

321 Readdressing/Reassigning Appraisal Reports Seevers Jordan Ziegenmeyer adheres to the requirements of the Edition of the Uniform Standards of Professional Appraisal Practice (USPAP). This edition is effective from January 1, 2016 through December 31, The following excerpts pertain to readdressing/reassigning appraisal reports: Advisory Opinion 26, Page A-164: Once a report has been prepared for a named client(s) and any other identified intended users and for an identified intended use, the appraiser cannot readdress (transfer) the report to another party. Advisory Opinion 27, Pages A-166 to A-169: Situations often arise in which appraisers who have previously appraised a property are asked by a different party to appraise the same property... Accepting the assignment from the subsequent prospective client is not prohibited by USPAP, assuming appropriate disclosure is made to the client before being engaged and any existing confidential information is handled properly... If there is a new potential client, valuation services performed for that new client would constitute a new assignment and the assignment results would be specific to that new assignment. Frequently Asked Question No. 119, Page F-266: It is never permissible to readdress a report by simply changing the client s name on a completed report, regardless of whether the first client gave a release. The request from Lender B must be treated as a new assignment.

322 E - GLOSSARY OF TERMS

323 GLOSSARY OF TERMS Unless otherwise noted, the following definitions are from The Dictionary of Real Estate Appraisal, 6th ed. (Chicago: Appraisal Institute, 2015). Aggregate of Retail Values: The sum of the separate and distinct market value opinions for each of the units in a condominium, subdivision development, or portfolio of properties, as of the date of valuation. The aggregate of retail values does not represent the value of all the units as though sold together in a single transaction; it is simply the total of the individual market value conclusions. As Is Market Value: The estimate of the market value of real property in its current physical condition, use, and zoning as of the appraisal date. Band of Investment: A technique in which the capitalization rates attributable to components of an investment are weighted and combined to derive a weighted-average rate attributable to the total investment. Bulk Value: The value of multiple units, subdivided plots, or properties in a portfolio as though sold together in a single transaction. Comparative-Unit Method: A method used to derive a cost estimate in terms of dollars per unit of area or volume based on known costs of similar structures that are adjusted for time and physical differences; usually applied to total building area. Cost Approach: A set of procedures through which a value indication is derived for the fee simple estate by estimating the current cost to construct a reproduction of (or replacement for) the existing structure, including an entrepreneurial incentive or profit; deducting depreciation from the total cost; and adding the estimated land value. Adjustments may then be made to the indicated value of the fee simple estate in the subject property to reflect the value of the property interest being appraised. Depreciation: In appraisal, a loss in property value from any cause; the difference between the cost of an improvement on the effective date of the appraisal and the market value of the improvement on the same date. Direct Capitalization: A method used to convert an estimate of a single year s income expectancy into an indication of value in one direct step, either by dividing the net income estimate by an appropriate capitalization rate or by multiplying the income estimate by an appropriate factor. Direct capitalization employs capitalization rates and multipliers extracted or developed from market data. Only one year s income is used. Yield and value changes are implied, but not explicitly identified. Discounted Cash Flow (DCF) Analysis: The procedure in which a discount rate is applied to a set of projected income streams and a reversion. The analyst specifies the quantity, variability, timing, and duration of the income streams and the quantity and timing of the reversion, and discounts each to its present value at a specified yield rate. Discount Rate: A rate of return on capital used to convert future payments or receipts into present value; usually considered to be a synonym for yield rate. Disposition Value: The most probable price that a specified interest in property should bring under the following conditions: 1) consummation of a sale within a specified time, which is shorter than the typical exposure time for such a property in that market; 2) the property is subjected to market conditions prevailing as of the date of valuation; 3) both the buyer and seller are acting prudently and knowledgeably; 4) the seller is under compulsion to sell; 5) the buyer

324 is typically motivated; 6) both parties are acting in what they consider to be their best interests; 7) an adequate marketing effort will be made during the exposure time; 8) payment will be made in cash in US dollars (or the local currency) or in terms of financial arrangements comparable thereto; 9) the price represents the normal consideration for the property sold, unaffected by special or creative financing or sales concessions granted by anyone associated with the sale. Easement: The right to use another s land for a stated purpose. Exposure Time: The estimated length of time that the property interest being appraised would have been offered on the market prior to the hypothetical consummation of a sale at market value on the effective date of the appraisal. External Obsolescence: A type of depreciation; a diminution in value caused by negative external influences and generally incurable on the part of the owner, landlord, or tenant. The external influence may be either temporary or permanent. Extraction: A method of estimating land value in which the depreciated cost of the improvements on an improved property is calculated and deducted from the total sale price to arrive at an estimated sale price for the land. Extraordinary Assumption: An assumption, directly related to a specific assignment, as of the effective date of the assignment results, which, if found to be false, could alter the appraiser s opinions or conclusions. Fair Market Value: The highest price on the date of valuation that would be agreed to by a seller, being willing to sell but under no particular or urgent necessity for so doing, nor obliged to sell, and a buyer, being ready, willing, and able to buy but under no particular necessity for so doing, each dealing with the other with full knowledge of all the uses and purposes for which the property is reasonably adaptable and available. (California Code of Civil Procedure, Section (a)) Fee Simple Estate: Absolute ownership unencumbered by any other interest or estate, subject only to the limitations imposed by the governmental powers of taxation, eminent domain, police power, and escheat. Floor Area Ratio (FAR): The relationship between the above-ground floor area of a building, as described by the zoning or building code, and the area of the plot on which it stands; in planning and zoning, often expressed as a decimal, e.g., a ratio of 2.0 indicates that the permissible floor area of a building is twice the total land area. Functional Obsolescence (Curable): An element of depreciation; a curable defect caused by a flaw in the structure, materials, or design, which can be practically and economically corrected. Functional Obsolescence (Incurable): An element of depreciation; a defect caused by a deficiency or superadequacy in the structure, materials, or design that cannot be practically or economically corrected as of the effective date of the appraisal. Highest and Best Use: The reasonably probable use of property that results in the highest value. The four criteria that the highest and best use must meet are legal permissibility, physical possibility, financial feasibility, and maximum productivity. Hypothetical Condition: A condition, directly related to a specific assignment, which is contrary to what is known by the appraiser to exist on the effective date of the assignment results, but is used for the purpose of analysis.

325 Income Capitalization Approach: Specific appraisal techniques applied to develop a value indication for a property based on its earning capability and calculated by the capitalization of property income. Leased Fee Interest: The ownership interest held by the lessor, which includes the right to receive the contract rent specified in the lease plus the reversionary right when the lease expires. Leasehold Interest: The right held by the lessee to use and occupy real estate for a stated term and under the conditions specified in the lease. Marketing Time: An opinion of the amount of time it might take to sell a real or personal property interest at the concluded market value level during the period immediately after the effective date of an appraisal. Marketing time differs from exposure time, which is always presumed to precede the effective date of an appraisal. Neighborhood: A group of complementary land uses; a congruous grouping of inhabitants, buildings, or business enterprises. Obsolescence: One cause of depreciation; an impairment of desirability and usefulness caused by new inventions, changes in design, improved processes for production, or external factors that make a property less desirable and valuable for a continued use; may be either functional or external. Prospective Opinion of Value: A value opinion effective as of a specified future date. The term does not define a type of value. Instead, it identifies a value opinion as being effective at some specific future date. An opinion of value as of a prospective date is frequently sought in connection with projects that are proposed, under construction, or under conversion to a new use, or those that have not yet achieved sellout or a stabilized level of long-term occupancy. Quantity Survey Method: A cost-estimating method in which the quantity and quality of all materials used and all categories of labor required are estimated and unit cost figures are applied to arrive at a total cost estimate for labor and materials. Replacement Cost: The estimated cost to construct, at current prices as of a specified date, a substitute for a building or other improvements, using modern materials and current standards, design, and layout. Reproduction Cost: The estimated cost to construct, at current prices as of the effective date of the appraisal, an exact duplicate or replica of the building being appraised, using the same materials, construction standards, design, layout, and quality of workmanship and embodying all the deficiencies, superadequacies, and obsolescence of the subject building. Sales Comparison Approach: The process of deriving a value indication for the subject property by comparing sales of similar properties to the property being appraised, identifying appropriate units of comparison, and making adjustments to the sale prices (or unit prices, as appropriate) of the comparable properties based on relevant, market-derived elements of comparison. Site Coverage Ratio: The gross area of the building footprint divided by the site area. Stabilized Occupancy: 1. The occupancy of a property that would be expected at a particular point in time, considering its relative competitive strength and supply and demand conditions at the time, and presuming it is priced at market rent and has had reasonable market exposure. A property is at stabilized occupancy when it is capturing its appropriate share of market demand. 2. An expression of the average or typical occupancy that would be expected for a property over a specified projection period or over its economic life.

326 Subdivision Development Method: A method of estimating land value when subdividing and developing a parcel of land is the highest and best use of that land. When all direct and indirect costs and entrepreneurial incentive are deducted from an estimate of the anticipated gross sales price of the finished lots (or the completed improvements on those lots), the resultant net sales proceeds are then discounted to present value at a marketderived rate over the development and absorption period to indicate the value of the land. Superadequacy: An excess in the capacity or quality of a structure or structural component; determined by market standards. Unit-In-Place Method: A cost-estimating method in which total building cost is estimated by adding together the unit costs for the various building components as installed; also called the segregated cost method. Yield Capitalization: A method used to convert future benefits into present value by 1) discounting each future benefit at an appropriate yield rate, or 2) developing an overall rate that explicitly reflects the investment s income pattern, holding period, value change, and yield rate. Yield Rate: A rate of return on capital, usually expressed as a compound annual percentage rate. A yield rate considers all expected property benefits, including the proceeds from sale at the termination of the investment.

327 F - QUALIFICATIONS OF APPRAISER(S)

328 Kevin K. Ziegenmeyer, MAI, Partner Introduction Mr. Ziegenmeyer is a partner with Seevers Jordan Ziegenmeyer, a real estate appraisal firm that engages in a wide variety of real estate valuation and consultation assignments. In 1989, Mr. Ziegenmeyer began his career in real estate as a controller for a commercial and residential real estate development corporation. In 1991 he began appraising and continued to be involved in appraisal assignments covering a wide variety of properties, including office, retail, industrial, residential income and subdivisions throughout the Central Valley area of California, Northern Nevada, and within the Sacramento Metropolitan Area. Over the past several years, Mr. Ziegenmeyer has handled many of the firm s master-planned property appraisals and has developed expertise in the valuation of Community Facilities Districts and Assessment Districts. In early 2015, Mr. Ziegenmeyer obtained the Appraisal Institute's MAI designation. Professional Affiliations Appraisal Institute MAI Designation Certified General Real Estate Appraiser - State of California (No. AG013567) Education Academic: Bachelor of Science in Accounting, Azusa Pacific University, California Appraisal and Real Estate Courses: Standards of Professional Practice, Parts A, B & C Basic Valuation Procedures Real Estate Appraisal Principles Capitalization Theory and Techniques, Part A Advanced Income Capitalization Report Writing and Valuation Analysis Advanced Applications IRS Valuation Summit I & II 2008, 2009, 2010 & 2011 Economic Forecast Business Practices and Ethics Contemporary Appraisal Issues with Small Business Administration Financing General Demonstration Appraisal Report Writing Seminar 7-Hour National USPAP Update Course Valuation of Easements and Other Partial Interests 2009 Summer Conference Uniform Appraisal Standards for Federal Land Acquisitions 2008 Economic Update Valuation of Conservation Easements Subdivision Valuation (continued on next page..)

329 (..continued from previous page) 2005 Annual Fall Conference General Comprehensive Exam Module I, II, III & IV Advanced Income Capitalization Advanced Sales Comparison & Cost Approaches 2004 Central CA Market Update Computer-Enhanced Cash Flow Modeling Forecast 2000, 2001, 2002, 2003 & 2004 Land Valuation Assignments Land Valuation Adjustment Procedures Highest & Best Use and Market Analysis Entitlements, Land Subdivision & Valuation Real Estate Value Cycles El Dorado Hills Housing Symposium Federal Land Exchanges M & S Computer Cost-Estimating, Nonresidential Appraisal Experience General-purpose: Offices Retail Industrial Apartments Subdivisions Land Special-purpose: Athletic Clubs Churches Educational Facilities Restaurants Assisted-living Facilities Auto Sales and Service Lodging Facilities

330 Sample of Appraisal Experience Hunters Point Shipyard Phase I San Francisco, San Francisco County, California City of San Mateo Community Facilities District No (Bay Meadows) San Mateo, San Mateo County, California City of Redwood City Community Facilities District No (One Marina) Redwood City, San Mateo County, California County of San Joaquin Community Facilities District No (Vernalis Interchange) Vernalis, San Joaquin County, California This appraisal was completed for use by the developer for determination of possible refinancing of the Redevelopment Agency of the City and County of San Francisco Community Facilities District (CFD) No. 7 (Hunters Point Shipyard) Bonds. The appraised property comprises Phase I of the Hunters Point Shipyard redevelopment area, which is commonly referred to as the Hilltop and Hillside subdivisions, and comprises approximately gross acres of land, which includes 23.72± developable acres proposed for the construction of 1,142 residential units in a variety of attached singlefamily, townhouse and stacked residential units. Specifically, the Hilltop development contains 15.92± acres of land to be developed with 768 residential units, and the Hillside development contains 7.8± acres to be developed with 374 single-family residential units. In addition, Phase I will include 36.0± acres dedicated to parks and open space and 15.6± acres of streets and rights-of-way. This appraisal was completed for use in a land-secured financing associated with the development of 52± developable acres proposed for the development of 724,225 square feet of office space, approximately 85,374 square feet of retail space and 1,121 residential housing units, with 832 residential housing units being developed on the residential land component and the balance (289 units) to be developed as part of the mixed-use component. The report was prepared for the City of San Mateo Department of Finance. This appraisal was completed for use in a land-secured financing associated with the development of 16.62± acres proposed for the construction of 231 townhome and flat-style residential units within 24 detached buildings. The report was prepared for the City of Redwood City Department of Finance. This assignment involved the appraisal of approximately 3, gross acres of land comprising 40 separate Assessor s parcels devoted to (or intended for) aggregate mining operations by six independent mining operators, including Teichert, West Coast Aggregates, Granite, Knife River, DeSilva Gates and Cemex. The summary appraisal was completed for bond financing purposes, with the proceeds intended to finance the construction of a new interchange on State Route 132 at Bird Road, which is intended to enhance traffic operation safety at this intersection. This report was prepared for the County of San Joaquin.

331 Sample of Appraisal Experience (continued) Bickford Ranch Community Facilities District No Placer County, California El Dorado Hills Community Facilities District No (portion) El Dorado County, California Community Facilities District No. 16 West Sacramento, California Community Facilities District No. 17 West Sacramento, California Diablo Grande Community Facilities District No. 1 (Series 2002) Stanislaus County, California Plumas Lake Community Facilities District No Yuba County, California The hypothetical market valuation of a proposed master planned community that will include acres of land designated for 1,783 residential lots and a 9.7- acre commercial component. The appraisal will be used for bond underwriting purposes and was prepared for the County of Placer. This assignment involved the hypothetical cumulative or aggregate, valuation of a sizeable portion of the existing Serrano master planned community. The appraisal included 1,597 single-family residential lots, 382 custom single-family residential lots, acres of commercial land and 344 existing single-family residences. The appraisal will be used for bond underwriting purposes and was prepared for the County of El Dorado. This project involved the valuation of Bridgeway Lakes, a high-end 609-lot single-family residential community located in the Southport area of West Sacramento. Lot densities within the project varied from low and medium density to rural estate lots. This report was prepared for the City of West Sacramento. This assignment concerned the valuation of 252 singlefamily lots and 252 proposed multifamily units comprising the Parella residential community in the Southport area of West Sacramento. This report was prepared for the City of West Sacramento. The appraisal involved the valuation of a partially improved resort and master planned community offering 1,410 residential lots, multifamily land, commercial land, a hotel site, vineyards and two 18- hole championship golf courses. The appraisal was used for bond underwriting purposes and was prepared for Western Hills Water District. This appraisal included the valuation of a portion of the proposed, and partially improved, Plumas Lake Specific Plan area, and comprised 3,314 detached single-family residential lots. The appraisal was used for bond underwriting purposes and was prepared for the Olivehurst Public Utility District.

332 Sample of Appraisal Experience (continued) Brentwood Assessment District No Brentwood, Contra Costa County, California Patterson Gardens & Keystone Pacific Business Park Patterson, Stanislaus County, California Syrah Condominiums Sacramento, Sacramento County, California This assignment involved the valuation of an assessment district containing commercial and residential components comprising 5.66 acres of commercial land, 882 single-family residential lots and 15.8 acres of multifamily land. The appraisal was used for bond underwriting purposes and was prepared for the City of Brentwood. This appraisal involved the valuation of a 985-lot single-family residential master planned community that included residential, commercial and public use components, and a non-contingent 224-acre industrial park. This report was prepared for Bank of America. Syrah is a proposed 245-unit residential condominium development with dual phase valuations. This report was prepared for KeyBank.

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334 Eric A. Segal, MAI, Partner Introduction Mr. Segal is a Certified General real estate appraiser with Seevers Jordan Ziegenmeyer, a real estate appraisal firm that engages in a wide variety of real estate valuation and consultation assignments. In 1998, Mr. Segal began his career in real estate as a research analyst/appraiser trainee for SJZ. By 1999, he began writing narrative appraisal reports covering a variety of commercial properties, with an emphasis on residential master planned communities and subdivisions. Today, Mr. Segal is a partner in the firm and is involved in appraisal assignments covering a wide variety of properties including office, retail, industrial, multifamily housing, master planned communities, and specializes in the appraisal of Mello-Roos and Assessment Districts for land-secured municipal financings. He has developed the experience and background necessary to deal with complex assignments covering an array of property types. Professional Affiliations Appraisal Institute MAI designation Certified General Real Estate Appraiser State of California (No. AG026558) Real Estate Appraiser - Certified General State of Nevada (No. A CG) Education Academic: Bachelor of Science in Business Administration (Concentrations in Finance and Real Estate & Land Use Affairs), California State University, Sacramento Appraisal and Real Estate Courses: Uniform Standards of Professional Appraisal Practice Appraisal Principles Basic Income Capitalization Highest & Best Use and Market Analysis Advanced Income Capitalization Report Writing and Valuation Analysis Appraisal Litigation Practice and Courtroom Management Computer Enhanced Cash Flow Modeling Advanced Sales Comparison & Cost Approaches Advanced Applications

335 Sample of Appraisal Experience Pleasant Valley Mixed-Use Development Visitacion Valley Neighborhood San Francisco, San Francisco County, California Hunters Point Shipyard Phase I San Francisco, San Francisco County, California Santa Barbara Palms Las Vegas, Clark County, Nevada City of Dixon Community Facilities District No (Parklane) Dixon, Solano County, California This appraisal was prepared for loan underwriting. The Pleasant Valley mixed-use development comprises approximately gross acres of land to be developed in three phases. Phase 1 will contain 568 residential units, a grocery store, in-line retail stores, office space, public park and pedestrian access to the Caltrain Bayshore station, which is located just east of the development. Phase 2 will contain approximately 556 residential units and an additional public park (Visitacion Park). Phase 3 will contain approximately 555 residential units. In total, Pleasant Valley is expected to be developed with 1,679 residential units of studio/loft, 1, 2, 3 and 4-bedroom unit types. This appraisal was completed for use by the developer for determination of possible refinancing of the Redevelopment Agency of the City and County of San Francisco Community Facilities District (CFD) No. 7 (Hunters Point Shipyard) Bonds. The appraised property comprises Phase I of the Hunters Point Shipyard redevelopment area, which is commonly referred to as the Hilltop and Hillside subdivisions, and comprises approximately gross acres of land, which includes 23.72± developable acres proposed for the construction of 1,142 residential units in a variety of attached singlefamily, townhouse and stacked residential units. Specifically, the Hilltop development contains 15.92± acres of land to be developed with 768 residential units, and the Hillside development contains 7.8± acres to be developed with 374 single-family residential units. In addition, Phase I will include 36.0± acres dedicated to parks and open space and 15.6± acres of streets and rights-of-way. Santa Barbara Palms is a 114-unit, age-restricted, lowincome housing apartment project in Las Vegas. The appraisal was prepared under Section 223(f) of the Federal Housing Administration (FHA) MAP Program for a 223(f) Refinance for Capital One Multifamily Finance, LLC. This assignment involved the appraisal of gross acres of land approved for the development of 401 singlefamily homes under construction by Brookefield Homes. The proposed Bond proceeds were to be used to reimburse the developer for infrastructure improvements. The estimate of market value accounted for the impact of the lien of the special taxes securing the proposed Bonds, and the estimated value was subject to a hypothetical condition such improvements were in place and available for use.

336 Sample of Appraisal Experience (continued) City of San Mateo Community Facilities District No (Bay Meadows) San Mateo, San Mateo County, California City of Redwood City Community Facilities District No (One Marina) Redwood City, San Mateo County, California County of San Joaquin Community Facilities District No (Vernalis Interchange) Vernalis, San Joaquin County, California HUD 223(f) Apartment Portfolio San Francisco, San Francisco County, California The Parkway & Quinto Ranch Santa Nella, Merced County, California This appraisal was completed for use in a land-secured financing associated with the development of 52± developable acres proposed for the development of 724,225 square feet of office space, approximately 85,374 square feet of retail space and 1,121 residential housing units, with 832 residential housing units being developed on the residential land component and the balance (289 units) to be developed as part of the mixed-use component. The report was prepared for the City of San Mateo Department of Finance. This appraisal was completed for use in a land-secured financing associated with the development of 16.62± acres proposed for the construction of 231 townhome and flat-style residential units within 24 detached buildings. The report was prepared for the City of Redwood City Department of Finance. This assignment involved the appraisal of approximately 3, gross acres of land comprising 40 separate Assessor s parcels devoted to (or intended for) aggregate mining operations by six independent mining operators, including Teichert, West Coast Aggregates, Granite, Knife River, DeSilva Gates and Cemex. The summary appraisal was completed for bond financing purposes, with the proceeds intended to finance the construction of a new interchange on State Route 132 at Bird Road, which is intended to enhance traffic operation safety at this intersection. This report was prepared for the County of San Joaquin. This appraisal assignment involved the appraisal of nine multifamily properties in San Francisco containing between seven and 50 units, as well as mixed-use properties including ground floor retail tenants. The selfcontained appraisals were completed in compliance with Federal regulatory requirements and guidelines that may apply as well as the requirements of the Federal Housing Administration (FHA) MAP Program for a 223(f) Refinance. This report was prepared for Column Guaranteed, LLC. This appraisal involved the valuation of a 1,464-lot singlefamily residential master planned community that included residential, commercial and public use components, and a non-contingent 1,644-acre ranch subject to a conservation easement. This report was prepared for IndyMac Bank.

337 Sample of Appraisal Experience (continued) Reclamation District No. 17 Mossdale Tract (portion) County of San Joaquin, California Bickford Ranch Community Facilities District No Placer County, California El Dorado Hills Community Facilities District No (portion) El Dorado County, California Diablo Grande Community Facilities District No. 1 (Series 2002) Stanislaus County, California Plumas Lake Community Facilities District No Yuba County, California Patterson Gardens & Keystone Pacific Business Park Patterson, Stanislaus County, California The appraised properties represented a portion of Reclamation District No. 17 identified as vacant residential, vacant commercial and vacant industrial land, and excluded those properties within the boundaries of the District zoned as agricultural and public use, and those properties with an assessed improvement value on the most recent property tax roll. Reclamation District No. 17 (Mossdale Tract) is located in San Joaquin County and contains approximately 16, acres of land comprising approximately 13,335 assessor s parcels. This report was prepared for Reclamation District No. 17. The hypothetical market valuation of a proposed master planned community that will include acres of land designated for 1,783 residential lots and a 9.7-acre commercial component. The appraisal will be used for bond underwriting purposes and was prepared for the County of Placer. This assignment involved the hypothetical cumulative, or aggregate, valuation of a sizeable portion of the existing Serrano master planned community. The appraisal included 1,597 single-family residential lots, 382 custom single-family residential lots, acres of commercial land and 344 existing single-family residences. The appraisal will be used for bond underwriting purposes and was prepared for the County of El Dorado. The appraisal involved the valuation of a partially improved resort and master planned community offering 1,410 residential lots, multifamily land, commercial land, a hotel site, vineyards and two 18-hole championship golf courses. The appraisal was used for bond underwriting purposes and was prepared for Western Hills Water District. This appraisal included the valuation of a portion of the proposed, and partially improved, Plumas Lake Specific Plan area, and comprised 3,314 detached single-family residential lots. The appraisal was used for bond underwriting purposes and was prepared for the Olivehurst Public Utility District. This appraisal involved the valuation of a 985-lot singlefamily residential master planned community that included residential, commercial and public use components, and a non-contingent 224-acre industrial park. This report was prepared for Bank of America.

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339 Justin Kobilis, MAI Introduction Mr. Kobilis is a licensed appraiser with Seevers Jordan Ziegenmeyer, a real estate appraisal firm that engages in a wide variety of real estate valuation and consultation assignments. Prior to joining the firm in June of 2006, Mr. Kobilis was employed as a realtor with Coldwell Banker and an accountant with Investors Bank and Trust. Mr. Kobilis is now writing narrative appraisal reports for a variety of commercial and residential properties. He is involved in appraisal assignments covering right-of-way, multifamily residential, office, retail, industrial, land and mixed-use properties. Professional Affiliations MAI Designation Appraisal Institute Certified General Real Estate Appraiser State of California (No. AG044370) Education Academic: Bachelor of Science in Managerial Economics with Highest Honors, University of California, Davis Passed Examinations for the Appraisal Institute Litigation Professional Development Programs Appraisal Institute Courses: Basic Appraisal Principles Basic Appraisal Procedures Basic Income Capitalization Report Writing and Case Studies Sales Comparison Approach Cost Approach Real Estate Finance and Statistics Highest and Best Use 15 Hour USPAP Advanced Income Capitalization Advanced Market Analysis and Highest and Best Use Advanced Concepts and Case Studies Complex Litigation Appraisal Case Studies Appraiser as an Expert Witness: Preparation and Testimony Condemnation Appraising: Principles and Applications Litigation Appraising: Specialized Topics and Applications

340 Sample of Appraisal Experience Litigation Support, Acres of Vacant Land Jackson, California Litigation Support, Acres of Vacant Land Tracy, California Litigation Support, 25 Acres of Vacant Land Galt, California 5.18 Acres of Commercial Land Placerville, California Partial Acquisition Sacramento, California Partial Acquisition Plymouth, California Portion of a Master Planned Community Roseville, California This assignment involved an appraisal of acres of rural/grazing land in the Jackson/Amador County region, in addition to subsequent litigation support. My client was an attorney for the Plaintiff, and I testified as a rebuttal witness in Federal Bankruptcy Court in Sacramento. In this assignment, I appraised the fee simple market value, both as of a current date and a retrospective date, of a acre parcel within a larger master planned development. I provided expert witness testimony at a deposition. My clients were attorneys representing the Defense. My client for this assignment was an attorney representing the Defense, and my assignment involved the valuation of a 25 acre vacant property in Galt. The valuation was concerned with the estimate of market value assuming commercial zoning and all off-site improvements in place (subject to a hypothetical condition), as well as an estimate of as-is market value. The appraisal was utilized for support in a litigation matter. In this assignment for El Dorado County, I estimated the fair market value of 5.18 acres of land to be involved in a swap with a private ownership entity. The County plans to construct a courthouse and supporting parking areas. The valuation was based upon the hypothetical condition that the subject site has road access and utilities in place. This appraisal was concerned with estimating the fair market value of the rights taken of a partial acquisition of 0.92 acres in Sacramento County. The acquisition area represented both unencumbered and encumbered land (drainage easement, road right of way). My client was the property owner. In this assignment for a right of way agency, I estimated the fair market value of the rights taken from seven parcels affected by a roundabout project in Amador County (Plymouth). I estimated damages to one of the parcels as a result of a relocation of parking stalls to an adjacent parcel. In this assignment, I estimated the as-is market value of a portion of a master planned community in West Roseville. The project contained single-family residential lots (both low density and medium density), multifamily residential parcels (both market rate and affordable units), commercial parcels, parks, open space and a school site. Significant backbone infrastructure and in-tract development remained to be completed.

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343 APPENDIX D FORMS OF COUNTY CONTINUING DISCLOSURE CERTIFICATE AND DEVELOPER CONTINUING DISCLOSURE CERTIFICATE COUNTY CONTINUING DISCLOSURE CERTIFICATE $20,920,000 $7,210,000 County of El Dorado County of El Dorado COMMUNITIES FACILITIES DISTRICT NO (Blackstone) COMMUNITIES FACILITIES DISTRICT NO (Blackstone) 2016 SERIES A SENIOR LIEN 2016 SERIES B JUNIOR LIEN SPECIAL TAX BONDS SPECIAL TAX BONDS This Continuing Disclosure Certificate (this "Disclosure Certificate") is executed and delivered by the County of El Dorado (the "County") in connection with the issuance of the bonds captioned above (the "Bonds"). The Bonds are being issued pursuant to a separate Fiscal Agent Agreement for each Series, each dated as of July 1, 2016 (the "Fiscal Agent Agreement"), by and between the County and The Bank of New York Mellon Trust Company, N.A., as fiscal agent (the "Fiscal Agent"). The County hereby covenants and agrees as follows: Section 1. Purpose of the Disclosure Certificate. This Disclosure Certificate is being executed and delivered by the County 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 above and in the Fiscal Agent Agreement, which apply to any capitalized term used in this Disclosure Certificate unless otherwise defined in this Section, the following capitalized terms shall have the following meanings: "Annual Report" means any Annual Report provided by the County pursuant to, and as described in, Sections 3 and 4 of this Disclosure Certificate. "Annual Report Date" means each April 30 after the end of the County's fiscal year (presently June 30). "Dissemination Agent" means NBS Government Finance Group, or any successor Dissemination Agent designated in writing by the County and which has filed with the County a written acceptance of such designation. "Listed Events" means any of the events listed in Section 5(a) of this Disclosure Certificate. "MSRB" means the Municipal Securities Rulemaking Board, which has been designated by the Securities and Exchange Commission as the sole repository of disclosure information for purposes of the Rule. "Official Statement" means the final official statement dated July 21, 2016, executed by the County in connection with the issuance of the Bonds. D-1

344 "Participating Underwriter" means Stifel Nicolaus & Co., the original underwriter of the Bonds required to comply with the Rule in connection with 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 it may be amended from time to time. Section 3. Provision of Annual Reports. (a) The County shall, or shall cause the Dissemination Agent to, not later than the Annual Report Date, commencing April 30, 2017, with the report for the fiscal year, provide to the MSRB, in an electronic format as prescribed by the MSRB, an Annual Report that is consistent with the requirements of Section 4 of this Disclosure Certificate. Not later than 15 Business Days prior to the Annual Report Date, the County shall provide the Annual Report to the Dissemination Agent (if other than the County). If by 15 Business Days prior to the Annual Report Date the Dissemination Agent (if other than the County) has not received a copy of the Annual Report, the Dissemination Agent shall contact the County to determine if the County is in compliance with the previous sentence. The Annual Report may be submitted as a single document or as separate documents comprising a package, and may include by reference other information as provided in Section 4 of this Disclosure Certificate; provided that the audited financial statements of the County may be submitted separately from the balance of the Annual Report, and later than the Annual Report Date, if not available by that date. If the County s fiscal year changes, it shall give notice of such change in the same manner as for a Listed Event under Section 5(c). The County shall provide a written certification with each Annual Report furnished to the Dissemination Agent to the effect that such Annual Report constitutes the Annual Report required to be furnished by the County hereunder. (b) If the County does not provide, or cause the Dissemination Agent to provide, an Annual Report by the Annual Report Date as required in subsection (a) above, the Dissemination Agent, in a timely manner, shall provide to the MSRB, in an electronic format as prescribed by the MSRB, a notice in substantially the form attached as Exhibit A. (c) The Dissemination Agent shall: (i) determine each year prior to the Annual Report Date the then-applicable rules and electronic format prescribed by the MSRB for the filing of annual continuing disclosure reports; and (ii) if the Dissemination Agent is other than the County, file a report with the County and the Participating Underwriter certifying that the Annual Report has been provided pursuant to this Disclosure Certificate, and stating the date it was provided. Section 4. Content of Annual Reports. The County's Annual Report shall contain or incorporate by reference the following documents and information: (a) The following additional items, indicating information as of the previous September 30 th, with respect to the Bonds: (1) Balance in the Reserve Fund. (2) Table indicating Special Tax levy, amount collected, delinquent amount and percent delinquent for the most recent fiscal year. D-2

345 (3) Assessed valuation of property shown on County Assessor s tax rolls in the District for the current (as of the date of the report) fiscal year. (4) Table providing the number of parcels, amount of Special Tax levy, percentage of Special Tax levy, the amount of Maximum Annual Special Tax levy, and assessed valuation, all as of the current fiscal year, broken out to show parcels with improvement value on the assessment roll, parcels without improvement value on the assessment roll and the totals. (5) Status of foreclosure proceedings and summary of results of foreclosure sales, if available. (6) Identity of any delinquent taxpayer representing more than 5% of levy and value-to-lien ratios of applicable properties (using assessed values unless more accurate information is available). (b) For so long as there is any owner of property in the District whose properties in the District collectively represent 10% or more of the Special Taxes, the following information regarding the status of development in the District: (1) Significant amendments to land use entitlements. (2) Status of any legislative, administrative and judicial challenges to the construction of the development known to the County. (3) List of landowners (as shown County Assessor's tax roll) whose properties collectively represent 10% or more of the Special Taxes for the current (as of the date of the report) fiscal year with the name, share of the Special Tax levy and assessed value for the current fiscal year provided for each. (4) Number of building permits issued by the County for property in the District for the reported fiscal year. (c) In addition to any of the information expressly required to be provided under paragraphs (a), (b) and (c) of this Section, the Issuer shall provide such further information, if any, as may be necessary to make the specifically required statements, in the light of the circumstances under which they are made, not misleading. (d) If not submitted as part of the annual financial information, then when and if available, audited financial statements prepared in accordance with generally accepted accounting principles as promulgated to apply to governmental entities from time to time by the Governmental Accounting Standards Board. This submission should be made with the following caveat: THE COUNTY'S ANNUAL FINANCIAL STATEMENT IS PROVIDED SOLELY TO COMPLY WITH THE SECURITIES EXCHANGE COMMISSION STAFF S INTERPRETATION OF RULE 15C2-12. NO FUNDS OR ASSETS OF THE COUNTY (OTHER THAN THE PROCEEDS OF THE SPECIAL TAXES LEVIED FOR THE DISTRICT AND SECURING THE BONDS) ARE REQUIRED TO BE USED TO PAY DEBT SERVICE ON THE BONDS AND THE COUNTY IS NOT OBLIGATED TO ADVANCE AVAILABLE FUNDS FROM THE COUNTY TREASURY TO COVER ANY DELINQUENCIES. INVESTORS SHOULD NOT RELY ON THE FINANCIAL CONDITION OF THE COUNTY IN EVALUATING WHETHER TO BUY, HOLD OR SELL THE BONDS. D-3

346 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 County or related public entities, which are available to the public on the MSRB s Internet web site or filed with the Securities and Exchange Commission. The County shall clearly identify each such other document so included by reference. Section 5. Reporting of Listed Events. (a) The County shall give, or cause to be given, notice of the occurrence of any of the following Listed Events with respect to the Bonds: (1) Principal and interest payment delinquencies. (2) Non-payment related defaults, if material. (3) Unscheduled draws on debt service reserves reflecting financial difficulties. (4) Unscheduled draws on credit enhancements reflecting financial difficulties. (5) Substitution of credit or liquidity providers, or their failure to perform. (6) Adverse tax opinions, the issuance by the Internal Revenue Service of proposed or final determinations of taxability, Notices of Proposed Issue (IRS Form 5701-TEB) or other material notices or determinations with respect to the tax status of the Bonds, or other material events affecting the tax status of the Bonds. (7) Modifications to rights of security holders, if material. (8) Bond calls, if material, and tender offers. (9) Defeasances. (10) Release, substitution, or sale of property securing repayment of the securities, if material. (11) Rating changes. (12) Bankruptcy, insolvency, receivership or similar event of the County. (13) The consummation of a merger, consolidation, or acquisition involving the County, or the sale of all or substantially all of the assets of the County (other than in the ordinary course of business), the entry into a definitive agreement to undertake such an action, or the termination of a definitive agreement relating to any such actions, other than pursuant to its terms, if material. (14) Appointment of a successor or additional Fiscal Agent or the change of name of the Fiscal Agent, if material. (b) Whenever the County obtains knowledge of the occurrence of a Listed Event, the County shall, or shall cause the Dissemination Agent (if not the County) to, file a notice of such occurrence with the MSRB, in an electronic format as prescribed by the MSRB, in a timely manner not D-4

347 in excess of 10 business days after the occurrence of the Listed Event. Notwithstanding the foregoing, notice of Listed Events described in subsections (a)(8) and (9) above need not be given under this subsection any earlier than the notice (if any) of the underlying event is given to holders of affected Bonds under the Indenture. (c) The County acknowledges that the events described in subparagraphs (a)(2), (a)(7), (a)(8) (if the event is a bond call), (a)(10), (a)(13), and (a)(14) of this Section 5 contain the qualifier "if material" and that subparagraph (a)(6) also contains the qualifier "material" with respect to certain notices, determinations or other events affecting the tax status of the Bonds. The County shall cause a notice to be filed as set forth in paragraph (b) above with respect to any such event only to the extent that it determines the event s occurrence is material for purposes of U.S. federal securities law. Whenever the County obtains knowledge of the occurrence of any of these Listed Events, the County will as soon as possible determine if such event would be material under applicable federal securities law. If such event is determined to be material, the County will cause a notice to be filed as set forth in paragraph (b) above. (d) For purposes of this Disclosure Certificate, any event described in paragraph (a)(12) above is considered to occur when any of the following occur: the appointment of a receiver, fiscal agent, or similar officer for the County in a proceeding under the United States Bankruptcy Code or in any other proceeding under state or federal law in which a court or governmental authority has assumed jurisdiction over substantially all of the assets or business of the County, or if such jurisdiction has been assumed by leaving the existing governing body and officials or officers in possession but subject to the supervision and orders of a court or governmental authority, or the entry of an order confirming a plan of reorganization, arrangement, or liquidation by a court or governmental authority having supervision or jurisdiction over substantially all of the assets or business of the County. Section 6. Identifying Information for Filings with the MSRB. All documents provided to the MSRB under the Disclosure Certificate shall be accompanied by identifying information as prescribed by the MSRB. Section 7. Termination of Reporting Obligation. The County'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 County shall give notice of such termination in the same manner as for a Listed Event under Section 5(c). Section 8. Dissemination Agent. The County may, from time to time, appoint or engage a Dissemination Agent to assist it in carrying out its obligations under this Disclosure Certificate, and may discharge any such Agent, with or without appointing a successor Dissemination Agent. The initial Dissemination Agent will be NBS Government Finance Group. Section 9. Amendment; Waiver. Notwithstanding any other provision of this Disclosure Certificate, the County may amend this Disclosure Certificate, and any provision of this Disclosure Certificate may be waived, provided that the following conditions are satisfied: (a) if the amendment or waiver relates to the provisions of Sections 3(a), 4 or 5(a), it may only be made in connection with a change in circumstances that arises from a change in legal requirements, change in law, or change in the identity, nature, or status of an obligated person with respect to the Bonds, or type of business conducted; (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 D-5

348 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 either (i) is approved by holders of the Bonds in the manner provided in the Fiscal Agent Agreement for amendments to the Fiscal Agent Agreement with the consent of holders, or (ii) does not, in the opinion of the Fiscal Agent or nationally recognized bond counsel, materially impair the interests of the holders or beneficial owners of the Bonds. If the annual financial information or operating data to be provided in the Annual Report is amended pursuant to the provisions hereof, the first annual financial information filed pursuant hereto containing the amended operating data or financial information shall explain, in narrative form, the reasons for the amendment and the impact of the change in the type of operating data or financial information being provided. If an amendment is made to the undertaking specifying the accounting principles to be followed in preparing financial statements, the annual financial information for the year in which the change is made shall present a comparison between the financial statements or information prepared on the basis of the new accounting principles and those prepared on the basis of the former accounting principles. The comparison shall include a qualitative discussion of the differences in the accounting principles and the impact of the change in the accounting principles on the presentation of the financial information, in order to provide information to investors to enable them to evaluate the ability of the County 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 filed in the same manner as for a Listed Event under Section 5(c). Section 10. Additional Information. Nothing in this Disclosure Certificate shall be deemed to prevent the County 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 County 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 County shall have no obligation under this Disclosure Certificate to update such information or include it in any future Annual Report or notice of occurrence of a Listed Event. Section 11. Default. In the event of a failure of the County to comply with any provision of this Disclosure Certificate, the Participating Underwriter or any holder or beneficial owner of the Bonds may take such actions as may be necessary and appropriate, including seeking mandate or specific performance by court order, to cause the County to comply with its obligations under this Disclosure Certificate. A default under this Disclosure Certificate shall not be deemed an Event of Default under the Fiscal Agent Agreement, and the sole remedy under this Disclosure Certificate in the event of any failure of the County to comply with this Disclosure Certificate shall be an action to compel performance. Section 12. Duties, Immunities and Liabilities of Dissemination Agent. The Dissemination Agent shall have only such duties as are specifically set forth in this Disclosure Certificate, and the County agrees to indemnify and save the Dissemination Agent, its officers, directors, employees and agents, harmless against any loss, expense and liabilities which it may incur arising out of or in the exercise or performance of its powers and duties hereunder, including the 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 Dissemination Agent shall have no duty or obligation to review any information provided to it hereunder and shall not be deemed to be acting in D-6

349 any fiduciary capacity for the County, the Fiscal Agent, the Bond owners or any other party. The obligations of the County under this Section shall survive resignation or removal of the Dissemination Agent and payment of the Bonds. Section 13. Beneficiaries. This Disclosure Certificate shall inure solely to the benefit of the County, the Fiscal Agent, the Dissemination Agent, the Participating Underwriter and holders and beneficial owners from time to time of the Bonds, and shall create no rights in any other person or entity. Section 14. Counterparts. This Disclosure Certificate may be executed in several counterparts, each of which shall be regarded as an original, and all of which shall constitute one and the same instrument. Date: July 28, 2016 COUNTY OF EL DORADO for and on behalf of the COUNTY OF EL DORADO COMMUNITY FACILITIES DISTRICT NO (BLACKSTONE) By: Authorized Officer AGREED AND ACCEPTED: NBS Government Finance Group, as Dissemination Agent By: Name: Title: D-7

350 EXHIBIT A NOTICE OF FAILURE TO FILE ANNUAL REPORT Name of Issuer: County of El Dorado Name of Bond Issue: County of El Dorado Community Facilities District No (Blackstone) 2016 Senior Series A and 2016 Junior Series B Special Tax Bonds Date of Issuance: July 28, 2016 NOTICE IS HEREBY GIVEN that the County has not provided an Annual Report with respect to the above-named Bonds as required by the Continuing Disclosure Certificate dated July 28, 2016 executed by the County and countersigned by, as dissemination agent. The County anticipates that the Annual Report will be filed by. Dated: DISSEMINATION AGENT: D-8

351 DEVELOPER CONTINUING DISCLOSURE CERTIFICATE $20,920,000 $7,210,000 County of El Dorado County of El Dorado COMMUNITIES FACILITIES DISTRICT NO (Blackstone) COMMUNITIES FACILITIES DISTRICT NO (Blackstone) 2016 Series A SENIOR LIEN 2016 Series B JUNIOR LIEN SPECIAL TAX BONDS SPECIAL TAX BONDS This Continuing Disclosure Certificate (this "Disclosure Certificate") is executed and delivered by Lennar Homes of California, Inc. in connection with the issuance of the bonds captioned above (the "Bonds"). The Bonds are being issued pursuant to a separate Fiscal Agent Agreement for each Series, each dated as of July 1, 2016 (together, the "Fiscal Agent Agreement"), by and between the County of El Dorado (the County ) and The Bank of New York Mellon Trust Company, N.A., as fiscal agent (the "Fiscal Agent"). Lennar Homes of California, Inc. hereby covenants and agrees as follows. This Disclosure Certificate is being executed and delivered for the benefit of the holders and beneficial owners of the Bonds and in order to assist the Participating Underwriter of the Bonds in complying with Securities and Exchange Commission Rule 15c2-12(b)(5). In connection therewith, the County covenants and agrees as follows: SECTION 1. Definitions. In addition to the definitions set forth in the Fiscal Agent Agreement, which apply to any capitalized term used in this Disclosure Certificate unless otherwise defined in this Section, the following capitalized terms shall have the following meanings: "Beneficial Owner" shall mean any person which (a) has the power, directly or indirectly, to vote or consent with respect to, or to dispose of ownership of, any Bonds (including persons holding Bonds through nominees, depositories or other intermediaries), or (b) is treated as the owner of any Bonds for federal income tax purposes. "Developer" shall mean Lennar Homes of California, Inc. and any entity affiliated with Lennar Homes of California, Inc. District shall mean the County s Community Facilities District No (Blackstone). "Dissemination Agent" shall mean NBS Local Government Solutions, acting in its capacity as Dissemination Agent hereunder, or any successor Dissemination Agent designated by the Developer. "Issuer" shall mean the County of El Dorado, California. "MSRB" means the Municipal Securities Rulemaking Board, which has been designated by the Securities and Exchange Commission as the sole repository of disclosure information for purposes of the Rule. "Official Statement" means the Official Statement, dated, July 21, 2016, relating to the Bonds. D-9

352 "Participating Underwriter" shall mean the original underwriter of the Bonds. "Semi-Annual Report" shall mean any Semi-Annual Report provided by the Developer pursuant to, and as described in, Sections 2 and 3 of this Disclosure Certificate "Semi-Annual Report Date" means each February 1 and August 1, Commencing February 1, "State" shall mean the State of California. SECTION 2. Provision of Semi-Annual Reports. (a) The Developer shall, by not later than the Semi-Annual Report Date, for semi-annual reporting periods ending December 31st and June 30th, commencing with the report to be filed on or before February 1, 2017 and continuing until the obligation is terminated pursuant to Section 5, provide to the Dissemination Agent a Semi-Annual Report which is consistent with the requirements of Section 3 of this Disclosure Certificate with a copy to the Issuer. The Developer shall provide a written certification with each Semi-Annual Report furnished to the Dissemination Agent and the Issuer to the effect that the Semi-Annual Report is being provided pursuant to this Disclosure Certificate. The Semi- Annual Report may be submitted as a single document or as separate documents comprising a package, and may cross-reference other information as provided in Section 4 of this Disclosure Certificate. (b) If by fifteen (15) Business Days prior to the date specified in subsection (a) for providing the Semi-Annual Report to the MSRB, the Dissemination Agent has not received a copy of the Semi- Annual Report, the Dissemination Agent shall contact the Developer to determine if the Developer is in compliance with subsection (a). (c) If the Developer is unable to provide to the Dissemination Agent a Semi-Annual Report by the date required in subsection (a), the Developer shall send a notice to the Dissemination Agent substantially the form attached as Exhibit A. (d) The Dissemination Agent shall: (i) (ii) determine each year prior to the date specified in subsection (a) the thenapplicable rules and electronic format prescribed by the MSRB for the filing of annual continuing disclosure reports; and (if the Dissemination Agent is other than the Developer), to the extent appropriate information is available to it, file a report with the Developer certifying that the Semi-Annual Report has been provided pursuant to this Disclosure Certificate, stating the date it was provided to the MSRB. SECTION 3. Content of Semi-Annual Reports. The Developer's Semi-Annual Report shall contain or incorporate by reference the following information as to the property in the District owned by the Developer, if material: (a) Any significant changes in the information contained in the Official Statement under the headings: "THE DISTRICT - Completed and Anticipated Development." For parcels owned by the Developer within the District. D-10

353 (b) A general description of the development status of the parcels owned by the Developer within the District. (c) A statement of the number of building permits issued by the County for construction of homes located on the Developer s property in the District. (d) A summary of property within the District sold by the Developer since the date of the Official Statement, showing number of homes sold to homeowners and name and identity of property sold to any developers and merchant builders. (e) A description of any change in the legal structure of the Developer which is material to Bond investors. (f) Material changes in status of any construction loans and any permanent financing received by the Developer that could have a significant impact on the Developer's ability to complete the construction and sale of homes on property it owns within the District. (g) Any denial of credit, lines of credit, loans or loss of source of capital that could have a significant impact on the Developer's ability to pay the Special Tax or other taxes or assessments or to comply with its obligations under the Development Agreement. (h) Any failure by the Developer to pay when due general property taxes, assessments or special taxes with respect to its property in the District. (i) Any previously undisclosed amendments to the land use entitlements or environmental conditions or other governmental conditions that are necessary to complete the Developer s development plan. (j) A description of any changes to the Development Agreement which materially adversely affect the Developer s development of the property within the District as set forth in the Official Statement. (k) Audited annual financial statements prepared in accordance with generally accepted accounting principles. If the audited financial statements are not available by the time the Semi-Annual Report is required to be filed pursuant to Section 2(a), the Semi-Annual Report shall contain unaudited financial statements in a format similar to that used for the audited financial statements, and the audited financial statements shall be filed in the same manner as the Semi-Annual Report when they become available. The financial statements need only be included in one Semi-Annual Report per year. SECTION 4. Reporting of Significant Events. (a) Pursuant to the provisions of this Section 4, the Developer shall give, to the Dissemination Agent, notice of the occurrence of any of the following events with respect to the Bonds, if material: (i) failure to pay any real property taxes (including any assessments or special taxes) levied within the District on a parcel owned by the Developer. D-11

354 (ii) (iii) (iv) the discovery of toxic material or hazardous waste which will require remediation on any property owned by the Developer subject to the Special Tax. default by the Developer on any loan with respect to the construction or permanent financing of public or private improvements with respect to the construction in the District. Initiation of Dissemination bankruptcy proceedings (whether voluntary or involuntary) by the Developer or any related entity. (b) Whenever the Developer obtains knowledge of the occurrence of an event described in section (a), the Developer shall as soon as possible determine if such event would be material to Bond investors under applicable federal securities laws. (c) If the Developer determines that knowledge of the occurrence of such event would be material under applicable federal securities laws, the Developer shall promptly provide a notice of such occurrence to the Dissemination Agent, with a copy to the Issuer. SECTION 5. Termination of Reporting Obligation. The obligations of the Developer and the Dissemination Agent under this Disclosure Certificate shall terminate upon the legal defeasance, prior redemption or payment in full of all of the Bonds. In addition the Developer shall have no obligations hereunder if the Special Tax of the District on all property within the District owned by the Developer and affiliates or partners thereof is less than twenty percent (20%) of the total Special Tax for the entire District. If such termination occurs prior to the final maturity of the Bonds, the Developer shall give notice of such termination in the manner set forth under Section 4(c). SECTION 6. Amendment; Waiver. Notwithstanding any other provision of this Disclosure Certificate, the Developer and the Dissemination Agent may amend this Disclosure Certificate (and the Dissemination Agent shall agree to any amendment so requested by the Developer, provided no amendment increasing or affecting the obligations or duties of the Dissemination Agent shall be made without the consent of either such party), and any provision of this Disclosure Certificate may be waived, provided that the following conditions are satisfied: (a) If the amendment or waiver relates to the provisions of Sections 2(a), 3, or 4(a), it may only be made in connection with a change in circumstances that arises from a change in legal requirements or change in law; (b) The amendment or waiver either (i) is approved by the Bondholders of the Bonds in the same manner as provided in the Agreement for amendments to the Agreement with the consent of Bondholders, or (ii) does not, in the opinion of nationally recognized bond counsel, materially impair the interests of the Bondholders or Beneficial Owners of the Bonds. In the event of any amendment or waiver of a provision of this Disclosure Certificate, the Developer shall describe such amendment in the next Semi-Annual Report, and shall include, as applicable, a narrative explanation of the reason for the amendment or waiver and its impact on the type of information being presented by the Developer. D-12

355 SECTION 7. 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 Semi-Annual Report or notice of occurrence of a material event, in addition to that which is required by this Disclosure Certificate. If the Developer chooses to include any information in any Semi-Annual Report or notice of occurrence of a material 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 Semi-Annual Report or notice of occurrence of a material event. SECTION 8. Duties, Immunities and Liabilities of Dissemination Agent. The Dissemination Agent shall have only such duties as are specifically set forth in this Disclosure Certificate, and the Developer agrees to indemnify and save the Dissemination Agent, its officers, directors, employees and agents, harmless against any loss, expense and liabilities which they may incur arising out of or in the exercise or performance of their respective 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 Dissemination Agent shall be paid compensation by the Developer for its services provided hereunder in accordance with its schedule of fees as amended from time to time, and all expenses, legal fees and advances made or incurred by the Dissemination Agent in the performance of its duties hereunder. The Dissemination Agent shall have no duty or obligation to review any information provided to it hereunder and shall not be deemed to be acting in any fiduciary County for the Issuer, the Bondholders, or any other party. The obligations of the Developer under this Section shall survive resignation or removal of the Dissemination Agent and payment of the Bonds. SECTION 9. Subsequent Developers. The Developer will require, as a condition of sale of any property which the Developer sells within the Project resulting in a new owner who, together with affiliates or partners thereof, owns at least twenty percent (20%) of the total assessments for the entire District, that such purchaser execute a certificate substantially in the form of this Disclosure Certificate, unless this Disclosure Certificate, as it may be amended from time to time, by its own terms would not require the purchaser to provide any disclosure. SECTION 10. Notices. Any notices or communications to or among any of the parties to this Disclosure Certificate may be given as follows: To the Developer: Lennar Homes of California, Inc Rocky Ridge Drive, Suite #320 Roseville, CA To the Dissemination Agent: NBS Local Government Solutions Enterprise Circle North, Suite 225 Temecula, CA To the Issuer/County: County of El Dorado 330 Fair Lane Placerville, CA Attn: CFD Administrator D-13

356 Any person may, by written notice to the other persons listed above, designate a different address or telephone number(s) to which subsequent notices or communications should be sent. SECTION 11. Beneficiaries. This Disclosure Certificate shall inure solely to the benefit of the County, the Dissemination Agent, the Participating Underwriter and Holders and Beneficial Owners from time to time of the Bonds, and shall create no rights in any other person or entity. D-14

357 IN WITNESS WHEREOF, the undersigned has executed this Disclosure Certificate as of the date first above written. Lennar Homes of California, Inc. By: Its: D-15

358 EXHIBIT A NOTICE TO REPOSITORIES OF FAILURE TO FILE SEMI-ANNUAL REPORT Name of Issuer: Name of Bond Issue: County of El Dorado County of El Dorado Community Facilities District No (Blackstone) 2016 Senior Series A and 2016 Junior Series B Special Tax Bonds Date of Issuance: July 28, 2016 NOTICE IS HEREBY GIVEN that Lennar Homes of California, Inc. (the Developer ) has not provided a Semi-Annual Report with respect to the above-named Bonds as required by the Continuing Disclosure Certificate of the Developer dated as of the date of issuance of such Bonds. The Developer anticipates that the Semi-Annual Report will be filed by. Dated: on behalf of the Dissemination Agent cc: Developer By: Its: D-16

359 APPENDIX E FORM OF OPINION OF BOND COUNSEL SENIOR LIEN BONDS July 28, 2016 Board of Supervisors County of El Dorado 330 Fair Lane Placerville, California OPINION: $20,920,000 County of El Dorado Community Facilities District No (Blackstone) 2016 Series A Senior Lien Special Tax Bonds Members of the Board of Supervisors: We have acted as bond counsel in connection with the issuance by the County of El Dorado (the "County") of its $20,920,000 County of El Dorado Community Facilities District No (Blackstone) 2016 Series A Senior Lien Special Tax Bonds (the "Bonds") pursuant to the Mello-Roos Community Facilities Act of 1982, as amended, being sections et seq. of the California Government Code (the "Act"), a resolution of the County adopted June 28, 2016 (the "Resolution") and a Fiscal Agent Agreement, dated as of July 1, 2016 by and between the County and The Bank of New York Mellon Trust Company, N.A., as fiscal agent (the "Fiscal Agent Agreement"). We have examined the law and such certified proceedings and other papers as we deem necessary to render this opinion. As to questions of fact material to our opinion, we have relied upon representations of the County contained in the Fiscal Agent Agreement and in the certified proceedings and other certifications of public officials furnished to us, without undertaking to verify the same by independent investigation. Based upon our examination we are of the opinion, under existing law, that: 1. The County is duly organized and validly existing as a municipal corporation and general law County under the laws of the State of California, with power to enter into the Fiscal Agent Agreement, to perform the agreements on its part contained therein and to issue the Bonds. 2. The Bonds have been duly authorized, executed and delivered by the County and are legal, valid and binding obligations of the County, payable solely from the sources provided therefor in the Fiscal Agent Agreement. E-1

360 3. The Fiscal Agent Agreement has been duly approved by the County and constitutes a legal, valid and binding obligation of the County enforceable against the County in accordance with its terms. 4. Pursuant to the Act, the Fiscal Agent Agreement establishes a valid lien on and pledge of the Special Tax Revenues (as such term is defined in the Fiscal Agent Agreement) for the security of the Bonds. 5. Interest on the Bonds is excluded from gross income for federal income tax purposes and is not an item of tax preference for purposes of the federal alternative minimum tax imposed on individuals and corporations; it should be noted, however, that for the purpose of computing the alternative minimum tax imposed on corporations (as defined for federal income tax purposes), such interest is taken into account in determining certain income and earnings. The opinions set forth in the preceding sentence are subject to the condition that the County complies with all requirements of the Internal Revenue Code of 1986 that must be satisfied subsequent to the issuance of the Bonds in order that interest thereon be, or continue to be, excluded from gross income for federal income tax purposes. The County has covenanted to comply with each such requirement. Failure to comply with certain of such requirements may cause the inclusion of interest on the Bonds in gross income for federal income tax purposes to be retroactive to the date of issuance of the Bonds. We express no opinion regarding other federal tax consequences arising with respect to the ownership, sale or disposition of the Bonds, or the amount, accrual or receipt of interest on the Bonds. 6. Interest on the Bonds is exempt from personal income taxation imposed by the State of California. The rights of the owners of the Bonds and the enforceability of the Bonds and the Fiscal Agent Agreement may be subject to bankruptcy, insolvency, reorganization, moratorium and other similar laws affecting creditors' rights heretofore or hereafter enacted and may also be subject to the exercise of judicial discretion in accordance with principles of equity or otherwise in appropriate cases. Respectfully submitted, E-2

361 FORM OF OPINION OF BOND COUNSEL JUNIOR LIEN BONDS July 28, 2016 Board of Supervisors County of El Dorado 330 Fair Lane Placerville, California OPINION: $7,210,000 County of El Dorado Community Facilities District No (Blackstone) 2016 Series B Junior Lien Special Tax Bonds Members of the Board of Supervisors: We have acted as bond counsel in connection with the issuance by the County of El Dorado (the "County") of its $7,210,000 County of El Dorado Community Facilities District No (Blackstone) 2016 Series B Junior Lien Special Tax Bonds (the "Bonds") pursuant to the Mello-Roos Community Facilities Act of 1982, as amended, being sections et seq. of the California Government Code (the "Act"), a resolution of the County adopted June 28, 2016 (the "Resolution") and a Fiscal Agent Agreement, dated as of July 1, 2016 by and between the County and The Bank of New York Mellon Trust Company, N.A., as fiscal agent (the "Fiscal Agent Agreement"). We have examined the law and such certified proceedings and other papers as we deem necessary to render this opinion. As to questions of fact material to our opinion, we have relied upon representations of the County contained in the Fiscal Agent Agreement and in the certified proceedings and other certifications of public officials furnished to us, without undertaking to verify the same by independent investigation. Based upon our examination we are of the opinion, under existing law, that: 1. The County is duly organized and validly existing as a municipal corporation and general law County under the laws of the State of California, with power to enter into the Fiscal Agent Agreement, to perform the agreements on its part contained therein and to issue the Bonds. 2. The Bonds have been duly authorized, executed and delivered by the County and are legal, valid and binding obligations of the County, payable solely from the sources provided therefor in the Fiscal Agent Agreement. 3. The Fiscal Agent Agreement has been duly approved by the County and constitutes a legal, valid and binding obligation of the County enforceable against the County in accordance with its terms. E-3

362 4. Pursuant to the Act, the Fiscal Agent Agreement establishes a valid lien on and pledge of the Special Tax Revenues, subordinate to the lien of the Senior Lien Bonds (as such term is defined in the Fiscal Agent Agreement) for the security of the Bonds. 5. Interest on the Bonds is excluded from gross income for federal income tax purposes and is not an item of tax preference for purposes of the federal alternative minimum tax imposed on individuals and corporations; it should be noted, however, that for the purpose of computing the alternative minimum tax imposed on corporations (as defined for federal income tax purposes), such interest is taken into account in determining certain income and earnings. The opinions set forth in the preceding sentence are subject to the condition that the County complies with all requirements of the Internal Revenue Code of 1986 that must be satisfied subsequent to the issuance of the Bonds in order that interest thereon be, or continue to be, excluded from gross income for federal income tax purposes. The County has covenanted to comply with each such requirement. Failure to comply with certain of such requirements may cause the inclusion of interest on the Bonds in gross income for federal income tax purposes to be retroactive to the date of issuance of the Bonds. We express no opinion regarding other federal tax consequences arising with respect to the ownership, sale or disposition of the Bonds, or the amount, accrual or receipt of interest on the Bonds. 6. Interest on the Bonds is exempt from personal income taxation imposed by the State of California. The rights of the owners of the Bonds and the enforceability of the Bonds and the Fiscal Agent Agreement may be subject to bankruptcy, insolvency, reorganization, moratorium and other similar laws affecting creditors' rights heretofore or hereafter enacted and may also be subject to the exercise of judicial discretion in accordance with principles of equity or otherwise in appropriate cases. Respectfully submitted, E-4

363 APPENDIX F DTC AND THE BOOK-ENTRY ONLY SYSTEM The following description of the Depository Trust Company ("DTC"), the procedures and record keeping with respect to beneficial ownership interests in the Bonds, payment of principal, interest and other payments on the Bonds (herein, the "Securities") to DTC Participants or Beneficial Owners, confirmation and transfer of beneficial ownership interest in the Securities and other related transactions by and between DTC, the DTC Participants and the Beneficial Owners is based solely on information provided by DTC. Accordingly, no representations can be made concerning these matters and neither the DTC Participants nor the Beneficial Owners should rely on the foregoing information with respect to such matters, but should instead confirm the same with DTC or the DTC Participants, as the case may be. Neither the issuer of the Securities (the "Issuer") nor the trustee, fiscal agent or paying agent appointed with respect to the Securities (the "Agent") takes any responsibility for the information contained in this Appendix. No assurances can be given that DTC, DTC Participants or Indirect Participants will distribute to the Beneficial Owners (a) payments of interest, principal or premium, if any, with respect to the Securities, (b) certificates representing ownership interest in or other confirmation or ownership interest in the Securities, or (c) redemption or other notices sent to DTC or Cede & Co., its nominee, as the registered owner of the Securities, or that they will so do on a timely basis, or that DTC, DTC Participants or DTC Indirect Participants will act in the manner described in this Appendix. The current "Rules" applicable to DTC are on file with the Securities and Exchange Commission and the current "Procedures" of DTC to be followed in dealing with DTC Participants are on file with DTC. 1. The Depository Trust Company ("DTC"), New York, NY, will act as securities depository for the securities (the "Securities"). The Securities will be issued as fully-registered securities registered in the name of Cede & Co. (DTC s partnership nominee) or such other name as may be requested by an authorized representative of DTC. One fully-registered Security certificate will be issued for each issue of the Securities, each in the aggregate principal amount of such issue, and will be deposited with DTC. If, however, the aggregate principal amount of any issue exceeds $500 million, one certificate will be issued with respect to each $500 million of principal amount, and an additional certificate will be issued with respect to any remaining principal amount of such issue. 2. DTC, the world s largest securities depository, is a limited-purpose trust company organized under the New York Banking Law, a "banking organization" within the meaning of the New York Banking Law, a member of the Federal Reserve System, a "clearing corporation" within the meaning of the New York Uniform Commercial Code, and a "clearing agency" registered pursuant to the provisions of Section 17A of the Securities Exchange Act of DTC holds and provides asset servicing for over 3.5 million issues of U.S. and non-u.s. equity issues, corporate and municipal debt issues, and money market instruments (from over 100 countries) that DTC s participants ("Direct Participants") deposit with DTC. DTC also facilitates the post-trade settlement among Direct Participants of sales and other securities transactions in deposited securities, through electronic computerized book-entry transfers and pledges between Direct Participants accounts. This eliminates the need for physical movement of securities certificates. Direct Participants include both U.S. and non-u.s. securities brokers and dealers, banks, trust companies, clearing corporations, and certain other organizations. DTC is a wholly-owned subsidiary of The Depository Trust & Clearing Corporation ("DTCC"). DTCC is the holding company for DTC, National Securities Clearing Corporation and Fixed Income Clearing F-1

364 Corporation, all of which are registered clearing agencies. DTCC is owned by the users of its regulated subsidiaries. Access to the DTC system is also available to others such as both U.S. and non-u.s. securities brokers and dealers, banks, trust companies, and clearing corporations that clear through or maintain a custodial relationship with a Direct Participant, either directly or indirectly ("Indirect Participants"). DTC has a Standard & Poor s rating of AA+. The DTC Rules applicable to its Participants are on file with the Securities and Exchange Commission. More information about DTC can be found at The information contained on this Internet site is not incorporated herein by reference. 3. Purchases of Securities under the DTC system must be made by or through Direct Participants, which will receive a credit for the Securities on DTC s records. The ownership interest of each actual purchaser of each Security ("Beneficial Owner") is in turn to be recorded on the Direct and Indirect Participants records. Beneficial Owners will not receive written confirmation from DTC of their purchase. Beneficial Owners are, however, expected to receive written confirmations providing details of the transaction, as well as periodic statements of their holdings, from the Direct or Indirect Participant through which the Beneficial Owner entered into the transaction. Transfers of ownership interests in the Securities are to be accomplished by entries made on the books of Direct and Indirect Participants acting on behalf of Beneficial Owners. Beneficial Owners will not receive certificates representing their ownership interests in Securities, except in the event that use of the book-entry system for the Securities is discontinued. 4. To facilitate subsequent transfers, all Securities deposited by Direct Participants with DTC are registered in the name of DTC s partnership nominee, Cede & Co., or such other name as may be requested by an authorized representative of DTC. The deposit of Securities with DTC and their registration in the name of Cede & Co. or such other DTC nominee do not affect any change in beneficial ownership. DTC has no knowledge of the actual Beneficial Owners of the Securities; DTC s records reflect only the identity of the Direct Participants to whose accounts such Securities are credited, which may or may not be the Beneficial Owners. The Direct and Indirect Participants will remain responsible for keeping account of their holdings on behalf of their customers. 5. Conveyance of notices and other communications by DTC to Direct Participants, by Direct Participants to Indirect Participants, and by Direct Participants and Indirect Participants to Beneficial Owners will be governed by arrangements among them, subject to any statutory or regulatory requirements as may be in effect from time to time. Beneficial Owners of Securities may wish to take certain steps to augment the transmission to them of notices of significant events with respect to the Securities, such as redemptions, tenders, defaults, and proposed amendments to the Security documents. For example, Beneficial Owners of Securities may wish to ascertain that the nominee holding the Securities for their benefit has agreed to obtain and transmit notices to Beneficial Owners. In the alternative, Beneficial Owners may wish to provide their names and addresses to the registrar and request that copies of notices be provided directly to them. 6. Redemption notices shall be sent to DTC. If less than all of the Securities within an issue are being redeemed, DTC s practice is to determine by lot the amount of the interest of each Direct Participant in such issue to be redeemed. 7. Neither DTC nor Cede & Co. (nor any other DTC nominee) will consent or vote with respect to Securities unless authorized by a Direct Participant in accordance with DTC s MMI Procedures. Under its usual procedures, DTC mails an Omnibus Proxy to Issuer as soon as possible after the record date. The Omnibus Proxy assigns Cede & Co. s consenting or voting rights to those Direct Participants to whose accounts Securities are credited on the record date (identified in a listing attached to the Omnibus Proxy). F-2

365 8. Redemption proceeds, distributions, and dividend payments on the Securities will be made to Cede & Co., or such other nominee as may be requested by an authorized representative of DTC. DTC s practice is to credit Direct Participants accounts upon DTC s receipt of funds and corresponding detail information from Issuer or Agent, on payable date in accordance with their respective holdings shown on DTC s records. Payments by Participants to Beneficial Owners will be governed by standing instructions and customary practices, as is the case with securities held for the accounts of customers in bearer form or registered in "street name," and will be the responsibility of such Participant and not of DTC, Agent, or Issuer, subject to any statutory or regulatory requirements as may be in effect from time to time. Payment of redemption proceeds, distributions, and dividend payments to Cede & Co. (or such other nominee as may be requested by an authorized representative of DTC) is the responsibility of Issuer or Agent, disbursement of such payments to Direct Participants will be the responsibility of DTC, and disbursement of such payments to the Beneficial Owners will be the responsibility of Direct and Indirect Participants. 9. DTC may discontinue providing its services as depository with respect to the Securities at any time by giving reasonable notice to Issuer or Agent. Under such circumstances, in the event that a successor depository is not obtained, Security certificates are required to be printed and delivered. 10. Issuer may decide to discontinue use of the system of book-entry-only transfers through DTC (or a successor securities depository). In that event, Security certificates will be printed and delivered to DTC. 11. The information in this section concerning DTC and DTC s book-entry system has been obtained from sources that Issuer believes to be reliable, but Issuer takes no responsibility for the accuracy thereof. F-3

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367 APPENDIX G SUMMARY OF CERTAIN PROVISIONS OF FISCAL AGENT AGREEMENTS The following is a summary of selected provisions of the Bonds Fiscal Agent Agreements that are not described elsewhere in this Official Statement. This summary does not purport to be comprehensive and reference should be made to the Fiscal Agent Agreements for a full and complete statement of their provisions. All capitalized terms not defined in this Official Statement have the meanings set forth in the Fiscal Agent Agreements. General THE FISCAL AGENT AGREEMENTS The Senior Lien Fiscal Agent Agreement and the Junior Lien Fiscal Agreement (together, the Fiscal Agent Agreements ) set forth the terms of the Bonds, the application of the proceeds of the sale of the Bonds, the nature and extent of the security for the Bonds, and the rights, duties, and immunities of the Fiscal Agent. The two Fiscal Agent Agreements pursuant to which the Bonds are issued are substantially the same, except for the pledge of Tax Revenues for the Senior Lien Bonds in the Senior Lien Fiscal Agent Agreement, and the pledge of Surplus Tax Revenues for the Junior Lien Bonds in the Junior Lien Fiscal Agent Agreement. The following is a summary of selected provisions that are common to each Fiscal Agent Agreement. This summary does not purport to be complete or definitive and is qualified in its entirety by reference to the full terms of the Fiscal Agent Agreements. Definitions "Additional Bonds" means one or more additional series of bonds which are issued in accordance with the Act and the Fiscal Agent Agreements and a Supplemental Fiscal Agent Agreement consistent with the terms of the Fiscal Agent Agreements, and are secured by the Special Tax on a parity with the Bonds, all as more specifically prescribed by the Fiscal Agent Agreements. "Authorized Officer" means the Chief Administrative Officer, the Auditor-Controller, the Clerk of the Board, County Counsel (including any person serving as interim in such position) or any other person duly authorized by the Board of Supervisors to execute any document pertaining to the CFD. "Business Day" means any day other than (i) a Saturday or a Sunday or (ii) a day on which banking institutions in the state in which the Fiscal Agent has its principal corporate trust office are authorized or obligated by law or executive order to be closed. "Federal Securities" means: (a) any direct general obligations of the United States of America (including obligations issued or held in book entry form on the books of the Department of the Treasury of the United States of America), the payment of principal of and interest on which are unconditionally and fully guaranteed by the United States of America; and (b) any obligations the principal of and interest on which are unconditionally guaranteed by the United States of America. "Owner" or "Bondowner" means any person who shall be the registered owner of any Outstanding Bond. G-1

368 "Permitted Investments" means any of the following, to the extent that they are lawful investments for County funds at the time of investment, and are acquired at Fair Market Value (the Fiscal Agent entitled to rely upon investment direction from the County as a certification that such investment constitutes a legal investment): (i) Federal Securities; (ii) any of following obligations of federal agencies not guaranteed by the United States of America: (a) debentures issued by the Federal Housing Administration; (b) participation certificates or senior debt obligations of the Federal Home Loan Mortgage Corporation or Farm Credit Banks (consisting of Federal Land Banks, Federal Intermediate Credit Banks or Banks for Cooperatives); (c) bonds or debentures of the Federal Home Loan Bank Board established under the Federal Home Loan Bank Act, bonds of any federal home loan bank established under said act and stocks, bonds, debentures, participations and other obligations of or issued by the Federal National Mortgage Association, the Student Loan Marketing Association, the Government National Mortgage Association and the Federal Home Loan Mortgage Corporation; and bonds, notes or other obligations issued or assumed by the International Bank for Reconstruction and Development; (iii) interest-bearing demand or time deposits (including certificates of deposit) in federal or State of California chartered banks (including the Fiscal Agent and its affiliates), provided that (a) in the case of a savings and loan association, such demand or time deposits shall be fully insured by the Federal Deposit Insurance Corporation, or the unsecured obligations of such savings and loan association shall be rated in one of the top two rating categories by a nationally recognized rating service, and (b) in the case of a bank, such demand or time deposits shall be fully insured by the Federal Deposit Insurance Corporation, or the unsecured obligations of such bank (or the unsecured obligations of the parent bank holding company of which such bank is the lead bank) shall be rated in one of the top two rating categories by a nationally recognized rating service; (iv) repurchase agreements with a registered broker/dealer subject to the Securities Investors Protection Corporation Liquidation in the event of insolvency, or any commercial bank provided that: (a) the unsecured obligations of such bank shall be rated in one of the top two rating categories by a nationally recognized rating service, or such bank shall be the lead bank of a banking holding company whose unsecured obligations are rated in one of the top two rating categories by a nationally recognized rating service; (b) the most recent reported combined capital, surplus an undivided profits of such bank shall be not less than $100 million; (c) the repurchase obligation under any such repurchase obligation shall be required to be performed in not more than 30 days; (d) the entity holding such securities as described in clause (c) shall have a pledged first security interest therein for the benefit of the Fiscal Agent under the California Commercial Code or pursuant to the book-entry procedures described by 31 C.F.R et seq. or 31 C.F.R et seq. and are rated in one of the top two rating categories by a nationally recognized rating service; (v) bankers acceptances endorsed and guaranteed by banks described in clause (iv) above; G-2

369 (vi) obligations, the interest on which is exempt from federal income taxation under Section 103 of the Code and which are rated in the one of the top two rating categories by a nationally recognized rating service; (vii) money market funds which invest solely in Federal Securities or in obligations described in the preceding clause (ii) of this definition, or money market funds which are rated in the highest rating category by Standard & Poor's Ratings Services or Moody's Investor Service, including such funds for which the Fiscal Agent, its affiliates or subsidiaries provide investment advisory or other management services or for which the Fiscal Agent or an affiliate of the Fiscal Agent serves as investment administrator, shareholder servicing agent, and/or custodian or subcustodian, notwithstanding that (i) the Fiscal Agent or an affiliate of the Fiscal Agent receives fees from funds for services rendered, (ii) the Fiscal Agent collects fees for services rendered pursuant to the Fiscal Agent Agreements, which fees are separate from the fees received from such funds, and (iii) services performed for such funds and pursuant to the Fiscal Agent Agreements may at times duplicate those provided to such funds by the Fiscal Agent or an affiliate of the Fiscal Agent; (viii) units of a taxable government money market portfolio comprised solely of obligations listed in (i) and (iv) above, including such funds for which the Fiscal Agent, its affiliates or subsidiaries provide investment advisory or other management services or for which the Fiscal Agent or an affiliate of the Fiscal Agent serves as investment administrator, shareholder servicing agent, and/or custodian or subcustodian, notwithstanding that (i) the Fiscal Agent or an affiliate of the Fiscal Agent receives fees from funds for services rendered, (ii) the Fiscal Agent collects fees for services rendered pursuant to the Fiscal Agent Agreements, which fees are separate from the fees received from such funds, and (iii) services performed for such funds and pursuant to the Fiscal Agent Agreements may at times duplicate those provided to such funds by the Fiscal Agent or an affiliate of the Fiscal Agent; (ix) any investment which is a legal investment for proceeds of the Bonds at the time of the execution of such agreement, and which investment is made pursuant to an agreement between the County or the Fiscal Agent or any successor Fiscal Agent and a financial institution or governmental body whose long term debt obligations are rated in one of the top two rating categories by a nationally recognized rating service; (x) commercial paper which at the time of purchase is of "prime" quality of the highest ranking or of the highest letter and numerical rating as provided for by Moody's Investors Service, or Standard and Poor's Corporation, of issuing corporations that are organized and operating within the United States and having total assets in excess of five hundred million dollars ($500,000,000) and having an "AA" or higher rating for the issuer's debentures, other than commercial paper, as provided for by Moody's Investors Service or Standard and Poor's Corporation, and provided that purchases of eligible commercial paper may not exceed 180 days maturity nor represent more than 10% of the outstanding paper of an issuing corporation; (xi) any general obligation of a bank or insurance company whose long term debt obligations are rated in one of the two highest rating categories of a national rating service; (xii) shares in a common law trust established pursuant to Title 1, Division 7, Charter 5 of the Government Code of the State that invests exclusively in investments G-3

370 permitted by Section of Title 5, Division 2, Chapter 4 of the Government Code of the State, as it may be amended; (xiii) shares in the California Asset Management Program; (xiv) the Local Agency Investment Fund established pursuant to Section of the Government Code of the State of California, provided, however, that the Fiscal Agent shall be permitted to make investments and withdrawals in its own name and the Fiscal Agent may restrict investments in such fund if necessary to keep moneys available for the purposes of the Fiscal Agent Agreements: or (xv) any other lawful investment for County funds. Investment of Funds. Moneys in any fund or account created or established under the Fiscal Agent Agreements and held by the Fiscal Agent or the Auditor-Controller, respectively, is required to be invested by the Fiscal Agent or the Auditor-Controller, respectively, in Permitted Investments, which in any event by their terms mature prior to the date on which such moneys are required to be paid out pursuant to the Fiscal Agent Agreements, as directed pursuant to an Officer s Certificate filed with the Fiscal Agent at least two (2) Business Days in advance of the making of such investments. In the absence of any such Officer s Certificate, the Fiscal Agent shall invest any such moneys in Permitted Investments described in clause (vii) of the definition thereof which by their terms mature prior to the date on which such moneys are required to be paid out under the Fiscal Agent Agreements to the extent reasonably practicable, provided, however, that any such investment shall be made by the Fiscal Agent only if, prior to the date on which such investment is to be made, the Fiscal Agent shall have received a written direction from the County specifying a specific money market fund and, if no such written direction is so received, the Fiscal Agent shall hold such moneys uninvested. The Authorized Officer shall make note of any investment of funds in excess of the yield on the Bonds so that appropriate actions can be taken to assure compliance with rebate requirements. Moneys in any fund or account created or established by the Fiscal Agent Agreements and held by the Auditor-Controller shall be invested by the Auditor-Controller in any Permitted Investment provided that amounts on deposit in the Administrative Expense Fund may be invested in any lawful investment the County may make. Obligations purchased as an investment of moneys in any fund shall be deemed to be part of such fund or account, subject, however, to the requirements of the Fiscal Agent Agreements for transfer of interest earnings and profits resulting from investment of amounts in funds and accounts. Whenever in the Fiscal Agent Agreements any moneys are required to be transferred by the County to the Fiscal Agent, such transfer may be accomplished by transferring a like amount of Permitted Investments. The Fiscal Agent and its affiliates or the Auditor-Controller may act as sponsor, advisor, depository, principal or agent in the acquisition or disposition of any investment. Neither the Fiscal Agent nor the Auditor-Controller shall incur any liability for losses arising from any investments made pursuant to this Section. The Fiscal Agent shall not be required to determine the legality of any investments. Investments in any and all funds and accounts may be commingled in a separate fund or funds for purposes of making, holding and disposing of investments, notwithstanding provisions in the Fiscal Agent Agreements for transfer to or holding in or to the credit of particular funds or accounts of amounts received or held by the Fiscal Agent or the Auditor-Controller, provided G-4

371 that the Fiscal Agent or the Auditor-Controller, as applicable, shall at all times account for such investments strictly in accordance with the funds and accounts to which they are credited and otherwise as provided in the Fiscal Agent Agreements. The Fiscal Agent or the Auditor-Controller, as applicable, shall sell at Fair Market Value, or present for redemption, any investment security whenever it shall be necessary to provide moneys to meet any required payment, transfer, withdrawal or disbursement from the fund or account to which such investment security is credited and neither the Fiscal Agent nor the Authorized Officer shall be liable or responsible for any loss resulting from the acquisition or disposition of such investment security in accordance herewith. The Fiscal Agent shall not be considered in breach of or in default in its obligations under the Fiscal Agent Agreements or progress in respect thereto in the event of enforced delay ("unavoidable delay") in the performance of such obligations due to unforeseeable causes beyond its control and without its fault or negligence, including, but not limited to, Acts of God or of the public enemy or terrorists, acts of a government, acts of the other party, fires, floods, epidemics, quarantine restrictions, strikes, freight embargoes, earthquakes, explosion, mob violence, riot, inability to procure or general sabotage or rationing of labor, equipment, facilities, sources of energy, material or supplies in the open market, litigation or arbitration involving a party or others relating to zoning or other governmental action or inaction pertaining to the project, malicious mischief, condemnation, and unusually severe weather or delays of suppliers or subcontractors due to such causes or any similar event and/or occurrences beyond the control of the Fiscal Agent. Supplemental Agreements. With Consent. The Fiscal Agent Agreements and the rights and obligations of the County and of the Owners of the Bonds may be modified or amended at any time by a Supplemental Agreement pursuant to the affirmative vote at a meeting of Owners, or with the written consent without a meeting, of the Owners of at least sixty percent (60%) in aggregate principal amount of the Bonds then Outstanding, exclusive of Bonds disqualified as provided in the Fiscal Agent Agreements. No such modification or amendment shall (i) extend the maturity of any Bond or reduce the interest rate thereon, or otherwise alter or impair the obligation of the County to pay the principal of, and the interest and any premium on, any Bond, without the express consent of the Owner of such Bond, or (ii) permit the creation by the County of any pledge or lien upon the Special Taxes superior to or on a parity with the pledge and lien created for the benefit of the Bonds (except as otherwise permitted by the Act, the laws of the State of California or the Fiscal Agent Agreements), or reduce the percentage of Bonds required for the amendment. Without Consent. The Fiscal Agent Agreements and the rights and obligations of the County and of the Owners may also be modified or amended at any time by a Supplemental Agreement, without the consent of any Owners, only to the extent permitted by law and only for any one or more of the following purposes: (i) to add to the covenants and agreements of the County, other covenants and agreements thereafter to be observed; or (b) to limit or surrender any right or power herein reserved to or conferred upon the County. (ii) to make modifications not adversely affecting any Outstanding Bonds in any material respect; G-5

372 Covenants. (iii) to make such provisions for the purpose of curing any ambiguity, or of curing, correcting or supplementing any defective provision contained in the Fiscal Agent Agreements, or in regard to questions arising under the Fiscal Agent Agreements, as the County and the Fiscal Agent may deem necessary or desirable and not inconsistent with the Fiscal Agent Agreements, and which shall not adversely affect the rights of the Owners of the Bonds; or (iv) to make such additions, deletions or modifications as may be necessary or desirable to assure exclusion from gross income for federal income tax purposes of interest on the Bonds. Collection of Special Tax Revenues. The County shall comply with all requirements of the Act so as to assure the timely collection of Special Tax Revenues, including without limitation, the enforcement of delinquent Special Taxes. (A) Levy. The Auditor-Controller shall effect the levy of the Special Taxes each Fiscal Year in accordance with the Ordinance by each August 1 that the Bonds are outstanding, or otherwise such that the computation of the levy is complete before the final date on which Auditor-Controller will accept the transmission of the Special Tax amounts for the parcels within the CFD for inclusion on the next real property tax roll. Upon the completion of the computation of the amounts of the levy, an Authorized Officer shall prepare or cause to be prepared, and shall transmit to the Auditor- Controller, such data as the Auditor-Controller requires to include the levy of the Special Taxes on the next real property tax roll. (B) Computation. The Auditor-Controller shall fix and levy the amount of Special Taxes within the CFD required for the payment of principal of and interest on any outstanding Bonds of the CFD becoming due and payable during the ensuing calendar year, including any necessary replenishment or expenditure of the Reserve Fund for the Bonds and an amount estimated to be sufficient to pay the Administrative Expenses including amounts necessary to discharge any rebate obligation, during such year, taking into account the balances in such funds and in the Special Tax Fund. The Special Taxes so levied shall not exceed the authorized amounts for the CFD. (C) Collection. The Special Taxes shall be payable and be collected in the same manner and at the same time and in the same installments as the general taxes on real property are payable, or by direct billing of the property owner, and, in either case, have the same priority, become delinquent at the same time and in the same proportionate amounts and bear the same proportionate penalties and interest after delinquency as do the ad valorem taxes on real property. Punctual Payment. The County will punctually pay or cause to be paid the principal of, and interest and any premium on, the Bonds when and as due in strict conformity with the terms of the Fiscal Agent Agreements and any Supplemental Agreement, and it will faithfully observe and perform all of the conditions covenants and requirements of the Fiscal Agent Agreements and all Supplemental Agreements and of the Bonds. Extension of Time for Payment. In order to prevent any accumulation of claims for interest after maturity, the County shall not, directly or indirectly, extend or consent to the G-6

373 extension of the time for the payment of any claim for interest on any of the Bonds and shall not, directly or indirectly, be a party to the approval of any such arrangement by purchasing or funding said claims for interest or in any other manner. In case any such claim for interest shall be extended or funded, whether or not with the consent of the County, such claim for interest so extended or funded shall not be entitled, in case of default under the Fiscal Agent Agreements, to the benefits of the Fiscal Agent Agreements, except subject to the prior payment in full of the principal of all of the Bonds then Outstanding and of all claims for interest which shall not have so extended or funded. Against Encumbrances. The County will not encumber, pledge or place any charge or lien upon any of the Special Tax Revenues or other amounts pledged to the Bonds superior to or on a parity with the pledge and lien created for the benefit of the Bonds, or their Owners, except as permitted by the Fiscal Agent Agreements. Books and Records. The County will keep, or cause to be kept, proper books of record and accounts, separate from all other records and accounts of the County, in which complete and correct entries shall be made of all transactions relating to the expenditure of amounts disbursed from the Administrative Expense Fund and the Special Tax Fund and to the Special Tax Revenues. Such books of record and accounts shall at all times during business hours be subject to the inspection of the Fiscal Agent and the Owners of not less than ten percent (10%) of the principal amount of the Bonds then Outstanding, or their representatives duly authorized in writing. Protection of Security and Rights of Owners. The County will preserve and protect the security of the Bonds and the rights of the Owners, and will warrant and defend their rights against all claims and demands of all persons. From and after the delivery of any of the Bonds by the County, the Bonds shall be incontestable by the County. Further Assurances. The County will adopt, make, execute and deliver any and all such further resolutions, instruments and assurances as may be reasonably necessary or proper to carry out the intention or to facilitate the performance of the Fiscal Agent Agreements, and for the better assuring and confirming unto the Owners of the rights and benefits provided in the Fiscal Agent Agreements. Maintenance of Tax-Exemption. The County shall take all actions necessary to assure the exclusion of interest on the Bonds from the gross income of the Owners of the Bonds to the same extent as such interest is permitted to be excluded from gross income under the Tax Code as in effect on the date of issuance of the Bonds. G-7

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375 APPENDIX H SPECIMEN MUNICIPAL BOND INSURANCE POLICY H-1

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377 MUNICIPAL BOND INSURANCE POLICY ISSUER: BONDS: $ in aggregate principal amount of Policy No: -N Effective Date: Premium: $ ASSURED GUARANTY MUNICIPAL CORP. ("AGM"), for consideration received, hereby UNCONDITIONALLY AND IRREVOCABLY agrees to pay to the trustee (the "Trustee") or paying agent (the "Paying Agent") (as set forth in the documentation providing for the issuance of and securing the Bonds) for the Bonds, for the benefit of the Owners or, at the election of AGM, directly to each Owner, subject only to the terms of this Policy (which includes each endorsement hereto), that portion of the principal of and interest on the Bonds that shall become Due for Payment but shall be unpaid by reason of Nonpayment by the Issuer. On the later of the day on which such principal and interest becomes Due for Payment or the Business Day next following the Business Day on which AGM shall have received Notice of Nonpayment, AGM will disburse to or for the benefit of each Owner of a Bond the face amount of principal of and interest on the Bond that is then Due for Payment but is then unpaid by reason of Nonpayment by the Issuer, but only upon receipt by AGM, in a form reasonably satisfactory to it, of (a) evidence of the Owner's right to receive payment of the principal or interest then Due for Payment and (b) evidence, including any appropriate instruments of assignment, that all of the Owner's rights with respect to payment of such principal or interest that is Due for Payment shall thereupon vest in AGM. A Notice of Nonpayment will be deemed received on a given Business Day if it is received prior to 1:00 p.m. (New York time) on such Business Day; otherwise, it will be deemed received on the next Business Day. If any Notice of Nonpayment received by AGM is incomplete, it shall be deemed not to have been received by AGM for purposes of the preceding sentence and AGM shall promptly so advise the Trustee, Paying Agent or Owner, as appropriate, who may submit an amended Notice of Nonpayment. Upon disbursement in respect of a Bond, AGM shall become the owner of the Bond, any appurtenant coupon to the Bond or right to receipt of payment of principal of or interest on the Bond and shall be fully subrogated to the rights of the Owner, including the Owner's right to receive payments under the Bond, to the extent of any payment by AGM hereunder. Payment by AGM to the Trustee or Paying Agent for the benefit of the Owners shall, to the extent thereof, discharge the obligation of AGM under this Policy. Except to the extent expressly modified by an endorsement hereto, the following terms shall have the meanings specified for all purposes of this Policy. "Business Day" means any day other than (a) a Saturday or Sunday or (b) a day on which banking institutions in the State of New York or the Insurer's Fiscal Agent are authorized or required by law or executive order to remain closed. "Due for Payment" means (a) when referring to the principal of a Bond, payable on the stated maturity date thereof or the date on which the same shall have been duly called for mandatory sinking fund redemption and does not refer to any earlier date on which payment is due by reason of call for redemption (other than by mandatory sinking fund redemption), acceleration or other advancement of maturity unless AGM shall elect, in its sole discretion, to pay such principal due upon such acceleration together with any accrued interest to the date of acceleration and (b) when referring to interest on a Bond, payable on the stated date for payment of interest. "Nonpayment" means, in respect of a Bond, the failure of the Issuer to have provided sufficient funds to the Trustee or, if there is no Trustee, to the Paying Agent for payment in full of all principal and interest that is Due for Payment on such Bond. "Nonpayment" shall also include, in respect of a Bond, any payment of principal or interest that is Due for Payment made to an Owner by or on behalf of the Issuer which has been recovered from such Owner pursuant to the