$5,520,000 MANTECA UNIFIED SCHOOL DISTRICT COMMUNITY FACILITIES DISTRICT NO SERIES A (2018) SPECIAL TAX BONDS

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1 NEW ISSUE--FULL BOOK ENTRY RATINGS: S&P (Insured Bonds): AA (Insured) S&P: A (Underlying) See RATINGS herein. 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 Series A (2018) 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, although, in the case of tax years beginning prior to January 1, 2018, for the purpose of computing the alternative minimum tax imposed on certain corporations, such interest earned by a corporation prior to the end of its tax year in 2018 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 Matters herein. Dated: Date of Delivery $5,520,000 MANTECA UNIFIED SCHOOL DISTRICT COMMUNITY FACILITIES DISTRICT NO SERIES A (2018) SPECIAL TAX BONDS Due: September 1, as shown on inside cover The Manteca Unified School District (the School District ) is issuing the above-captioned bonds (the Series A (2018) Bonds ) for and on behalf of its Community Facilities District No (the Community Facilities District ) under the Mello-Roos Community Facilities Act of 1982 (the Act ), the Resolution of Issuance (as defined herein), and a Fiscal Agent Agreement dated as of November 1, 2018 (the Fiscal Agent Agreement ), by and between the School District and The Bank of New York Mellon Trust Company, N.A., as fiscal agent (the Fiscal Agent ). See THE SERIES A (2018) BONDS Authority for Issuance. The Series A (2018) Bonds are being issued to (i) construct and acquire certain public facilities authorized for the Community Facilities District, and (ii) pay the costs of issuing the Series A (2018) Bonds, including the premium for a bond insurance policy and a debt service reserve insurance policy. See FINANCING PLAN. The Series A (2018) Bonds are payable from the Special Tax Revenues (as defined herein) received by the School District from special taxes levied on property within the Community Facilities District according to the rate and method of apportionment of special tax for the Community Facilities District. The Series A (2018) Bonds are secured by a first pledge of the Special Tax Revenues and the moneys on deposit in certain funds held by the Fiscal Agent under the Fiscal Agent Agreement. Additional bonds may be issued for the Community Facilities District in the future on a parity with the Series A (2018) Bonds. See SECURITY FOR THE SERIES A (2018) BONDS. Interest on the Series A (2018) Bonds is payable on semiannually on each March 1 and September 1, commencing March 1, The Series A (2018) Bonds will be issued in denominations of $5,000 or integral multiples of $5,000. The Series A (2018) Bonds, when delivered, will be initially registered in the name of Cede & Co., as nominee of The Depository Trust Company ( DTC ). DTC will act as securities depository for the Series A (2018) Bonds. See THE SERIES A (2018) BONDS Description of the Series A (2018) Bonds and APPENDIX F DTC and the Book-Entry Only System. The Series A (2018) Bonds are subject to optional redemption, mandatory sinking fund redemption and special mandatory redemption from prepaid special taxes. See THE SERIES A (2018) BONDS Redemption. The scheduled payment of principal of and interest on the Series A (2018) Bonds maturing on September 1, 2026 through 2038, inclusive and September 1, 2044 (collectively, the Insured Series A 2018 Bonds ) when due will be guaranteed under a municipal bond insurance policy to be issued concurrently with the delivery of the Insured Series A (2018) Bonds by Build America Mutual Assurance Company (the Series A (2018) Bond Insurer ). The final determination on which maturities to insure will be made at the time of pricing. The Series A (2018) Bond Insurer will also be providing a reserve insurance policy for deposit to the reserve fund for the Series A (2018) Bonds in the amount of the Reserve Requirement (defined herein). The Series A (2018) Bonds, the interest thereon, and any premiums payable on the redemption of any Series A (2018) Bonds, are not an indebtedness of the School District, the Community Facilities District (except to the limited extent described in this Official Statement), the State of California (the State ) or any of their respective political subdivisions. None of the School District, the Community Facilities District (except to the limited extent described in this Official Statement), the State or any of its political subdivisions is liable for the Series A (2018) Bonds. Neither the faith and credit nor the taxing power of the School District, the Community Facilities District (except to the limited extent described in this Official Statement) or the State or any of their respective political subdivisions is pledged to the payment of the Series A (2018) Bonds. Other than the Special Tax Revenues, no taxes are pledged to the payment of the Series A (2018) Bonds. The Series A (2018) Bonds do not constitute a general obligation of the Community Facilities District but are limited obligations of the Community Facilities District payable solely from the Special Tax Revenues as more fully described in this Official Statement. MATURITY SCHEDULE (see inside cover) This cover page contains certain information for quick reference only. It is not a summary of essential information about the Series A (2018) Bonds. Potential investors should read this entire Official Statement to obtain information essential for making an informed investment decision. Investment in the Series A (2018) 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 Series A (2018) Bonds. The Series A (2018) Bonds are offered when, as and if issued by the School District and accepted by the Underwriters, subject to approval as to their legality by Jones Hall, A Professional Law Corporation, San Francisco, California, Bond Counsel, and subject to certain other conditions. Jones Hall, A Professional Law Corporation, is also serving as disclosure counsel to the School District. Certain matters will be passed upon for the Underwriters by Kutak Rock LLP, Irvine California. It is anticipated that the Series A (2018) Bonds, in book-entry form, will be available for delivery through the facilities of DTC on or about November 14, The date of this Official Statement is: October 25, 2018.

2 MATURITY SCHEDULE $5,520,000 MANTECA UNIFIED SCHOOL DISTRICT COMMUNITY FACILITIES DISTRICT NO SERIES A (2018) SPECIAL TAX BONDS (Base CUSIP : ) Maturity Date (September 1) Principal Amount Interest Rate Yield CUSIP No $215, % 1.880% PD , PE , PF , PG , PH , PJ , PK7 2026* 235, PL5 2027* 245, C PM3 2028* 255, C PN1 2029* 270, C PP6 2030* 285, PQ4 2031* 295, PR2 2032* 300, PS0 2033* 310, PT8 2034* 325, PU5 2035* 270, PV3 2036* 215, PW1 2037* 180, PX9 2038* 185, PY7 $ 755, % Term Bond due September 1, 2044*, Yield: 4.070%, CUSIP No. PZ4 *Insured Bonds. C: Yield to call at first optional redemption date of September 1, 2025 at 103%. CUSIPÒ is a registered trademark of the American Bankers Association. CUSIP data herein is provided by CUSIP Global Services, managed by S&P Global Market Intelligence on behalf of The American Bankers Association. None of the School District, the Community Facilities District, or the Underwriters takes any responsibility for the accuracy of the CUSIP data.

3 MANTECA UNIFIED SCHOOL DISTRICT (San Joaquin County, California) Board of Trustees Stephen Schluer, President Bob Wallace, Vice President Evelyn Moore, Clerk Eric Duncan, Trustee Kathy Howe, Trustee Michael Seelye, Trustee Nancy Teicheira, Trustee School District Administration Dr. Clarke Burke, Superintendent Jacqui Breitenbucher, Chief Business Officer PROFESSIONAL SERVICES Financial Advisor and Special Tax Consultant California Financial Services Santa Rosa, California Bond and Disclosure 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

4 GENERAL INFORMATION ABOUT THIS OFFICIAL STATEMENT Use of Official Statement. This Official Statement is submitted in connection with the sale of the Series A (2018) 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 Series A (2018) 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 Community Facilities District or the School District, in any press release and in any oral statement made with the approval of an authorized officer of the Community Facilities District or the School District, 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 Community Facilities District or the School District since the date hereof. Limit of Offering. No dealer, broker, salesperson or other person has been authorized by the School District or the Underwriters 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 Series A (2018) Bonds by a person in any jurisdiction in which it is unlawful for such person to make such an offer, solicitation or sale. Involvement of Underwriters. The Underwriters have 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 Underwriters do not guarantee the accuracy or completeness of such information. The information and expressions of opinions herein are subject to change without notice and neither delivery of this Official Statement nor any sale made hereunder shall, under any circumstances, create any implication that there has been no change in the affairs of the School District or the Community Facilities District since the date hereof. All summaries of the Fiscal Agent Agreement or other documents referred to in this Official Statement, are made subject to the provisions of such documents, respectively, and do not purport to be complete statements of any or all of such provisions. Bond Insurer Disclaimer. Build America Mutual Assurance Company ( BAM ) makes no representation regarding the Insured Series A (2018) Bonds or the advisability of investing in the Insured Series A (2018) Bonds. In addition, BAM 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 BAM, supplied by BAM and presented under the heading Bond Insurance and Appendix G - Specimen Municipal Bond Insurance Policy. IN CONNECTION WITH THIS OFFERING, THE UNDERWRITERS MAY OVERALLOT OR EFFECT TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE SERIES A (2018) BONDS OFFERED HEREBY AT LEVELS ABOVE THOSE THAT MIGHT OTHERWISE PREVAIL IN THE OPEN MARKET. SUCH STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME. THE UNDERWRITERS MAY OFFER AND SELL THE SERIES A (2018) 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 UNDERWRITERS. THE SERIES A (2018) 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 SERIES A (2018) BONDS HAVE NOT BEEN REGISTERED OR QUALIFIED UNDER THE SECURITIES LAWS OF ANY STATE. The School District maintains an Internet website, but the information on that website is not incorporated in this Official Statement. -i-

5 TABLE OF CONTENTS Page INTRODUCTION...1 FINANCING PLAN...6 General...6 Estimated Sources and Uses of Funds...6 THE SERIES A (2018) BONDS...6 Authority for Issuance...6 Description of the Series A (2018) Bonds...6 Redemption...8 Transfer or Exchange of Series A (2018) Bonds.. 10 SECURITY FOR THE SERIES A (2018) BONDS Pledge of Special Tax Revenues Special Taxes Special Tax Methodology Levy of Annual Special Tax; Maximum Special Tax Special Tax Analysis Special Tax Fund Bond Fund Reserve Fund Delinquent Payments; Covenant for Superior Court Foreclosure Additional Bonds DEBT SERVICE SCHEDULE THE COMMUNITY FACILITIES DISTRICT Formation of the Community Facilities District Location and Description of the Community Facilities District and the Immediate Area Financing Plan Current Status of Development in the Community Facilities District Property Ownership Secured Assessed Valuation Value to Special Tax Burden Ratios Overlapping Liens and Priority of Lien Sample Tax Bill Special Tax Collection and Delinquency Rates Page THE SCHOOL DISTRICT General Administration BOND INSURANCE SPECIAL RISK FACTORS Limited Obligation of the School District to Pay Debt Service Levy and Collection of the Special Tax Property Tax Delinquencies Risks Related to Homeowners with High Loan Mortgage to Value Ratios Payment of Special Tax is Not a Personal Obligation of the Property Owners Property Values Other Possible Claims Upon the Value of Taxable Property Tax Cuts and Jobs Acts Enforcement of Special Taxes on Governmentally Owned Properties Depletion of Reserve Subaccount; Draw on the Reserve Policy Bankruptcy and Foreclosure Delays No Acceleration Provisions Loss of Tax Exemption IRS Audit of Tax-Exempt Bond Issues Voter Initiatives Secondary Market for Bonds LEGAL MATTERS Legal Opinion Tax Matters No Litigation CONTINUING DISCLOSURE RATINGS UNDERWRITING FINANCIAL ADVISOR EXECUTION APPENDIX A Rate and Method of Apportionment of Special Tax APPENDIX B San Joaquin County and City of Lathrop Demographic Information APPENDIX C Form of Opinion of Bond Counsel APPENDIX D Form of Continuing Disclosure Certificate APPENDIX E DTC and the Book-Entry Only System APPENDIX F Summary of Certain Provisions of the Fiscal Agent Agreement APPENDIX G Specimen Municipal Bond Insurance Policy -ii-

6 Manteca Unified School District Elementary SchoolSchool Attendance Boundaries Manteca Unified District George Komure ES August Knodt ES Great Valley School French Camp ES Joseph Widmer Jr ES New Haven ES George McParland ES Neil Hafley ES Lathrop ES Golden West ES Stella Brockman ES Shasta ES Joshua Cowell ES Mossdale ES Manteca Community Day ES Lincoln ES Sequoia ES Brock Elliott ES Veritas ES Walter Woodward ES Nile Garden ES Miles Map Created: 5/22/2018

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9 OFFICIAL STATEMENT $5,520,000 MANTECA UNIFIED SCHOOL DISTRICT COMMUNITY FACILITIES DISTRICT NO SERIES A (2018) SPECIAL TAX BONDS This Official Statement, including the cover page and attached appendices, is provided to furnish information regarding the bonds captioned above (the Series A (2018) Bonds ) to be issued by the Manteca Unified School District (the School District ) on behalf of its Community Facilities District No (the Community Facilities District ). Any statements made in this Official Statement involving matters of opinion or of estimates, whether or not so expressly stated, are set forth as such and not as representations of fact, and no representation is made that any of the estimates will be realized. Definitions of certain terms used herein and not defined herein have the meaning set forth in the Fiscal Agent Agreement. See APPENDIX F Summary of Certain Provisions of the Fiscal Agent Agreement. Investment in the Series A (2018) Bonds involves risks that may not be appropriate for some investors. See SPECIAL RISK FACTORS for a discussion of certain risk factors which should be considered, in addition to the other matters set forth in this Official Statement, in considering the investment quality of the Series A (2018) Bonds. 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 Series A (2018) Bonds to potential investors is made only by means of the entire Official Statement. The Series A (2018) Bonds. Pursuant to 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 ), February 8, 2005, the Board of Trustees of the School District (the Board of Trustees ), which serves as the legislative body of the Community Facilities District, adopted Resolution No. 04/05-86, which formed the Community Facilities District and called for an election to authorize the issuance of bonds and the levying of a special tax. The approval by the landowner electors of the Community Facilities District by an affirmative two-thirds vote authorized the Board of Trustees to issue up to $400,000,000 in aggregate principal amount of bonded indebtedness (the Authorization ) to finance certain school facilities and to annually levy a special tax (the Special Tax ) on property in the Community Facilities District pursuant to the Rate and Method of Apportionment of Special Tax (the Special Tax Formula ) within the Community Facilities District. A copy of the Special Tax Formula is set forth in Appendix A.

10 The Series A (2018) Bonds represent the first series of special tax bonds issued under the Authorization. Authority for Issuance. The Series A (2018) Bonds are issued pursuant to the Act, a Fiscal Agent Agreement dated as of November 1, 2018 (the Fiscal Agent Agreement ) between the School District and The Bank of New York Mellon Trust Company, N.A., as fiscal agent (the Fiscal Agent ), and a resolution adopted on October 9, 2018 (the Resolution of Issuance ) by the Board of Trustees of the School District, as the legislative body of the Community Facilities District. See THE BONDS Authority for Issuance. The Series A (2018) Bonds represent the first series of a total of $400,000,000 of bonds authorized for the Community Facilities District, and Additional Bonds (as defined herein) may be issued in the future to pay for the construction and acquisition of facilities authorized to be funded by the Community Facilities District (the Authorized Facilities ). The School District. The School District is located in the southern portion of San Joaquin County (the County ), and covers an area of approximately 113 square miles. The territory of the School District includes nearly all of the cities of Manteca and Lathrop, a small portion of the City of Stockton, and other adjacent unincorporated territory within the County. Manteca is located about 14 miles south of downtown Stockton and about 75 miles east of San Francisco. Both U.S. Interstate Highway 5, the principal north-south highway connecting the Pacific coastal states, and State Route 99, a north-south highway connecting the major cities in California s Central Valley, pass through the School District. Major airport and deep-water port facilities are located in Stockton. For economic and demographic information regarding the area in and around the School District, see APPENDIX C San Joaquin County and City of Manteca Demographic Information. Description of the Series A (2018) Bonds. The Series A (2018) 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, The Series A (2018) Bonds will be initially issued only in book-entry form and registered to Cede & Co. as nominee of The Depository Trust Company ( DTC ), which will act as securities depository of the Series A (2018) Bonds. Principal and interest (and premium, if any) on the Series A (2018) Bonds is payable by the Fiscal Agent to DTC, which remits such payments to its Participants for subsequent distribution to the registered owners as shown on the Trustee s books. See THE SERIES A (2018) BONDS. Purpose of the Series A (2018) Bonds. Proceeds of the Series A (2018) Bonds will be used primarily to finance costs of acquiring and constructing certain public school facilities authorized to be funded by the District, as well as pay costs of issuance, including the premiums for bond insurance and the reserve surety. See FINANCING PLAN and THE COMMUNITY FACILITIES DISTRICT. Security and Sources of Payment for the Series A (2018) Bonds. The Board of Trustees will annually levy special taxes on the property in the Community Facilities District (the Special Taxes ) in accordance with the Special Tax Formula, which is attached as APPENDIX A to this Official Statement. The Series A (2018) Bonds are secured by and payable from a first pledge of the net proceeds of the Special Taxes, including interest and penalties levied and received thereon (as more particularly defined in the Fiscal Agent Agreement, the Special Tax Revenues ), subject to the conditions contained in the Fiscal Agent Agreement. The Series A (2018) Bonds will also be secured by certain funds and accounts established and held under the Fiscal Agent Agreement. In particular, a debt service reserve fund (the Reserve Fund ) will be -2-

11 established in connection with the issuance of the Series A (2018) Bonds in an amount equal to the Reserve Requirement (as defined further herein), which will be satisfied with the purchase of a debt service reserve insurance policy from the Series A (2018) Bond Insurer (defined below). See SECURITY FOR THE SERIES A (2018) BONDS. Pursuant to the Act, the Resolution of Issuance, and the Fiscal Agent Agreement, so long as any Series A (2018) Bonds are outstanding, the School District will annually levy the Special Tax against all land within the Community Facilities District taxable under the Act in accordance with the Special Tax Formula and to make provision for the collection of the Special Tax in amounts which will be sufficient to pay interest on, principal of and redemption premium (if any) on the Series A (2018) Bonds as such becomes due and payable and to replenish the Reserve Fund as necessary. See SECURITY FOR THE SERIES A (2018) BONDS Special Tax Methodology and APPENDIX A Rate and Method of Apportionment of Special Tax. The Series A (2018) Bonds are the first series of special tax bonds issued for the Community Facilities District based on the $400,000,000 authorized par amount; however, additional parity bonds may be issued in the future. See Additional Bonds below. Unpaid Special Taxes do not constitute a personal indebtedness of the owners of any of the parcels within the Community Facilities 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 Community Facilities District. Bond Insurance and Reserve Insurance. The scheduled payment of principal of and interest on the Series A (2018) Bonds maturing on September 1, 2026 through 2038, inclusive and September 1, 2044 (collectively, the Insured Series A 2018 Bonds ) when due will be guaranteed under a municipal bond insurance policy to be issued concurrently with the delivery of the Series A (2018) Bonds by Build America Mutual Assurance Company (the Series A (2018) Bond Insurer ). The Series A (2018) Bond Insurer will also provide a debt service reserve insurance policy in the amount of $398,253.01, thereby satisfying the Reserve Requirement for the Series A (2018) Bonds. Covenant to Foreclose. The School District has covenanted in the Fiscal Agent Agreement to cause foreclosure proceedings to be commenced and prosecuted against certain parcels with delinquent installments of the Special Taxes. For a more detailed description of the foreclosure covenant see SECURITY FOR THE SERIES A (2018) BONDS Delinquent Payments; Covenant for Superior Court Foreclosure. Additional Bonds. The maximum authorized indebtedness for the Community Facilities District, referred to as the Authorization, is $400,000,000. The Series A (2018) Bonds represent the first series issued under the Authorization, and Additional Bonds may be issued in the future to pay for the construction and acquisition of additional Authorized Facilities. So long as the Series A (2018) Bonds are outstanding, any future bonds issued for the Community Facilities District and secured on parity with the Series A (2018) Bonds (herein, Additional Bonds ) are required to meet certain conditions of issuance as set forth in the Fiscal Agent Agreement, and no bonds having a lien senior to the lien of the Series A (2018) Bonds are allowed. Following issuance of the Series A (2018) Bonds, $394,480,000 will be unissued under the Authorization. See SECURITY FOR THE SERIES A (2018) BONDS Additional Bonds. -3-

12 The Community Facilities District. The property within the Community Facilities District consists of approximately 70 noncontiguous acres within the City of Lathrop ( Lathrop ). The parcels are fairly evenly distributed within a three-mile radius around the perimeter of Lathrop and are located in areas of residential development. Additional property may be annexed to the Community Facilities District as residential development continues in Lathrop. Since the formation of the Community Facilities District, no additional property has annexed; however, property is expected to be annexed to the Community Facilities District from time to time in the future. In Fiscal Year , taxable property in the Community Facilities District consisted of 445 single-family units. For additional details, see THE COMMUNITY FACILITIES DISTRICT and OWNERSHIP OF PROPERTY WITHIN THE COMMUNITY FACILITIES DISTRICT. Value Estimate of Property in the Community Facilities District. Taxable real property within the Community Facilities District is security for the Special Tax securing the Series A (2018) Bonds. The total secured assessed value of property in the Community Facilities District in Fiscal Year , as determined by the County Assessor, is $153,318,859, all of which is developed property subject to the Special Tax. See VALUE OF PROPERTY WITHIN THE COMMUNITY FACILITIES DISTRICT AND SPECIAL TAX BURDEN. The $153,318,859 Fiscal Year secured assessed valuation of the real property subject to the Special Tax in the Community Facilities District is27.78 times the $5,520,000 estimated principal amount of the Series A (2018) Bonds. Adding overlapping tax and assessment debt (consisting of general obligation bonded indebtedness, other community facilities district indebtedness, and assessment district indebtedness, as described herein), the assessed value-to-debt ratio for property in the Community Facilities District subject to the Special Tax is approximately to 1. Value-to-debt ratios on individual parcels may vary considerably from this average. See VALUE OF PROPERTY WITHIN THE COMMUNITY FACILITIES DISTRICT AND SPECIAL TAX BURDEN Value to Special Tax Burden Ratios herein. Redemption of Series A (2018) Bonds Before Maturity. The Series A (2018) Bonds are subject to redemption prior to maturity. See THE SERIES A (2018) BONDS Redemption. Limited Obligation. The Series A (2018) Bonds, the interest thereon, and any premiums payable on the redemption of any Series A (2018) Bonds, are not an indebtedness of the School District, the Community Facilities District (except to the limited extent described in this Official Statement), the State of California (the State ) or any of their respective political subdivisions. None of the School District, the Community Facilities District (except to the limited extent described in this Official Statement), the State or any of its political subdivisions is liable for the Series A (2018) Bonds. Neither the faith and credit nor the taxing power of the School District, the Community Facilities District (except to the limited extent described in this Official Statement), or the State or any of their respective political subdivisions is pledged to the payment of the Series A (2018) Bonds. Other than the Special Tax Revenues, no taxes are pledged to the payment of the Series A (2018) Bonds. The Series A (2018) Bonds do not constitute a general obligation of the School District but are limited obligations of the School District, payable solely from the Special Tax Revenues as more fully described in this Official Statement. -4-

13 Summary of Information. Brief descriptions of certain provisions of the Fiscal Agent Agreement and certain other documents are included herein. The descriptions and summaries of documents herein do not purport to be comprehensive or definitive, and reference is made to each such document for the complete details of all its respective terms and conditions, copies of which are available for inspection at the office of the School District. All statements herein with respect to certain rights and remedies are qualified by reference to laws and principles of equity relating to or affecting creditors rights generally. Capitalized terms used in this Official Statement and not otherwise defined herein have the meanings ascribed to such terms in the Fiscal Agent Agreement. See APPENDIX F Summary of Certain Provisions of the Fiscal Agent Agreement. The information and expressions of opinion herein speak only as of the date of this Official Statement and are subject to change without notice. Neither delivery of this Official Statement, any sale made hereunder, nor any future use of this Official Statement shall, under any circumstances, create any implication that there has been no change in the affairs of the School District or the Community Facilities District since the date hereof. -5-

14 FINANCING PLAN General The Series A (2018) Bonds are being issued to (i) construct and acquire certain public facilities authorized for the Community Facilities District, and (ii) pay the costs of issuing the Series A (2018) Bonds, including the premium for a bond insurance policy and a debt service reserve insurance policy. Estimated Sources and Uses of Funds A summary of the estimated sources and uses of funds associated with the sale of the Series A (2018) Bonds follows. Sources Principal Amount of Series A (2018) Bonds $5,520, Plus: Net Original Issue Premium 202, Total Sources $5,722, Uses Deposit to Improvement Fund $5,386, Costs of Issuance (1) 336, Total Uses $5,722, (1) Includes, among other things, the fees and expenses of Bond Counsel and Disclosure Counsel, the Fiscal Agent, the Financial Advisor, the Appraiser, and the Special Tax Consultant, Underwriters discount, premiums for bond insurance and reserve insurance policies, as well as the cost of printing the preliminary and final Official Statements. THE SERIES A (2018) BONDS This section generally describes certain of the terms of the Series A (2018) Bonds contained in the Fiscal Agent Agreement. See APPENDIX F Summary of Certain Provisions of the Fiscal Agent Agreement. Authority for Issuance The Series A (2018) Bonds are issued pursuant to the Fiscal Agent Agreement, the Resolution of Issuance and the Act. On March 22, 2005, the Board of Trustees adopted Resolution No. 04/05-86 (the Resolution of Formation ), which formed the Community Facilities District. The Community Facilities District was established and authorized to incur bonded indebtedness in an aggregate principal amount not to exceed $400,000,000 at a special election of the qualified landowner electors in the Community Facilities District held on the same day. Description of the Series A (2018) Bonds The Series A (2018) Bonds are being issued as fully registered bonds, registered in the name of Cede & Co. as nominee of The Depository Trust Company ( DTC ), and will be available to ultimate purchasers in the denomination of $5,000 or any integral multiple thereof, under the book-entry system maintained by DTC. Ultimate purchasers of Series A (2018) Bonds will not receive physical certificates representing their interest in the Series A (2018) -6-

15 Bonds. So long as the Series A (2018) 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 Series A (2018) Bonds. Payments of the principal, premium, if any, and interest on the Series A (2018) 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 Series A (2018) 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 E DTC and the Book-Entry Only System. The Series A (2018) 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 Series A (2018) Bonds will be payable in lawful money of the United States of America at the principal corporate trust office of the Fiscal Agent in Los Angeles, California, or such other place as designated by the Fiscal Agent, upon presentation and surrender of the Series A (2018) Bonds. Interest on the Series A (2018) 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, Interest on the Series A (2018) Bonds (including the final interest payment upon maturity or earlier redemption) is payable by check of the Fiscal Agent mailed on each Interest Payment Date by first class mail to the registered Owner thereof at such registered Owner s address as it appears on the registration books maintained by the Fiscal Agent at the close of business on the 15th 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 Series A (2018) Bonds; provided that so long as any Series A (2018) Bonds are in book-entry form, payments with respect to such Series A (2018) Bonds will be made by wire transfer, or such other method acceptable by the Fiscal Agent, to DTC. See APPENDIX E DTC and the Book-Entry Only System. Each Series A (2018) 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 Series A (2018) Bond, interest is in default thereon, such Series A (2018) 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 Series A (2018) Bonds are registered in the name of Cede & Co., as nominee of DTC, payments of the principal, premium, if any, and interest on the Series A (2018) 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 -7-

16 payments to the Beneficial Owners is the responsibility of DTC s direct participants and indirect participants, as more fully described herein. See APPENDIX E DTC and the Book-Entry Only System. Redemption Optional Redemption. The Series A (2018) Bonds are subject to optional redemption from any source of available funds prior to maturity, in whole, or in part among maturities as specified by the School District and by lot within a maturity, on any Interest Payment Date on and after September 1, 2025, at the following respective redemption prices (expressed as percentages of the principal amount of the Series A (2018) Bonds to be redeemed), plus accrued interest thereon to the date of redemption: Redemption Dates Redemption Price September 1, 2025 and March 1, % September 1, 2026 and March 1, September 1, 2027 and March 1, September 1, 2028 and Interest Payment Dates thereafter 100 Mandatory Redemption from Prepayments. The Series A (2018) Bonds are subject to mandatory redemption from Prepayments of the Special Tax by property owners, in whole or in part among maturities as specified by the School District and by lot within a maturity, on any Interest Payment Date at the following respective redemption prices (expressed as percentages of the principal amount of the Series A (2018) Bonds to be redeemed), plus accrued interest thereon to the date of redemption: Redemption Dates Redemption Price Interest Payment Dates through March 1, % September 1, 2026 and March 1, September 1, 2027 and March 1, September 1, 2028 and Interest Payment Dates thereafter 100 Mandatory Sinking Fund Redemption. The Series A (2018) Bonds maturing September 1, 2044 (the Term Bonds ) are subject to mandatory sinking payment redemption in part on September 1, 2039, and on each September 1 thereafter to maturity, by lot, at a redemption price equal to 100% of the principal amount thereof to be redeemed, without premium, in the aggregate respective principal amounts as set forth in the following table: Term Bonds Due September 1, 2044 Mandatory Redemption Date (September 1) Sinking Fund Payment 2039 $195, , , , , (maturity) 35,000-8-

17 The amounts in the foregoing table will be reduced pro rata, in order to maintain substantially level debt service, as a result of any prior partial optional redemption or mandatory redemption of the Term Bonds. Purchase In Lieu of Redemption. In lieu of redemption, moneys in the Bond Fund may be used and withdrawn by the Fiscal Agent for purchase of outstanding Series A (2018) Bonds, upon the filing with the Fiscal Agent of an Officer s Certificate requesting such purchase, at public or private sale as and when, and at such prices (including brokerage and other charges) as such Officer s Certificate may provide, but in no event may Series A (2018) Bonds be purchased at a price in excess of the principal amount thereof, plus interest accrued to the date of purchase. Redemption Procedure by Fiscal Agent. The Fiscal Agent will cause notice of any redemption to be mailed by first class mail, postage prepaid, at least 20 days but not more than 60 days prior to the date fixed for redemption, to the Securities Depositories and to one or more Information Services, and to the respective registered Owners of any Series A (2018) Bonds designated for redemption, at their addresses appearing on the bond registration books in the principal office of the Fiscal Agent; but such mailing is not a condition precedent to such redemption and failure to mail or to receive any such notice, or any defect therein, will not affect the validity of the proceedings for the redemption of such Series A (2018) Bonds. Whenever provision is made in the Fiscal Agent Agreement for the redemption of less than all of the Series A (2018) Bonds of any maturity, the Fiscal Agent will select the Series A (2018) Bonds to be redeemed, from all Series A (2018) Bonds or such given portion thereof of such maturity by lot in any manner which the Fiscal Agent in its sole discretion deems appropriate. Upon surrender of Series A (2018) Bonds redeemed in part only, the School District will execute and the Fiscal Agent will authenticate and deliver to the registered Owner, at the expense of the School District, 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 Series A (2018) Bond or Series A (2018) Bonds. Conditional Notices; Right to Rescind. Any notice of the optional redemption of Series A (2018) Bonds may state that it is conditional upon receipt by the Fiscal Agent, on or prior to the date fixed for such redemption, of moneys that, together with other available amounts held by the Fiscal Agent, are sufficient to pay the redemption price of, and accrued interest on, the Series A (2018) Bonds to be redeemed, and that if such moneys shall not have been so received said notice shall be of no force and effect and the School District shall not be required to redeem such Series A (2018) Bonds. The School District has the right to rescind any notice of the optional redemption of Series A (2018) Bonds by written notice to the Fiscal Agent on or prior to two Business Days prior the date fixed for redemption. Any notice of redemption shall be cancelled and annulled if for any reason funds will not be or are not available on the date fixed for redemption for the payment in full of the Series A (2018) Bonds then called for redemption, and such cancellation shall not constitute an event of default. The School District and the Fiscal Agent have no liability to the Owners or any other party related to or arising from such rescission of redemption. The Fiscal Agent shall mail notice of such rescission of redemption in the same manner as the original notice of redemption was sent under the Fiscal Agent Agreement. Effect of Redemption. Notice having been mailed, and moneys for the redemption price, and the interest to the applicable date fixed for redemption, having been set aside with the -9-

18 Fiscal Agent, the Series A (2018) Bonds shall become due and payable on said date, and, upon presentation and surrender thereof at the office of the Fiscal Agent, said Series A (2018) Bonds shall be paid at the redemption price thereof, together with interest accrued and unpaid to said date. If, on said date fixed for redemption, moneys for the redemption price of all the Series A (2018) Bonds to be redeemed, together with interest to said date, shall be held by the Fiscal Agent so as to be available therefor on such date, and, if notice of redemption thereof shall have been mailed as aforesaid and not canceled, then, from and after said date, interest on said Series A (2018) Bonds shall cease to accrue and become payable. All moneys held by or on behalf of the Fiscal Agent for the redemption of Series A (2018) Bonds shall be held for the account of the Owners of the Series A (2018) Bonds so to be redeemed without liability to such Owners for interest thereon. All Series A (2018) Bonds paid at maturity or redeemed prior to maturity pursuant to the provisions hereof shall be canceled upon surrender thereof and destroyed. Transfer or Exchange of Series A (2018) Bonds So long as the Series A (2018) Bonds are registered in the name of Cede & Co., as nominee of DTC, transfers and exchanges of Series A (2018) Bonds will be made in accordance with DTC procedures. See APPENDIX F. Any Series A (2018) 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 Series A (2018) Bond for cancellation, accompanied by delivery of a duly written instrument of transfer in a form approved by the Fiscal Agent. Whenever any Series A (2018) Bond(s) will be surrendered for transfer or exchange, the School District will execute and the Fiscal Agent will authenticate and deliver a new Series A (2018) Bond(s), for a like aggregate principal amount of Series A (2018) Bond(s) of authorized denominations and of the same maturity. The School District 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 Series A (2018) Bonds will be required to be made (i) within 15 days prior to the date established by the Fiscal Agent for selection of Series A (2018) Bonds for redemption or (ii) with respect to a Series A (2018) Bond after that Series A (2018) Bond has been selected for redemption. SECURITY FOR THE SERIES A (2018) BONDS As used in this section, references to Bonds means the Series A (2018) Bonds and any Additional Bonds issued under the Fiscal Agent Agreement, as the context requires. -10-

19 Pledge of Special Tax Revenues The Bonds are secured by and payable from a first pledge of the Special Tax Revenues. The Special Tax Revenues and all moneys deposited into the Bond Fund, the Reserve Fund and, until disbursed as provided in the Fiscal Agent Agreement, the Special Tax Fund, are pledged to the payment of the principal of, and interest and any premium on, the Bonds, as provided in the Fiscal Agent Agreement and in the Act, until all the Bonds have been paid and retired, or until moneys or Federal Securities have been set aside irrevocably for that purpose. The Improvement Fund and the improvements acquired with the proceeds of the Series A (2018) 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 improvements are not pledged to pay the debt service on the Bonds and are free and clear of any lien or obligation imposed under the Fiscal Agent Agreement. Special Taxes A Special Tax applicable to each taxable parcel in the Community Facilities District will be levied and collected according to the tax liability determined by the Board of Trustees through the application of the Special Tax Formula, the complete copy of which is set forth in APPENDIX A hereto, for all taxable properties in the Community Facilities District, by California Financial Services, Santa Rosa, California, the special tax consultant for the Community Facilities District (the Special Tax Consultant ). Interest and principal on the Series A (2018) Bonds is payable from the annual Special Taxes to be levied and collected on taxable property within the Community Facilities District, from amounts held in certain funds and accounts established under the Fiscal Agent Agreement 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 School District pursuant to the Act in an amount determined according to the Special Tax Formula approved by the School District and the qualified landowner electors. See Special Tax Methodology below and APPENDIX A Rate and Method of Apportionment of Special Tax. The amount of Special Taxes that the School District may levy in any year, and from which principal and interest on the Series A (2018) Bonds are to be paid, is strictly limited by the maximum rates approved by the qualified electors within the Community Facilities District which are set forth as the Maximum Annual Special Tax in the Special Tax Formula. Under the Special Tax Formula, Special Taxes for the purpose of making payments on the Series A (2018) Bonds will be levied annually in an amount, not in excess of the annual Maximum Annual Special Tax. The Special Taxes and any interest earned on the Special Taxes constitute a trust fund for the principal of and interest on the Series A (2018) Bonds pursuant to the Fiscal Agent Agreement and, so long as the principal of and interest on these obligations remain unpaid, the Special Taxes and investment earnings thereon will not be used for any other purpose, except as permitted by the Fiscal Agent Agreement, and will be held in trust for the benefit of the owners thereof and will be applied pursuant to the Fiscal Agent Agreement. The Special Tax Formula apportions the Annual Costs (as defined in the Special Tax Formula and described below) among the taxable parcels of real property within the Community Facilities District -11-

20 according to the rate and methodology set forth in the Special Tax Formula. See Annual Costs below. See also APPENDIX A Rate and Method of Apportionment of Special Tax. The School District may levy the Special Tax at the Maximum Annual Special Tax rate, which has been authorized by the qualified electors within the Community Facilities District, as set forth in the Special Tax Formula, if conditions so require. The School District has covenanted to annually levy the Special Taxes in an amount at least sufficient to pay the Annual Costs (as defined below). Because each year s Special Tax levy is limited to the Maximum Annual Special Tax rates authorized as set forth in the Special Tax Formula, no assurance can be given that, in the event of Special Tax delinquencies, the amount of the Annual Costs will in fact be collected in any given year. See SPECIAL RISK FACTORS Levy and Collection of the Special Tax herein. The Special Taxes are collected for the School District by the County in the same manner and at the same time as ad valorem property taxes. Special Tax Methodology The Special Tax authorized under the Act applicable to land within the Community Facilities District will be levied and collected according to the tax liability determined by the School District through the application of the appropriate amount or rate as described in the Special Tax Formula set forth in APPENDIX A Rate and Method of Apportionment of Special Tax and in accordance with the Act. See SPECIAL RISK FACTORS Levy and Collection of Special Taxes. Capitalized terms set forth in this section and not otherwise defined have the meanings set forth in the Special Tax Formula. Determination of Annual Costs. Each year, the School District will determine the Annual Costs of the Community Facilities District for the upcoming Fiscal Year, which include the following items: (i) Debt Service; (ii) Administrative Expenses for such Fiscal Year; (iii) any amounts needed to replenish any bond reserve fund for bonds of the School District issued for the Community Facilities District 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 and an amount for anticipated delinquencies for the current Fiscal Year; and (v) current or expected pay-as-you-go expenditures for Authorized Facilities to be constructed or acquired by the Community Facilities District, (vi) less any credit from earnings on the bond reserve fund, less credit for applicable development fees, less any reimbursements, and/or less the application of any funds available from Prepayments. The first priority for the use of Special Tax revenues is the payment of Debt Service and Administrative Expenses. -12-

21 Parcels Subject to the Special Tax. Each Fiscal Year, the Administrator will prepare a list of the parcels subject to the Special Tax using the records of the County Assessor. The School District will tax all parcels within the Community Facilities District except property that is exempt from the Special Tax pursuant to the Special Tax Formula. Taxable Parcel that is acquired by a public agency after the Community Facilities District was 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 Special Tax Formula. Annual Special Tax Levy; Method of Apportionment. The Special Tax is levied each year by computing the Annual Costs and calculating the Special Tax for each Taxable Parcel according to the following steps: Step 1: Compute the Maximum Annual Special Tax Revenues which could be collected from all Developed Parcels by summing the Maximum Annual Special Tax for each Developed Parcel assigned according to the Special Tax Formula. Step 2: If the Annual Costs are less than the Maximum Annual Special Tax Revenues from Developed Parcels as calculated in step 1, decrease proportionately the Special Tax levy for each Developed Parcel until the Special Tax Revenues equal the Annual Costs. (Note: The Special Tax assigned to a Developed Parcel that is a single-family residential Parcel will not be increased by more than 10% from the previous year if the increase is due to Special Tax delinquencies of other Parcels.) Step 3: If the Maximum Annual Special Tax Revenue from Developed Parcels is less than Annual Costs but greater than the Adjusted Annual Costs, the Special Tax levy for each Developed Parcel will be calculated based on the Maximum Annual Special Tax for each Parcel assigned according to the Special Tax Formula. Step 4: If the Adjusted Annual Costs are greater than the Maximum Annual Special Tax Revenues from Developed Parcels, calculate Backup Special Taxes for Undeveloped-Final Map Parcels by applying equal proportions of the Maximum Annual Special Tax for each Undeveloped-Final Map Parcel until the total of the Special Tax revenues from Developed Parcels and Undeveloped- Final Map Parcels equals the amount of Adjusted Annual Costs, or until the Maximum Annual Special Tax is reached for all Undeveloped-Final Map Parcels. Step 5: If the Adjusted Annual Costs are greater than the Maximum Annual Special Tax Revenues obtainable from Developed Parcels and Undeveloped- Final Map Parcels, calculate Backup Special Taxes for Undeveloped-Planned Parcels by applying equal proportions of the Maximum Annual Special Tax for each Undeveloped Planned Parcel until the total of the Special Tax revenues from Developed Parcels, Undeveloped-Final Map Parcels and Undeveloped- Planned Parcels equals the amount of Adjusted Annual Costs, or until the Maximum Annual Special Tax is reached for all Undeveloped-Planned Parcels. See the Special Tax Formula in Appendix A and Backup Special Taxes below, for additional details. -13-

22 The following table shows the Maximum Annual Special Tax by land use class for Parcels within the Community Facilities District in Fiscal Year Table 1 Manteca Unified School District Community Facilities District No Maximum Annual Special Tax for Fiscal Year by Land Use Class Land Use Class Maximum Annual Special Tax Rate (2) Developed Parcels (1) Non-Low Income Parcels (3) Multi-Family dwelling units $ per square foot Single Family dwelling units $ per square foot Commercial/Industrial Parcels (4) NA Low Income Parcels (3) Single Family dwelling units Undeveloped Parcels (Backup Tax Only) (5) Undeveloped-Final Map Parcels Zoning Class R-1 Zoning Class R-2, R-3, R-4 Undeveloped-Planned Parcels Zoning Class R-1 Zoning Class R-2, R-3, R-4 $ per square foot $1, per approved dwelling units $ per approved dwelling units $ per approved dwelling units $71.27 per approved dwelling units (1) Parcels are considered Developed Parcels when building permits are issued. (2) Maximum Annual Special Tax Rates will be increased in accordance with the escalation factor in the CFD No Special Tax Formula; however, the escalation factor applies only to the Maximum Annual Special Tax Rates prior to their being levied on Developed Parcels. Once the CFD No Special Tax is levied on a Developed Parcel, the respective Maximum Annual Special Tax Rate remains unchanged for the duration of the levy. (3) These amounts do not include the One-Time Special Tax that will be imposed if the fees described in Government Code Section and to be collected on residential development within CFD No are not made available to the School District. The Maximum Annual Special Tax Rate for property first classified as Developed Parcels in Fiscal is capped at $3, per unit regardless of unit size. (4) Commercial/industrial parcels within CFD No are expected to contribute to school construction funding requirements through development fees authorized by Government Code Sections and If these fees are not made available to the School District, developed commercial/industrial parcels which have not paid these fees will be liable for a One-Time Special Tax. (5) These parcels are liable for a Backup Special Tax only. Any required Backup Special Tax will be levied only on approved residential units with utility commitments. Source: California Financial Services Termination of the Special Tax. When all of the expenditures which may be incurred by the Community Facilities District to construct the Authorized Facilities have been paid, and all bonds issued to pay such expenditures have been retired, the Special Tax will cease to be levied on all Parcels. However, the Special Tax will not be levied on any Parcel after Fiscal Year There is no limit on the number of years a Parcel can remain subject to the Special Tax as an Undeveloped Parcel, nor will the number of years a Parcel is subject to the Special Tax as an Undeveloped Parcel affect the period of time that Parcel may be subject to the Special Tax as a Developed Parcel. However, after a Parcel has paid the Special Tax for 29 years as a Developed Parcel, the Special Tax shall cease to be levied on that Parcel. -14-

23 Prepayment of the Special Tax. The Special Tax Formula provides that landowners may permanently satisfy all or a portion of the Special Tax by a cash settlement with the School District. The amount of the prepayment required is to be calculated according to a formula set forth in the Special Tax Formula, which is generally based on the Parcel s share of the outstanding bonds, remaining facilities costs which have not been bonded, the Reserve Fund, fees, call premiums, negative arbitrage and any expenses incurred by the School District in connection with the prepayment and expected future facilities costs. Backup Special Taxes. The Special Tax Formula defines Backup Special Taxes as Special Taxes which can be imposed on Undeveloped Parcels only in the event that levying the Maximum Annual Special Tax Rates on Developed Parcels produces insufficient revenue to pay the Adjusted Annual Costs. The Maximum Special Tax for each Taxable Parcel classified as a Developed Parcel in any Fiscal Year will be determined as follows: (i) For a Developed Parcel in its Development Year, the Maximum Annual Special Tax is determined by multiplying the applicable escalated Maximum Annual Special Tax Rates by the amount of Actual Development for each Developed Parcel. If any Approved Development remains on the Parcel, the relevant portion of the Parcel shall be treated as an Undeveloped Parcel. (ii) After the Development Year, the only change in the Maximum Annual Special Tax for a Developed Parcel shall occur if a Prepayment occurs after the Development Year. If additional building permits are granted for a Developed Parcel, the relevant portion of the Parcel shall be treated as a separate Parcel. Levy of Annual Special Tax; Maximum Special Tax The annual Special Tax will be calculated by the School District and levied each year to meet the Annual Costs. However, in no event may the School District levy a Special Tax in any year above the Maximum Annual Special Tax identified for each parcel in the Special Tax Formula. In addition to the Maximum Annual Special Tax rate limitation in the Special Tax Formula, Section 53321(d) of the Act provides that the special tax levied against any parcel for which an occupancy permit for private residential use has been issued may not be increased as a consequence of delinquency or default by the owner of any other parcel within a community facilities district by more than 10% above the amount that would have been levied in such Fiscal Year had there never been any such delinquencies or defaults. In cases of significant delinquency, these factors may result in defaults in the payment of principal of and interest on the Series A (2018) Bonds. The Special Tax levy may include a Pay-As-You-Go Expenditure. The Special Tax Formula provides a mechanism whereby the School District may utilize a Pay-As-You-Go Expenditure to pay for and/or reimburse developers of property in the Community Facilities District for a portion of the cost of Authorized Facilities not funded by proceeds of the bonds issued for the Community Facilities District. In the event it is utilized, proceeds of the annual Special Tax levy will first be used to pay the Annual Costs other than Pay-As-You-Go Expenditures and second, if the levy included a Pay-As-You-Go Expenditure, for Authorized Facilities costs not funded from bond proceeds. -15-

24 The following table summarizes the Maximum Special Tax that can be levied in Fiscal Year , showing Developed Parcels subject to the Special Tax by rate category. Table 2A Manteca Unified School District Community Facilities District No Maximum Annual Special Tax for Fiscal Year by Tax Rate Category Maximum Annual Special Tax Average Maximum Annual Special Tax Per Unit Tax Rate Category Taxable Units Developed (1) Single Family Non-Low Income (2) 445 $679, $1, Single Family Low Income 0 $0.00 NA Multi-Family 0 $0.00 NA Commercial/Industrial 0 $0.00 NA Total 445 $679, $1, (1) Developed Parcels with a building permit issued on or before June 1, (2) Parcels in this category are subject to only to the Backup Special Tax, which has not been levied in previous Fiscal Years. Source: California Financial Services The following table summarizes the Actual Special Tax Levy on Developed Property that is being levied in Fiscal Year , showing Developed Parcels subject to the Special Tax by rate category. Table 2B Manteca Unified School District Community Facilities District No Actual Special Tax Levy for Fiscal Year on Developed Property Actual Special Tax Average Actual Special Tax Per Unit Tax Rate Category Taxable Units Developed (1) Single Family Non-Low Income 445 $459, $1, Single Family Low Income 0 $0.00 NA Multi-Family 0 $0.00 NA Commercial/Industrial 0 $0.00 NA Total 445 $459, $1, (1) Developed Parcels with a building permit issued on or before June 1, (2) In Fiscal Year 2018/2019 CFD No Special Taxes were levied at the Maximum Annual Special Tax Rates less $53.64 per parcel representing a "credit" for the District's Measure M GO Bond Authorization and an Administrative Reduction limiting the Special Tax to 70% of the Maximum Special Tax. Source: California Financial Services Special Tax Analysis The proceeds of the Special Tax will be the source of payment of principal and interest on the Series A (2018) Bonds, Administrative Expenses and other incidental costs and expenses constituting Annual Costs as defined in the Special Tax Formula, including, if levied therefor, costs of Authorized Facilities for the Community Facilities District. The Special Tax Formula provides for the levy of a Special Tax up to the Maximum Special Tax. For the tax year, the Special Tax is being levied against each Developed Parcel at approximately 70% of the Maximum Special Tax, less $53.64 per taxable parcel as an offset as described below. Approximately 85% of the Special Tax levied in will be applied to pay debt -16-

25 service on the Series A (2018) Bonds, approximately 10% will be applied to pay Administrative Expenses associated with the Community Facilities District, and approximately 5% will be applied to pay directly the costs of certain Authorized Facilities for the Community Facilities District. The actual amount of Special Tax that will be levied against each parcel in each year will be determined in accordance with the Special Tax Formula, and the aggregate amount of Special Tax that will be levied in each year will be equal to the lesser of the total Maximum Special Tax and the sum of the debt service requirement on the Series A (2018) Bonds, Administrative Expenses, and other incidental costs and expenses constituting Annual Costs as defined in the Special Tax Formula including, if levied therefor, costs of Authorized Facilities for the Community Facilities District for such year. See APPENDIX A RATE AND METHOD OF APPORTIONMENT OF SPECIAL TAX. The School District is currently levying the Special Tax in the Community Facilities District at rates lower than the Maximum Annual Tax Rates. The Board of the School District has directed a reduction in the annual Special Tax by $53.64 per taxable parcel as an offset to the ad valorem property tax levied for the payment of general obligation bonds issued pursuant to the School District s $66 million Measure M bond authorization approved by voters on March 2, The Board of Trustees currently expects to continue payments on the outstanding Measure M bonds through Additionally, the Board of Trustees has directed that the Special Tax be levied at an amount equal to 70% of the Maximum Special Tax, as described above. The Special Tax will be levied at a greater amount if needed to satisfy obligations of the Communities Facility District, including debt service and other amounts due with respect to the Series A (2018) Bonds. Although the School District is authorized to issue Additional Bonds secured by the Special Tax to finance the Authorized Facilities for the Community Facilities District and incidental costs and expenses, the School District would have to satisfy the conditions related to Additional Bonds described in the Indenture. The actual amount of the Special Tax that could be levied in future years at the Maximum Annual Special Tax Rates will vary from the amount levied in Fiscal Year based upon a number of factors, including the amount to be levied for costs of Authorized Facilities for the Community Facilities District and level of development. The Maximum Annual Special Tax Rate will increase each year by the Escalator Factor (as defined in the Special Tax Formula) until a parcel becomes a Developed Parcel, at which time it is fixed at the escalated amount for the remaining years over which the Special Tax is levied. However, once residential properties receive a building permit and are classified as Developed Parcels, they are subject to the tax for only 29 years. In Fiscal Year , there are 445 taxable units subject to the Special Tax. Because of the 29-year limit of the Special Tax levy on Developed Parcels, the number of taxable units in the Community Facilities District will begin to decline in Fiscal Year , unless additional development occurs in the Community Facilities District or additional property to be developed is annexed to the Community Facilities District. The following table shows the number of taxable units in the Community Facilities District in Fiscal Year and future years if no additional development occurs in the Community Facilities District over the life of the Series A (2018) Bonds to Fiscal Year beyond the number of parcels subject to the Special Tax in Fiscal Year Special Taxes levied in excess of debt service coverage will be used for funding Authorized Improvements on a pay-as-you-go basis. -17-

26 Special Tax Fund Table 3 Manteca Unified School District Community Facilities District No Number of Taxable Units Assuming No Additional Development between Fiscal Year and Fiscal Year Fiscal Year Ending Units Taxed (1) Fiscal Year Ending Units Taxed (1) (1) Pursuant to the Special Tax Formula, each parcel classified as a Developed Parcel is taxed for a period of 29 years. Source: California Financial Services Under the Fiscal Agent Agreement, there is established as a separate fund to be held by the Fiscal Agent, the Community Facilities District No Special Tax Bonds Special Tax Fund (the Special Tax Fund ), to the credit of which the Fiscal Agent shall deposit, immediately upon receipt, all Special Tax Revenues received from, or on behalf of, the School District (other than as a result of Prepayments, which shall be transferred to the Prepayment Account of the Bond Fund held by the Fiscal Agent). Moneys in the Special Tax Fund shall be held in trust by the Fiscal Agent for the benefit of the School District and the Owners of the Bonds, shall be disbursed as provided below and, pending any disbursement, shall be subject to a lien in favor of the Owners of the Bonds. From time to time as needed to pay the obligations of the School District under the Fiscal Agent Agreement, but no later than the Business Day before each Interest Payment Date, the Fiscal Agent shall withdraw from the Special Tax Fund and transfer the following amounts in the following order of priority: (i) to the Bond Fund, an amount, taking into account any amounts then on deposit in the Bond Fund, such that the amount in the Bond Fund equals the principal, premium, if any, and interest due on the Bonds for such Interest Payment Date; and (ii) to the Reserve Fund, an amount, taking into account amounts then on deposit in the various subaccounts of the Reserve Fund, so that the amounts therein equal the Reserve Requirement with respect to each applicable Series of Bonds. -18-

27 After the transfers under subsections (i) and (ii) have been made (or the Fiscal Agent has determined amounts in the Special Tax Fund are sufficient to make such required transferred), the Fiscal Agent shall transfer amounts remaining in the Special Tax Fund to the CFD Fund held by the School District, whereupon such amounts transferred shall be free of the pledge for payment of the Bonds. For a description of the CFD Fund, see APPENDIX F. Bond Fund The Fiscal Agent Agreement establishes a Bond Fund (the Bond Fund ) to be held in trust by the Fiscal Agent for the benefit of the Owners of the Bonds. Moneys in the Bond Fund will be used for the payment of the principal of, and interest and any premium on, the Bonds, and pending such disbursement, subject to a lien in favor of the Owners of the Bonds. Within the Bond Fund, the Fiscal Agent will establish and maintain a Prepayment Account, which will be used exclusively for the administration of any Prepayments of Special Taxes to assure the timely redemption of Bonds. On each Interest Payment Date, the Fiscal Agent will withdraw from the Bond Fund and pay to the Owners of the Bonds the principal of, and interest and any premium, then due and payable on the Bonds, including any amounts due on the Bonds by reason of the mandatory sinking fund payments or any optional redemption of the Bonds. If 15 days before any Interest Payment Date it appears to the Fiscal Agent that there is a danger of deficiency in the Bond Fund and that the Fiscal Agent may be unable to pay regularly scheduled debt service on the Bonds in a timely manner, the Fiscal Agent will report such fact to the School District. The School District covenants in the Fiscal Agent Agreement to increase the levy of the Special Taxes in the next Fiscal Year (subject to the maximum amounts authorized) in accordance with the procedures set forth in the Act for the purpose of curing Bond Fund deficiencies. If 10 days before any Interest Payment Date it appears to the Fiscal Agent is that it will be unable to pay principal, interest and premium, if any, due on any Interest Payment Date for the Bonds due to insufficient funds in the Bond Fund, or if funds are withdrawn from the Reserve Fund to pay principal and/or interest on the Bonds, the Fiscal Agent shall notify the School District in writing of such fact, and the Chief Business Officer shall notify CDIAC of such fact within 5 days of such Interest Payment Date. In the event that amounts in the Bond Fund are insufficient to pay regularly scheduled payments of principal of and interest on any Series of Bonds on any Interest Payment Date, then the Fiscal Agent shall withdraw from the respective reserve account within the Reserve Fund established for such Series of Bonds to the extent of any funds therein, the amount of such insufficiency, and the Fiscal Agent shall provide written notice to the Chief Business Officer of the amounts so withdrawn from the Reserve Fund. Amounts so withdrawn from the Reserve Fund shall be deposited in the Bond Fund not later than the Business Day prior to the applicable Interest Payment Date. If, after the foregoing transfers, there are insufficient funds in the Bond Fund to make the payments provided for to pay principal of and interest on the Bonds on any Interest Payment Date, the Fiscal Agent shall apply the available funds first to the payment of interest on the Bonds, then to the payment of principal due on the Bonds other than by reason of sinking payments, and then to payment of principal due on the Bonds by reason of sinking payments, on a pro rata basis among all Bonds. Any sinking payment not made as scheduled shall be added to the sinking payment to be made on the next sinking payment date. -19-

28 Reserve Fund Under the Fiscal Agent Agreement, the Fiscal Agent establishes a Reserve Fund (the Reserve Fund ), to be held by the Fiscal Agent, and within the Reserve Fund the Series A (2018) Reserve Account, to be maintained at an amount equal to the Reserve Requirement. As used in the Fiscal Agent Agreement, Reserve Requirement means, calculated separately as to each Series of Bonds, an amount equal to the lesser of (a) Maximum Annual Debt Service on the respective Outstanding Bonds, (b) 125% of the average Annual Debt Service on the respective Outstanding Bonds, as calculated at the time of issuance thereof, or (c) 10% of the original principal amount of the respective Bonds (or the issue price of the respective Bonds excluding accrued interest, if the net original issue discount or premium is less than 98% or more than 102% of the principal amount of the respective Bonds), as calculated by the School District. However, in no event will the School District, in connection with the issuance of Additional Bonds covered by the Reserve Fund be obligated to deposit an amount in the Reserve Fund which is in excess of the amount permitted by the applicable provisions of the Tax Code to be so deposited from the proceeds of tax-exempt bonds without having to restrict the yield of any investment purchased with any portion of such deposit and, in the event the amount of any such deposit into the Reserve Fund is so limited, the Reserve Requirement will, in connection with the issuance of such Additional Bonds, be increased only by the amount of such deposit as permitted by the Code, and the Community Facilities District may meet all or a portion of the Reserve Requirement by depositing a Qualified Reserve Fund Credit Instrument in the Reserve Fund as described above. The School District is required to maintain an amount of money or other security equal to the Reserve Requirement in the Reserve Fund at all times that the Bonds are outstanding. Except as otherwise provided in the Fiscal Agent Agreement, all amounts deposited in the Reserve Fund will be used and withdrawn by the Fiscal Agent solely for the purpose of making transfers to the Bond Fund in the event of any deficiency prior to any Interest Payment Date in the Bond Fund of the amount required for payment of the principal of, and interest on, the respective series of Bonds on such Interest Payment Date. On the Series A (2018) Bonds Closing Date, the Series A (2018) Bonds Reserve Policy will be deposited in the Series A (2018) Bonds Reserve Subaccount. The Series A (2018) Bonds Reserve Policy is defined as the Municipal Bond Debt Service Reserve Insurance Policy issued by the Series A (2018) Bond Insurer under which claims may be made in order to provide moneys in the Series A (2018) Bonds Reserve Subaccount available for the purposes thereof. The Series A (2018) Bonds Reserve Policy is a Qualified Reserve Fund Credit Instrument as described below. The School District is initially utilizing a Qualified Reserve Fund Credit Instrument to fund the Reserve Requirement and may similarly utilize one in connection with the issuance of Additional Bonds. A Qualified Reserve Fund Credit Instrument means an irrevocable standby or direct-pay letter of credit, insurance policy or surety bond issued by a commercial bank or insurance company and deposited with the Fiscal Agent, provided that all of the following requirements are met: (i) the long-term credit rating of such bank or insurance company is rated in the "AA" category or higher by S&P or Moody's at the time of issuance; (ii) such letter of credit, insurance or surety has a term of at least 12 months; -20-

29 (iii) such letter of credit, insurance or surety has a stated amount at least equal to the portion of the Reserve Requirement with respect to which funds are proposed to be released under the Fiscal Agent Agreement; and (iv) the Fiscal Agent is authorized pursuant to the terms of such letter of credit, insurance or surety to draw thereunder an amount equal to any deficiencies which may exist from time to time in the Bond Fund for the purpose of making payments required pursuant to the Fiscal Agent Agreement. In the event that the long-term credit rating of a provider of a Qualified Reserve Fund Credit Instrument was downgraded after the date of issuance of such Qualified Reserve Fund Credit Instrument, the School District would not be obligated to replace the Qualified Reserve Fund Credit Instrument or otherwise fund the Reserve Fund. The following provisions will be applicable to the Series A (2018) Bonds Reserve Policy: (i) If a draw has been made on the Series A (2018) Bonds Reserve Policy, the Fiscal Agent will, from the deposits to the Series A (2018) Bonds Reserve Subaccount made pursuant to the Fiscal Agent Agreement, repay the Series A (2018) Bond Insurer for such draw, pay the Series A (2018) Bond Insurer for any Series A (2018) Bond Insurer Expenses related to such draw and pay the Series A (2018) Bond Insurer interest on such draw and Series A (2018) Bond Insurer Expenses from the date of payment by the Series A (2018) Bond Insurer at the 2018 Late Payment Rate. Amounts so paid to the Series A (2018) Bond Insurer will be applied, first, to such interest due, second, to such Series A (2018) Bond Insurer Expenses due and, third, to repayment of such draw. As and to the extent that payments are made to the Series A (2018) Bond Insurer in repayment of such draw, the coverage under the Series A (2018) Reserve Policy will be increased by a like amount, subject to the terms of the Series A (2018) Reserve Policy. (ii) If the School District fails to pay any amounts owing to the Series A (2018) Bond Insurer pursuant to paragraph (i) above, the Series A (2018) Bond Insurer will be entitled to exercise any and all legal and equitable remedies available to it, including those provided under the Indenture other than remedies which would adversely affect Owners of the Series A (2018) Bonds. (iii) The Fiscal Agent Agreement will not be discharged until all amounts owing to the Series A (2018) Bond Insurer pursuant to paragraph (i) above will have been paid in full. The School District s obligation to pay such amounts will expressly survive payment in full of the Series A (2018) Bonds. (iv) The Fiscal Agent will ascertain the necessity for a claim upon the Series A (2018) Reserve Policy in accordance with the provisions of the Fiscal Agent Agreement and provide notice to the Series A (2018) Bond Insurer at least three business days prior to each date upon which a draw thereon is required to pay principal of or interest on the Series A (2018) Bonds when due. (v) The Series A (2018) Reserve Policy will expire on the earlier of the date the Series A (2018) Bonds are no longer Outstanding and the final maturity date of the Series A (2018) Bonds. -21-

30 (vi) Policy Costs due and owing shall be included in debt service requirements for purposes of calculation of the additional bonds test and the levy and disposition of Special Tax in the Fiscal Agent Agreement. Whenever, on the Business Day prior to any Interest Payment Date, the amount in the Reserve Fund exceeds the then applicable Reserve Requirement, the Fiscal Agent will transfer an amount equal to the excess from the Reserve Fund to the Improvement Fund (if the Project has not been completed as the date of such transfer) or to the Bond Fund (if the Project has been completed as of such date), 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. Whenever the balance in the Reserve Fund exceeds the amount required to redeem or pay the outstanding 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 the Fiscal Agent Agreement, the Fiscal Agent will transfer the amount in the Reserve Fund to the Bond Fund to be applied, on the next succeeding Interest Payment Date, to the payment and redemption of all of the outstanding Bonds. If the amount so transferred from the Reserve Fund to the Bond Fund exceeds the amount required to pay and redeem the outstanding Bonds, the balance in the Reserve Fund will be transferred to the School District, after payment of any amounts due the Fiscal Agent, to be used for any lawful purpose of the School District. Delinquent Payments; Covenant for Superior Court Foreclosure The Special Tax will be collected in the same manner and the same time as ad valorem property taxes, except at the School District s option, the Special Taxes may be billed directly to property owners or collected at a different time to meet the School District s financial obligations. In the event of a delinquency in the payment of any installment of Special Taxes, the School District is authorized by the Act to order institution of an action in superior court to foreclose the lien therefor. The School District has covenanted in the Fiscal Agent Agreement, with and for the benefit of the Owners of the Bonds, that it will annually on or before July 1 of each year review the public records of the County relating to the collection of the Special Tax in order to determine the amount of the Special Tax collected in the prior Fiscal Year, and on the basis of such review, if the amounts delinquent will cause the Reserve Fund to fall below 95% of the Reserve Requirement for all Bonds covered thereby, or in any case with respect to a property owner whose delinquencies exceed $3,000 (including penalties and interest), the School District will, within 60 days thereafter, institute foreclosure proceedings as authorized by law in order to enforce the line of the delinquent Special Taxes and will diligently prosecute and pursue such foreclosure proceedings to judgment and sale. Notwithstanding the foregoing, the School District may, in any particular case, and after the amount of the delinquency has been stripped from the County tax roll, elect to advance (from any available funds other than the Special Tax Fund, the Bond Fund or the Reserve Fund) the amount of any delinquency (excluding penalties and statutory interest on the delinquency but including interest on the delinquent amount at the blended yield of the outstanding bonds of the respective community facilities district from the date of delinquency) to the Special Tax Fund. In that event the School District need not initiate the foreclosure action within any particular time period; although it will still be necessary for the School District (and not the County) to collect the Special Tax in question. In such a case, the School District may reimburse -22-

31 itself, when the Special Tax is paid on the property, for the principal amount of its advance plus the statutory interest and penalties paid in respect of the delinquency. Under the Act, foreclosure proceedings are instituted by the bringing of an action in the superior court of the county in which the parcel lies, naming the owner and other interested persons as defendants. The action is prosecuted in the same manner as other civil actions. In such action, the real property subject to the special taxes may be sold at a judicial foreclosure sale for a minimum price that will be sufficient to pay or reimburse the delinquent special taxes. The Owners of the Bonds benefit from the Reserve Fund established pursuant to the Fiscal Agent Agreement; however, if delinquencies in the payment of the Special Taxes with respect to the Bonds are significant enough to completely deplete the Reserve Fund, there could be a default or a delay in payments of principal and interest to the Owners of the Bonds pending prosecution of foreclosure proceedings and receipt by the School District of the proceeds of foreclosure sales. Provided that it is not levying the Special Tax at the Maximum Annual Special Tax rates set forth in the Special Tax Formula, the School District may adjust (but not to exceed the Maximum Annual Special Tax and subject to the limitation described under the caption Special Tax Methodology Limitation on Increases of Special Tax Levy above) the Special Taxes levied on all property within the Community Facilities District subject to the Special Tax to provide an amount required to pay debt service on the Bonds and to replenish the Reserve Fund. Under current law, a judgment debtor (property owner) has at least 120 days from the date of service of the notice of levy in which to redeem the property to be sold. If a judgment debtor fails to redeem and the property is sold, his or her only remedy is an action to set aside the sale, which must be brought within 90 days of the date of sale. If, as a result of such an action a foreclosure sale is set aside, the judgment is revived and the judgment creditor is entitled to interest on the revived judgment as if the sale had not been made (California Code of Civil Procedure Section ). Foreclosure by court action is subject to normal litigation delays, the nature and extent of which are largely dependent upon the nature of the defense, if any, put forth by the debtor and the condition of the calendar of the superior court of the county. Such foreclosure actions can be stayed by the superior court on generally accepted equitable grounds or as the result of the debtor s filing for relief under the federal bankruptcy laws. The Act provides that, upon foreclosure, the Special Tax lien will have the same lien priority as is provided for ad valorem taxes and special assessments. See VALUE OF PROPERTY WITHIN THE COMMUNITY FACILITIES DISTRICT AND SPECIAL TAX BURDEN Overlapping Liens and Priority of Lien. No assurances can be given that the real property subject to a judicial foreclosure sale will be sold or, if sold, that the proceeds of sale will be sufficient to pay any delinquent Special Tax installment. The Act does not require the Community Facilities District to purchase or otherwise acquire any lot or parcel of property foreclosed upon if there is no other purchaser at such sale. Section of the Act requires that property sold pursuant to foreclosure under the Act be sold for not less than the amount of judgment in the foreclosure action, plus postjudgment interest and authorized costs, unless the consent of the owners of 75% of the outstanding Bonds is obtained. However, under Section of the Act, the Community Facilities District, as judgment creditor, is entitled to purchase any property sold at foreclosure using a credit bid, where the Community Facilities District could submit a bid crediting all or -23-

32 part of the amount required to satisfy the judgment for the delinquent amount of the Special Tax. If the Community Facilities District becomes the purchaser under a credit bid, the Community Facilities District must pay the amount of its credit bid into the redemption fund established for the Bonds, but this payment may be made up to 24 months after the date of the foreclosure sale. Teeter Plan. In 1949, the California Legislature enacted an alternative method for the distribution of property taxes to local agencies. This method, known as the Teeter Plan, is found in Sections of the California Revenue and Taxation Code. Upon adoption and implementation of this method by a county board of supervisors, local agencies for which the county collects property taxes and certain other public agencies and taxing areas located in the county receive annually the full amount of their shares of property taxes and other levies collected on the secured roll, including delinquent property taxes which have yet to be collected. While the county bears the risk of loss on unpaid delinquent taxes, it retains the penalties associated with delinquent taxes when they are paid. In turn, the Teeter Plan provides participating local agencies with stable cash flow and the elimination of collection risk. Once adopted, a county s Teeter Plan will remain in effect in perpetuity unless the board of supervisors orders its discontinuance or unless, prior to the commencement of a fiscal year, a petition for discontinuance is received and joined in by resolutions of the governing bodies of not less than two-thirds of the participating districts in the county. An electing county may, however, decide to discontinue the Teeter Plan with respect to any levying agency in the county if the board of supervisors, by action taken not later than July 15 of a fiscal year, elects to discontinue the procedure with respect to such levying agency and the rate of secured tax delinquencies in that agency in any year exceeds 3% of the total of all taxes and assessments levied on the secured roll by that agency. Under the Teeter Plan, the County distributes tax collections on a cash basis to taxing entities during the fiscal year and at year-end distributes 100% of any taxes delinquent as of June 30th to the taxing entities and those special assessment districts and community facilities districts (and individual parcels within each district) that the County determines are eligible to participate in the Teeter Plan. The County may make eligibility determinations on an annual basis and may exclude a district or an individual parcel that had previously been included in the plan. The Board of Supervisors of San Joaquin County adopted the Teeter Plan in Fiscal Year The County has elected to apply its Teeter Plan to the collection of the Special Taxes levied within the Community Facilities District. To the extent that the County s Teeter Plan continues in existence and is carried out as adopted, and to the extent the County does not discontinue the Teeter Plan with respect to the School District or the Community Facilities District, the County s Teeter Plan may help protect owners of the Bonds from the risk of delinquencies in the payment of Special Tax. On September 13, 2011, the County Auditor-Controller recommended to the Board of Supervisors that all direct assessments be removed from the Teeter Plan for fiscal year and thereafter. The County Auditor-Controller s recommendation did not apply to the collection fo ad valorem taxes levied to pay general obligation bonds. The Board of Supervisors, at its September 13, 2011 meeting, postponed making a decision on the County Auditor-Controller s recommendation and directed the County Auditor-Controller to work with appropriate County officials and staff to recommend the appropriate method of removing direct assessements from the Teeter Plan. After discussions and surveys of the affected agencies and meetings with -24-

33 County officials and staff, the County Auditor-Controller recommended to the Board of Supervisors at its June 26, 2012 meeting to remove code enforcement/civil penalties/administrative citiation direct assessments, the City of Lathrop s Community Facilities District (CFD) , and the non-public safety portion of the City of Lathrop s Community Facilites District from the Teeter Plan. The School District is not aware of any further changes to the Teeter Plan at this time. There can be no assurance that the County will not modify or eliminate its Teeter Plan or choose to remove the Community Facilities District from its Teeter Plan while the Bonds are outstanding. Additional Bonds The School District is authorized to issue up to $400,000,000 of bonds on behalf of the Community Facilities District, of which the Bonds represent the first series. Additional Bonds may be issued in the future to pay for the construction and acquisition of Authorized Facilities necessary for further development of land in the Community Facilities District. The School District may by a Supplemental Agreement to the Fiscal Agent Agreement (a Supplemental Agreement ), authorize the issuance of one or more additional series of Additional Bonds, payable from Special Taxes and secured by the Special Taxes on a parity with the Bonds and other Bonds previously issued, as development progresses in the Community Facilities District and upon compliance by the School District with the conditions set forth in the Fiscal Agent Agreement, which include the following: (i) The deposit into a subaccount in the Reserve Fund, or into a separate parity reserve fund, forthwith upon the receipt of the proceeds of the sale of such Additional Bonds, an amount of money or a Qualified Reserve Fund Credit Instrument at least equal to the Reserve Requirement with respect to such Series. (ii) For each Bond Year that Bonds will be outstanding, projected maximum Special Taxes on Developed Parcels in each Fiscal Year are equal to or greater than 115% of maximum Debt Service due in the Bond Year that begins in the corresponding Fiscal Year and with respect to the period of time preceding the receipt of Special Tax proceeds as calculated above, the funds that would be available to the School District if the Special Tax as most recently levied is fully collected, and funds from any other source identified in an Officer s Certificate or a Supplemental Agreement (including capitalized interest) shall be equal to at least 100% of the interest and principal requirements due on all outstanding Bonds of the Community Facilities District during such period, together with 100% of any payment or reimbursement obligations of the School District with respect to any reserve facilities. (iii) The aggregate value of all parcels in the Community Facilities District subject to the Special Tax, including then existing improvements and any facilities to be constructed or acquired with the proceeds of the proposed series of bonds, as determined by an MAI appraisal or, in the alternative, the assessed value of all such parcels and improvements thereon (and improvements to be financed from proceeds of the bonds proposed to be issued) as shown on the then current County tax roll, or by a combination of both methods is at least eight (8.00) times the sum of (1) the aggregate principal amount of all Bonds then outstanding plus (2) the aggregate principal amount of the Series of Additional Bonds proposed to be issued, plus (3) the aggregate principal amount of any bonds then outstanding and payable from assessments which are a lien -25-

34 against property in the Community Facilities District, plus (4) a portion of the aggregate principal amount of all Mello-Roos bonds, other than the Bonds then outstanding, and payable at least partially from special taxes to be levied on parcels of land subject to the Special Tax within the Community Facilities District (the Other Mello-Roos Bonds ) equal to the aggregate principal amount of the Other Mello-Roos Bonds multiplied by a fraction, the numerator of which is the amount of special taxes levied for the Other Mello- Roos Bonds on parcels of land within the Community Facilities District subject to the Special Tax, and the denominator of which is the total amount of special taxes levied for the Other Mello-Roos Bonds on all parcels of land subject to the Special Tax against which the special taxes are levied to pay the Other Mello-Roos Bonds (such fraction to be determined based upon the special taxes which could be levied the year in which maximum annual debt service on the Other Mello-Roos Bonds occurs), based upon information from the most recent available Fiscal Year. Nothing in the Fiscal Agent Agreement will prevent or be construed to prevent any Supplemental Agreement to the Fiscal Agent Agreement providing for the issuance of Additional Bonds from pledging or otherwise providing, in addition to the security given or intended to be given by the Fiscal Agent Agreement, additional security for the benefit of such Additional Bonds or any portion thereof. -26-

35 DEBT SERVICE SCHEDULE The annual debt service on the Series A (2018) Bonds, based on the interest rates and maturity schedule set forth on the inside cover of this Official Statement (assuming no early redemptions), is set forth below. Manteca Unified School District Community Facilities District No Series A (2018) Special Tax Bonds Debt Service Schedule Year Ending (Sept. 1) Principal Interest Total 2019 $215, $180, $395, , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , Total $5,520, $2,699, $8,219, Source: Underwriters. -27-

36 Formation of the Community Facilities District THE COMMUNITY FACILITIES DISTRICT On February 8, 2005, the Board of Trustees of the School District, which serves as the legislative body of the Community Facilities District, adopted a Resolution of Intention to form a community facilities district under the Act, to levy a special tax and to incur bonded indebtedness for the purpose of financing the acquisition and construction of certain public school facilities. After conducting a noticed public hearing, on March 22, 2005, the Board of Trustees adopted the Resolution of Formation, which established the Community Facilities District, set forth the Special Tax Formula within the Community Facilities District and described the Authorized Facilities to be financed by the Community Facilities District. On the same day, an election was held within the Community Facilities District in which all of the qualified landowners in the Community Facilities District approved the proposed bonded indebtedness in the maximum aggregate principal amount of $400,000,000 and the levy of the Special Tax in accordance with the Special Tax Formula. The Series A (2018) Bonds will provide a funding source for moneys expended to finance the public school facilities authorized to be financed by the levy of Special Taxes in the Community Facilities District. The list of eligible Facilities is set forth in Exhibit A to the Resolution of Formation, adopted by the Board of Trustees, as the legislative body of the Community Facilities District, on March 22, Location and Description of the Community Facilities District and the Immediate Area The property within the Community Facilities District consists of approximately 70 noncontiguous acres within Manteca. The parcels are located in areas of residential development. Additional property may be annexed to the Community Facilities District as residential development continues in Manteca. Since the formation of the Community Facilities District, property has been annexed into the Community Facilities District from time to time. Financing Plan On October 4, 2016, the Board of Trustees approved Resolution No. 16/17-26 and instructed the superintendent of the School District to prepare the Manteca Unified School District Community Facilities District No Financing Plan (the CFD No Financing Plan ). The Community Facilities District was designed to finance a series of schools over a multi-year period to serve the students generated by new housing developments within the Community Facilities District. As new housing was built, the tax base of the Community Facilities District was expected to increase and additional schools could be funded from the Special Tax. Construction of one elementary school and the expansion of high school capacity are expected to be funded by the Community Facilities District. The Authorization of $400,000,000 was established to allow for construction costs of all of the CFD No School Facilities, land costs and bond financing costs. -28-

37 Current Status of Development in the Community Facilities District Property in the Developed tax rate category as of June 1, 2018, accounts for 100% of the Special Tax levied in fiscal year Because property in the Undeveloped Final Map and the Undeveloped-Planned tax rate categories as of June 1, 2018, is subject only to the Backup Special Tax, and the Backup Special Tax is not currently levied on property in the Community Facilities District, Undeveloped Final Map and Undeveloped-Planned properties account for none of the Special Tax levied in Fiscal Year Debt service on the Series A (2018) Bonds is based on revenue generated from Special Taxes levied on property that is Developed Property as of Fiscal Year Property Ownership The following table shows the apportionment of the Maximum Special Tax by owners of Taxable Parcels within the Community Facilities District for Fiscal Year , based on the development status of Taxable Parcels in the Community Facilities District as of June 1, Table 4 Manteca Unified School District Community Facilities District No Apportionment of Fiscal Year Special Tax by Property Owner (1) Property Owner No. of Units Fiscal Year Special Tax Levy % of Total Individual Owner-Occupied Single Family Homes 441 $455, % Single Family Homes - Owners of More than One Home Khan, Mohammad Anwar & Naheed Niazi 2 2, Singh, Bhupinder 2 1, Subtotal Owners of More Than One Single Family Home 4 4, Total 445 $459, % (1) Table data as of June 1, Source: San Joaquin County Assessor's Office, as compiled by California Financial Services. Secured Assessed Valuation The following table shows the secured assessed valuation of Taxable Parcels within the Community Facilities District from Fiscal Year to Fiscal Year

38 Value-to-Debt Ratios Table 5 Manteca Unified School District Community Facilities District No Secured Assessed Valuation of Taxable Parcels Fiscal Year Secured Assessed Valuation Annual % Change $97,064,133 NA ,134,950 (38.05)% ,406,046 (1.21) ,668, ,600, ,078, ,198, ,926, ,537, ,945, ,318, Source: San Joaquin County Assessor's Office, as compiled by California Financial Services. The total secured assessed value of property subject to the Special Tax in the Community Facilities District is $153,318,859 in , as determined by the County Assessor. The secured assessed valuation of real property in the Community Facilities District subject to the Special Tax is times the $5,520,000 principal amount of the Series A (2018) Bonds. Adding overlapping tax and assessment debt (consisting of general obligation bonded indebtedness, other community facilities district indebtedness, and assessment district indebtedness, as described herein), the assessed value-to-debt ratio for property in the Community Facilities District subject to the Special Tax is approximately to-1. Value-todebt ratios on individual parcels may vary considerably from this average. Table 6 Manteca Unified School District Community Facilities District No Distribution of Value-to-Debt Ratio As of September 1, 2018 % of Fiscal Year Special Tax Levy Allocated Share of Series A (2018) Bonds (1) Allocated Share of Overlapping Tax & Assessment Debt (2) Total Allocated Share of Series A (2018) Bonds, Overlapping Tax, & Assessment Debt District Valueto-Debt Ratio Valueto-Debt Ratio Value to Debt Range No. of Parcels Fiscal Year Special Tax Levy to $1, % $23, $52, $76, to , ,470, ,773, ,243, Less than , , , , Totals 445 $459, % $5,520, $6,846, $12,366, (1) Reflects the par amount of the Series A (2018) Bonds to be issued. (2) Includes general obligation debt of Manteca Unified School District and San Joaquin delta Community College District, debt of the City of Lathrop Mossdale Village Reassessment District Nos & , City of Lathrop Community Facilities District No and debt of Reclamation District No. 17 Assessment District. Source: Manteca Unified School District, San Joaquin County Assessor, California Municipal Statistics, Inc., and California Financial Services. -30-

39 Overlapping Liens and Priority of Lien The principal of and interest on the Series A (2018) Bonds is payable from the Special Tax authorized to be collected within the Community Facilities District, and payment of the Special Tax is secured by a lien on certain real property within the Community Facilities 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 Community Facilities 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 School District, 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 Community Facilities District. Other public agencies whose boundaries overlap those of the Community Facilities District could, without the consent of the School District and in certain cases without the consent of the owners of the land within the Community Facilities District, impose additional taxes or assessment liens on the land within the Community Facilities District. The lien created on the land within the Community Facilities District through the levy of such additional taxes or assessments may be secured on parity with the lien of the Special Tax. In addition, construction loans may be obtained by the homebuilder owners and home loans are likely to be obtained by ultimate homeowners. The deeds of trust securing such debt on property within the Community Facilities District, however, will be subordinate to the lien of the Special Tax. Set forth below is an overlapping debt table showing the existing authorized indebtedness payable with respect to property within the Community Facilities District. This table has been prepared by California Municipal Statistics Inc. as of the date indicated and is included for general information purposes only. Neither the School District nor Underwriters have reviewed the data for completeness or accuracy and makes no representations in connection therewith. -31-

40 Table 7 Manteca Unified School District Community Facilities District No Summary of Overlapping Bonded Debt As of July 1, 2018 (Reflecting Fiscal Year Assessed Values) Local Secured Assessed Valuation: $146,587,491 (Land and Improvements only) DIRECT AND OVERLAPPING TAX AND ASSESSMENT DEBT: % Applicable Debt San Joaquin Delta Community College District General Obligation Bonds 0.189% $ 290,896 Manteca Unified School District General Obligation Bonds ,706,897 Manteca Unified School District Community Facilities District No (1) City of Lathrop Mossdale Village Reassessment District No ,439,206 City of Lathrop Mossdale Village Reassessment District No ,653 City of Lathrop Community Facilities District No ,180,545 Reclamation District No. 17 Assessment District ,755 TOTAL DIRECT AND OVERLAPPING TAX AND ASSESSMENT DEBT $6,846,952 OVERLAPPING GENERAL FUND DEBT: San Joaquin County Certificates of Participation 0.206% $190,035 Manteca Unified School District Qualified Zone Academy Bonds ,989 City of Lathrop General Fund Obligations ,406 TOTAL OVERLAPPING GENERAL FUND DEBT $634,430 COMBINED TOTAL DEBT $7,481,382 (2) Ratios to Assessed Valuation: Direct Debt % Total Direct and Overlapping Tax and Assessment Debt % Combined Total Debt % (1) Excludes the Series A (2018) Bonds described herein. (2) Excludes tax and revenue anticipation notes, enterprise revenue, mortgage revenue and non-bonded capital lease obligations. Source: California Municipal Statistics, Inc. -32-

41 Sample Tax Bill Sample Tax Bill, Single-Family Home. The following table sets forth the estimated total tax burden on a developed single-family detached unit in the Community Facilities District, based on special tax rates for Fiscal Year Table 8 Manteca Unified School District Community Facilities District No Fiscal Year Tax Rates (Developed Single-Family Detached Units) Assessed Valuations and Property Taxes Amount Assessed Value $320, Homeowner's Exemption (7,000.00) Estimated Assessed Value $315, Ad Valorem Property Taxes Percent of Net Assessed Value Amount Basic Levy % $3, Manteca Unified School District General Obligation Bond 2014A % Manteca Unified School District General Obligation Bond 2015R % Manteca Unified School District General Obligation Bond 2017B % San Joaquin Delta College GO Bond 2004B % San Joaquin Delta College GO Bond 2004C % 5.64 San Joaquin Delta College GO Bond 2015R % 2.20 Total Ad Valorem Property Taxes $3, Assessments, Special Taxes and Parcel Charges City of Lathrop Community Facilities District No $ City of Lathrop Community Facilities District No , City of Lathrop Mossdale Village Reassessment District No City of Lathrop Mossdale Village Reassessment District No City of Lathrop Mossdale Village Reassessment District B San Joaquin County Mosquito Abatement 1.58 San Joaquin Mosquito & Vector Control Benefit Assessment 9.28 Reclamation District No. 17 Assessment District CSA No Hazardous Waste 4.00 Water Investigation District # South Delta Water Agency 2.00 City of Lahtrop Manteca Fire Manteca Unified School District No , Total Assessments, Special Taxes and Parcel Charges $3, Total Property Taxes $7, Total Effective Tax Rate 2.21% (1) Represents the Fiscal Year Median Assessed Value of Developed Property within CFD No Source: County of San Joaquin -33-

42 Special Tax Collection and Delinquency Rates The following table shows the Special Tax levy in each Fiscal Year for the last five Fiscal Years and the corresponding Special Tax collections and delinquencies as of June 30 of the subject fiscal year. Table 9 Manteca Unified School District Community Facilities District No Special Tax Levies and Collections (1) Fiscal Year Special Tax Levy Special Tax Collection Amount Delinquent % Delinquent $561, $551, $10, % , , , , , , , , , , , , (1) The County currently includes the Community Facilities District within its Teeter Plan, which means the School District will receive 100% of the amounts levied within the Community Facilities District, irrespective of delinquencies. However, the County could discontinue the Teeter Plan or remove the Community Facilities District from the Teeter Plan in the future. See SECURITY FOR THE SERIES A (2018) BONDS Delinquent Payments; Covenant for Superior Court Foreclosure Teeter Plan. Source: San Joaquin County Tax Collector. Potential Consequences of Special Tax Delinquencies. Future delinquencies in the payment of property taxes (including the Special Taxes) with respect to property in the Community Facilities District could result in draws on the Series A (2018) Reserve Subaccount of the Reserve Fund established for the Series A (2018) Bonds, and perhaps, ultimately, a default in the payment on the Series A (2018) Bonds. See SPECIAL RISK FACTORS. The School District could receive additional funds for the payment of debt service through foreclosure sales of delinquent property, but no assurance can be given as to the amount foreclosure sale proceeds or when foreclosure sale proceeds would be received. The School District has covenanted in the Fiscal Agent Agreement to take certain enforcement actions and commence and pursue foreclosure proceedings against delinquent parcels under the terms and conditions described herein. See SECURITY FOR THE SERIES A (2018) BONDS Delinquent Payments; Covenant for Superior Court Foreclosure. Foreclosure actions would include, among other steps, formal action by the Board of Trustees to authorize commencement of foreclosure proceedings, mailing multiple demand letters to the record owners of the delinquent parcels advising them of the consequences of failing to pay the applicable Special Taxes and contacting secured lenders to obtain payment. If these efforts were unsuccessful, they would be followed (as needed) by the filing of an action to foreclose in superior court against each parcel that remained delinquent. If owners are delinquent in the payment of Special Taxes, the School District may not increase Special Tax levies to make up for delinquencies for prior Fiscal Years above the Maximum Special Tax rates specified for each category of property within the Community Facilities District. See SECURITY FOR THE SERIES A (2018) 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 -34-

43 cases of significant delinquency, these factors may result in defaults in the payment of principal of and interest on the Series A (2018) Bonds. See SPECIAL RISK FACTORS. General THE SCHOOL DISTRICT The School District is located in the southern portion of San Joaquin County (the County ), and covers an area of approximately 113 square miles. The territory of the School District includes nearly all of the cities of Manteca and Lathrop, a small portion of the City of Stockton, and other adjacent unincorporated territory within the County. Manteca is located about 14 miles south of downtown Stockton and about 75 miles east of San Francisco. Both U.S. Interstate Highway 5, the principal north-south highway connecting the Pacific coastal states, and State Route 99, a north-south highway connecting the major cities in California s Central Valley, pass through the School District. Major airport and deep-water port facilities are located in Stockton. See Appendix B hereto for additional demographic and other statistical information for the County and the City of Lathrop, which is the city in which the Community Facilities District is located. During the academic year, the School District maintained 20 elementary schools, five comprehensive high schools, two continuation high schools, one community day school, an adult school and a dependent charter school. Enrollment in the School District for the academic year was approximately 23,364 students. Administration Board of Trustees. The School District is governed by a seven-member Board of Trustees (the Board ), each member of which is elected to a four-year term. Elections for positions to the Board by trustee area are held every two years, alternating between three and four available positions. Current members of the Board of Trustees, together with their office and the date their term expires, are listed below: BOARD OF TRUSTEES Manteca Unified School District Name Office Term Expires Stephen J. Schluer, Area 6 President November 2018 Bob Wallace, Area 7 Vice-President November 2020 Evelyn Moore, Area 5 Clerk November 2018 Eric Duncan, Area 1 Trustee November 2020 Kathy Howe, Area 2 Trustee November 2018 Michael Seelye, Area 3 Trustee November 2020 Nancy Teicheira, Area 4 Trustee November 2018 Superintendent and Administrative Personnel. The Superintendent of the School District, appointed by the Board, is responsible for management of the day-to-day operations and supervises the work of other School District administrators. Dr. Clarke Burke is currently serving as the Superintendent and Jacqui Breitenbucher is serving as Chief Business Official. -35-

44 There follows under this caption certain information concerning the terms of the Insurance Policy and BAM that has been supplied by BAM for inclusion in this Official Statement. No representation is made by the School District or the Underwriters as to the accuracy, completeness or adequacy of such information, nor as to the absence of material adverse changes in such information subsequent to the date of this Official Statement. The School District and Underwriters have made any independent investigation of the Insurer or the Insurance Policy, and reference is made to the information set forth below and in Appendix G hereto for a description thereof. Bond Insurance Policy Concurrently with the issuance of the Series A (2018) Bonds, BAM will issue its Municipal Bond Insurance Policy for the Insured Series A (2018) Bonds. The Insurance Policy guarantees the scheduled payment of principal of and interest on the Insured Series A (2018) Bonds when due as set forth in the form of the Insurance Policy included as APPENDIX G SPECIMEN MUNICIPAL BOND INSURANCE POLICY. The Insurance Policy is not covered by any insurance security or guaranty fund established under New York, California, Connecticut or Florida insurance law. Build America Mutual Assurance Company BOND INSURANCE BAM is a New York domiciled mutual insurance corporation and is licensed to conduct financial guaranty insurance business in all fifty states of the United States and the District of Columbia. BAM provides credit enhancement products solely to issuers in the U.S. public finance markets. BAM will only insure obligations of states, political subdivisions, integral parts of states or political subdivisions or entities otherwise eligible for the exclusion of income under section 115 of the U.S. Internal Revenue Code of 1986, as amended. No member of BAM is liable for the obligations of BAM. The address of the principal executive offices of BAM is: 200 Liberty Street, 27th Floor, New York, New York 10281, its telephone number is: , and its website is located at: BAM is licensed and subject to regulation as a financial guaranty insurance corporation under the laws of the State of New York and in particular Articles 41 and 69 of the New York Insurance Law. BAM s financial strength is rated AA/Stable by S&P Global Ratings, a business unit of Standard & Poor's Financial Services LLC ( S&P ). An explanation of the significance of the rating and current reports may be obtained from S&P at The rating of BAM should be evaluated independently. The rating reflects the S&P s current assessment of the creditworthiness of BAM and its ability to pay claims on its policies of insurance. The above rating is not a recommendation to buy, sell or hold the Series A (2018) Bonds, and such rating is subject to revision or withdrawal at any time by S&P, including withdrawal initiated at the request of BAM in its sole discretion. Any downward revision or withdrawal of the above rating may have an adverse effect on the market price of the Series A (2018) Bonds. BAM only guarantees scheduled principal and scheduled interest payments payable by the issuer of the Bonds 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 Insurance -36-

45 Policy), and BAM does not guarantee the market price or liquidity of the Series A (2018) Bonds, nor does it guarantee that the rating on the Series A (2018) Bonds will not be revised or withdrawn. Capitalization of BAM. BAM s total admitted assets, total liabilities, and total capital and surplus, as of June 30, 2018 and as prepared in accordance with statutory accounting practices prescribed or permitted by the New York State Department of Financial Services were $519.5 million, $99.3 million and $420.2 million, respectively. BAM is party to a first loss reinsurance treaty that provides first loss protection up to a maximum of 15% of the par amount outstanding for each policy issued by BAM, subject to certain limitations and restrictions. BAM s most recent Statutory Annual Statement, which has been filed with the New York State Insurance Department and posted on BAM s website at is incorporated herein by reference and may be obtained, without charge, upon request to BAM at its address provided above (Attention: Finance Department). Future financial statements will similarly be made available when published. BAM makes no representation regarding the Series A (2018) Bonds or the advisability of investing in the Series A (2018) Bonds. In addition, BAM 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 BAM, supplied by BAM and presented under the heading BOND INSURANCE. Additional Information Available from BAM. Credit Insights Videos. For certain BAM-insured issues, BAM produces and posts a brief Credit Insights video that provides a discussion of the obligor and some of the key factors BAM's analysts and credit committee considered when approving the credit for insurance. The Credit Insights videos are easily accessible on BAM's website at buildamerica.com/creditinsights/. (The preceding website address is provided for convenience of reference only. Information available at such address is not incorporated herein by reference.) Credit Profiles. Prior to the pricing of bonds that BAM has been selected to insure, BAM may prepare a pre-sale Credit Profile for those bonds. These pre-sale Credit Profiles provide information about the sector designation (e.g. general obligation, sales tax); a preliminary summary of financial information and key ratios; and demographic and economic data relevant to the obligor, if available. Subsequent to closing, for any offering that includes bonds insured by BAM, any pre-sale Credit Profile will be updated and superseded by a final Credit Profile to include information about the gross par insured by CUSIP, maturity and coupon. BAM pre-sale and final Credit Profiles are easily accessible on BAM s website at buildamerica.com/obligor/. BAM will produce a Credit Profile for all bonds insured by BAM, whether or not a pre-sale Credit Profile has been prepared for such bonds. (The preceding website address is provided for convenience of reference only. Information available at such address is not incorporated herein by reference.) Disclaimers. The Credit Profiles and the Credit Insights videos and the information contained therein are not recommendations to purchase, hold or sell securities or to make any -37-

46 investment decisions. Credit-related and other analyses and statements in the Credit Profiles and the Credit Insights videos are statements of opinion as of the date expressed, and BAM assumes no responsibility to update the content of such material. The Credit Profiles and Credit Insight videos are prepared by BAM; they have not been reviewed or approved by the School District or the Underwriters for the Series A (2018) Bonds, and the School District and Underwriters assume no responsibility for their content. BAM receives compensation (an insurance premium) for the insurance that it is providing with respect to the Bonds. Neither BAM nor any affiliate of BAM has purchased, or committed to purchase, any of the Series A (2018) Bonds, whether at the initial offering or otherwise. SPECIAL RISK FACTORS The purchase of the Series A (2018) Bonds described in this Official Statement involves a degree of risk that may not be appropriate for some investors. The following includes a discussion of some of the risks which should be considered before making an investment decision. This discussion does not purport to be comprehensive or definitive or a complete statement of all factors that may be considered as risks in evaluating the credit quality of the Series A (2018) Bonds. Limited Obligation of the School District to Pay Debt Service The School District has no obligation to pay principal of and interest on the Series A (2018) Bonds in the event Special Tax collections are delinquent, other than from amounts, if any, on deposit in the Reserve Fund or funds derived from the tax sale or foreclosure and sale of parcels on which levies of the Special Tax are delinquent, nor is the School District obligated to advance funds to pay such debt service on the Series A (2018) Bonds. The Series A (2018) Bonds are not general obligations of the School District but are limited obligations of the School District and the Community Facilities District payable solely from the proceeds of the Special Tax and certain funds held under the Fiscal Agent Agreement, including amounts deposited in the Reserve Fund and investment income thereon, and the proceeds, if any, from the sale of property subject to the Special Tax in the event of a foreclosure. See SECURITY FOR THE SERIES A (2018) BONDS. Any tax for the payment of the Series A (2018) Bonds will be limited to the Special Tax to be collected within the Community Facilities District. Levy and Collection of the Special Tax General. The principal source of payment of principal of and interest on the Series A (2018) Bonds is the proceeds of the annual levy and collection of the Special Tax against property within the Community Facilities District. Limitation on Maximum Annual Special Tax Rate. The annual levy of the Special Tax is subject to the maximum annual Special Tax rate authorized in the Special Tax Formula. The levy cannot be made at a higher rate even if the failure to do so means that the estimated proceeds of the levy and collection of the Special Tax, together with other available funds, will not be sufficient to pay debt service on the Series A (2018) Bonds. -38-

47 In addition to the maximum annual Special Tax rate limitation in the Special Tax Formula, Section 53321(d) of the Act provides that the special tax levied against any parcel for which an occupancy permit for private residential use has been issued may not be increased as a consequence of delinquency or default by the owner of any other parcel within a community facilities district by more than 10% above the amount that would have been levied in such Fiscal Year had there never been any such delinquencies or defaults. In cases of significant delinquency, these factors may result in defaults in the payment of principal of and interest on the Series A (2018) Bonds. No Relationship Between Property Value and Special Tax Levy. Because the Special Tax Formula is not based on property value, the levy of the Special Tax will rarely, if ever, result in a uniform relationship between the value of particular parcels of Taxable Property and the amount of the levy of the Special Tax against those parcels. Thus, there will rarely, if ever, be a uniform relationship between the value of the parcels of Taxable Property and their proportionate share of debt service on the Series A (2018) Bonds, and certainly not a direct relationship. Factors that Could Lead to Special Tax Deficiencies. The following are some of the factors that might cause the levy of the Special Tax on any particular parcel of Taxable Property to vary from the Special Tax that might otherwise be expected: Transfers to Governmental Entities. The number of parcels of Taxable Property could be reduced through the acquisition of Taxable Property by a governmental entity and failure of the government to pay the Special Tax based upon a claim of exemption or, in the case of the federal government or an agency thereof, immunity from taxation, thereby resulting in an increased tax burden on the remaining taxed parcels. Property Tax Delinquencies. Failure of the owners of Taxable Property to pay property taxes (and, consequently, the Special Tax), or delays in the collection of or inability to collect the Special Tax by tax sale or foreclosure and sale of the delinquent parcels, could result in a deficiency in the collection of Special Tax revenues. For a summary of recent Special Tax collection and delinquency rates in the Community Facilities District, see VALUE OF PROPERTY WITHIN THE COMMUNITY FACILITIES DISTRICT AND SPECIAL TAX BURDEN herein. Value-to-debt ratios on individual parcels may vary considerably from the average presented in this Official Statement. Property Tax Delinquencies General. Delinquencies in the payment of property taxes and, consequently, the Special Tax, can occur because the owners of delinquent parcels may not have received property tax bills from the County in a timely manner. Delinquencies can also reflect economic difficulties and duress by the property owner. See THE COMMUNITY FACILITIES DISTRICT Special Tax Collection and Delinquency Rates. Sustained or increased delinquencies in the payment of the Special Tax could cause a draw on the Series A (2018) Bonds Reserve Subaccount established for the Series A (2018) Bonds and perhaps, ultimately, a default in the payment on the Series A (2018) Bonds. -39-

48 Measures to Mitigate Consequences of Continuing Delinquencies. The School District intends to take certain actions designed to mitigate the impact of future delinquencies, including: enforcing the lien of the Special Tax through collection procedures that will include foreclosure actions under certain circumstances (see SECURITY FOR THE SERIES A (2018) BONDS Delinquent Payments; Covenant for Superior Court Foreclosure ); and increasing the levy of Special Tax against non-delinquent property owners in the Community Facilities District, to the extent permitted under the Special Tax Formula and the Act and to the extent the Special Tax is not already being levied at the maximum Special Tax rate. Limitations on Increases in Special Tax Levy. If owners are delinquent in the payment of the Special Tax, the School District may not increase Special Tax levies to make up for delinquencies for prior fiscal years above the maximum Special Tax rates specified in the Special Tax Formula. In addition, the School District s ability to increase Special Tax levies on residential property to make up for delinquencies for prior Fiscal Years is limited by Section 53321(d) of the California Government Code, which provides that the special tax levied against any parcel for which an occupancy permit for private residential use has been issued may not be increased as a consequence of delinquency or default by the owner of any other parcel by more than 10% above the amount that would have been levied in such Fiscal Year had there never been any such delinquencies or defaults. In cases of significant delinquency, these factors may result in defaults in the payment of principal of and interest on the Series A (2018) Bonds. Teeter Plan. The County currently includes the Community Facilities District within its Teeter Plan, which means the School District will receive 100% of the special taxes levied within the Community Facilities District, irrespective of delinquencies. However, the County could discontinue the Teeter Plan or remove the Community Facilities District from the Teeter Plan in the future. See SECURITY FOR THE SERIES A (2018) BONDS Delinquent Payments; Covenant for Superior Court Foreclosure Teeter Plan. Risks Related to Homeowners with High Loan Mortgage to Market Value Ratios Any future decline in home values in the Community Facilities District could result in property owner unwillingness or inability to pay mortgage payments. ad valorem property taxes, and the Special Tax, when due. Under such circumstances, bankruptcies are likely to increase. Bankruptcy by homeowners with delinquent Special Taxes would delay the commencement and completion of foreclosure proceedings to collect delinquent Special Taxes. It is possible that laws could be enacted in the future to assist homeowners in default in the payment of mortgages and property taxes. It is further possible that federal laws could be enacted that would adversely impact the ability of the School District to foreclose on parcels with delinquent Special Taxes. No assurance can be given that any such laws will be enacted, or if enacted will be effective in assisting affected homeowners. Payment of Special Tax is Not a Personal Obligation of the Property Owners An owner of Taxable Property is not personally obligated to pay the Special Tax. Rather, the Special Tax is an obligation running only against the parcels of Taxable Property. If, after a default in the payment of the Special Tax and a foreclosure sale by the School District, -40-

49 the resulting proceeds are insufficient, taking into account other obligations also constituting a lien against the affected parcels of Taxable Property, the School District will not have any recourse against the owner. Property Values The value of taxable property within the Community Facilities District is a critical factor in determining the investment quality of the Series A (2018) Bonds. If a property owner defaults in the payment of the Special Tax, the School District s only remedy is to foreclose on the delinquent property in an attempt to obtain funds with which to pay the delinquent Special Tax. Property values could be adversely affected by economic and other factors beyond the School District s control, such as a general economic downturn, relocation of employers out of the area, shortages of water, electricity, natural gas or other utilities, destruction of property caused by earthquake, flood, wildfires, or other natural disasters, environmental pollution or contamination, inability to obtain necessary permits or agreements with governmental entities, or unfavorable economic conditions. Neither the Community Facilities District nor the School District has evaluated development risks related to the development of land in the Community Facilities District. Since these are largely business risks of the type that property owners customarily evaluate individually, and inasmuch as changes in land ownership may well mean changes in the evaluation with respect to any particular parcel, the School District is issuing the Series A (2018) Bonds without regard to any such evaluation. Thus, the creation of the Community Facilities District and the issuance of the Series A (2018) Bonds in no way implies that the Community Facilities District or the School District has evaluated these risks or the reasonableness of these risks. The following is a discussion of specific risk factors that could affect the value of property in the Community Facilities District. Natural Disasters. The value of the parcels in the Community Facilities District in the future can be adversely affected by a variety of natural occurrences, particularly those that may affect infrastructure and other public improvements and private improvements on the parcels in the Community Facilities District and the continued habitability and enjoyment of such private improvements. For example, the areas in and surrounding the Community Facilities District, like those in much of the State, may be subject to earthquakes or other unpredictable seismic activity. Other natural disasters could include, without limitation, landslides, floods, droughts or tornadoes. One or more natural disasters could occur and could result in damage to improvements of varying seriousness. The damage may entail significant repair or replacement costs and that repair or replacement may never occur either because of the cost, or because repair or replacement will not facilitate habitability or other use, or because other considerations preclude such repair or replacement. Under any of these circumstances there could be significant delinquencies in the payment of Special Taxes, and the value of the parcels may well depreciate. Legal Requirements. Other events that may affect the value of a parcel include changes in the law or application of the law. Such changes may include, without limitation, local growth control initiatives, local utility connection moratoriums and local application of statewide tax and governmental spending limitation measures. Development in the Community Facilities -41-

50 District may also be adversely affected by the application of laws protecting endangered or threatened species. Hazardous Substances. Any discovery of a hazardous substance detected on property within the Community Facilities District would affect the marketability and the value of some or all of the property in the Community Facilities District. In that event, the owners and operators of a parcel within the Community Facilities District may be required by law to remedy conditions of the parcel relating to releases or threatened releases of hazardous substances. The federal Comprehensive Environmental Response, Compensation and Liability Act of 1980, sometimes referred to as CERCLA or the Superfund Act, is the most well-known and widely applicable of these laws. State law with regard to hazardous substances are also applicable to property within the Community Facilities District and are as stringent as the federal laws. Under many of these laws, the owner (or operator) is obligated to remedy a hazardous substance condition of property whether or not the owner (or operator) has anything to do with creating or handling the hazardous substance. The effect, therefore, should any of the parcels be contaminated by a hazardous substance is to reduce the marketability and value of the parcel by the costs of remedying the condition, because the purchaser, upon becoming owner, will become obligated to remedy the condition just as is the seller. Although the School District is not aware of a current liability for a hazardous substance with respect to any of the parcels in the Community Facilities District, it is possible that such liabilities do currently exist and that the School District is not aware of them. Further, it is possible that liabilities may arise in the future with respect to any of the parcels within the Community Facilities District resulting from the existence, currently, on the parcel of a substance presently classified as hazardous but which has not been released or the release of which is not presently threatened, or may arise in the future resulting from the existence, currently, on the parcel of a substance not presently classified as hazardous but which may in the future be so classified. Further, such liabilities may arise not simply from the existence of a hazardous substance but from the method of handling it. All of these possibilities could significantly affect the value of a parcel within the Community Facilities District that is realizable upon a foreclosure sale. Other Possible Claims Upon the Value of Taxable Property While the Special Taxes are secured by the taxable property in the Community Facilities District, the security only extends to the value of such property that is not subject to priority and parity liens and similar claims. The table in the section entitled VALUE OF PROPERTY WITHIN THE COMMUNITY FACILITIES DISTRICT AND SPECIAL TAX BURDEN Overlapping Liens and Priority of Lien shows the presently outstanding amount of governmental obligations (with stated exclusions), the tax or assessment for which is or may become an obligation of one or more of the parcels of taxable property. The table also states the additional amount of general obligation bonds the tax for which, if and when issued, may become an obligation of one or more of the parcels of taxable property. The table does not specifically identify which of the governmental obligations are secured by liens on one or more of the parcels of taxable property. -42-

51 The School District, 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 Community Facilities District. Other governmental obligations may be authorized and undertaken or issued in the future, the tax, assessment or charge for which may become an obligation of one or more of the parcels of taxable property and may be secured by a lien on a parity with the lien of the Special Tax securing the Series A (2018) Bonds. The lien of the Special Tax 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 Community Facilities 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 School District, 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 Community Facilities District. Although the Special Taxes will generally have priority over non-governmental liens on a parcel of Taxable Property, regardless of whether the non-governmental liens were in existence at the time of the levy of the Special Tax or not, this result may not apply in the case of bankruptcy. Tax Cuts and Jobs Act The Tax Cuts and Jobs Act was enacted into law on December 22, 2017 (the Tax Act ). The Tax Act makes significant changes to many aspects of the Internal Revenue Code of 1986, as amended. For example, the Tax Act reduces the amount of mortgage interest expense and state and local income tax and property tax expense that individuals may deduct from their gross income for federal income tax purposes, which could increase the cost of home ownership within the Community Facilities District. This increase in the cost of home ownership could, in turn, have an adverse effect on the price of homes in the Community Facilities District, or the ability or willingness of homeowners to pay the Special Tax or property taxes. Enforcement of Special Taxes on Governmentally Owned Properties General. The ability of the School District to foreclose the lien of delinquent unpaid Special Tax installments may be limited with regard to properties in which the FDIC, the Drug Enforcement Agency, the Internal Revenue Service (the IRS ), or other federal agency has or obtains an interest. Federal courts have held that, based on the supremacy clause of the United States Constitution, in the absence of Congressional intent to the contrary, a state or local agency cannot foreclose to collect delinquent taxes or assessments if foreclosure would impair the federal government interest. The supremacy clause of the United States Constitution reads as follows: This Constitution, and the Laws of the United States which shall be made in Pursuance thereof; and all Treaties made, or which shall be made, under the Authority of the United States, shall be the supreme Law of the Land; and the Judges in every State shall be bound thereby, any Thing in the Constitution or Laws of any State to the contrary notwithstanding. -43-

52 This means that, unless Congress has otherwise provided, if a federal governmental entity owns a parcel that is subject to the Special Tax within the Community Facilities District but does not pay taxes and assessments levied on the parcel (including the Special Tax), 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 Community Facilities 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 Tax 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. The School District has not undertaken to determine whether any federal governmental entity currently has, or is likely to acquire, any interest (including a mortgage interest) in any of the parcels subject to the Special Tax within the Community Facilities District. No assurance can be given as to the likelihood that the risks described above will materialize while the Series A (2018) Bonds are outstanding. FDIC. If any financial institution making any loan secured by real property within the Community Facilities District is taken over by the FDIC, and prior thereto or thereafter the loan (or loans) goes into default, resulting in ownership of the property by the FDIC, then the ability of the School District to collect interest and penalties specified by State law and to foreclose the lien of delinquent unpaid Special Taxes may be limited. The FDIC s policy statement regarding the payment of state and local real property taxes (the Policy Statement ) provides that property owned by the FDIC is subject to state and local real property taxes only if those taxes are assessed according to the property s value, and that the FDIC is immune from real property taxes assessed on any basis other than property value. According to the Policy Statement, the FDIC will pay its property tax obligations when they become due and payable and will pay claims for delinquent property taxes as promptly as is consistent with sound business practice and the orderly administration of the institution s affairs, unless abandonment of the FDIC s interest in the property is appropriate. The FDIC will pay claims for interest on delinquent property taxes owed at the rate provided under state law, to the extent the interest payment obligation is secured by a valid lien. The FDIC will not pay any amounts in the nature of fines or penalties and will not pay nor recognize liens for such amounts. If any property taxes (including interest) on FDIC-owned property are secured by a valid lien (in effect before the property became owned by the FDIC), the FDIC will pay those claims. The Policy Statement further provides that no property of the FDIC is subject to levy, attachment, garnishment, foreclosure or sale without the FDIC s consent. In addition, the FDIC will not permit a lien or security interest held by the FDIC to be eliminated by foreclosure without the FDIC s consent. The Policy Statement states that the FDIC generally will not pay non-ad valorem taxes, including special taxes and assessments, on property in which it has a fee interest unless the amount of tax is fixed at the time that the FDIC acquires its fee interest in the property, nor will it recognize the validity of any lien to the extent it purports to secure the payment of any such -44-

53 amounts. Special taxes imposed under the Act and a special tax formula, which determines the special tax due each year, are specifically identified in the Policy Statement as being imposed each year and therefore covered by the FDIC s federal immunity. The Ninth Circuit issued a ruling on August 28, 2001, in which it determined that the FDIC, as a federal agency, is exempt from Mello-Roos special taxes. Prohibiting the lien of the Special Tax to be foreclosed out at a judicial foreclosure sale could reduce or eliminate the number of persons willing to purchase a delinquent parcel at a foreclosure sale. Exemptions and Reductions Under Special Tax Formula and the Act. Certain properties are exempt from the Special Tax in accordance with the Special Tax Formula and the Act, which provides that properties or entities of the state, federal or local government are exempt from the Special Tax; provided, however, that property within the Community Facilities 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. In addition, although the Act provides that if property subject to the Special Tax is acquired by a public entity through eminent domain proceedings, the obligation to pay the Special Tax with respect to that property is to be treated as if it were a special assessment, the constitutionality and operation of these provisions of the Act have not been tested, meaning that such property could become exempt from the Special Tax. Depletion of Reserve Subaccount; Draw on the Reserve Policy The Series A (2018) Bonds Reserve Subaccount is to be maintained at an amount equal to the Series A (2018) Bonds Reserve Requirement. See SECURITY FOR THE SERIES A (2018) BONDS Series A (2018) Bonds Reserve Subaccount. The School District has purchased the Series A (2018) Bonds Reserve Policy to satisfy the Series A (2018) Bonds Reserve Requirement. Draws on the Series A (2018) Bonds Reserve Policy and amounts, if any, in the Series A (2018) Bonds Reserve Subaccount will be used to pay principal of and interest on the Series A (2018) Bonds Bonds if insufficient funds are available from the proceeds of the levy and collection of the Special Tax against property within the Community Facilities District. If the Series A (2018) Bonds Reserve Subaccount is depleted, it can be replenished from the proceeds of the levy and collection of the Special Tax that exceed the amounts to be paid to the Series A (2018) Bond Owners under the Fiscal Agent Agreement. However, because the Special Tax levy is limited to the maximum annual Special Tax rates, it is possible that no replenishment would be possible if the Special Tax proceeds, together with other available funds, remain insufficient to pay all such amounts. Thus, it is possible that the Series A (2018) Bonds Reserve Subaccount will be depleted and not be replenished by the levy and collection of the Special Tax. Bankruptcy and Foreclosure Delays If sales or foreclosures of property are necessary, there could be a delay in payments to owners of the Series A (2018) Bonds pending such sales or the prosecution of foreclosure proceedings and receipt by the School District of the proceeds of sale if the Series A (2018) Bonds Reserve Subaccount of the Reserve Fund is depleted. See SECURITY FOR THE SERIES A (2018) BONDS Delinquent Payments; Covenant for Superior Court Foreclosure. -45-

54 The payment of the Special Tax and the ability of the School District to foreclose the lien of a delinquent unpaid Special Tax may also be limited by bankruptcy, insolvency or other laws generally affecting creditors' rights or by the laws of the State of California relating to judicial foreclosure. The various legal opinions to be delivered concurrently with the delivery of the Series A (2018) Bonds (including Bond Counsel's approving legal opinion) will be qualified as to the enforceability of the various legal instruments by bankruptcy, insolvency, reorganization, moratorium and other similar laws affecting creditors' rights, by the application of equitable principles and by the exercise of judicial discretion in appropriate cases. Other laws generally affecting creditors rights or relating to judicial foreclosure may affect the ability to enforce payment of Special Taxes or the timing of enforcement of Special Taxes. For example, the Soldiers and Sailors Civil Relief Act of 1940 affords protections such as a stay in enforcement of the foreclosure covenant, a six-month period after termination of military service to redeem property sold to enforce the collection of a tax or assessment and a limitation on the interest rate on the delinquent tax or assessment to persons in military service if the court concludes the ability to pay such taxes or assessments is materially affected by reason of such service. No Acceleration Provisions The Series A (2018) Bonds do not contain a provision allowing for their acceleration in the event of a payment default or other default under the terms of the Series A (2018) Bonds or the Fiscal Agent Agreement. Under the Fiscal Agent Agreement, a Bondowner is given the right for the equal benefit and protection of all Bondowners similarly situated to pursue certain remedies. So long as the Series A (2018) Bonds are in book-entry form, DTC will be the sole Bondowner and will be entitled to exercise all rights and remedies of Bondowners, in accordance with its procedures and rules. Loss of Tax Exemption As discussed under the caption LEGAL MATTERS Tax Exemption, interest on the Series A (2018) Bonds might become includable in gross income for purposes of federal income taxation retroactive to the date the Series A (2018) Bonds were issued as a result of future acts or omissions of the School District in violation of its covenants in the Fiscal Agent Agreement. The Fiscal Agent Agreement does not contain a special redemption feature triggered by the occurrence of an event of taxability. As a result, if interest on the Series A (2018) Bonds were to become includable in gross income for purposes of federal income taxation, the Series A (2018) Bonds would continue to remain outstanding until maturity unless earlier redeemed pursuant to optional redemption, mandatory sinking fund redemption or special mandatory redemption upon prepayment of the Special Taxes. IRS Audit of Tax-Exempt Bond Issues The IRS has initiated an expanded program for the auditing of tax-exempt bond issues, including both random and targeted audits. It is possible that the Series A (2018) Bonds will be selected for audit by the IRS. It is also possible that the market value of such Series A (2018) Bonds might be affected as a result of such an audit of such Series A (2018) Bonds (or by an audit of similar bonds or securities). -46-

55 Voter Initiatives Under the California Constitution, the power of initiative is reserved to the voters for the purpose of enacting statutes and constitutional amendments. Since 1978, the voters have exercised this power through the adoption of Proposition 13 and similar measures, including Proposition 218, which was approved in the general election held on November 5, 1996, and Proposition 26, which was approved on November 2, Proposition 218. Proposition 218 Voter Approval for Local Government Taxes Limitation on Fees, Assessments, and Charges Initiative Constitutional Amendment, added Articles XIIIC and XIIID to the California Constitution, imposing certain vote requirements and other limitations on the imposition of new or increased taxes, assessments and property-related fees and charges. Among other things, Section 3 of Article XIIIC states that... the initiative power shall not be prohibited or otherwise limited in matters of reducing or repealing any local tax, assessment, fee or charge. The Act prohibits a legislative body from adopting any resolution to reduce the rate of any special tax or terminate the levy of any special tax pledged to repay any debt incurred pursuant to the Act unless the legislative body determines that the reduction or termination of the special tax would not interfere with the timely retirement of that debt. Proposition 26. On November 2, 2010, California voters approved Proposition 26, entitled the Supermajority Vote to Pass New Taxes and Fees Act. Section 1 of Proposition 26 declares that Proposition 26 is intended to limit the ability of the State Legislature and local government to circumvent existing restrictions on increasing taxes by defining the new or expanded taxes as fees. Proposition 26 amended Articles XIIIA and XIIIC of the State Constitution. The amendments to Article XIIIA limit the ability of the State Legislature to impose higher taxes (as defined in Proposition 26) without a twothirds vote of the Legislature. Article XIIIC requires that all new local taxes be submitted to the electorate before they become effective. Taxes for general governmental purposes require a majority vote and taxes for specific purposes ( special taxes ) require a two-thirds vote. The Special Tax and the Series A (2018) Bonds were each authorized by not less than a two-thirds vote of the registered voters within the Community Facilities District who constituted the qualified electors at the time of such voted authorization, and the statute of limitations period for any challenges to the formation of the Community Facilities District and the levy of the Special Tax has expired. The School District believes, therefore, that issuance of the Series A (2018) Bonds does not require the conduct of further proceedings under the Act, Proposition 218 or Proposition 26. Like their antecedents, Proposition 218 and Proposition 26 have undergone, and are likely to undergo, both judicial and legislative scrutiny. For example, in August 2014, in City of San Diego. v. Melvin Shapiro, an Appellate Court invalidated an election held by the City of San Diego to authorize the levying of special taxes on hotels City-wide pursuant to a City charter ordinance creating a convention center facilities district which specifically defined the electorate to consist solely of (1) the owners of real property in the City on which a hotel is located, and (2) the lessees of real property owned by a governmental entity on which a hotel is located. The court held that such landowners and lessees are neither qualified electors of the City for purposes of Articles XIII A, Section 4 of the California Constitution, nor a proper electorate under Article XIIIC, Section 2(d) of the California Constitution. The court specifically noted that the decision did not require the court to -47-

56 consider the distinct question of whether landowner voting to impose special taxes under Section 53326(b) of the Act (which was the nature of the voter approval through which the Community Facilities District was formed) violates the California Constitution in districts that lack sufficient registered voters to conduct an election among registered voters. Accordingly, this case should have no effect on the levy of the Special Tax by the School District. The School District cannot predict the ultimate outcome or effect of any such judicial scrutiny, legislative actions, or future initiatives. These initiatives, and any future initiatives, may affect the collection of fees, taxes and other types of revenue by local agencies such as the School District. Subject to overriding federal constitutional principles, such collection may be materially and adversely affected by voter-approved initiatives, possibly to the extent of creating cash-flow problems in the payment of outstanding obligations such as the Series A (2018) Bonds. Secondary Market for Bonds There can be no guarantee that there will be a secondary market for the Series A (2018) Bonds or, if a secondary market exists, that any Series A (2018) Bonds can be sold for any particular price. Prices of bond issues for which a market is being made will depend upon thenprevailing circumstances. Such prices could be substantially different from the original purchase price. No assurance can be given that the market price for the Series A (2018) Bonds will not be affected by the introduction or enactment of any future legislation (including without limitation amendments to the Code), or changes in interpretation of the Code, or any action of the IRS, including but not limited to the publication of proposed or final regulations, the issuance of rulings, the selection of the Series A (2018) Bonds for audit examination, or the course or result of any IRS audit or examination of the Series A (2018) Bonds or obligations that present similar tax issues as the Series A (2018) Bonds. Potential Early Redemption of Bonds from Prepayments Property owners within the Community Facilities District are permitted to prepay their Special Taxes at any time. Such payments will result in a redemption of the Series A (2018) Bonds on the Interest Payment Date for which timely notice may be given under the Fiscal Agent Agreement following the receipt of the prepayment. The resulting redemption of Series A (2018) Bonds purchased at a price greater than par could reduce the otherwise expected yield on such Series A (2018) Bonds. Legal Opinion LEGAL MATTERS The legal opinion of Jones Hall, A Professional Law Corporation, San Francisco, California, Bond Counsel, approving the validity of the Series A (2018) Bonds will be made available to purchasers at the time of original delivery and is attached in substantially final form as APPENDIX D. -48-

57 Jones Hall, A Professional Law Corporation, San Francisco, California, is also serving as Disclosure Counsel to the School District. Kutak Rock LLP, Irvine, California, will pass upon certain legal matters for the Underwriters. Tax Matters Federal Tax Status. In the opinion of Jones Hall, A Professional Law Corporation, San Francisco, California, Bond Counsel, subject, however to the qualifications set forth below, under existing law, the interest on the Series A (2018) 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, although, in the case of tax years beginning prior to January 1, 2018, for the purpose of computing the alternative minimum tax imposed on certain corporations, such interest earned by a corporation prior to the end of its tax year in 2018 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 School District comply with all requirements of the Internal Revenue Code of 1986, as amended (the "Tax Code") relating to the exclusion from gross income for federal income tax purposes of interest on obligations such as the Series A (2018) Bonds. The School District has made certain representations and covenants in order to comply with each such requirement. Inaccuracy of those representations, or failure to comply with certain of those covenants, may cause the inclusion of such interest in gross income for federal income tax purposes, which may be retroactive to the date of issuance of the Series A (2018) Bonds. Tax Treatment of Original Issue Discount and Premium. If the initial offering price to the public at which a Series A (2018) Bond is sold is less than the amount payable at maturity thereof, then such difference constitutes "original issue discount" for purposes of federal income taxes and State of California personal income taxes. If the initial offering price to the public at which a Series A (2018) Bond is sold is greater than the amount payable at maturity thereof, then such difference constitutes "original issue premium" for purposes of federal income taxes and State of California personal income taxes. De minimis original issue discount and original issue premium are disregarded. Under the Tax Code, original issue discount is treated as interest excluded from federal gross income and exempt from State of California personal income taxes to the extent properly allocable to each owner thereof subject to the limitations described in the first paragraph of this section. The original issue discount accrues over the term to maturity of the Series A (2018) 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 Series A (2018) Bonds to determine taxable gain upon disposition (including sale, redemption, or payment on maturity) of such Series A (2018) Bond. The Tax Code contains certain provisions relating to the accrual of original issue discount in the case of purchasers of the Series A (2018) Bonds who purchase the Series A (2018) Bonds after the initial offering of a substantial amount of such maturity. Owners of such Series A (2018) Bonds should consult their own tax advisors with respect to the tax consequences of ownership of Series A (2018) 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 Series A (2018) Bonds under federal individual alternative minimum taxes. -49-

58 Under the Tax Code, original issue premium is amortized on an annual basis over the term of the Series A (2018) Bond (said term being the shorter of the Series A (2018) 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 Series A (2018) Bond for purposes of determining taxable gain or loss upon disposition. The amount of original issue premium on a Series A (2018) Bond is amortized each year over the term to maturity of the Series A (2018) 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 Series A (2018) Bond premium is not deductible for federal income tax purposes. Owners of premium Series A (2018) 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 Series A (2018) Bonds. California Tax Status. In the further opinion of Bond Counsel, interest on the Series A (2018) Bonds is exempt from California personal income taxes. Other Tax Considerations. Current and future legislative proposals, if enacted into law, clarification of the Tax Code or court decisions may cause interest on the Series A (2018) Bonds to be subject, directly or indirectly, to federal income taxation or to be subject to or exempted from state income taxation, or otherwise prevent beneficial owners from realizing the full current benefit of the tax status of such interest. The introduction or enactment of any such legislative proposals, clarification of the Tax Code or court decisions may also affect the market price for, or marketability of, the Series A (2018) Bonds. It cannot be predicted whether or in what form any such proposal might be enacted or whether, if enacted, such legislation would apply to bonds issued prior to enactment. The opinions expressed by Bond Counsel are based upon existing legislation and regulations as interpreted by relevant judicial and regulatory authorities as of the date of such opinion, and Bond Counsel has expressed no opinion with respect to any proposed legislation or as to the tax treatment of interest on the Series A (2018) Bonds, or as to the consequences of owning or receiving interest on the Series A (2018) Bonds, as of any future date. Prospective purchasers of the Series A (2018) Bonds should consult their own tax advisors regarding any pending or proposed federal or state tax legislation, regulations or litigation, as to which Bond Counsel expresses no opinion. Owners of the Series A (2018) Bonds should also be aware that the ownership or disposition of, or the accrual or receipt of interest on, the Series A (2018) Bonds may have federal or state tax consequences other than as described above. Other than as expressly described above, Bond Counsel expresses no opinion regarding other federal or state tax consequences arising with respect to the Series A (2018) Bonds, the ownership, sale or disposition of the Series A (2018) Bonds, or the amount, accrual or receipt of interest on the Series A (2018) Bonds. -50-

59 No Litigation At the time of delivery of and payment for the Series A (2018) Bonds, the School District will certify 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 School District 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 Series A (2018) Bonds, the application of the proceeds thereof in accordance with the Fiscal Agent Agreement, or the collection or application of the Special Tax to pay the principal of and interest on the Series A (2018) Bonds, or in any way contesting or affecting the validity or enforceability of the Series A (2018) Bonds, the Fiscal Agent Agreement or any action of the School District 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 School District or its authority with respect to the Series A (2018) Bonds or any action of the School District contemplated by any of said documents. CONTINUING DISCLOSURE The School District has covenanted for the benefit of owners of the Series A (2018) Bonds to provide certain financial information and operating data relating to the Community Facilities District by not later than nine months after the end of the School District s Fiscal Year (presently June 30) in each year (the Annual Report ) commencing with its report for the Fiscal Year (due April 1, 2019) and to provide notices of the occurrence of certain enumerated events. The Annual Reports and notice of a listed event will be filed with the Municipal Securities Rulemaking Board. The covenants of the School District have been made in order to assist the Underwriters in complying with Securities and Exchange Commission Rule 15c2-12(b)(5) (the Rule ). The specific nature of the information to be contained in the annual reports or the notices of listed events by the School District is summarized in APPENDIX E Forms of Continuing Disclosure Certificates. A review of the School District s compliance with prior continuing disclosure undertakings in the last five years identified a few instances of non-compliance, consisting of the late filing of certain rating changes. Such instance of non-compliance has been fully remediated. The identification of such instance of non-compliance is not a representation that the School District has made a determination that such instance is material under the Rule. The School District has engaged contract support for the preparation and filing of its continuing disclosure reports in order to help comply with future continuing disclosure obligations. RATINGS S&P Global Ratings, a Standard & Poor s Financial Services LLC Business ( S&P ) has assigned a rating of AA to the Series A (2018) Bonds, based on the understanding that the Bond Insurer will deliver the Policy upon delivery of the Series A (2018) Bonds. S&P has also assigned an underlying rating of A to the Series A (2018) Bonds. The ratings reflect only the view of S&P, and an explanation of the significance of the ratings, and any outlook assigned to or associated with the rating, should be obtained from S&P. The School District provided certain information and materials to S&P (some of which does not appear in this Official Statement) in connection with the application for a rating. -51-

60 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 these ratings will continue for any given period of time or that the ratings will not be revised downward or withdrawn entirely by S&P, if in its judgment, circumstances so warrant. Any such downward revision or withdrawal of any rating on the Series A (2018) Bonds may have an adverse effect on the market price or marketability of the Series A (2018) Bonds. UNDERWRITING The Series A (2018) Bonds are being purchased by Stifel, Nicolaus & Company, Incorporated, and Piper Jaffray & Co., as underwriters (the Underwriters ), at a purchase price of $5,653,325.80, which represents the aggregate principal amount of the Series A (2018) Bonds ($5,520,000.00) less an Underwriters discount of $69, and plus a net original issue premium of $202, Piper Jaffray & Co. has entered into a distribution agreement with Charles Schwab & Co., Inc. ( CS&Co. ) for the retail distribution of certain securities offerings at the original issue prices. Pursuant to the agreement, CS&Co. will purchase the Series A (2018) Bonds from Piper Jaffray & Co. at the original issue price less a negotiated portion of the selling concession applicable to any Series A (2018) Bonds that CS&Co. sells. The purchase agreement relating to the Series A (2018) Bonds provides that the Underwriters will purchase all of the Series A (2018) 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 Underwriters may offer and sell the Series A (2018) 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 Underwriters. FINANCIAL ADVISOR The School District has retained California Financial Services as its registered independent municipal advisor in connection with the planning, structuring and issuance of the Series A (2018) Bonds. California Financial Services is not obligated to undertake, and has not undertaken to make, an independent verification or assume responsibility for the accuracy, completeness, or fairness of the information contained in this Official Statement. The fees of the financial advisor are contingent upon the sale and delivery of the Series A (2018) Bonds. -52-

61 EXECUTION The execution and delivery of this Official Statement by the School District has been duly authorized by the Board of Trustees on behalf of the Community Facilities District. MANTECA UNIFIED SCHOOL DISTRICT COMMUNITY FACILITIES DISTRICT NO By: /s/ Dr. Clark Burke Superintendent -53-

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63 APPENDIX A RATE AND METHOD OF APPORTIONMENT OF SPECIAL TAX A-1

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65 EXHIBITC RATE AND METHOD OF ApPORTIONMENT OF SPECIAL TAX COMMUNITY FACILITIES DISTRICT No MANTECA UNIFIED SCHOOL DISTRICT, SAN JOAQUIN COUNTY, CALIFORNIA 1. BASIS OF SPECIAL TAX LEVY A Special Tax authorized under the Mello-Roos Community Facilities Act of 1982(the "Act") applicable to the land in Community Facilities District No (the "CFD") of the Manteca Unified School District (the "District") shall be levied and collected according to the tax liability determined by the District 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. "Actual Development" means the number and size of residential units or commercial/ industrial development developed on each Parcel, based on granting of building permits. "Administrative Expenses" means the following actual or reasonably estimated costs directly related to the administration of the CFD, including: Costs of computing Special Taxes and preparing annual Special Tax collection schedules (whether by the District or designee thereof or both); Costs of collecting the Special Taxes (whether by the County, the District, 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 District, CFD or any designee thereof of complying with arbitrage rebate requiremen ts: Costs to the District, CFD or any designee thereof of complying with IPA, District or obliged persons disclosure requirements; Costs associated with preparing Special Tax disclosure statements; Costs incurred in responding to public inquiries regarding the Special Taxes; nnldoc. print date

66 Manteca USO efo No Rate and Method March 22, 2005 Costs to the District, 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 District 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 Superintendent of the District, or designee. "Adjusted Annual Costs" means the result of subtracting Pay-As-You-Go Expenditures for Authorized Facilities to be constructed or acquired by the CFD from the Annual Costs for a given Fiscal Year. "Annexation Parcel" means any Parcel that is annexed to the CFD after the CFD is formed. "Annual Costs" means, for any Fiscal Year, the total of (i) (ii) (iii) (iv) Debt Service; Administrative Expenses for such Fiscal Year; Any amounts needed to replenish any bond reserve fund for Bonds of the District issued for the CFD to the level required under the Bond Indenture; An amount equal to the amount of delinquencies in payments of Special Taxes levied in the previous Fiscal Year and an amount for anticipated delinquencies for the 'current Fiscal Year; and (v) (vi) Current or expected future Pay-As-You-Go Expenditures for Authorized Facilities to be constructed or acquired by the CFD, Less any credit from earnings on the bond reserve fund, less credit for applicable development fees, less any reimbursements, and/or less the application of any funds available from Prepayments as described in SECTION 7. The first priority for the use of Special Tax revenues is the payment of Debt Service and Administrative Expenses. "Annual Special Tax Revenues" means the amount of Special Taxes required each Fiscal Year to pay the Annual Costs. "Approved Development" means the approximate number and size of residential units approved for each Undeveloped Parcel. In the case of Parcels with approved residential 2 13(,24 rlll1.dot". prilrl dll/;'" 31371:005

67 Manteca USD CFD No Rate and Method March 22, 2005 zoning, the number of approved dwelling units is defined as the maximum number of units which could be constructed on that site based on the parcel's size and zoning classification. "Assessor" means the Assessor of the County of San Joaquin. "Assessor's Parcel Number" means the Assessor's Parcel and Assessor's Parcel number as recorded by the Assessor on the equalized tax roll. "Assignment Date" means the date on which the Maximum Annual Special Tax Rate is adjusted by the Tax Escalation Factor. This date is June 1 prior to the Fiscal Year for which the Special Tax will be levied. "Authorized Facilities" means those facilities to be financed as identified in the resolution forming the CFD. "Backup Special Taxes" means Special Taxes which can be imposed on Undeveloped Parcels only in the event that levying the Maximum Annual Special Tax Rates on Developed Parcels produces insufficient revenue to pay the Adjusted Annual Costs. "Base Fiscal Year" means the Fiscal Year beginning July 1, 2005and ending June 30,2006. "Board" means the Board of Education of the District acting for the CFD under the Act. "Bond(s)" means bond(s) issued by the District under the Act for the CFD. "Bond Indenture" means the indenture, resolution, fiscal agent agreement, or other financing document pursuant to which the Bonds are issued. "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 Community Facilities District No ,Manteca Unified School District, San Joaquin County, California. "Class B Construction Index" is the cost index used by the State Allocation Board. "County" means the County of San Joaquin, California. "Debt Service" means for each Fiscal Year or Bond Year, the total amount of principal and interest for any Bonds, notes or certificates of participation of the District for the CFD during that Fiscal Year, less any applicable credits that may be available from any other sources 3 ").1('.:'4 1"IIII.Iiclf:, prillt dlllt' - 3/31/2005

68 Manteca USD CFD No Rate and Method March 22, 2005 available to the District to pay principal and interest for the previous or current Fiscal Year or Bond Year. "Developed Parcel" means a Parcel for which a building permit has been issued for construction of any residential or commercial/industrial use after the establishment of the CFD. Once classified as developed, no Parcel shall be removed from the developed classification. If an Undeveloped Parcel is issued one or more building permits for fewer residential units than the maximum number of units allowed by the Parcel's zoning classification, or for a lower amount of commercial/industrial development than allowed by the Parcel's zoning classification, the District may review the potential of that Parcel for additional residential units or commercial/industrial development. If such review determines that additional residential units or commercial/industrial development could legally and feasibly be constructed on that Parcel, that portion of the Parcel which is still developable shall remain classified as an Undeveloped Parcel. "Development Year" means, for each Developed Parcel, the Fiscal Year in which the Parcel changes classifications from Undeveloped Parcel to Developed Parcel. For a Parcel which so changed classifications during or after Original Base Fiscal Year but prior to the Base Fiscal Year, the Development Year shall be defined to be the Base Fiscal Year. "District" means the Manteca Unified School District, San Joaquin County, California. "ENR Index" means the Building Cost Index as printed by the Engineering News Record, as of the date of publication most immediately preceding the date of the calculation. If the Engineering News Record or the Building Cost Index ceases to be printed, the District shall select an alternative factor representing estimated increases in construction costs from the Base Fiscal Year. "Escalation Factor" means a factor equal to the lesser of the following two calculations: Calculation #1 is determined by dividing the ENR Index at the time of the Assignment Date of the Maximum Annual Special Tax Rate by the ENR Index for July Calculation #2 is determined by compounding the Expected Inflation Factor from the Base Fiscal Year to the time of the assignment of the Maximum Annual Special Tax Rate (in other words 1.04raised to the X power, where X equals the number of elapsed Fiscal Years since the Base Fiscal Year). "Expected Inflation Factor" means a factor equal to 1.04, which accounts for expected future annual inflation of 4 percent. 4 1.%~4 1' ,,',print tlafl" 3/31/2005

69 Manteca USD CFD No Rate and Method March 22, 2005 "Final Map" means a subdivision map, created under the provisions of the State Subdivision Map Act, that has been determined by the City of Lathrop, the City of Manteca, the County or any successor jurisdiction to have met all conditions of approval, including dedications of public use including streets, roads, parks, etc. "Fiscal Year" means a period starting July 1 and ending the following June 30. "Land Use Information" means the land use code contained in the Secured Property Tax Roll of the Assessor, in combination with records maintained by the District of the size of each dwelling unit in the CFD, and all land uses approved by the City of Lathrop, the City of Manteca, the County or any successor jurisdiction as of June 1 of each year. If no land use code has been assigned on the Secured Property Tax Roll or the code is incorrect, the District will assign the appropriate code based on its review of the status of the property. "Low-Income Parcel" means any parcel designated by the City of Manteca, City of Lathrop, or the County as meeting the health and safety code requirements pertaining to Low Income and/or moderate income housing. Low-Income Parcels are subject to a Maximum Annual Special Tax equal to one half of the Maximum Annual Special Tax for Non-Low Income Parcels until such Parcels are no longer designated as Low-Income Parcels. Low Income Parcel status only applies to single family residential development. "Maximum Annual Special Tax Rate" means the maximum Special Tax Rate per square foot and or dwelling unit that can be applied in any Fiscal Year to a Parcel for any Actual Development or Approved Development. If a Parcel contains Actual Development or Approved Development of multiple types, the appropriate Maximum Annual Special Tax Rate for each type of development can be applied to that Parcel. "Maximum Annual Special Tax Revenue" means the maximum amount of revenue that can be collected by levying the Maximum Annual Special Tax Rates against a group of Parcels within a specific classification, such as Developed Parcels. "Non-Law-Income Parcel" means any Taxable Parcel that is not classified as a Low-Income Parcel. "Original Base Fiscal Year" means the Fiscal Year beginning July 1, 2004, and ending June 30,2005. "Original Parcel" means a Parcel which existed within the boundaries of the CFD prior to formation of the CFD. "Outstanding Bonds" means the total principal amount of Bonds that have been issued and not fully repaid or legally defeased. 5 13(i:!4 nld.d(jf.l'rjllf dnk 3/311:!005

70 Mnnteca USD CFD No Rate lind Method March 22, 2005 "Parcel" means any Assessor's parcel in the CFD based on the equalized tax rolls of the County as of January 1 of each Fiscal Year. In the event one Assessor's parcel contains Actual Development with building permits granted in two or more Fiscal Years, each portion of the Assessor's parcel covered by the separate building permits shall be considered to be separate Parcels for the purposes of levying the Tax. In the event one Assessor's parcel contains both Actual Development and Approved Development, the Assessor's parcel shall be considered to be multiple Parcels for the purposes of levying the Tax. "Pay-As-You-Go Expenditure" means the use of annual Special Tax revenues to pay for Authorized Facilities. "Prepayment" means the permanent satisfaction of all or a specified portion of the Special Tax obligation for one or more Parcels by a cash settlement with the District as permitted under Government Code Section "Prepayment Parcel" means a Parcel which has had its entire Special Tax obligation satisfied with a Prepayment under SECTION7 hereof. Following a Prepayment, such a Parcel shall be thenceforth deemed to be a Tax-Exempt Parcel. "Public Parcel" means any Parcel that is, or is intended to be, publicly owned and would therefore normally be tax-exempt under California law, including public streets, schools, parks, public drainageways, landscaping, greenbelts, and open space. Any such Parcel is exempt from Special Taxes as described below, provided that leasehold/possessory interests shall be taxed. "Qualified Annuity" means an annuity, in which the District can invest Prepayment amounts or other CFD funds, which must be handled in such a fashion as not to cause the bonds to become arbitrage bonds under the Tax Reform Act of 1986,as may be amended. "Semi-Public Parcel" means any Parcel that, as of the formation of the CFO, was normally tax-exempt under California law because it supported a publicly owned and non-profit hospital, cemetery, or a building used exclusively for religious worship. Any such Parcel is exempt from Special Taxes as described below, provided that leasehold/possessory interests shall be taxed. "Senior Housing Parcel" means a parcel which contains one or more Senior Housing Units and no other residential units or other development. "Senior Housing Unit" means a residential unit which is limited through deed or other permanent restriction to usage by senior citizens. 6 13[124 rm1.t/ril.', prior dllll' 313 Ji2005

71 Manteca USD CFD No Rate and Method March 22, 2005 "Special Tax Rate" means the rate per square foot or per dwelling unit which is applied to each type of Actual Development or Approved Development on a Parcel in order to calculate the amount of Special Taxes which are due from that Parcel. "Special Tax(es)" mean(s) any tax levy under the Act in the CFD. "Square Feet" means a measurement of the habitable area contained within the perimeter of each individual residential unit, or the covered and enclosed area contained within the perimeter of a commercial structure on a given Parcel, which can be or has been developed on that Parcel based on a building permit, or other planning approval. This figure shall be determined in accordance with the standard practice of the District in calculating structural parameters. "Subdivision" means a division of a Parcel into a set of Successor Parcels in accordance with the State Subdivision Map Act. "Successor Parcel" means a Parcel created by Subdivision, lot line adjustment, Parcel map or other means from an Original Parcel. Once created, the Successor Parcel will be treated in the same manner as an Original Parcel in the creation of any additional Successor Parcels from such Successor Parcel. "Tax Collection Schedule" means the document prepared by the District for the County 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-Exempt Parcel" means a Parcel not subject to the Special Tax. Tax-Exempt Parcels include: (i) Public Parcels, (ii) Semi-Public Parcels, (iii) Senior Housing Parcels, and (iv) any Prepayment Parcel. Certain privately owned Parcels may also be exempt from the levy of Special Taxes induding common areas, wetlands and open space because they contain no residential units or commercial development. "Trustee" means the entity acting as the trustee or fiscal agent, as applicable, under the Bond Indenture. "Undeveloped-Final Map Parcel" means an Undeveloped Parcel created by an approved Final Map after the establishment of the CFD. This includes Parcels which have a Final Map recorded for a residential subdivision prior to June 1 of any year but have not yet been subdivided according to the County's records as of January 1 of that year. "Undeveloped Parcel" means a Parcel, or a portion of a Parcel, for which no building permit for residential, commercial or industrial structures has been granted after the 7 13l>:!4rllll.dm',l'rinl datr 3/

72 Mantem USD CFD No Rate and Method March 22, 2005 establishment of the CFD. This may include Parcels which have received building permits for residential, commercial or industrial structures prior to the establishment of the CFD. "Undeveloped-Planned Parcel" means an Undeveloped Parcel which has an approved tentative map for a residential subdivision or which has approved residential zoning, but does not yet have a Final Map recorded. "Utility Commitment" means all necessary sewer allocations, water allocations or similar commitments which are required before building permits can be issued for one or more residential units on a given Parcel. The records of the Cities of Lathrop and Manteca and the County and other relevant jurisdictions shall be used to determine if utility commitments have been granted to parcels within the CFD. If a residential unit can be developed with a septic system or otherwise does not require any utility commitments prior to the issuance of a building permit, that unit shall be considered to have all necessary utility commitments. 3. DETERMINATION OF PARCELS SUBJECT TO SPECIAL TAX The Special Tax shall be levied on the Parcels on the Assessor's records as of the end of each Fiscal Year based on the Land Use Information and the Maximum Annual Special Tax assigned to each Parcel by the District as of June 1 of each year. The District shall prepare a list of the Taxable Parcels in the CFD using the records of the Assessor and other records maintained by the District. The District shall select the Taxable Parcels from a list of all Parcels within the CFD using the procedure described below. A. 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. An exception to this may be made if Public Parcels, such as a school site, are relocated and previously Tax-Exempt Parcels become Taxable Parcels such that there is no net loss in Maximum Annual Special Tax Revenue. B. Exclude all parcels zoned for agriculture with no residential improvements based upon County Assessor's land use codes and District review of the status of the parcel. C. Exclude all Prepayment Parcels. D. The remaining Parcels shall be subject to the Special Tax according to the method detailed in SECTIONS. 13{i~4 rill1.1111(', Jlr;l//!lnt, 8 313J12005

73 Mmueca USD CFD No Rate and Method Mllrch 22, 2005 It shall be the burden of the taxpayer to correct any errors in the determination of the Parcels subject tidthe Special Tax and their Special Tax assignments. 4. TERMINATION OF THE SPECIAL TAX When all of the expenditures which may be incurred by the CFD to construct the Authorized Facilities have been paid and all bonds issued to pay such expenditures have been retired, the Special Tax shall cease to be levied on all Parcels. However, in no event shall the Special Tax be levied on any Parcel after Fiscal Year There is no limit on the number of years a Parcel can remain subject to the Special Tax as an Undeveloped Parrcel,nor shall the number of years a Parcel is subject to the Special Tax as an Undeveloped Parcel affect the period of time that Parcel may be subject to the Special Tax as a Developed Parcel. However, after a Parcel has paid the Special Tax for 29 years as a Developed Parcel, the Special Tax shall cease to be levied on that Parcel. When the Special Tax ceases to be levied on one or more Parcels in accordance with the procedures above, the District shall prepare a list of all such Parcels, and provide this list to the Board. The Board shall then direct the County Clerk to record a Notice of Cessation of Special Tax for all Parcels on the list. 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, recorded on the County Recorder's rolls, is extinguished. The Notice of Cessation of Special Tax shall additionally identify 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. CLASSIFICA non OF PARCELS Each Fiscal Year, using the Definitions above, the Parcel records of the Assessor's Secured Tax Roll as of January I, and other Land Use Information, the District shall cause: 1. Each Parcel tiobe classified as a Tax-Exempt Parcel or a Taxable Parcel; 2. Each Taxable Parcel to be further classified as a Developed Parcel or an Undeveloped Parcel; 3. Each Developed Parcel to be further classified as a Low-Income Parcel or a Non-Low Income Parcel; and 4. Each Undeveloped Parcel to be further classified as an Undeveloped-Final Map Parcel or an Undeveloped-Planned Parcel. 9 13(.~,' 1"1II1.d(I(,print dull' /~005

74 Mnnteca USD CFD No Rntr and Method Mnrch 22, 2005 The District shall make every effort to correctly determine the Parcels subject to the tax. It shall be the burden of the taxpayer to correct any errors in the determination of the Parcels subject to the tax and their classifications. B. ASSIGNMENT OF MAXIMUM ANNUAL SPECIAL TAXES The District shall then assign the appropriate Taxable Parcel as follows: Maximum Annual Special Taxes to each 1. Escalate Maximum Annual Special Tax Rates Escalate the Maximum Annual Special Tax Rates for the Base Year, as shown on ATTACHMENiT1, by the Escalation Factor. Use the escalated Maximum Annual Special Tax Rates in assigning the Maximum Annual Special Taxes, as detailed below. 2. Undeveloped Parcels The District shall assign the Maximum Annual Special Tax for each Undeveloped Parcel by multiplying the applicable escalated Maximum Annual Special Tax Rates times the amount of Approved Development with Utility Commitments on each Undeveloped Parcel. 3. Developed Parcels a. Develo~ment Year. The District shall assign the Maximum Annual Special Tax for each Developed Parcel in its Development Year by multiplying the applicable escalated Maximum Annual Special Tax Rates by the amount of Actual Development for each Developed Parcel. If any Approved Development remains on the Parcel, the relevant portion of the Parcel shall be treated as an Undeveloped Parcel. b. Fiscal Yfars following the Development Year. The Maximum Annual Special Tax for a Developed Parcel shall not be increased after the Development Year. The only change in the Maximum Annual Special Tax for a Developed Parcel shall occur if a Prepayment occurs after the Development Year in accordance with SECTION 7 below. If additional building permits are granted for a Developed Parcel, the relevant portion of the Parcel shall be treated as a separate Parcel. C. CONVERSION OF A TAX-EXEMPT PARCEL TO A TAXABLE PARCEL If a Parcel determined to be a Tax-Exempt Parcel is later converted to a private use, it shall become subject to the Special Tax. The Maximum Annual Special Tax Rate or Rates for such a Parcel shall be assigned according to the steps described above for Undeveloped Parcels (1~4,.1II1.dor. prillt,/lltl" 3/31/2005

75 Mantem USO efo No Rate and Method March 22, 2005 D. A 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 SpecialTax unless the Special Tax obligation is satisfied pursuant to Section of the Government Code. An exception to this may be made, in connection with such acquisition, if a Tax-Exempt Parcel becomes a Taxable Parcel, there is no net loss in Maximum CFD Revenue, and the Administrator agrees to the transfer. E. ANNEXA non PARCELS A Parcel may be annexed to the CFD after the CFD has been formed. In the event a Taxable Parcel is annexed to the CFD, the Maximum Annual Special Tax will be assigned using the provisions of this section. 6. CALCULATING ANNUAL SPECIAL TAXES The District shall annually calculate the Special Tax for each Taxable Parcel as follows: A Compute the Annual Costs using the definition of Annual Costs in SECTION2. B. Calculate the Special Tax for each Taxable Parcel by the following steps: STEP1: Compute the Maximum Annual Special Tax Revenues which could be collected from all Developed Parcels by summing the Maximum Annual Special Tax for each Developed Parcel assigned in SECTION5. STEP2: STEP3: STEP4: If the Annual Costs are less than the Maximum Annual Special Tax Revenues from Developed Parcels as calculated in STEP1, decrease proportionately the Special Tax levy for each Developed Parcel until the Special Tax Revenues equals the Annual Costs. [Note: the Special Tax assigned to n Developed Parcel that is a single family residential Parcel shall not be increased by more than ten percent (10%) from the previous year if the increase is due to Special Tax delinquencies of other Parccls.] If the Maximum Annual Special Tax Revenue from Developed Parcels are less than Annual Costs but are greater than the Adjusted Annual Costs, the Special Tax levy for each Developed Parcel shall be calculated based on the Maximum Annual Special Tax for each Parcel assigned in SECTION5. If the Adjusted Annual Costs are greater than the Maximum Annual Special Tax Revenues from Developed Parcels, calculate Backup Special Taxes for Undeveloped-Final Map Parcels by applying equal proportions of the Maximum 11 ]3(,].1 rml.lfclt"l'ril1l dille 31311'2005

76 Manteca usa CFO No Rate and Method March 22, 2005 Annual Special Tax for each Undeveloped-Final Map Parcel until the total of the Special Tax revenues from Developed Parcels and Undeveloped-Final Map Parcels equals the amount of Adjusted Annual Costs, or until the Maximum Annual Special Tax is reached for all Undeveloped-Final Map Parcels. STEP5: If the Adjusted Annual Costs are greater than the Maximum Annual Special Tax Revenues obtainable from Developed Parcels and Undeveloped-Final Map Parcels, calculate Backup Special Taxes for Undeveloped-Planned Parcels by applying equal proportions of the Maximum Annual Special Tax for each Undeveloped Planned Parcel until the total of the Special Tax revenues from Developed Parcels, Undeveloped-Final Map Parcels and Undeveloped-Planned Parcels equals the amount of Adjusted Annual Costs, or until the Maximum Annual Special Tax is reached for all Undeveloped-Planned Parcels. C. Levy on each Taxable Parcel the amount calculated in STEPS1-5 above. In the event that one Assessor's Parcel Number contains more than one Parcel based on the definition in SECTION2, aggregate the separate amounts calculated for each such Parcel. D. Prepare the Tax Collection Schedule listing the tax levy for each Assessor's parcel and send it to the appropriate county official 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 for such inclusion. The District shall make every effort to correctly assign the Special Tax Rate and calculate the annual Tax liability 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. 7. PREPAYMENT OF SPECIAL TAX OBLIGATION With a Prepayment, a landowner may permanently satisfy the entire Special Tax obligation for one or more Parcels. By exercising the right to Prepayment, a landowner can eliminate the future annual Special Tax liability for one or more Parcels. Prepayment is permitted based on the following conditions: Any landowner who wishes to exercise the right to a Prepayment for a Parcel must pay any and all delinquent special taxes and penalties attributable to that Parcel no later than the time of the Prepayment. After a building permit is issued, developers have an absolute right to make a Prepayment by the earlier of the following two dates: 12 J3{'~4rllll.ci(l(. prinl/illft' 31311:!CXJS

77 Manteca USO efo No Rate and Method Mnrch 22, 2005 (1) at the close of escrow on the initial sale of the Parcel as a Developed Parcel, or (2) the June 15th immediately preceding the Fiscal Year for which the Special Tax would otherwise be levied for the first time on the prepaying Parcel as a Developed Parcel if the Parcel had not elected to prepay. After the initial close of escrow on a Developed Parcel, Parcel owners may make Prepayment between May 1 and June 15 of any year. Such Prepayment shall only be permitted if the District determines that the Prepayment for a Developed Parcel after the initial close of escrow on the Developed Parcel does not jeopardize the District's ability to make timely payments of Debt Service on Outstanding Bonds The Prepayment amount shall be established by the District through the following steps: STEP1: Determine the Maximum Annual Special Tax which, if no Prepayment was made, would apply to the Parcel during the following Fiscal Year, based on the assignment procedure described in SECTION 5 above. STEP2: At the District's discretion, the District may reduce the Maximum Annual Special Tax by the delinquency coverage factor and increase the Maximum Annual Special Tax by a factor sufficient to cover the higher of (i) the average annual tax delinquency rate for property in the CFD over the previous five Fiscal Years, or (ii) the average annual tax delinquency rate for property in the District as a whole over the previous five Fiscal Years. STEP3a: Calculate the annual revenue which would be produced by the Maximum Annual Special Tax, based on the Tax determined in STEP2, from the date of Prepayment up to and including the final payment which would satisfy the full 29-year Special Tax obligation of that Parcel, or if all bonds of the CFD have been issued, until the last maturity date of outstanding bonds. STEP3b: In the event that all Authorized Facilities have been provided, the District determines that all Bonds of the CFD have been issued, and the future Debt Service, through the maturity of all Outstanding Bonds, is known with certainty, the Prepayment amount shall be determined by calculating the present value of the annual taxes which would otherwise be collected from the affected Parcel up to and including the final payment which would satisfy the full 29-year Special Tax obligation of that Parcel or until the maximum term of all Bonds, whichever period is shorter, if no Prepayment took place. STEP4: Calculate the present value of the annual revenue stream determined in STEP3a or 3b. The present value shall be calculated using that discount rate which, when the Prepayment is invested in actually available approved investments (as specified by 13 73('24 I'IIJ l.t1(i{.'.l'r;ii' dll'(" 3131/2005

78 Mnnteca USD CFD No Rnte and Method Mnrch 22, 2005 the resolution authorizing the issuance of Bonds) earning a rate of interest equal to the discount rate, would produce annual revenues equal to the amounts calculated in STEP3a or 3b. The discount rate may not exceed the Bond yield as determined by the Tax Reform Act of 1986,as may be amended. STEP6: Determine the amount of a Prepayment by adding to the present value calculated in STEP4 any fees, call premiums, or expenses which would be expected to be incurred by the City in connection with the calculation or application of the proceeds of a Prepayment. 8. RECORDS MAINTAINED FOR THE CFD As development in the CFD takes place, the District will maintain a file containing records of the following information for each Parcel: the current Assessor's Parcel Number; the amount of Approved Development, as apportioned from Original Parcels to Successor Parcels; any changes in the amount of Approved Development or Actual Development; the Maximum Annual Special Tax Rates and Maximum Annual Special Taxes which applied in each Fiscal Year; and the authorized Annual Special Taxes levied in each Fiscal Year. For each Developed Parcels, the District shall further maintain records of : the Parcel's Development Year; and the Maximum Annual Special Tax Rates and Maximum Annual Special Taxes which applied in the Parcel's Development Year. The file containing the information listed above will be available for public inspection. The District will prepare an itemized list of the Annual Costs for each Fiscal Year. This list will indicate which facilities are to be paid for out of Special Taxes, will account for State and other funding, and other applicable credits. The District shall also prepare a companion report which shows the number of developed units, the number of students enrolled in Manteca Unified School District from within CFD ,and the projected need for additional facilities. This itemization of Annual Costs and the companion report shall be approved annually by the Board and shall be attached to the Special Tax Report which apportions and levies the Tax in each Fiscal Year. The Special Tax Report shall be completed by July 15th or as soon thereafter as is possible each year. 14

79 Manteca USD CFD No Rate and Method March 22, APPEALS Any taxpayer who feels that the amount of the Special Tax assigned to a Parcel is in error may file a notice with the District appealing the levy of the Special Tax. The District will then promptly review the appeal, and if necessary, meet with the applicant. If the District 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 (';]4 nll1.dclf:. print d,rtf' - 3!31/~005

80 Attachment 1 Manteca Unified School District Mello-Roos Community Facilities District - CFD Base Fiscal Year Maximum Annual Special Tax Rates Land Use Type [1J Maximum Annual Special Tax Rate [2J Notes Developed Parcels Non-Low-Income Parcels Multifamily dwelling units Single-Family dwelling units Commercialllndustrial Parcels Base Fiscal Year $0.396 per sq ft $0.600 per sq ft [3] [3] [4] Low-Income Parcels Single Family dwelling units $0.300 per sq ft [3J Undeveloped Parcels Backup Tax Only Undeveloped-Final Map Parcels Zoning Class R-1 Zoning Classes R-2, R-3, R-4 Undeveloped-Planned Parcels Zoning Class R-1 Zoning Classes R-2, R-3, R-4 per approved dwelling $ unit per approved dwelling $ unit per approved dwelling $ unit per approved dwelling $49.50 unit (5J [5] [5] [5] [1JParcels are considered Developed Parcels when building permits are received. [2] Maximum Annual Tax Rates shall be increased in accordance with the Escalation Factor presented in the definitions in Section 2. [3] The Maximum Annual Special Tax for the Base Year is capped at $1, per unit in the Base Fiscal Year regardless of unit size. This amount is increased by the Tax Escalation Factor in each Fiscal Year after the Base Fiscal Year. [4] Commerciallindustrial parcels in CFD are expected to contribute to school construction funding requirement through development fees authorized by Government Code Sections and and will not be subject to the Special Tax. [5] These parcels are liable for a Backup Special Tax only. Any required Backup Special Tax will be levied only on approved residential units with utility commitments. 16 J3li24 nn1.do...l'rillt dete

81 APPENDIX B SAN JOAQUIN COUNTY AND CITY OF LATHROP DEMOGRAPHIC INFORMATION The following information concerning the City of Lathrop (the City ) (the city in which the Community Facilites District is primarily located) and San Joaquin County (the County ) is included only for the purpose of supplying general information regarding the area of the Community Facilities District. The Series A (2018) Bonds are not a debt of the City, the School District, the County, the State of California (the State ) or any of its political subdivisions, and neither the City, the School District, the County, the State nor any of its political subdivisions is liable therefor. General The City. The City is centrally located in the State, in the San Joaquin Valley between the San Francisco Bay Area and the Sierra Nevada foothills. The City is located one hour east of the San Francisco Bay Area and one hour south of Sacramento, the State capital. Four freeways provide access to the City: U.S. Interstate 5 which links the Pacific states from Mexico to Canada; U.S. Interstate 205, which connects U.S. Interstate 5 to U.S. Interstate 580; State Route 120, which is the primary east-west corridor in the School District; and State Route 99, which provides a north-south alternative to U.S. Interstate 5 for most of California s Central Valley. The County. The County was established by an act of the State Legislature on February 18, 1850, as one of California s original 27 counties. The area of the County is 1,448 square miles, and it is the fifteenth largest county in the State, as measured by population. The County seat is the City of Stockton, with a population of 315,103 in 2018 and an area of 55.1 square miles. Population The following sets forth the City and County population estimates as of January 1 for the years 2014 to CITY OF LATHROP AND COUNTY OF SAN JOAQUIN Population Estimates Calendar Years 2014 through 2018 Area Escalon 7,245 7,332 7,353 7,479 7,558 Lathrop 20,065 21,022 22,500 23,384 24,268 Lodi 63,975 64,415 64,920 65,911 67,121 Manteca 73,266 75,211 77,360 79,349 81,345 Ripon 14,750 14,868 14,993 15,565 15,847 Stockton 300, , , , ,103 Tracy 86,495 88,074 89,591 91,051 92,553 Balance of County 146, , , , ,949 County Total 712, , , , ,744 Source: State of California Department of Finance, Demographic Research Unit (as of January 1). B-1

82 Employment and Industry The unemployment rate in the County was 6.0% in July 2018, down from a revised 6.3% in June 2018, and below the year-ago estimate of 7.1%. This compares with an unadjusted unemployment rate of 4.4% for the State and 4.1% for the nation during the same period. The County is part of the Stockton-Lodi Metropolitan Statistical Area (the MSA ). Set forth below is data from 2013 through 2017, reflecting the MSA's civilian labor force, employment, and unemployment. STOCKTON-LODI MSA (San Joaquin County) Annual Average Civilian Labor Force, Employment and Unemployment, Employment by Industry (March 2017 Benchmark) Civilian Labor Force (1) 313, , , , ,900 Employment 274, , , , ,200 Unemployment 38,500 32,900 27,900 25,700 22,600 Unemployment Rate 12.3% 10.5% 8.9% 8.1% 7.0% Wage and Salary Employment: (2) Agriculture 16,100 15,700 16,700 16, Mining and Logging Construction 8,800 8,900 10,100 11,100 11,500 Manufacturing 17,900 18,500 18,600 18,700 19,200 Wholesale Trade 11,100 11,100 11,400 11,600 12,100 Retail Trade 25,600 25,700 26,000 26,600 26,800 Transportation, Warehousing and Utilities 17,200 18,300 20,400 22,800 26,700 Information 2,100 2,100 1,900 2,000 1,900 Finance and Insurance 5,000 4,900 4,800 4,800 4,900 Professional and Business Services 17,400 18,300 19,400 19,400 19,000 Educational and Health Services 35,500 35,900 36,500 37,200 38,000 Leisure and Hospitality 18,200 19,100 19,700 20,300 21,400 Other Services 6,600 6,900 7,200 7,600 7,900 Federal Government 3,500 3,100 3,000 3,000 3,100 State Government 4,300 5,800 6,200 6,400 6,600 Local Government 29,300 29,600 30,400 31,500 32,400 Total, All Industries (3) 221, , , , ,900 (1) Labor force data is by place of residence; includes self-employed individuals, unpaid family workers, household domestic workers, and workers on strike. (2) Industry employment is by place of work; excludes self-employed individuals, unpaid family workers, household domestic workers, and workers on strike. (3) Columns may not add to totals due to rounding. Source: State of California Employment Development Department. B-2

83 Major Employers The following table lists the principal employers within the City as of June 30, CITY OF LATHROP Principal Employers for Fiscal Year Ended June 30, 2017 Number of Employer Employees California Natural Products 500 Super Store Industries 500 Diamond Pet Foods Inc. 500 Swiss American Sausage CO 250 J R Simplot CO 250 Pilkington North America Inc 250 Cbc Steel Buildings 250 Home Depot 250 Food 4 Less 250 Target 250 Source: City of Lathrop, Comprehensive Annual Financial Report, Fiscal Year Ended June 30, B-3

84 The major employers in the County as of May 2018 are shown below in alphabetical order without regard to the number of employees. SAN JOAQUIN COUNTY Major Employers as of May 2018 Employer Name Location Industry Amazon Corpnet Tracy Distribution Centers Blue Shield of California Lodi Insurance Dameron Hospital Stockton Hospitals Derby International Not Available Telecommunication Services Deuel Vocational Institution Tracy City Govt-Correctional Institutions Division of Juvenile Justice Stockton Government Offices Foster Care Svc Stockton Government Offices Inland Flying Svc Stockton Aircraft Servicing & Maintenance Leprino Foods Co Tracy Cheese Processors) Lodi Health Home Health Agency Lodi Home Health Service Lodi Memorial Hospital Lodi Hospitals Morada Produce Stockton Fruits & Vegetables North Ca Correctional Youth Not Available Police Departments O-G Packing & Cold Storage Co Stockton Fruits & Vegetables Pacific Coast Producers Lodi Canning Prima Frutta Packing Inc Linden Fruit & Produce Safeway Distribution Ctr Tracy Distribution Centers San Joaquin County Human Svc Stockton Government Offices San Joaquin General Hospital French Camp Hospitals San Joaquin Sheriff s Office French Camp Government Offices Sjgov Stockton Government Offices St Joseph s Cancer Ctr Stockton Cancer Treatment Centers University of the Pacific Stockton Schools-Accounting Walmart Supercenter Stockton Department Stores Waste Management Lodi Consultants-Business NEC Source: California State Employment Development Department, extracted from the America's Labor Market Information System (ALMIS) Employer Database, st Edition. B-4

85 Effective Buying Income Effective Buying Income is defined as personal income less personal tax and nontax payments, a number often referred to as disposable or after-tax income. Personal income is the aggregate of wages and salaries, other labor-related income (such as employer contributions to private pension funds), proprietor's income, rental income (which includes imputed rental income of owner-occupants of non-farm dwellings), dividends paid by corporations, interest income from all sources, and transfer payments (such as pensions and welfare assistance). Deducted from this total are personal taxes (federal, state and local), nontax payments (fines, fees, penalties, etc.) and personal contributions to social insurance. According to U.S. government definitions, the resultant figure is commonly known as disposable personal income. The following table summarizes the median household effective buying income for the City, the County, the State and the United States for 2013 through CITY OF LATHROP AND SAN JOAQUIN COUNTY, STATE OF CALIFORNIA AND UNITED STATES Median Household Effective Buying Income 2013 through City of Lathrop $54,200 $51,072 $52,296 $57,792 $58,359 San Joaquin County 43,204 44,235 46,491 48,149 49,883 California 48,340 50,072 53,589 55,681 59,646 United States 43,715 45,448 46,738 48,043 50,735 Source: The Nielsen Company (US), Inc. B-5

86 Commercial Activity The following table shows the annual volume of permits and taxable transactions within the City from 2012 through Annual figures are not yet available for CITY OF LATHROP Taxable Retail Sales Number of Permits and Valuation of Taxable Transactions (Dollars in thousands) Retail Stores Total All Outlets Number of Permits Taxable Transactions Number of Permits Taxable Transactions $162, $221, , , , , (1) , , , ,572 (1) Permit figures for calendar year 2015 are not comparable to that of prior years due to outlet counts in these prior year reports including the number of outlets that were active during the reporting period. Retailers that operate part-time are now tabulated with store retailers. Source: California State Board of Equalization, Taxable Sales in California (Sales & Use Tax). The following table shows the annual volume of permits and taxable transactions within the County from 2012 through Annual figures are not yet available for SAN JOAQUIN COUNTY Taxable Retail Sales Number of Permits and Valuation of Taxable Transactions (Dollars in thousands) Retail Stores Total All Outlets Number of Permits Taxable Transactions Number of Permits Taxable Transactions ,524 $6,124,320 12,613 $9,010, ,754 6,519,537 12,752 9,466, ,900 6,780,160 12,865 10,031, (1) 4,958 6,986,878 14,255 10,467, ,480 7,380,226 14,682 10,911,271 (1) Permit figures for calendar year 2015 are not comparable to that of prior years due to outlet counts in these prior year reports including the number of outlets that were active during the reporting period. Retailers that operate part-time are now tabulated with store retailers. Source: California State Board of Equalization, Taxable Sales in California (Sales & Use Tax). B-6

87 Construction Activity years. The tables below summarize building activity in the City and the County for the past five CITY OF LATHROP Building Activity and Valuation Fiscal Years 2012 through 2016 (Dollars in thousands) Permit Valuation: New Single-family $19,693.5 $47,728.7 $107,103.1 $45,387.0 $87,807.0 New Multi-family Res. Alterations/Additions , , Total Residential $20,114.8 $47,774.7 $108,286.4 $46,526.1 $88,349.8 New Commercial $1,332.5 $563.0 $253.0 $77,898.5 $11,834.4 New Industrial , New Other , , ,418.9 Com. Alterations/Additions 12, , , ,645.1 Total Nonresidential $14,329.9 $623.0 $30,364.3 $93,997.0 $42,898.4 New Dwelling Units: Single Family Multiple Family TOTAL Source: Construction Industry Research Board, Building Permit Summary. SAN JOAQUIN COUNTY Building Activity and Valuation Fiscal Years 2012 through 2016 (Dollars in thousands) Permit Valuation: New Single-family $264,761.1 $318,760.1 $455,877.1 $467,494.7 $652,308.1 New Multi-family 7, , , , ,635.8 Res. Alterations/Additions 28, , , , ,489.3 Total Residential $301,127.8 $401,998.1 $547,434.8 $633,339.1 $758,433.2 New Commercial $158,299.3 $42,976.5 $177,272.0 $218,485.4 $357,856.9 New Industrial 1, , , , ,728.4 New Other 21, , , , ,794.7 Com. Alterations/Additions 79, , , , ,172.8 Total Nonresidential $260,049.1 $203,784.2 $500,627.0 $625,273.7 $834,552.8 New Dwelling Units Single Family 1,062 1,214 1,698 1,754 2,078 Multiple Family TOTAL 1,136 1,233 2,085 2,304 2,594 Source: Construction Industry Research Board, Building Permit Summary. B-7

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89 APPENDIX C FORM OF OPINION OF BOND COUNSEL November 14, 2018 Board of Trustees Manteca Unified School District 2271 W. Louise Avenue Manteca, California OPINION: $5,520,000 Manteca Unified School District Community Facilities District No Series A (2018) Special Tax Bonds Members of the Board of Trustees: We have acted as bond counsel to the Manteca Unified School District (the School District ), the Board of Trustees of which (the Board ) acts as the legislative body of Community Facilities District No of the School District (the Community Facilities District ) in connection with the issuance by the School District of the special tax bonds captioned above (the Bonds ). In such capacity, we have examined such law and such certified proceedings, certifications and other documents as we have deemed necessary to render this opinion. The Bonds are issued 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 Board adopted on October 9, 2018 (the Resolution ), and a Fiscal Agent Agreement dated as of November 1, 2018 (the Fiscal Agent Agreement ), between the School District and the Bank of New York Mellon Trust Company, N.A., as Fiscal Agent (the Fiscal Agent ). Under the Fiscal Agent Agreement, the School District has pledged certain special tax revenues ( Special Tax Revenues ) for the payment of principal, premium (if any) and interest on the Bonds when due. Regarding questions of fact material to our opinion, we have relied on representations of the School District 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 on the foregoing, we are of the opinion that, under existing law: 1. The Community Facilities District is a community facilities district duly created and validly existing under the Constitution and the laws of the State of California. 2. The School District is a duly created and validly existing school district with the power to adopt the Resolution, enter into the Fiscal Agent Agreement and perform the agreements on its part contained therein, and issue the Bonds. C-1

90 3. The Fiscal Agent Agreement has been duly authorized, executed and delivered by the School District, and constitutes a valid and binding obligation of the School District, enforceable against the School District. 4. The Fiscal Agent Agreement creates a valid lien on the Net Special Taxes and other funds pledged by the Fiscal Agent Agreement for the security of the Bonds. 5. The Bonds have been duly authorized and executed by the School District and are valid and binding limited obligations of the School District, payable solely from the Special Tax Revenues and other funds provided therefor in the Fiscal Agent Agreement. 6. The interest on the Bonds is excluded from gross income for federal income tax purposes and is not an item of tax preference for purposes of the federal alternative minimum tax, although, in the case of tax years beginning prior to January 1, 2018, for the purpose of computing the alternative minimum tax imposed on certain corporations, such interest earned by a corporation prior to the end of its tax year in 2018 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 School District comply with all requirements of the Internal Revenue Code of 1986, as amended, relating to the exclusion from gross income for federal income tax purposes of interest on obligations such as the Bonds. The School District has made certain representations and covenants in order to comply with each such requirement. Inaccuracy of those representations, or failure to comply with certain of those covenants, may cause the inclusion of such interest in gross income for federal income tax purposes, which may be retroactive to the date of issuance of the Bonds. 7. The interest on the Bonds is exempt from personal income taxation imposed by the State of California. We express no opinion regarding any other tax consequences arising with respect to the ownership, sale or disposition of, or the amount, accrual or receipt of interest on, the Bonds. The rights of the owners of the Bonds and the enforceability of the Bonds and the Fiscal Agent Agreement are limited by bankruptcy, insolvency, reorganization, moratorium and other similar laws affecting creditors' rights generally, and by equitable principles, whether considered at law or in equity. This opinion is given as of the date hereof, and we assume no obligation to revise or supplement this opinion to reflect any facts or circumstances that may hereafter come to our attention, or any changes in law that may hereafter occur. Our engagement with respect to this matter has terminated as of the date hereof. Respectfully submitted, A Professional Law Corporation C-2

91 APPENDIX D FORM OF CONTINUING DISCLOSURE CERTIFICATE $5,520,000 MANTECA UNIFIED SCHOOL DISTRICT COMMUNITY FACILITIES DISTRICT NO SERIES A (2018) SPECIAL TAX BONDS This CONTINUING DISCLOSURE CERTIFICATE (this Disclosure Certificate ), dated as of November 1, 2018 is executed and delivered by the MANTECA UNIFIED SCHOOL DISTRICT (the School District ), for and on behalf of the Manteca Unified School District Community Facilities District No (the Community Facilities District ), in connection with the execution and delivery of its Manteca Unified School District Community Facilities District No Series A (2018) Special Tax Bonds, (the Series A (2018) Bonds ). The Series A (2018) Bonds are being executed and delivered pursuant to a Fiscal Agent Agreement, dated as of November 1, 2018 (the Fiscal Agent Agreement ), by and between the School District and The Bank of New York Mellon Trust Company, N.A., as fiscal agent (the Fiscal Agent ). The School District covenants and agrees, for and on behalf of the Community Facilities District, as follows: Section 1. Definitions. In addition to the definitions set forth above and in the Fiscal Agent Agreement, which apply to any capitalized term used in this Disclosure Certificate unless otherwise defined herein, the following capitalized terms shall have the following meanings: Annual Report means any Annual Report provided by the School District pursuant to, and as described in, Sections 2 and 3 of this Disclosure Certificate. Annual Report Date means the date that is nine months after the end of the School District s Fiscal Year (currently April 1 based on the School District s Fiscal Year end of June 30). s Dissemination Agent means, initially, California Financial Services, or any successor Dissemination Agent designated in writing by the School District and which has filed with the School District a written acceptance of such designation in accordance with Section 7 of this Disclosure Certificate. Listed Events means any of the events listed in Section 4(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, or any other repository of disclosure information that may be designated by the Securities and Exchange Commission as such for purposes of the Rule in the future. Official Statement means the final official statement executed by the School District in connection with the issuance of the Series A (2018) Bonds. D-1

92 Participating Underwriter means any of the original underwriters of the Series A (2018) Bonds required to comply with the Rule in connection with the offering of the Series A (2018) Bonds. Rule means Rule 15c2-12(b)(5) adopted by the Securities and Exchange Commission under the Securities Exchange Act of 1934, as it may be amended from time to time. Special Taxes means the special taxes of the Community Facilities District levied on taxable property within the Community Facilities District. Section 2. Provision of Annual Reports. (a) The School District shall, or shall cause the Dissemination Agent to, not later than the Annual Report Date, commencing April 1, 2019, 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 3 of this Disclosure Certificate. Not later than 15 Business Days prior to the Annual Report Date, the School District shall provide the Annual Report to the Dissemination Agent (if other than the School District). If by 15 Business Days prior to the Annual Report Date the Dissemination Agent (if other than the School District) has not received a copy of the Annual Report, the Dissemination Agent shall contact the School District to determine if the School District 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 3 of this Disclosure Certificate; provided, that the audited financial statements of the School District 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 School District s Fiscal Year changes, it shall give notice of such change in the same manner as for a Listed Event. The School District 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 School District hereunder. (b) If the School District does not provide (or cause the Dissemination Agent to provide) an Annual Report by the Annual Report Date, the School District shall provide (or cause the Dissemination Agent to provide) to the MSRB in a timely manner, in an electronic format as prescribed by the MSRB, a notice in substantially the form attached as Exhibit A to this Disclosure Certificate. (c) With respect to each Annual Report, the Dissemination Agent shall: (i) determine prior to each Annual Report Date the then-applicable rules and electronic format prescribed by the MSRB for the filing of annual continuing disclosure reports; and (ii) if the Dissemination Agent is other than the School District, file a report with the School District certifying that the Annual Report has been provided pursuant to this Disclosure Certificate, and stating the date it was provided. Section 3. Content of Annual Reports. The School District s Annual Report shall contain or incorporate by reference the following: D-2

93 (a) The School District s audited financial statements prepared in accordance with generally accepted accounting principles as promulgated to apply to governmental entities from time to time by the Governmental Accounting Standards Board. If the School District s audited financial statements are not available by the Annual Report Date, the Annual Report shall contain unaudited financial statements in a format similar to the financial statements contained in the Official Statement, and the audited financial statements shall be filed in the same manner as the Annual Report when they become available. (b) The following information: (i) The principal amount of Series A (2018) Bonds outstanding as of the close of the applicable Fiscal Year. (ii) A listing of the Series A (2018) Bonds redeemed prior to maturity by other than scheduled sinking fund redemption during the applicable Fiscal Year. (iii) Balances in each of the following funds established pursuant to the Fiscal Agent Agreement as of the close of the applicable Fiscal Year: (1) The Special Tax Fund (with a statement of the debt service requirement for the Series A (2018) Bonds and any Additional Bonds prior to the receipt of expected additional tax revenue); and (2) The Series A (2018) Bonds Reserve Subaccount (with a statement of the current Series A (2018) Bonds Reserve Requirement). (iv) A current statement of the information set forth in the following tables found in the Official Statement: (1) Table 2A, entitled Maximum Annual Special Tax by Tax Rate Category ; (2) Table 2B. entitled, Actual Special Tax Levy on Developed Property ; (3) Table 3, entitled Number of Taxable Units Assuming No Additional Development between Fiscal Year and Fiscal Year ; (4) Table 4, entitled Apportionment of Special Tax by Property Owner ; (5) Table 5, entitled Secured Assessed Valuation of Taxable Parcels ; (6) Table 6, entitled Distribution of Value-To-Debt Ratio (except for overlapping debt information therein) ; and (7) Table 9, entitled Special Tax Levies and Collections. (c) Any or all of the items listed above may be included by specific reference to other documents, including official statements of debt issues of the School District or related public D-3

94 entities, which are available to the public on the MSRB s Internet web site or filed with the Securities and Exchange Commission. The School District shall clearly identify each such other document so included by reference. Section 4. Reporting of Listed Events. (a) The School District shall give, or cause to be given, notice of the occurrence of any of the following Listed Events with respect to the Series A (2018) Bonds: (1) Principal and interest payment delinquencies. (2) Non-payment related defaults, if material. (3) Unscheduled draws on debt service reserves reflecting financial difficulties. (4) Unscheduled draws on credit enhancements reflecting financial difficulties. (5) Substitution of credit or liquidity providers, or their failure to perform. (6) Adverse tax opinions, the issuance by the Internal Revenue Service of proposed or final determinations of taxability, Notices of Proposed Issue (IRS Form 5701-TEB) or other material notices or determinations with respect to the tax status of the security, or other material events affecting the tax status of the security. (7) Modifications to rights of security holders, if material. (8) Bond calls, if material, and tender offers. (9) Defeasances. (10) Release, substitution, or sale of property securing repayment of the securities, if material. (11) Rating changes. (12) Bankruptcy, insolvency, receivership or similar event of the School District or other obligated person. (13) The consummation of a merger, consolidation, or acquisition involving the School District or an obligated person, or the sale of all or substantially all of the assets of the School District or an obligated person (other than in the ordinary course of business), the entry into a definitive agreement to undertake such an action, or the termination of a definitive agreement relating to any such actions, other than pursuant to its terms, if material. (14) Appointment of a successor or additional fiscal agent or the change of name of the fiscal agent, if material. D-4

95 (b) Whenever the School District obtains knowledge of the occurrence of a Listed Event, the School District shall, or shall cause the Dissemination Agent (if not the School District) to, file a notice of such occurrence with the MSRB, in an electronic format as prescribed by the MSRB, in a timely manner not in excess of 10 business days after the occurrence of the Listed Event. (c) The School District 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 4 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 Series A (2018) Bonds. The School District 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 School District obtains knowledge of the occurrence of any of these Listed Events, the School District 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 School District 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 School District 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 School District, 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 School District. Section 5. Identifying Information for Filings with the MSRB. All documents provided to the MSRB pursuant to this Disclosure Certificate shall be accompanied by identifying information as prescribed by the MSRB. Section 6. Termination of Reporting Obligation. The School District s obligations under this Disclosure Certificate shall terminate upon the legal defeasance, prior redemption or payment in full of all of the Series A (2018) Bonds. If such termination occurs prior to the final maturity of the Series A (2018) Bonds, the School District shall give notice of such termination in the same manner as for a Listed Event under Section 4(c). Section 7. Dissemination Agent. The School District may, from time to time, appoint or engage a Dissemination Agent to assist it in carrying out its obligations under this Disclosure Certificate, and may discharge any Dissemination Agent, with or without appointing a successor Dissemination Agent. Any Dissemination Agent may resign by providing 30 days written notice to the School District. Section 8. Amendment; Waiver. Notwithstanding any other provision of this Disclosure Certificate, the School District may amend this Disclosure Certificate, and any provision of this Disclosure Certificate may be waived, provided that the following conditions are satisfied: (a) if the amendment or waiver relates to the provisions of Sections 2(a), 3 or 4(a), it may only be made in connection with a change in circumstances that arises from D-5

96 a change in legal requirements, change in law, or change in the identity, nature, or status of an obligated person with respect to the Series A (2018) Bonds, or type of business conducted; and (b) the proposed amendment or waiver either (i) is approved by holders of the Series A (2018) Bonds in the manner provided in the Fiscal Agent Agreement for amendments to the Fiscal Agent Agreement with the consent of holders, or (ii) does not, in the opinion of nationally recognized bond counsel, materially impair the interests of the holders or beneficial owners of the Series A (2018) Bonds. If the annual financial information or operating data to be provided in the Annual Report is amended pursuant to the provisions hereof, the first Annual Report filed pursuant hereto containing the amended operating data or financial information shall explain, in narrative form, the reasons for the amendment and the impact of the change in the type of operating data or financial information being provided. If an amendment is made to this Disclosure Certificate modifying the accounting principles to be followed in preparing financial statements, the Annual Report for the year in which the change is made shall present a comparison between the financial statements or information prepared on the basis of the new accounting principles and those prepared on the basis of the former accounting principles. The comparison shall include a qualitative discussion of the differences in the accounting principles and the impact of the change in the accounting principles on the presentation of the financial information, in order to provide information to investors to enable them to evaluate the ability of the School District to meet its obligations. To the extent reasonably feasible, the comparison shall be quantitative. A notice of any amendment made pursuant to this Section 8 shall be filed in the same manner as for a Listed Event under Section 4(b). Section 9. Additional Information. Nothing in this Disclosure Certificate shall be deemed to prevent the School District from disseminating any other information, using the means of dissemination set forth in this Disclosure Certificate or any other means of communication, or including any other information in any Annual Report or notice of occurrence of a Listed Event, in addition to that which is required by this Disclosure Certificate. If the School District chooses to include any information in any Annual Report or notice of occurrence of a Listed Event in addition to that which is specifically required by this Disclosure Certificate, the School District shall have no obligation under this Disclosure Certificate to update such information or include it in any future Annual Report or notice of occurrence of a Listed Event. Section 10. Default. If the School District fails to comply with any provision of this Disclosure Certificate, the Participating Underwriter or any holder or beneficial owner of the Series A (2018) Bonds may take such actions as may be necessary and appropriate, including seeking mandate or specific performance by court order, to cause the School District 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 School District to comply with this Disclosure Certificate shall be an action to compel performance. D-6

97 Section 11. Duties, Immunities and Liabilities of Dissemination Agent. (a) The Dissemination Agent shall have only such duties as are specifically set forth in this Disclosure Certificate, and the School District agrees to indemnify and save harmless the Dissemination Agent, its officers, directors, employees and agents (each, an Indemnified Party ), against any loss, expense and liability which it may incur arising out of or in the exercise or performance of its powers and duties hereunder, including the reasonable costs and expenses (including reasonable attorneys fees) of defending against any claim of liability, but excluding losses, liabilities, costs and expenses due to an Indemnified Party s negligence, willful misconduct or failure to perform its duties hereunder. The Dissemination Agent shall have no duty or obligation to review any information provided to it by the School District hereunder, and shall not be deemed to be acting in any fiduciary capacity for the School District, the holders and beneficial owners from time to time of the Series A (2018) Bonds or any other party. The obligations of the School District under this Section shall survive resignation or removal of the Dissemination Agent and payment of the Series A (2018) Bonds. (b) The Dissemination Agent shall be paid compensation by the School District for its services provided hereunder in accordance with its schedule of fees as amended from time to time, and shall be reimbursed for all reasonable and documented expenses, legal fees and advances made or incurred by the Dissemination Agent in the performance of its duties hereunder. Section 12. Beneficiaries. This Disclosure Certificate shall inure solely to the benefit of the School District, the Dissemination Agent, the Participating Underwriter and the holders and beneficial owners from time to time of the Series A (2018) Bonds, and shall create no rights in any other person or entity. Section 13. Counterparts. This Disclosure Certificate may be executed in several counterparts, each of which shall be regarded as an original, and all of which shall constitute one and the same instrument. D-7

98 IN WITNESS WHEREOF, the parties hereto have executed this Disclosure Certificate as of the date first above written. MANTECA UNIFIED SCHOOL DISTRICT, for and on behalf of Manteca Unified School District Community Facilities District No By: Authorized Officer CALIFORNIA FINANCIAL SERVICES, as Dissemination Agent By: Authorized Officer D-8

99 EXHIBIT A NOTICE OF FAILURE TO FILE ANNUAL REPORT Name of Issuer: Name of Bond Issue: Manteca Unified School District $ 5,520,000 Manteca Unified School District Community Facilities District No Series A (2018) Special Tax Bonds Date of Issuance: November 14, 2018 NOTICE IS HEREBY GIVEN that the Manteca Unified School District (the School District ), on behalf of Manteca Unified School District Community Facilities District No , has not provided an Annual Report with respect to the above-named bonds as required by the Fiscal Agent Agreement dated as of November 1, 2018 (the Fiscal Agent Agreement ) by and between the School District and The Bank of New York Mellon Trust Company, N.A., as Fiscal Agent. The School District anticipates that the Annual Report will be filed by. Dated: [Dissemination Agent] By: Authorized Officer cc: Manteca Unified School District D-9

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101 APPENDIX E 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") 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 E-1

102 dealers, banks, trust companies, clearing corporations, and certain other organizations. DTC is a wholly-owned subsidiary of The Depository Trust & Clearing Corporation ("DTCC"). DTCC is the holding company for DTC, National Securities Clearing Corporation and Fixed Income Clearing Corporation, all of which are registered clearing agencies. DTCC is owned by the users of its regulated subsidiaries. Access to the 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 effect any change in beneficial ownership. DTC has no knowledge of the actual Beneficial Owners of the Securities; DTC s records reflect only the identity of the Direct Participants to whose accounts such Securities are credited, which may or may not be the Beneficial Owners. The Direct and Indirect Participants will remain responsible for keeping account of their holdings on behalf of their customers. 5. Conveyance of notices and other communications by DTC to Direct Participants, by Direct Participants to Indirect Participants, and by Direct Participants and Indirect Participants to Beneficial Owners will be governed by arrangements among them, subject to any statutory or regulatory requirements as may be in effect from time to time. Beneficial 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. E-2

103 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). 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. E-3

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105 APPENDIX F SUMMARY OF CERTAIN PROVISIONS OF THE FISCAL AGENT AGREEMENT This summary of the Fiscal Agent Agreement does not purport to be complete, and reference is hereby made to the Indenture for further information. Unless otherwise defined, terms used in this section shall have the same meaning as those terms have in the Fiscal Agent Agreement. Copies of the Fiscal Agent Agreement are available from the School District. Funds and Accounts The Fiscal Agent Agreement establishes certain special accounts for administering proceeds of the Special Tax collections for the School District, on behalf of the Community Facilities District, and of the sale of Series of Bonds described in the Fiscal Agent Agreement and for administering payment of the principal of, premium, if any, and interest on such Series of Bonds and other expenses. Special Tax Fund; Bond Fund; Reserve Fund. The Special Tax Fund, Bond Fund and Reserve Fund are described in the main body of the Official Statement. CFD Fund. There is established as a separate fund to be held by the Chief Business Officer, the Community Facilities District No Special Tax Bonds CFD Fund to the credit of which a deposit shall be made as required by the Fiscal Agent Agreement. From time to time, the School District may withdraw from the CFD Fund amounts needed to pay Administrative Costs, costs of the Project or incidental expenses of the School District authorized under the Act. Moneys in the CFD Fund may, at the School District's discretion, also be used to pay the principal of, premium, if any, and interest on the Bonds or to replenish any account within the Reserve Fund to the amount of the Reserve Requirement for any Series of Bonds. Upon the filing of an Officer's Certificate stating that the portion of the Project to be financed from the CFD Fund and the accounts established thereunder has been completed and that all costs of such portion of the Project and all Administrative Expenses of the School District have been paid, the Fiscal Agent shall transfer the amount, if any, remaining in the CFD Fund to the Bond Fund for application to the payment of principal of and interest on the Bonds in accordance with the Fiscal Agent Agreement and the CFD Fund shall be closed. Improvement Fund. There is established as a separate fund to be held by the Fiscal Agent, the Community Facilities District No Special Tax Bonds Improvement Fund to the credit of which a deposit shall be made as required by the Fiscal Agent Agreement. Moneys in the Improvement Fund shall be held in trust and shall be disbursed as provided in the Fiscal Agent Agreement for the payment or reimbursement of costs of the Project. Each such Officer s Certificate shall be sufficient evidence to the Fiscal Agent of the facts stated therein and the Fiscal Agent shall have no duty to confirm the accuracy of such facts. Prior to disbursement, amounts on deposit in the Improvement Fund shall be subject to a lien in favor of the Owners of the Bonds. Upon the filing of an Officer's Certificate stating that the portion of the Project to be financed from the Improvement Fund and the accounts established thereunder has been completed and that all costs of such portion of the Project and all Administrative Expenses of the District have been paid, the Fiscal Agent shall transfer the amount, if any, remaining in the Improvement Fund to the Bond Fund for application to the payment of principal of and interest on the Bonds in accordance with the Fiscal Agent Agreement and the Improvement Fund shall be closed. Costs of Issuance Fund. There is established as a separate fund to be held by the Fiscal Agent, the Community Facilities District No Special Tax Bonds Costs of Issuance Fund, to the credit of which a deposit shall be made as required by the Fiscal Agent Agreement. Moneys in the Costs of Issuance Fund shall be held in trust by the Fiscal Agent and shall be disbursed as provided in the Fiscal Agent Agreement for the payment or reimbursement of Costs of Issuance of the Series A (2018) Bonds. F-1

106 Certain Covenants of the School District The Fiscal Agent Agreement contains the following covenants of the School District to be in effect so long as any Bonds are outstanding. Collection of Special Tax Revenues. The School District shall comply with all requirements of the Act so as to assure the timely collection of Special Tax Revenues, including without limitation, the enforcement of delinquent Special Taxes. On or within 5 Business Days of each June 1, the Fiscal Agent shall provide the Chief Business Officer with a notice stating the amount then on deposit in the Bond Fund and the Reserve Fund. The receipt of such notice by the Chief Business Officer shall in no way affect the obligations of the Chief Business Officer under the following two paragraphs. Upon receipt of such notice, the Chief Business Officer and/or her or his designee shall ascertain the relevant parcels on which the Special Taxes are to be levied, taking into account any parcel splits during the preceding and then current year. The School District shall effect the levy of the Special Taxes each Fiscal Year in accordance with the Ordinance such that the computation of the levy is complete before the final date on which the County Auditor will accept the transmission of the Special Tax amounts for the parcels within the District for inclusion on the next secured real property tax roll. Upon the completion of the computation of the amounts of the levy, the School District shall prepare or cause to be prepared, and shall transmit to the Chief Business Officer, such data as the County Auditor requires to include the levy of the Special Taxes on the next secured real property tax roll. The School District shall fix and levy the amount of Special Taxes within the District required for the payment of principal of and interest on any outstanding Bonds of the District becoming due and payable during the ensuing Bond Year, including any necessary replenishment or expenditure of the Reserve Fund for the Bonds and an amount estimated to be sufficient to pay the Administrative Expenses during such year, all in accordance with the rate and method of apportionment of the Special Taxes for the District and the Ordinance. In any event, the Special Taxes so levied shall not exceed the authorized amounts as provided in the proceedings pursuant to the Resolution of Formation. The Special Taxes shall be payable and be collected in the same manner and at the same time and in the same installment as the general taxes on real property are payable, and have the same priority, become delinquent at the same times and in the same proportionate amounts and bear the same proportionate penalties and interest after delinquency as do the general taxes on real property. Notwithstanding the foregoing, the Special Taxes may be collected in such other manner as the School District shall prescribe if necessary to pay the debt service on the Bonds. Arbitrage. The School District shall not take, or permit or suffer to be taken by the Fiscal Agent or otherwise, any action with respect to the gross proceeds of the Bonds which if such action had been reasonably expected to have been taken, or had been deliberately and intentionally taken, on the Closing Date would have caused the Bonds to be "arbitrage bonds" within the meaning of Section 148 of the Code and Regulations. Maintenance of Tax-Exemption. The School District shall take all actions necessary to assure the exclusion of interest on the Bonds from the gross income of the Owners of the Bonds to the same extent as such interest is permitted to be excluded from gross income under the Code as in effect on the date of issuance of the Bonds. Private Activity Bond Limitation. The School District shall assure that the proceeds of the Bonds are not so used as to cause the Bonds to satisfy the private business tests of Section 141(b) of the Code or the private loan financing test of Section 141(c) of the Code. Federal Guarantee Prohibition. The School District shall not take any action or permit or suffer any action to be taken if the result of the same would be to cause any of the Bonds to be "federally guaranteed" within the meaning of Section 149(b) of the Code. F-2

107 Punctual Payment. The School District 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 Agreement, and it will faithfully observe and perform all of the conditions covenants and requirements of the Fiscal Agent Agreement and all Supplemental Agreements and of the Bonds. Defeasance If the School District shall pay and discharge the entire indebtedness on all or any portion of the Bonds Outstanding in any one or more of the following ways: (A) by well and truly paying or causing to be paid the principal of, and interest and any premium on, such Bonds Outstanding, as and when the same become due and payable; (B) by depositing with the Fiscal Agent or other fiduciary, at or before maturity, money which, together with (in the event that all of the Bonds are to be defeased) the amounts then on deposit in the funds and accounts provided for in the Fiscal Agent Agreement, is fully sufficient to pay such Bonds Outstanding, including all principal, interest and redemption premiums, or; (C) by irrevocably depositing with the Fiscal Agent or other fiduciary, cash and Federal Securities in such amount as the School District shall determine as confirmed in writing by an independent certified public accountant will, together with the interest to accrue thereon and (in the event that all of the Bonds are to be defeased) moneys then on deposit in the fund and accounts provided for in the Fiscal Agent Agreement, be fully sufficient to pay and discharge the indebtedness on such Bonds (including all principal, interest and redemption premiums) at or before their respective maturity dates; and if such Bonds are to be redeemed prior to the maturity thereof notice of such redemption shall have been given as in the Fiscal Agent Agreement provided or provision satisfactory to the Fiscal Agent shall have been made for the giving of such notice, then, at the election of the School District, and notwithstanding that any Bonds shall not have been surrendered for payment, the pledge of the Special Taxes and other funds provided for in the Fiscal Agent Agreement and all other obligations of the School District under the Fiscal Agent Agreement with respect to such Bonds Outstanding shall cease and terminate, except only the obligations of the School District (i) with respect to the covenant regarding Maintenance of Tax-Exemption and (ii) to pay or cause to be paid to the Owners of the Bonds not so surrendered and paid all sums due thereon and all amounts owing to the Fiscal Agent pursuant to the Fiscal Agent Agreement; and thereafter Special Taxes shall not be payable to the Fiscal Agent. Notice of such election shall be filed with the Fiscal Agent. Any funds thereafter held by the Fiscal Agent upon payments of all fees and expenses of the Fiscal Agent, which are not required for said purpose, shall be paid over to the School District. So long as the 2018 Insurance Policy is in effect, additional requirements are applicable to defeasance of the Series A (2018) Bonds, as set forth in in the Fiscal Agent Agreement. Amendments to or Supplements to the Indenture The Fiscal Agent Agreement and the rights and obligations of the School District and of the Owners of the Bonds may be modified or amended at any time by a Supplemental Agreement pursuant to the affirmative vote at a meeting of Owners, or with the written consent without a meeting, of the Owners of at least 60% in aggregate principal amount of the Bonds then Outstanding, exclusive of Bonds disqualified as provided in the Fiscal Agent Agreement. No such modification or amendment shall (i) extend the maturity of any Bond or reduce the interest rate thereon, or otherwise alter or impair the obligation of the School District 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 School District 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 F-3

108 or this Agreement), or reduce the percentage of Bonds required for the amendment hereof. No such amendment may modify any of the rights or obligations of the Fiscal Agent without its written consent. This Agreement and the rights and obligations of the School District and of the Owners may also be modified or amended at any time by a Supplemental Agreement, without the consent of any Owners, only to the extent permitted by law and only for any one or more of the following purposes: (A) to add to the covenants and agreements of the School District in the Fiscal Agent Agreement contained, other covenants and agreements thereafter to be observed, or to limit or surrender any right or power herein reserved to or conferred upon the School District; (B) to make modifications which, in the judgment of the School District, do not materially adversely affect any outstanding series of Bonds of the School District; (C) 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 Agreement, or in regard to questions arising under the Fiscal Agent Agreement, as the School District and the Fiscal Agent may deem necessary or desirable, and which, in the judgment of the School District, does not adversely affect the rights of the Owners of the Bonds; (D) to issue Additional Bonds as provided in the Fiscal Agent Agreement; (E) to make such additions, deletions or modifications as may be necessary or desirable to assure compliance with Section 148 of the Code relating to required rebate of excess investment earnings to the United States or otherwise as may be necessary to assure exclusion from gross income for federal income tax purposes of interest on the Bonds or to conform with the Regulations. No such amendment may modify any of the rights or obligations of the Fiscal Agent without its written consent. Insurance Policy Provisions BAM shall mean Build America Mutual Assurance Company, or any successor thereto. Insured Obligations shall have the same meaning as the Insured Series A (2018) Bonds. Amendments, Supplements and Consents. BAM s prior written consent is required for all amendments and supplements to the Fiscal Agent Agreement, with the exceptions noted in the Fiscal Agent Agreement. The School District shall send copies of any such amendments or supplements to BAM and the rating agencies which have assigned a rating to the Insured Obligations. Whenever the Fiscal Agent Agreement requires the consent of holders of Insured Obligations, BAM s consent shall also be required. In addition, any amendment, supplement, modification to, or waiver of, the Fiscal Agent Agreement that adversely affects the rights or interests of BAM shall be subject to the prior written consent of BAM. Notice To and Consent of BAM in the Event of Insolvency. To the extent the School District enters into any reorganization or liquidation plan with respect to the School District, it must be acceptable to BAM. The Fiscal Agent and each owner of the Insured Obligations hereby appoint BAM as their agent and attorney-in-fact with respect to the Insured Obligations and agree that BAM may at any time during the continuation of any proceeding by or against the School District under the United States Bankruptcy Code or any other applicable bankruptcy, insolvency, receivership, rehabilitation or similar law (an Insolvency Proceeding ) direct all matters relating to such Insolvency Proceeding, including without limitation, (A) all matters relating to any claim or enforcement proceeding in connection with an Insolvency Proceeding (a Claim ), (B) the direction of any appeal of any order relating to any Claim, (C) the posting of any surety, supersedeas or performance bond pending any such appeal, and (D) the right to vote to accept or reject any plan of adjustment. In addition, the Fiscal Agent and each owner of the Insured Obligations delegate F-4

109 and assign to BAM, to the fullest extent permitted by law, the rights of the Fiscal Agent and each owner of the Insured Obligations with respect to the Insured Obligations in the conduct of any Insolvency Proceeding, including, without limitation, all rights of any party to an adversary proceeding or action with respect to any court order issued in connection with any such Insolvency Proceeding. Control by BAM Upon Default. Anything in the Fiscal Agent Agreement to the contrary notwithstanding, upon the occurrence and continuance of a default or an event of default, BAM shall be entitled to control and direct the enforcement of all rights and remedies granted to the holders of the Insured Obligations or the Fiscal Agent for the benefit of the holders of the Insured Obligations under the Fiscal Agent Agreement. No default or event of default may be waived without BAM s written consent. BAM as Owner. Upon the occurrence and continuance of a default or an event of default, BAM shall be deemed to be the sole owner of the Insured Obligations for all purposes under the Fiscal Agent Agreement, including, without limitations, for purposes of exercising remedies and approving amendments. Consent of BAM for acceleration. BAM s prior written consent is required as a condition precedent to and in all instances of acceleration. Grace Period for Payment Defaults. No grace period shall be permitted for payment defaults on the Insured Obligations. No grace period for a covenant default shall exceed 30 days without the prior written consent of BAM. Special Provisions for Insurer Default. If an Insurer Default shall occur and be continuing, then, notwithstanding anything in the Fiscal Agent Agreement to the contrary, (1) if at any time prior to or following an Insurer Default, BAM has made payment under the Policy, to the extent of such payment BAM shall be treated like any other holder of the Insured Obligations for all purposes, including giving of consents, and (2) if BAM has not made any payment under the Policy, BAM shall have no further consent rights until the particular Insurer Default is no longer continuing or BAM makes a payment under the Policy, in which event, the foregoing clause (1) shall control. For purposes of this paragraph, Insurer Default means: (A) BAM has failed to make any payment under the Policy when due and owing in accordance with its terms; or (B) BAM shall (i) voluntarily commence any proceeding or file any petition seeking relief under the United States Bankruptcy Code or any other Federal, state or foreign bankruptcy, insolvency or similar law, (ii) consent to the institution of or fail to controvert in a timely and appropriate manner, any such proceeding or the filing of any such petition, (iii) apply for or consent to the appointment of a receiver, trustee, custodian, sequestrator or similar official for such party or for a substantial part of its property, (iv) file an answer admitting the material allegations of a petition filed against it in any such proceeding, (v) make a general assignment for the benefit of creditors, or (vi) take action for the purpose of effecting any of the foregoing; or (C) any state or federal agency or instrumentality shall order the suspension of payments on the Policy or shall obtain an order or grant approval for the rehabilitation, liquidation, conservation or dissolution of BAM (including without limitation under the New York Insurance Law). BAM As Third Party Beneficiary. BAM is recognized as and shall be deemed to be a third party beneficiary of the Fiscal Agent Agreement and may enforce the provisions of the Fiscal Agent Agreement as if it were a party thereto. Exercise of Rights by BAM. The rights granted to BAM under the Fiscal Agent Agreement to request, consent to or direct any action are rights granted to BAM in consideration of its issuance of the Policy. Any exercise by BAM of such rights is merely an exercise of the BAM s contractual rights and shall not be construed or deemed to be taken for the benefit, or on behalf, of the holders of the Insured Obligations and such action does not evidence any position of BAM, affirmative or negative, as to whether the consent of the holders of the Insured Obligations or any other person is required in addition to the consent of BAM. BAM shall be entitled to pay principal or interest on the Insured Obligations that shall become Due for Payment but shall be unpaid by reason of Nonpayment by the School District (as such terms are defined in the Policy) and any amounts due on the Insured Obligations as a result of acceleration F-5

110 of the maturity thereof in accordance with the Fiscal Agent Agreement, whether or not BAM has received a claim upon the Policy. No contract shall be entered into or any action taken by which the rights of BAM or security for or source of payment of the Insured Obligations may be impaired or prejudiced in any material respect except upon obtaining the prior written consent of BAM. Reserve Policy Provisions The School District shall repay any draws under the Municipal Bond Debt Service Reserve Insurance Policy (the Reserve Policy ) and pay all related reasonable expenses incurred by BAM (the Bond Insurer ). Interest shall accrue and be payable on such draws and expenses from the date of payment by the Bond Insurer at the Late Payment Rate. Late Payment Rate means the lesser of (A) the greater of (i) the per annum rate of interest, publicly announced from time to time by JPMorgan Chase Bank at its principal office in the City of New York, as its prime or base lending rate ( Prime Rate ) (any change in such Prime Rate to be effective on the date such changes are announced by JPMorgan Chase Bank) plus 3%, and (ii) the then applicable highest rate of interest on the Bonds, and (B) the maximum rate permissible under applicable usury or similar laws limiting interest rates. The Late Payment Rate shall be computed on the basis of the actual number of days elapsed over a year of 360 days. In the event JPMorgan Chase Bank ceases to announce its Prime Rate publicly, Prime Rate shall be the publicly announced prime or base lending rate of such bank, banking association or trust company bank as the Bond Insurer in its sole and absolute discretion shall specify. Repayment of draws and payment of expenses and accrued interest thereon at the Late Payment Rate (collectively, the Policy Costs ) will commence in the first month following each draw, and each such monthly payment will be in an amount at least equal to 1/12 of the aggregate of Policy Costs related to such draw. Amounts in respect of Policy Costs paid to BAM will be credited first to interest due, then to the expenses due and then to principal due. As and to the extent that payments are made to BAM on account of principal due, the coverage under the Reserve Policy will be increased by a like amount, subject to the terms of the Reserve Policy. All cash and investments in the Reserve Account established for the Series A (2018) Bonds and all other available amounts in any funds available to pay debt service on the Series A (2018) Bonds will be transferred to the Debt Service Fund for payment of the debt service on the Series A (2018) Bonds before any drawing may be made on the Reserve Policy or any other Qualified Reserve Account Credit Instrument on deposit in the Reserve Account in lieu of cash. Draws under the Reserve Policy may only be used to make payments on the Series A (2018) Bonds covered under the Reserve Policy. If the School District fails to pay any Policy Costs in accordance with the requirements of paragraph (a) above, BAM will be entitled to exercise any and all legal and equitable remedies available to it, including those provided under this Fiscal Agent Agreement other than (i) acceleration of the maturity of the Series A (2018) Bonds, or (ii) remedies which would adversely affect owners of the Series A (2018) Bonds. The Fiscal Agent Agreement will not be discharged until all Policy Costs owing to BAM have been paid in full. The School District s obligation to pay such amount will expressly survive payment in full of the Series A (2018) Bonds. The Fiscal Agent will ascertain the necessity for a claim upon the Reserve Policy in accordance with the provisions hereof and will provide notice to BAM in accordance with the terms of the Reserve Policy at least three business days prior to each date upon which interest or principal is due on the Series A (2018) Bonds. The Reserve Policy shall expire on the earlier of the date the Series A (2018) Bonds are no longer outstanding and the final maturity date of the Series A (2018) Bonds. Policy Costs due and owing shall be included in debt service requirements for purposes of calculation of the additional bonds test in the Fiscal Agent Agreement. F-6

111 APPENDIX G SPECIMEN MUNICIPAL BOND INSURANCE POLICY G-1

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113 MUNICIPAL BOND INSURANCE POLICY ISSUER: [NAME OF ISSUER] Policy No: MEMBER: [NAME OF MEMBER] BONDS: $ in aggregate principal amount of [NAME OF TRANSACTION] [and maturing on] Effective Date: Risk Premium: $ Member Surplus Contribution: $ Total Insurance Payment: $ BUILD AMERICA MUTUAL ASSURANCE COMPANY ( BAM ), for consideration received, hereby UNCONDITIONALLY AND IRREVOCABLY agrees to pay to the trustee (the Trustee ) or paying agent (the Paying Agent ) for the Bonds named above (as set forth in the documentation providing for the issuance and securing of the Bonds), for the benefit of the Owners or, at the election of BAM, 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 first Business Day following the Business Day on which BAM shall have received Notice of Nonpayment, BAM will disburse (but without duplication in the case of duplicate claims for the same Nonpayment) to or for the benefit of each Owner of the Bonds, the face amount of principal of and interest on the Bonds that is then Due for Payment but is then unpaid by reason of Nonpayment by the Issuer, but only upon receipt by BAM, in a form reasonably satisfactory to it, of (a) evidence of the Owner s right to receive payment of such 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 BAM. 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 BAM is incomplete, it shall be deemed not to have been received by BAM for purposes of the preceding sentence, and BAM shall promptly so advise the Trustee, Paying Agent or Owner, as appropriate, any of whom may submit an amended Notice of Nonpayment. Upon disbursement under this Policy in respect of a Bond and to the extent of such payment, BAM shall become the owner of such Bond, any appurtenant coupon to such Bond and right to receipt of payment of principal of or interest on such Bond and shall be fully subrogated to the rights of the Owner, including the Owner s right to receive payments under such Bond. Payment by BAM either to the Trustee or Paying Agent for the benefit of the Owners, or directly to the Owners, on account of any Nonpayment shall discharge the obligation of BAM under this Policy with respect to said Nonpayment. 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 (as defined herein) 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 BAM 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 made to an Owner by or on behalf of the Issuer of principal or interest that is Due for Payment, which payment has been recovered from such Owner pursuant to the United States Bankruptcy Code in accordance with a final, nonappealable order of a court having competent jurisdiction. Notice means delivery to BAM of a notice of claim and certificate, by certified mail, or telecopy as set forth on the attached Schedule or other acceptable electronic delivery, in a form satisfactory to BAM, from and signed by an Owner, the Trustee or the Paying Agent, which notice shall specify (a) the person or entity making the claim, (b) the Policy Number, (c) the claimed amount, (d) payment instructions and (e) the date such claimed amount becomes or became Due for Payment. Owner means, in respect of a Bond, the person or entity who, at the time of Nonpayment, is entitled under the terms of such Bond to payment thereof, except that Owner shall not include the Issuer, the Member or any other person or entity whose direct or indirect obligation constitutes the underlying security for the Bonds.

114 BAM may appoint a fiscal agent (the Insurer s Fiscal Agent ) for purposes of this Policy by giving written notice to the Trustee, the Paying Agent, the Member and the Issuer specifying the name and notice address of the Insurer s Fiscal Agent. From and after the date of receipt of such notice by the Trustee, the Paying Agent, the Member or the Issuer (a) copies of all notices required to be delivered to BAM pursuant to this Policy shall be simultaneously delivered to the Insurer s Fiscal Agent and to BAM and shall not be deemed received until received by both and (b) all payments required to be made by BAM under this Policy may be made directly by BAM or by the Insurer s Fiscal Agent on behalf of BAM. The Insurer s Fiscal Agent is the agent of BAM only, and the Insurer s Fiscal Agent shall in no event be liable to the Trustee, Paying Agent or any Owner for any act of the Insurer s Fiscal Agent or any failure of BAM to deposit or cause to be deposited sufficient funds to make payments due under this Policy. To the fullest extent permitted by applicable law, BAM agrees not to assert, and hereby waives, only for the benefit of each Owner, all rights (whether by counterclaim, setoff or otherwise) and defenses (including, without limitation, the defense of fraud), whether acquired by subrogation, assignment or otherwise, to the extent that such rights and defenses may be available to BAM to avoid payment of its obligations under this Policy in accordance with the express provisions of this Policy. This Policy may not be canceled or revoked. This Policy sets forth in full the undertaking of BAM and shall not be modified, altered or affected by any other agreement or instrument, including any modification or amendment thereto. Except to the extent expressly modified by an endorsement hereto, any premium paid in respect of this Policy is nonrefundable for any reason whatsoever, including payment, or provision being made for payment, of the Bonds prior to maturity. THIS POLICY IS NOT COVERED BY THE PROPERTY/CASUALTY INSURANCE SECURITY FUND SPECIFIED IN ARTICLE 76 OF THE NEW YORK INSURANCE LAW. THIS POLICY IS ISSUED WITHOUT CONTINGENT MUTUAL LIABILITY FOR ASSESSMENT. In witness whereof, BUILD AMERICA MUTUAL ASSURANCE COMPANY has caused this Policy to be executed on its behalf by its Authorized Officer. BUILD AMERICA MUTUAL ASSURANCE COMPANY By: Authorized Officer

115 Address: 200 Liberty Street, 27th floor New York, New York Telecopy: (attention: Claims) Notices (Unless Otherwise Specified by BAM)

116 CALIFORNIA ENDORSEMENT TO MUNICIPAL BOND INSURANCE POLICY NO. This Policy is not covered by the California Insurance Guaranty Association established pursuant to Article 15.2 of Chapter 1 of Part 2 of Division 1 of the California Law. Nothing herein shall be construed to waive, alter, reduce or amend coverage in any other section of the Policy. If found contrary to the Policy language, the terms of this Endorsement supersede the Policy language IN WITNESS WHEREOF, BUILDAMERICA MUTUAL ASSURANCE COMPANY has caused this policy to be executed on its behalf by its Authorized Officer. BUILD AMERICA MUTUAL ASSURANCE COMPANY By Authorized Officer

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118 MANTECA UNIFIED SCHOOL DISTRICT COMMUNITY FACILITIES DISTRICT NO SERIES A (2018) SPECIAL TAX BONDS