City Council Report 915 I Street, 1 st Floor Sacramento, CA

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1 City Council Report 915 I Street, 1 st Floor Sacramento, CA File ID: August 14, 2018 Public Hearing Item 16 Title: Formation Proceedings for the Railyards Community Facilities District No (Improvements) (Noticed on 07/31/18) Location: District 3 Recommendation: Conduct a public hearing and upon conclusion, pass 1) a Resolution of Formation establishing the Railyards Community Facilities District No (Improvements) and providing for a levy of a special tax; 2) a Resolution deeming it necessary to incur bonded indebtedness; and 3) a Resolution calling for a special mailed-ballot election on August 15, Contact: Mary Jean Rodriguez, Program Specialist, (916) ; Sheri Smith, Program Manager, (916) , Department of Finance; Colin Bettis, Senior Debt Analyst, (916) , Office of the City Treasurer Presenter: Mary Jean Rodriguez, Program Specialist, (916) , Department of Finance Attachments: 01-Description/Analysis 02-Background 03-Schedule of Proceedings 04-Resolution of Formation 05- Exhibit A Boundary Map 06-Exhibit B List of Authorized Facilities 07-Exhibit C Representative List of Incidental Expenses 08-Exhibit D Rate, Method of Apportionment, and Manner of Collection of Special Tax 09- Exhibit E Hearing Report 10-Resolution - Deeming It Necessary to Incur Bonded Indebtedness 11-Resolution - Calling Special Mailed-Ballot Election 12-Exhibit A Ballot 13-Exhibit B Waiver and Consent Forms Susana Alcala Wood, City Attorney Mindy Cuppy, City Clerk John Colville, City Treasurer Howard Chan, City Manager Page 1 of 118

2 File ID: Public Hearing Item 16 Description/Analysis Issue Detail: Downtown Railyard Venture, LLC ( DRV ), the master developer of the Railyards development, has applied to the City to form the Railyards Community Facilities District No (Improvements) (the CFD ) for the purpose of obtaining tax-exempt bond financing. The bond proceeds will partially reimburse DRV for the cost of public infrastructure that the City will acquire from DRV. Approval of the CFD will authorize the City to sell bonds and to levy the special tax to pay debt service for the bonds and administrative costs of the CFD and to pay for public infrastructure. Policy Considerations: The procedures under which this CFD is being formed are set forth in the Mello-Roos Community Facilities Act of 1982 (Government Code ) (the Mello-Roos Act ). Formation of the CFD is consistent with the City s Policies and Procedures for Use of Special Assessment and Mello-Roos Community Facilities District Financing for Infrastructure and Public Facilities, as amended, adopted August 9, 1994, by Resolution (the Mello-Roos Policy ). Economic Impacts: None. Environmental Considerations: California Environmental Quality Act (CEQA): Under the CEQA Guidelines, the formation of community facilities districts does not constitute a project and is therefore exempt from review. (14 Cal. Code Regs (b)(4)). Sustainability: Not applicable. Commission/Committee Action: Not applicable. Rationale for Recommendation: The actions in the recommended Resolutions are required by the Mello-Roos Act to form the CFD, authorize the special tax, and authorize the bonds. Financial Considerations: Formation of the CFD will allow the public facilities, governmental fees, and incidental expenses listed on Exhibits B and C to this report to be financed through the CFD. DRV will fund fees and improvements up front and be reimbursed at a later time if and when sufficient bond proceeds and special taxes are available. Reimbursements will be limited to expenses for public improvements and to fees that finance the construction of public improvements and otherwise comply with the Mello-Roos Policy or any subsequent update to the policy. The special taxes will be used for the sole purpose of funding reimbursements and paying administrative expenses. Both uses may be paid by bond proceeds. City of Sacramento August 14, 2018 powered by Legistar Page 2 of 118

3 File ID: Public Hearing Item 16 There is no impact on the General Fund or any other special revenue funds as a result of this action. Local Business Enterprise (LBE): Not applicable. City of Sacramento August 14, 2018 powered by Legistar Page 3 of 118

4 Attachment 2 Background The proposed CFD consists of an approximately 244-acre historic Union Pacific Railroad (UPRR) site planned for mixed-use. The Railyards project area is generally bounded by North B Street and the Sacramento River Water Treatment Plant to the north, the Sacramento River to the west, I Street and H Street to the south, and 7th and 12th Streets to the east. It is located on the north side of Downtown and south of the River District and once served as the western terminus of the 1860s Transcontinental Railroad. To date a number of improvements totaling almost $337 million have been completed in the area, including track relocations, station renovations, and backbone infrastructure. These initial improvements have been funded through State Proposition 1C grant funds, Measure A, UPRR funding, and property-owner funding. Despite the magnitude of this initial investment, much of it from public sources, the City and Downtown Railyard Venture, LLC recognize that the Railyards Project development still faces an extraordinary infrastructure-funding burden. Purpose of the CFD Through the issuance of bonds or the incurrence of other debt, the proposed CFD will finance certain development fees and public improvements within the public right-of-way and adjacent public-utility easements of the major public roads intersecting, serving, and/or bordering the CFD s boundary. Full descriptions of the improvements, fees, and incidental expenses are shown as Exhibits B and C to the Resolution of Formation for the CFD. The maximum principal amount of debt proposed to be incurred for the purposes of the proposed district is $75 million. CFD Special Election Proceedings The proposed CFD will be formed under the Mello-Roos Community Facilities District Act of As part of the formation proceedings, a special election on the special tax and the incurrence of debt is required. In this case, where fewer than 12 registered voters reside within the proposed CFD, the vote is by landowners, with each landowner having one vote for each acre or portion of an acre owned within the proposed CFD. There are two landowners within this proposed CFD. The City is prohibited from levying the tax or incurring related debt unless at least two-thirds of the votes cast are in favor of formation and the debt. The ballot question has three parts: Should the City be authorized to levy a special tax to pay for fees and infrastructure? Should the City be authorized to incur debt of $75 million to be funded by the levy? Should the appropriation limit of the CFD be set at $75 million? The appropriation limit is the amount that can be appropriated in any one year. The ballots are due August 15, A schedule for the CFD-formation proceedings is provided on the following pages. Page 4 of 118

5 Special Tax Formula The proposed Rate and Method of Apportionment (the RMA) of the special tax is attached as Exhibit D to the Resolution of Intention to establish the CFD. The special tax is applied to both developed and undeveloped properties. The maximum special-tax rates for developed properties are shown in Exhibit D to the Resolution of Intention. The City Council is being asked to modify the Resolution of Intention by making minor corrections to Attachment 1 and Attachment 2 of the proposed RMA: The minor corrections to Attachment 1 of the proposed RMA consist of removing Lot Number 41 from Attachment 1 and grouping Lot Number 40 with the other proposed lot numbers located in Original Parcel and adjusting downward the taxable acreage of, and the maximum annual special tax on, Original Parcels and The minor corrections to Attachment 2 of the proposed RMA consist of adjusting downward the total number of taxable acres within the CFD that are subject to the special tax and correspondingly reducing the calculated maximum annual special tax. These corrections to Attachment 1 and Attachment 2 of the proposed RMA do not increase the maximum special tax on any parcel, increase the probable special tax to be paid by the owner of any lot or parcel, or add territory to the proposed CFD. The proposed RMA as so modified will be attached to the Resolution of Formation as Exhibit D. Page 5 of 118

6 SCHEDULE OF FORMATION PROCEEDINGS PROPOSED CITY OF SACRAMENTO RAILYARDS COMMUNITY FACILITIES DISTRICT NO (IMPROVEMENTS) July 3, 2018 July 11, 2018 July 23, 2018 July 31, 2018 August 14, 2018 August 15, 2018 August 21, 2018 August 22, 2018 August 28, 2018 City Council Initiate Proceedings o Pass Resolution of Intention to Form CFD and Levy Special Tax (sets hearing date and approves boundary map) o Pass Resolution of Intention to Incur Bonded Indebtedness Record Boundary Map Mail Notice of Public Hearing Publish Notice of Hearing City Council Public Hearing and Notice for a Special Election o Conduct Public Hearing o Pass Resolution of Formation o Pass Resolution Deeming Debt Necessary o Pass Resolution Calling Special Election Special Election Ballots Due City Council o Pass Resolution Declaring Results of Special Election o Pass for Publication Ordinance to Levy Tax Record Notice of Special Tax City Council o Adopt Ordinance to Levy Special Tax o Pass Resolution Creating Accounting Fund Page 6 of 118

7 RESOLUTION NO. Adopted by the Sacramento City Council August 14, 2018 Resolution of Formation Establishing the City of Sacramento Railyards Community Facilities District No (Improvements) and Providing for the Levy of a Special Tax Therein to Finance the Acquisition and Construction of Certain Public Facilities and to Finance Certain Governmental Fees for Public Facilities BACKGROUND A. On Tuesday, July 3, 2018, the City Council duly adopted Resolution No (the Resolution of Intention ) declaring its intention (1) to establish a community facilities district within the City s jurisdictional boundaries under the Mello-Roos Community Facilities Act of 1982, set forth at Government Code sections through (the Act ), to be known and designated as the City of Sacramento Railyards Community Facilities District No (Improvements) (the CFD ); and (2) to levy a special tax therein to finance the acquisition and construction of certain public capital facilities and to finance certain governmentally imposed development fees used to finance public facilities. B. As required by Streets and Highways Code section 3110, in the Resolution of Intention the City Council approved the boundary map for the CFD, which is titled Proposed Boundaries of City of Sacramento Railyards Community Facilities District No (Improvements), City of Sacramento, County of Sacramento, State of California (the Boundary Map ) and is set forth in Exhibit A to the Resolution of Intention (the same Exhibit A is also attached to this resolution). The Boundary Map was recorded on July 11, 2018, in Book 125 at Page 39 of the Book of Maps of Assessment and Community Facilities Districts maintained by the Sacramento County Clerk/Recorder. C. In the Resolution of Intention, the City Council fixed Tuesday, August 14, 2018, at 6:00 p.m., in the Council Chambers in New City Hall, 915 I Street, Sacramento, California, as the time and place for a public hearing (the Public Hearing ) to be held by the City Council to consider the establishment of the CFD; the authorization of a special tax to be levied and collected within the CFD (the Special Tax ); the proposed rate, method of apportionment, and manner of collection of the Special Tax (the RMA ); the facilities and governmental fees proposed to be financed; the establishment of an appropriations limit for the CFD; and all other matters set forth in the Resolution of Intention. D. In accordance with the Resolution of Intention, the Manager of the Public Improvement Finance Division of the City Finance Department submitted a report Page 7 of 118

8 (the Hearing Report ) to the City Council on the need for, and the estimated cost of, the proposed facilities to be financed; the cost of the governmental fees to be financed; and certain other matters. The City Council has reviewed the Hearing Report, which is attached to this resolution as Exhibit E and is made a part of the record of the Public Hearing. E. On August 14, 2018, at or shortly after the time set for the Public Hearing, the City Council opened the Public Hearing to consider the establishment of the CFD, the authorization of the Special Tax, the proposed RMA, the facilities proposed to be financed, the governmental fees proposed to be financed, the establishment of the appropriations limit, and all other matters set forth in the Resolution of Intention. F. At the Public Hearing, the City Council determined to modify the Resolution of Intention by making minor corrections to Attachment 1 and Attachment 2 of the proposed RMA. The minor corrections to Attachment 1 of the proposed RMA consisted of removing Lot Number 41 from Attachment 1 and grouping Lot Number 40 with the other proposed lot numbers located in Original Parcel and adjusting downward the taxable acreage of, and the Maximum Annual Special Tax (as defined in the proposed RMA) on, Original Parcels and The minor corrections to Attachment 2 of the Proposed RMA consisted of adjusting downward the total number of taxable acres within the CFD that are subject to the Special Tax and correspondingly reducing the calculated Maximum Annual Special Tax (as defined in the proposed RMA). The City Council found and determined that none of the corrections to Attachment 1 or Attachment 2 of the proposed RMA increased the maximum special tax on any parcel, increased the probable special tax to be paid by the owner of any lot or parcel, or added territory to the CFD. The proposed RMA as so modified is attached to this resolution as Exhibit D. G. At the Public Hearing, all persons interested, including all taxpayers, property owners, and registered voters within the CFD, were given an opportunity to appear and be heard, and the City Council heard and considered the testimony of all interested persons for or against the establishment of the CFD, the levy of the Special Tax, the extent of the CFD, the acquisition and construction of any of the proposed facilities, the establishment of the appropriations limit for the CFD, and any other matters set forth in the Resolution of Intention. H. All registered voters residing within the boundaries of the proposed CFD and all owners of land within the boundaries of the proposed CFD that would not be exempt from the proposed levy of the Special Tax were allowed to submit written protests to any aspect of the proposals contained in the Resolution of Intention and were permitted to withdraw their protests before the close of the Public Hearing. Page 8 of 118

9 I. On file with the City Clerk are (1) a proof of publication of the Notice of Public Hearing in the SACRAMENTO BULLETIN and (2) a Certificate of Mailing of Notice of Public Hearing showing mailed notice to the owners of land within the CFD. BASED ON THE FACTS SET FORTH IN THE BACKGROUND, THE CITY COUNCIL RESOLVES AS FOLLOWS: Section 1. Section 2. Section 3. Section 4. Section 5. The City Council finds that the statements in the Background are true. Except to the extent inconsistent with this resolution, the Resolution of Intention is reaffirmed, and its provisions and findings are, to that same extent, incorporated into this resolution. The City Council accepts the proof of publication of the Notice of Public Hearing and the Certificate of Mailing of Notice of Public Hearing and finds, based thereon, that proper notice of the Public Hearing has been given in accordance with the Act and that the Public Hearing was conducted with proper and legal notice in all respects. The City Council finds and determines that at the close of the Public Hearing written protests, if any, to the establishment of the CFD, the levy of the Special Tax, the extent of the CFD, the acquisition and construction of any of the facilities described in the Resolution of Intention, the financing of any of the governmental fees described in the Resolution of Intention, the establishment of the appropriations limit for the CFD, or any other matters contained in the Resolution of Intention were submitted by less than 50% of the registered voters residing within the CFD or by less than six of the registered voters residing within the CFD, whichever is more. The City Council also finds that, at the close of the Public Hearing, the written protests, if any, were submitted by the owners of less than onehalf of the area of land in the territory proposed to be included in the CFD and not exempt from the Special Tax. Thus, finding that it is not precluded by the Act from proceeding further in this matter, the City Council hereby orders and determines that it has considered, and that it overrules, all protests to the following: the establishment of the CFD, the levy of the Special Tax, the extent of the CFD, the acquisition and construction of any of the facilities described in the Resolution of Intention, the financing of any of the governmental fees described in the Resolution of Intention, the establishment of the appropriations limit for the CFD, and any other matters contained in the Resolution of Intention that may have been submitted. The public facilities (the Facilities ) and the governmental fees (the Fees ) authorized to be financed by and through the CFD are those shown on Exhibit B attached to this resolution. The City Council finds that the Facilities and the Fees do not in any way exceed the description of the Page 9 of 118

10 authorized facilities and governmental fees proposed in the Resolution of Intention. All of the Facilities and the facilities to be financed by the Fees have an estimated useful life of five years or longer and are public facilities that (a) (b) the City or other governmental agencies are authorized by law to construct, own, or operate, or to which they may contribute revenue; and are necessary to meet increased demands on the City or other governmental agencies as the result of development occurring or expected to occur within the CFD. The authorization to finance the acquisition and construction of the Facilities and to finance the Fees includes incidental expenses consisting of the costs of planning and designing the Facilities and facilities to be financed with the Fees, together with the costs of environmental evaluations thereof; all costs associated with the creation of the CFD, the issuance of bonds and incurrence of other debt (as defined in the Act) (collectively, Debt ), the determination of the amount of any Special Taxes, and the collection or payment of any Special Taxes; and costs otherwise incurred to carry out the authorized purposes of the CFD, together with any other expenses incidental to the acquisition or construction of the Facilities or the public facilities to be financed with the Fees. A representative list of the incidental expenses proposed to be incurred is set forth on Exhibit C attached to this resolution. Section 6. The RMA, which includes the maximum annual Special Tax, is set forth on Exhibit D attached to this resolution. Exhibit D provides sufficient detail to allow each landowner or resident within the CFD to estimate the maximum amount the landowner or resident will have to pay. The City Council finds that the RMA does not in any way exceed the proposed rate and method of apportionment of the Special Tax described in the Resolution of Intention. As required by the Act (a) (b) the maximum authorized special tax that may be levied against any parcel used for private residential purposes (which use begins no later than the date on which an occupancy permit for private residential use is issued) is specified as a dollar amount that will be calculated and thereby established no later than the date on which the parcel is first subject to the Special Tax because of its use for private residential purposes and will not increase by more than 2% each year; the Special Tax will not be levied against such property after fiscal year (but a Special Tax that is lawfully levied in or before Page 10 of 118

11 that year and that remains delinquent may be collected in subsequent years); and (c) under no circumstances will the Special Tax levied on property in any fiscal year be increased on the property, as a consequence of delinquency or default by the owner of any other parcel or parcels within the CFD, by more than 10% above the amount that would have been levied in that fiscal year had there never been any such delinquencies or defaults. Section 7. Section 8. Section 9. Section 10. If the election referred to in Section 12 below results in the approval of the authorizations of this resolution, then upon recordation of a Notice of Special Tax Lien as required by Streets and Highways Code section , a continuing lien to secure each levy of the Special Tax will attach to all nonexempt real property in the CFD, and the lien will continue in force and effect until the Special Tax obligation is prepaid and permanently satisfied and the lien cancelled in accordance with law or until collection of the Special Tax ceases and a Notice of Cessation of Special Tax is recorded in accordance with section of the Act. Except where funds are otherwise available, and subject to the limits described in the RMA, a Special Tax will be levied annually within the CFD in an amount sufficient to pay for the following: the acquisition and construction of the Facilities and the financing of the Fees, including but not limited to the payment of interest on, principal of, and other payments on, Debt issued to finance the acquisition and construction of the Facilities or to finance the Fees; the making of lease payments for Facilities (whether in conjunction with the issuance of certificates of participation or not); and the repayment of funds advanced by the City for the CFD, including repayment under any agreement (which will not constitute a debt or liability of the City) of advances of funds or reimbursement for the lesser of the value or cost of work in-kind provided by any person for the CFD. The Special Tax will be collected through the regular County of Sacramento secured property-tax bills and will be subject to the same enforcement mechanism and the same penalties and interest for late payment as regular ad valorem property taxes; however, the City Council reserves the right to use any other lawful means of billing, collecting, and enforcing the Special Tax, including direct billing, supplemental billing, and, when lawfully available, judicial foreclosure of the Special Tax lien. Under section of the Act, the Special Tax will be levied on leasehold or possessory interests in property owned by a public agency (which property is otherwise exempt from the Special Tax), to be payable by the owner of the leasehold or possessory interests in the property. Page 11 of 118

12 Section 11. Section 12. Section 13. Section 14. Section 15. Section 16. Under section of the Act, and subject to the voter approval requirement in that section, the appropriations limit, as defined by subdivision (h) of section 8 of article XIIIB of the California Constitution, for fiscal year 2018/19 for the CFD, subject to adjustment as provided therein, is established in the amount of $75 million. The City Council will submit the authorizations of this resolution to the qualified electors of the CFD in a special mailed-ballot election. Based on findings to be formally made by the City Council in a resolution to be adopted this date calling the special mailed-ballot election, to which reference is made for further particulars, the qualified electors of the CFD are the landowners owning property in the CFD that is not exempt from the Special Tax, in accordance with section 53326(b) of the Act. In the opinion of the City Council, the public interest will not be served by allowing the owners of property in the CFD to enter into a contract under section (a) of the Act to do the work to be financed under the Act. The Manager of the Public Improvement Finance Division of the City Finance Department, 915 I Street, City Hall, Fifth Floor, Sacramento, CA 95814, telephone number (916) , will be responsible for annually preparing, or causing to be prepared, the roll of Special Tax levies on the parcels within the CFD (identified by Sacramento County Assessor s parcel numbers) and will be responsible for estimating future Special Tax levies as required by section of the Act. The City Council finds and determines that all proceedings conducted and approved by the City Council with respect to the establishment of the CFD, up to and including the adoption of this resolution and the other resolutions adopted this date in connection with the CFD, are valid and in conformity with the requirements of the Act. This determination is final and conclusive for all purposes and is binding upon all persons. Accordingly, the City Council finds, determines, and orders that the CFD is hereby established with all of the authorities described and set forth in this resolution, the exercise of which is subject only to the election. This resolution takes effect when adopted. Table of Contents: Exhibit A Boundary Map Exhibit B List of Authorized Facilities Exhibit C Representative List of Incidental Expenses Exhibit D Rate, Method of Apportionment, and Manner of Collection of Special Tax Exhibit E Hearing Report Page 12 of 118

13 Exhibit A Boundary Map Page 13 of 118

14 EXHIBIT B City of Sacramento Railyards Community Facilities District No (Improvements) Sacramento County, California LIST OF AUTHORIZED FACILITIES AND FEES Authorized facilities that may be funded through Railyards Community Facilities District No (Improvements) include the following public improvements: Transportation Improvements Authorized facilities include any and all transportation improvements designed to meet the needs of development within the Railyards Community Facilities District No (Improvements), including but not limited to acquisition of land and easements; roadway design; project management; bridge crossings and culverts; clearing, grubbing, and demolition; grading, soil import/export, paving (including slurry seal), and decorative/enhanced pavement concrete and/or pavers; joint trenches, underground utilities and undergrounding of existing utilities; dry utilities and appurtenances; curbs, gutters, sidewalks, bike trails (including onsite and off-site), other pedestrian improvements; enhanced fencing, and access ramps; street lights, signalization, and traffic signal control systems; bus turnouts; signs and striping; erosion control; median and parkway landscaping and irrigation; entry monumentation; bus shelters, masonry walls; traffic control and agency fees; and other improvements related thereto. Eligible improvements for the roads listed above also include any and all necessary underground potable and recycled water, sanitary sewer, and storm drainage system improvements. Authorized facilities include but are not limited to the following transportation improvements: 5th Street (between Railyards and North B Street) 6th Street Bike Lanes 6th Street (between Railyards and North B Street). 7th Street Widening 8th Street (between Railyards and North B Street) 10th Street (between Railyards Boulevard and Northern Project Boundary) 10th Street (extension to North B Street) Bercut Drive (from south of the drainage pump station to South Park Drive) Camille Street (between 5th Street and 6th Street) Camille Street (between Bercut Drive and 5th Street) Judah from Railyards to South Park Street B-1 Page 14 of 118

15 North B Street (between 5th and 6th) North B Street (between 6th and 7th Street) North B Street (between 7th and 8th Street North B Street (between 8th and 10th Street) Railyards Boulevards (between 7th Street and 10th Street) Railyards Boulevard (between 10th Street and 12th Street) Railyards Boulevard (lane shift) Richards/I-5 Interchange (Railyards contribution) South Park Drive (between Bercut Drive and 5th Street) South Park Drive (between 5th and 6th Street) South Park Paseo (between 6th and 7th Street) Stanford Street (between Stevens Street and Railyards Boulevard) Stevens Street (between 6th Street and Stanford Street) Stevens Street (between 5th Street and 6th Street) Huntington Street (between Camille Street and Railyards Boulevard) Class 1 Bike Trail (between Railyards and 6 th ) Interim Traffic Signal at Railyards Boulevard and Jiboom Street Intersection Improvements at 7th Street and Railyards Boulevard Intersection Improvements at 7th Street and North B Street Transit Improvements Authorized facilities include any and all improvements to transit facilities designed to meet the needs of development in the Railyards Community Facilities District No (Improvements). 7th Street Light Rail Transit (LRT) station West LRT Station Wastewater System Improvements Authorized facilities include any and all wastewater facilities designed to meet the needs of development within Railyards Community Facilities District No (Improvements). These facilities include but are not limited to pipelines and all appurtenances thereto; manholes; tie-in to existing main line; force mains; lift stations; odor-control facilities; and permitting related thereto; and related sewer system improvements, including: Sewer lines in all authorized facility transportation facilities 3rd Street Sewer (offsite) Trunk Sewer (Railyards to 3 rd Street) Trunk Sewer (7 th Street to the end of 10 th Street) Storm Drain Improvements Authorized facilities include any and all onsite and off-site backbone drainage and storm B-2 Page 15 of 118

16 drainage improvements designed to meet the needs of development of the development within Railyards Community Facilities District No (Improvements). These facilities include but are not limited to mains, pipelines and appurtenances, outfalls and water quality measures, temporary drainage facilities, detention/retention basins and drainage pretreatment facilities; drainage ways/channels, pump stations, landscaping and irrigation; access roads, gates, and fencing; and striping and signage. All storm drain lines and facilities within authorized facility roadways Storm Drainage detention facility (cistern), pump station, and outfall Interim retention facilities Flood Wall and Gate Drain Line Replacement (Railyards Boulevard) Drain line SOTA Water Improvements Authorized facilities include any and all on- and off-site backbone water facilities designed to meet the needs of development of the development within Railyards Community Facilities District No (Improvements). These facilities include but are not limited to potable and non-potable mains, valves, services, and appurtenances. Water lines in all authorized facility roads 7th Street Water Line Park and Open Space Improvements Authorized facilities include any and all improvements to parks and open space designed to meet the needs of development in Railyards Community Facilities District No (Improvements). Vista Park Under I-5 Lot 1 Open Space Lot 2E Kaiser Plaza. Market Plaza (Parcels 21a and 21b) between Car Shop #3 and the Paint Shop Lot 30 Plaza (State Parks footprint) Park Lot 31 Lot 32 Plaza (State Parks Museum) Riverfront Park Lot 34 Sacramento River Connection Lot 35 Lot 53 Open Space (along Railyards Boulevard from 10 th Street to 12 th Street) Park Lot 57A Park Lot 58A Vista Connector Lot 60 MLS Promenade Lot 65 Park Lot 68 B-3 Page 16 of 118

17 Park Lot 70 Other Public Facilities Authorized facilities include any and all public facilities or infrastructure including but not limited to land acquisition, vertical construction, site clearing, grading, utility connections, street frontage improvements including curbs, gutters: Community Center/Library Facilities Police Station Fire Station Intermodal Tunnel Gateway Structure (Parcel 22) Pedestrian Access Improvements between the 5th and 6th Street Public Parking Garage and the Intermodal Tunnel North Entrance 5th and 6th Street Public Parking Garage Development Impact Fees and Other Eligible Fees Authorized development impact fees and other fees that may be funded include the following fees: Railyards Plan Area Fee Park Development Impact Fees Park Quimby Land Fee Water Fee Water Meter Fee SAFCA fee Construction Excise Tax Transportation Development Impact Fee I-5 Subregional Corridor Mitigation Program Combined Sewer/Storm Drainage Fee SRCSD (Regional Sewer) Sacramento Transportation Authority Sacramento City Unified School District Sacramento Metro Air Quality Management District Fees Formation, Administrative and Incidental Expenses In addition to the above facilities, other expenses incidental to the above and authorized by the Mello-Roos Community Facilities Act of 1982, including but not limited to the cost of planning, permitting, and designing the facilities (including the cost of environmental evaluation, orthophotography, environmental remediation/mitigation, associated with authorized facilities); SWPPP; land acquisition and easement payment for the facilities; project management; construction staking; engineering studies and reports; utility B-4 Page 17 of 118

18 relocation and demolition costs incidental to construction of the facilities, wetland/species mitigation purchase; reimbursements to other areas for infrastructure facilities or planning serving development in the CFD; planning, legal, engineering, and technical studies costs related to the facilities; and any other expenses incidental to the construction, completion, and inspection of the facilities. In addition, expenses eligible to be financed by the CFD include all expenses associated with the formation and ongoing administration of the CFD and issuance of bonds; determination of the amount of taxes and collection of taxes; inspection, plan check, and other costs related to acceptance of the facilities by the City; payment of taxes; and any other costs incurred to carry out the authorized purposes of the CFD. B-5 Page 18 of 118

19 EXHIBIT C RAILYARDS COMMUNITY FACILITIES DISTRICT NO (IMPROVEMENTS) REPRESENTATIVE LISTING OF INCIDENTAL EXPENSES The following list, which is not exhaustive, identifies incidental expenses that may be incurred in the proceedings for formation of the Railyards Community Facilities District No (Improvements) (the CFD ); in the construction, improvement, and acquisition of the authorized public facilities; in the financing of the authorized governmental fees; or in the related bond or debt financing. These expenses will be payable from proceeds of bonds or other debt or directly from the proceeds of the authorized special tax: Services of special-tax consultants Administrative services by City staff, including review, oversight, and administration Services of bond counsel and disclosure counsel Services of financial advisors Services of special-tax administrators Services of appraisers and market-absorption consultants Services of bond-transfer agents, trustees, fiscal agents, registrars, paying agents, and rebate-calculation consultants Bond printing and the printing and mailing of a Preliminary Official Statement and Official Statement Publishing, mailing, and posting of notices Recording fees Underwriter s discount Bond-reserve fund Capitalized interest Governmental notification and filing fees Credit-enhancement costs Rating-agency fees Continuing-disclosure services Any other incidental expenses of a similar nature that may be incurred from time to time with respect to the CFD C-1 Page 19 of 118

20 The expenses of certain recurring services relating to the CFD may be included in each annual special-tax levy, and these expenses are described in the definition of Administrative Expenses set forth in the Rate, Method of Apportionment and Manner of Collection of Special Tax attached to this resolution as Exhibit D. C-2 Page 20 of 118

21 EXHIBIT D City of Sacramento Railyards Community Facilities District No (Improvements) Sacramento County, California RATE, METHOD OF APPORTIONMENT, AND MANNER OF COLLECTION OF SPECIAL TAX 1. Basis of Special Tax Levy A Special Tax authorized under the Mello-Roos Community Facilities Act of 1982 applicable to the land in the City of Sacramento Railyards Community Facilities District No (Improvements) of the City of Sacramento shall be levied and collected according to the tax liability determined by the City through the application of the appropriate amount or rate, as described below. 2. Definitions Acre or Acreage means the land area of an Assessor s Parcel as shown on an Assessor s Parcel Map or, if the land area is not shown on an Assessor s Parcel Map, the land area shown on the applicable records of the City or the County. Act means the Mello-Roos Community Facilities Act of 1982, as amended, Sections and following of the California Government Code. Administrative Expenses mean the actual or reasonably estimated costs related to the administration of the CFD, including, but not limited to, the following items: a. Costs of computing Special Taxes and preparing annual Special Tax collection schedules (whether by the City or any City designee). b. Costs of collecting, auditing, and accounting for the Special Taxes (whether by the County, the City, or otherwise), including costs related to collection of delinquent Special Taxes and foreclosure proceedings. c. Costs of remitting the Special Taxes to the Trustee. d. Costs of any Trustee (including its legal counsel) in the discharge of the duties required of it under any indenture for any Bonds. e. Costs to the City or to any City designee of complying with arbitrage rebate requirements. f. Costs to the City or to any City designee of complying with ongoing continuing-disclosure requirements with respect to the Bonds for the City or any obligated persons. Page 21 of 118 Economic & Planning Systems, Inc. (EPS) D-1 P:\172000\ Sacramento Railyards CFD Formation\Rate and Method\ rm6.docx

22 Rate, Method of Apportionment, and Manner of Collection of Special Tax Exhibit D June 27, 2018 g. Costs associated with preparing disclosure statements for any Bonds. h. Costs incurred in responding to public inquiries regarding the Special Tax. i. Costs to the City or to any City designee related to any appeal of the Special Tax. j. Costs associated with the release of funds from an escrow account, if any. k. Costs to the City for the issuance and sale of Bonds authorized by the CFD that are not recovered through the proceeds of the Bond sale. Such costs may include some of the cost of services provided by City staff. l. Costs to the City for any other administrative purposes, including attorney s fees for legal advice and attorney s fees and other costs related to collection of the Special Taxes and commencing and pursuing to completion any foreclosure of delinquent Special Taxes. Such costs include the cost of services provided by City staff. Administrator means the official of the City, or designee thereof, responsible for determining the Annual Costs and providing for the levy and collection of the Special Tax. Annual Costs mean, for any Fiscal Year, the total of the following after excluding any capitalized interest available to pay Debt Service that is due in the subsequent calendar year (i.e., January 1 to December 31) following the beginning of a Fiscal Year (i.e., July 1); any available earnings on, or surplus balances in, the reserve fund for Bonds or the Special Tax fund for the CFD; and any other available revenues of the City that relate to the CFD and may be lawfully used to pay Annual Costs for such Fiscal Year: a. Debt Service that is due in the subsequent calendar year (i.e., January 1 to December 31) following the beginning of a Fiscal Year (i.e., July 1). b. The amount needed to replenish the reserve fund for Bonds to the level required under any indenture for any Bonds, to the extent not included in a computation of Annual Costs in a previous Fiscal Year. c. Administrative Expenses for the Fiscal Year. d. To the extent permitted by the Act, the amount needed to fund (1) unpaid Special Tax delinquencies from previous Fiscal Years, to the extent not previously levied, and (2) anticipated delinquencies for the current Fiscal Year on any Parcel which has no outstanding delinquent Special Taxes. Collections from prior delinquencies should be used to offset the amount needed for current and future delinquencies if available. e. Authorized Facilities funded on a Pay-As-You-Go Basis. Anticipated Construction Proceeds mean the amount anticipated to be available through the CFD for acquiring or constructing Authorized Facilities, which is equal to $30 million at formation of the CFD. This amount is increased on July 1 of the current Fiscal Year by the increase in the ENR-CCI. In the event there is a decrease or no change in the ENR-CCI between Fiscal Years, there shall be no change in the updated Anticipated Construction Proceeds. As determined by the City, once all Authorized Facilities costs, including Authorized Facilities costs Page 22 of 118 Economic & Planning Systems, Inc. (EPS) D-2 P:\172000\ Sacramento Railyards CFD Formation\Rate and Method\ rm6.docx

23 Rate, Method of Apportionment, and Manner of Collection of Special Tax Exhibit D June 27, 2018 funded on a Pay-As-You-Go Basis, have been funded, the City may stop escalating the Anticipated Construction Proceeds. Assessor s Parcel or Parcel means a lot or Parcel with an assigned Assessor s Parcel Number and which is shown on an Assessor s Parcel Map. Assessor s Parcel Map means an official map of the County Assessor designating Parcels by Assessor s Parcel Number. Assessor's Parcel Number means the number assigned to a Parcel by the County Assessor on the equalized tax roll. Authorized Facilities mean those facilities to be financed, as identified in the resolution forming the CFD. Base Year means the Fiscal Year beginning July 1, 2018, and ending June 30, Benefit Share means, for any Fiscal Year, the Maximum Annual Special Tax for a Parcel divided by the Maximum Annual CFD Special Tax Revenue. Bond Share means the share of Outstanding Bonds assigned to a Parcel as the term is used in Section 6 hereof. Bond(s) mean(s) any bond(s) issued by the City for the CFD under the Act and any other debt, as defined in the Act, used to acquire or construct Authorized Facilities. Building Permit means a permit issued by the City or other permitting agency, such as the State of California, for the construction of a structure on a Taxable Parcel. CFD means the City of Sacramento Railyards Community Facilities District No (Improvements) of the City of Sacramento, Sacramento County, California. City means the City of Sacramento in Sacramento County, California. Condominium Plan means the plan created for each Condominium Structure that is defined in Civil Code Section 4120 and described in Civil Code Section Condominium Structure means a residential, commercial, or mixed-use structure consisting of two or more units that share common walls and are capable of being offered as for-sale residential condominium units or for-sale nonresidential condominium units, with each such unit having its own separate Assessor s Parcel Number. Condominium Structures include such structures that met the statutory definition of a condominium contained in Civil Code Section Condominium Unit means an airspace residential unit or nonresidential unit in a Condominium Structure which has been assigned its own separate Assessor s Parcel Number. Condominium Unit Building Area means the square footage of a Condominium Unit as shown on the Condominium Plan. Council means the City Council of the City acting for the CFD under the Act. County means the County of Sacramento, California. Page 23 of 118 Economic & Planning Systems, Inc. (EPS) D-3 P:\172000\ Sacramento Railyards CFD Formation\Rate and Method\ rm6.docx

24 Rate, Method of Apportionment, and Manner of Collection of Special Tax Exhibit D June 27, 2018 County Auditor-Controller means the Auditor-Controller of the County. Debt Service means, for any period, the total amount of principal of, interest on, scheduled sinking fund payments for, and other regularly scheduled payments on the Outstanding Bonds for the period. Developed Parcel means, in any Fiscal Year, a Parcel for which a Building Permit for residential use or nonresidential use has been issued before June 1 of the preceding Fiscal Year. Once a Parcel is classified as a Developed Parcel, it shall remain a Developed Parcel. ENR-CCI means the year-over-year change in the Engineering News Record Construction Cost Index for San Francisco (March to March). Fiscal Year means the period starting July 1 and ending the following June 30. Full Prepayment means the complete fulfillment of a Parcel s Special Tax obligation, as determined by following the procedures in Section 6. Lot Number means a numbered lot identified on Map 2, which illustrates the anticipated Parcels to be created upon further subdivision of Original Parcels. Maximum Annual Special Tax means the greatest amount of Special Tax that can be levied against a Parcel in a given Fiscal Year, as shown in Attachments 1 and 2. Maximum Annual Special Tax Rate means the rate of Maximum Annual Special Tax charged per Acre, as shown in Attachments 1 and 2. Maximum Annual Special Tax Revenue means the greatest amount of revenue that can be collected in total from a group of Parcels (such as Developed Parcels) by levying the Maximum Annual Special Tax. Maximum Annual CFD Special Tax Revenue means the sum of the Maximum Annual Special Tax levied on all Taxable Parcels in the CFD in a Fiscal Year. Original Parcel means a Parcel identified in Attachment 1 at formation of the CFD and shown on Map 1. Outstanding Bonds mean the total principal amount of Bonds that have been issued and not fully repaid, optionally redeemed, or legally defeased. Partial Prepayment means the partial fulfillment of a Parcel s Special Tax obligation, as determined by following the procedures in Section 6. Pay-As-You-Go Basis means the use of Special Tax revenues to directly fund the acquisition, construction, and improvement of Authorized Facilities as part of an acquisition agreement with the City. Prepayment means the complete or partial fulfillment of a Parcel s Special Tax obligation, as determined by following the procedures in Section 6. Proportionately means that the ratio of the actual Special Tax levy to the Maximum Annual Special Tax is equal for all Developed Parcels. For Undeveloped Parcels, Proportionately means Page 24 of 118 Economic & Planning Systems, Inc. (EPS) D-4 P:\172000\ Sacramento Railyards CFD Formation\Rate and Method\ rm6.docx

25 Rate, Method of Apportionment, and Manner of Collection of Special Tax Exhibit D June 27, 2018 that the ratio of the actual Special Tax levy to the Maximum Annual Special Tax is equal for all Undeveloped Parcels. Public Agency means the City, State of California, the County, the federal government, other governmental agencies, the Sacramento City Unified School District, or other special district. Public Parcel means any Parcel, in its entirety, that is or is intended to be publicly owned that is normally exempt from the levy of general ad valorem property taxes under California law, including public streets, schools, parks, public drainageways, public landscaping, wetlands, greenbelts, and public open space. Any such Parcel is a Tax-Exempt Parcel. Remaining Facilities Funding Requirement means the amount of Anticipated Construction Proceeds less construction proceeds from previous CFD Bond issuances and costs of Authorized Facilities funded on a Pay-As-You-Go Basis from the levy of the Special Tax. Remaining Facilities Funding Requirement Share means the Remaining Facilities Funding Requirement multiplied by the Benefit Share. Reserve Fund means any Debt Service reserve fund established pursuant to the indenture for the Bonds. Reserve Fund Requirement means the amount required to be held in any Reserve Fund in accordance with the indenture for the Bonds. Reserve Fund Share means the amount on deposit in any Reserve Fund, but in any event not to exceed the Reserve Fund Requirement, multiplied by the Benefit Share for a given Parcel. RMA means this Rate, Method of Apportionment, and Manner of Collection of Special Tax. Special Tax(es) mean(s) any tax levy under the Act in the CFD. Subdivision or Subdivided means a division of a Parcel into two or more Parcels through the Subdivision Map Act process. A Subdivision may also include the merging of two or more Parcels to create new Parcels. Successor Parcel means a Parcel created by the Subdivision of an Original Parcel or a Successor Parcel. Tax Collection Schedule means the document prepared by the Administrator for the County Auditor-Controller to use in levying and collecting the Special Taxes each Fiscal Year. Tax Escalation Factor means a factor of 2 percent in each Fiscal Year following the Base Year by which the Maximum Annual Special Tax for the previous Fiscal Year will be increased. Taxable Acreage means that area of a Parcel determined by the Administrator anticipated to become a Taxable Parcel or Parcels upon Subdivision. Taxable Parcel means any Parcel that is not a Tax-Exempt Parcel. Tax-Exempt Parcel means any Public Parcel and any other Parcel that in its entirety, is or is intended to be, publicly owned that is normally exempt from the levy of general ad valorem property taxes under California law, including public streets, schools, parks, public drainageways, public landscaping, wetlands, greenbelts, common areas, and public open space. Page 25 of 118 Economic & Planning Systems, Inc. (EPS) D-5 P:\172000\ Sacramento Railyards CFD Formation\Rate and Method\ rm6.docx

26 Rate, Method of Apportionment, and Manner of Collection of Special Tax Exhibit D June 27, 2018 Total Condominium Unit Building Area means the sum of all Condominium Unit Building Areas for all Condominium Units in a Condominium Structure as shown on a Condominium Plan. Trustee means a national banking association organized and existing under the laws of the United States. Undeveloped Parcel means a Taxable Parcel that is not a Developed Parcel. 3. Duration of the Special Tax The Special Tax will be levied and collected for as long as it is needed to pay Annual Costs; however, in no event shall the Special Tax be levied on any Parcel in the CFD after Fiscal Year When the costs of all Authorized Facilities have been funded (as determined by the Administrator) and other Annual Costs incurred by the CFD have been paid, the Special Taxes shall cease to be levied. The City shall direct the County Recorder to record a Notice of Cessation of Special Tax. Such notice will state that the obligation to pay the Special Tax has ceased and that the lien imposed by the Notice of Special Tax Lien is extinguished. In addition, the Notice of Cessation of Special Tax shall 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. 4. Administrative Tasks Tasks required annually of the Administrator are discussed below: a. Classification of Parcels. By June 30 of each Fiscal Year, for purposes of the next Fiscal Year tax levy, the Administrator shall use the Parcel records of the Assessor s Secured Tax Roll as of January 1 of the preceding Fiscal Year, and other City development approval records, and cause: 1. Each Parcel to be classified as a Taxable Parcel or a Tax-Exempt Parcel. 2. Each Taxable Parcel to be classified as a Developed Parcel or an Undeveloped Parcel. b. Annual Special Tax Escalation. The Administrator shall increase the Maximum Annual Special Tax by the Tax Escalation Factor in each Fiscal Year following the Base Year. c. Assignment of the Maximum Annual Special Tax to Original Parcels. All Original Parcels at formation of the CFD are identified by Assessor s Parcel Number and are shown in Attachment 1 and Map 1. A Maximum Annual Special Tax is assigned to each Original Parcel in Attachment 1 by multiplying the Taxable Acreage for each Lot Number within such Original Parcel anticipated to include Taxable Acreage by the Maximum Annual Special Tax per Acre. The sum of the Maximum Annual Special Tax calculated for Lot Numbers anticipated to include Taxable Acreage within each Original Parcel equals the Maximum Annual Special Tax for that Original Parcel. Each Original Parcel has one or more Lot Numbers assigned corresponding to the Lot Numbers shown in Map 2 and Attachment 1. As Parcels are Subdivided, Successor Parcels are anticipated to be created similar to the Lot Numbers shown in Map 2. Using the procedures described below, the Maximum Annual CFD Special Tax Revenue shall not be reduced because of Subdivision. Page 26 of 118 Economic & Planning Systems, Inc. (EPS) D-6 P:\172000\ Sacramento Railyards CFD Formation\Rate and Method\ rm6.docx

27 Rate, Method of Apportionment, and Manner of Collection of Special Tax Exhibit D June 27, 2018 As noted in Attachment 1, there are several Lot Numbers that are located within two Assessor s Parcels and At CFD formation, the Maximum Annual Special Tax on these two Assessor s Parcels has been assigned to the Original Parcels as shown on Attachment 1. If these two Assessor s Parcels Subdivide as anticipated, the Maximum Annual Special Tax would be assigned to each Successor Parcel as indicated by for each Lot Number shown on Attachment 1. d. Assignment of the Maximum Annual Special Tax to Successor Parcels if Original Parcels are Subdivided into Parcels like Lot Numbers displayed on Attachment 1. If Original Parcels are Subdivided and Successor Parcels are created substantially in the size and configuration as shown in Map 2 and in Attachment 1, assign the Maximum Annual Special Tax to each Successor Parcel as shown in Attachment 1. e. Assignment of the Maximum Annual Special Tax to Successor Parcels if Original Parcels are Subdivided in a manner different than anticipated by Lot Numbers in Attachment 1. As Original Parcels and Successor Parcels are Subdivided creating new Successor Parcels, the Maximum Annual Special Tax per Successor Parcel will be assigned using the following procedures: 1. The Administrator shall identify the Taxable Acreage for each Successor Parcel created from an Original Parcel. 2. Multiply the Taxable Acreage of each Successor Parcel by the Maximum Annual Special Tax Rate per Acre (as escalated by the Tax Escalation Factor). 3. If the sum of Maximum Annual Special Taxes from all Successor Parcels from an Original Parcel equals or exceeds the Maximum Annual Special Tax for that Original Parcel, assign the Maximum Annual Special Tax for each Successor Parcel as calculated in Section 4.e If the sum of Maximum Annual Special Taxes from all Successor Parcels from an Original Parcel is less than the Maximum Annual Special Tax for that Original Parcel being Subdivided, use the procedures below to assign the Maximum Annual Special Tax to each Successor Parcel. A. Identify the Maximum Annual Special Tax (as increased by the Tax Escalation Factor) assigned to the Taxable Parcel(s) being Subdivided. B. Determine the Taxable Acreage assigned to each Successor Parcel. C. Sum the Taxable Acreage for all Successor Parcels determined in Section 4.e.4.B. D. Divide the Taxable Acreage for each Successor Parcel determined in Section 4.e.4.B by the sum of the Taxable Acreage for all Successor Parcels of an Original Parcel determined in Section 4.e.4.C. E. Multiply the result for each Successor Parcel from Section 4.e.4.D by the Maximum Annual Special Tax identified in Section 4.e.4.A. F. Assign the Maximum Annual Special Tax calculated in Section 4.e.E to each Successor Parcel. Page 27 of 118 Economic & Planning Systems, Inc. (EPS) D-7 P:\172000\ Sacramento Railyards CFD Formation\Rate and Method\ rm6.docx

28 Rate, Method of Apportionment, and Manner of Collection of Special Tax Exhibit D June 27, 2018 f. Assignment of the Maximum Annual Special Tax to Each Condominium Unit Within a Condominium Structure. For Condominium Units, the Maximum Annual Special Tax must be assigned to improvements on the Parcel rather than the land. Assign the Maximum Annual Special Tax to Condominium Units using the following procedures: 1. Identify the Maximum Annual Special Tax (as increased by the Tax Escalation Factor) assigned to the Taxable Parcel(s) being subdivided by the Condominium Plan. 2. Determine the Total Condominium Unit Building Area for the applicable Successor Parcel as identified on the Condominium Plan. 3. Determine the Condominium Unit Building Area for each Condominium Unit. 4. Divide the Condominium Unit Building Area determined in Section 4.f.3 by the Total Condominium Unit Building Area determined in Section 4.f Multiply the result for each Condominium Unit from Section 4.f.4 by the Maximum Annual Special Tax identified in Section 4.f Assign the Maximum Annual Special Tax calculated in Section 4.f.5 to each Condominium Unit. 7. Once a Condominium Unit has been assigned the Maximum Annual Special Tax identified in Section 4.f.6, this amount shall not change for future building permits or for additions or changes to the Condominium Unit. g. Conversion of a Tax-Exempt Parcel to a Taxable Parcel. If a Tax-Exempt Parcel is converted to a taxable use or transferred to a private owner as a Taxable Parcel, it shall become subject to the Special Tax. The Maximum Annual Special Tax for such a Parcel shall be determined using the provisions of Section 4.c. through 4.f. Once a Parcel has been identified as a Taxable Parcel, it shall remain a Taxable Parcel, except for Parcels transferred under Section 4.h. h. Taxable Parcels Acquired by a Public Agency. A Taxable Parcel that is acquired by a Public Agency after the CFD is formed will remain subject to the applicable Special Tax unless the Special Tax obligation is satisfied pursuant to Section of the Act. An exception to this may be made if a Public Parcel, such as a school site, is relocated to a Taxable Parcel, in which case the previously Tax-Exempt Parcel of comparable Acreage becomes a Taxable Parcel and the Maximum Annual Special Tax from the previously Taxable Parcel is transferred to the new Taxable Parcel. This transfer of a Parcel from a Taxable Parcel to a Public Parcel will be permitted to the extent there is no net loss in Maximum CFD Special Tax Revenue and the transfer is agreed to by the owners of the Parcels involved in the transfer and the Administrator. At CFD formation, the City has identified the possibility of up to, but not to exceed, 5 acres of land that initially is considered Taxable Acreage that may become Tax-Exempt Parcels. In priority order, 5 acres of Taxable Acreage may be converted to Tax-Exempt parcels for (1) a fire station, (2) a police station, and (3) a public school site without requiring any transfers of Maximum Annual Special Tax or Prepayment of the obligation. Attachment 2 shows the adjusted Maximum Annual CFD Revenue for the Base Year if up to 5 Taxable Acres Page 28 of 118 Economic & Planning Systems, Inc. (EPS) D-8 P:\172000\ Sacramento Railyards CFD Formation\Rate and Method\ rm6.docx

29 Rate, Method of Apportionment, and Manner of Collection of Special Tax Exhibit D June 27, 2018 were to be converted to Tax-Exempt Parcels. In whole or in part, the City, in its sole discretion, can release this reservation to permit up to 5 acres to be converted from Taxable Acreage to Tax Exempt Parcels. The Administrator shall annually document whether any of this reservation of up to 5 Taxable Acres has been converted to one or more Tax-Exempt Parcels. i. Transfer of the Maximum Annual Special Tax amongst Taxable Parcels. As Taxable Parcels are Subdivided, the Maximum Annual Special Tax (on a per Taxable Acreage basis) may become greater or less than other similar Parcels. As long as no vertical construction has occurred on Parcels proposed for a transfer of Maximum Annual Special Tax, owners of such Parcels may request that the City allow a transfer of the Maximum Annual Special Tax amongst two or more Taxable Parcels to remedy such differences between Taxable Parcels. All allowed transfers shall only occur such that there is no reduction in the Maximum Annual Special Tax Revenue of all Taxable Parcels included in such transfers and the Administrator and property owner agree to the transfer(s). j. Release of Special Tax Lien for Lot Number 51b. At CFD formation, the planned Lot Number 51b, with a Maximum Annual Special Tax of $0, was included in a larger Assessor s Parcel and therefore could not be excluded from the CFD boundary. If a Parcel is created consistent with the Lot Number 51b identified in Map 2 and Attachment 1, the City shall file a Notice of Release of the Special Tax lien for that Parcel. Once the notice is filed, that Parcel will no longer be subject to a Maximum Annual Special Tax under this RMA. 5. Calculating Annual Special Taxes Each Fiscal Year, the Administrator will compute the Annual Costs and determine the annual Special Tax levy for each Taxable Parcel based on the assignment of the Special Tax in Section 4. The Administrator then will determine the Special Tax levy for each Taxable Parcel using the following process: a. Compute the Annual Costs of the CFD. b. For all Taxable Parcels, calculate the Special Tax levy for each using the following steps: Step 5.b.1. The Special Tax shall be levied Proportionately on all Parcels of Developed Property up to the amount of the Annual Costs or up to 100 percent of the Maximum Special Tax for each Developed Parcel, whichever is lower. Step 5.b.2. If additional revenue is needed after Step 5.b.1, the Special Tax shall be levied Proportionately on each Undeveloped Parcel until the revenue from the Special Tax levy in this step, when added to the levy amounts determined in Step 5.b.1, equals the Annual Costs, or up to 100 percent of the Maximum Annual Special Tax for all Undeveloped Parcels. c. Levy on each Taxable Parcel the amount calculated above. d. Prepare the Tax Collection Schedule and, unless an alternative method of collection has been selected pursuant to Section 8, send it to the County Auditor-Controller requesting that it be placed on the general, secured property tax roll for the Fiscal Year. The Tax Collection Page 29 of 118 Economic & Planning Systems, Inc. (EPS) D-9 P:\172000\ Sacramento Railyards CFD Formation\Rate and Method\ rm6.docx

30 Rate, Method of Apportionment, and Manner of Collection of Special Tax Exhibit D June 27, 2018 Schedule will not be sent later than the date required by the County Auditor-Controller for such inclusion. The Administrator will make every effort to calculate the Special Tax correctly for each Parcel. It will be the burden of the taxpayer to correct any errors in determining which Parcels are subject to the tax and the Special Tax assignments. 6. Prepayment of the Special Tax Obligation A property owner may permanently or partially satisfy the Maximum Annual Special Tax for a Taxable Parcel by a Prepayment as permitted under Government Code Section An owner of an Assessor s Parcel intending to prepay the Special Tax obligation shall provide the City with written notice of intent to prepay. Within 45 days of receipt of such written notice and payment of any required fee, the City or its designee shall notify such owner of the Prepayment amount for such Parcel. Prepayment must be made no fewer than 75 days before any redemption date for Bonds to be redeemed with the proceeds of such prepaid Special Taxes. Full Prepayment is permitted only under the following conditions: The City determines that the Full Prepayment of the Special Tax does not jeopardize its ability to make timely payments of Debt Service on Outstanding Bonds and maintain a 110-percent Special Tax coverage of Debt Service plus Administrative Expenses in all years where there will be Outstanding Bonds. The property owner prepaying the Special Tax on a Parcel has paid any delinquent Special Taxes and penalties on that Parcel before Full Prepayment. Amounts in the Reserve Fund are equal to or greater than the Reserve Fund Requirement. When permitted, the Administrator shall calculate Full Prepayment using the following steps: a. The Full Prepayment amount before any issuance of CFD Bonds shall be calculated using the following procedures (see Table 1 for a sample of Full Prepayment): 1. Determine the Maximum Annual Special Tax for the Taxable Parcel for which the Special Tax is to be prepaid using the provisions of Section Divide the amount from Step 6.a.1 by the Maximum CFD Annual Special Tax Revenue to determine the Benefit Share for the Full Prepayment Parcel. 3. Multiply the Remaining Facilities Funding Requirement by the Benefit Share to determine the Full Prepayment amount. 4. Add to the amount determined in Step 6.a.3 any costs to the City associated with the preparation of the Full Prepayment calculation. b. The Full Prepayment amount after issuance of the initial CFD Bonds shall be calculated using the following procedures (see Table 2 for a sample of Full Prepayment): 1. Determine the Maximum Annual Special Tax for the Taxable Parcel for which the Special Tax is to be prepaid using the provisions of Section 4. Page 30 of 118 Economic & Planning Systems, Inc. (EPS) D-10 P:\172000\ Sacramento Railyards CFD Formation\Rate and Method\ rm6.docx

31 Rate, Method of Apportionment, and Manner of Collection of Special Tax Exhibit D June 27, Divide the amount from Step 6.b.1 by the Maximum CFD Annual Special Tax Revenue to determine the Benefit Share for the Parcel. 3. Multiply the Benefit Share by the total amount of Outstanding Bonds to determine the Bond Share for the Full Prepayment Parcel. 4. Multiply the Benefit Share by the Remaining Facilities Funding Requirement to determine the Remaining Facilities Funding Requirement Share for the Full Prepayment Parcel. 5. Determine the total amount of Bonds to be called by rounding the amount summed in Step 6.b.3 down to the nearest $5, Multiply the amount calculated in Step 6.b.5 by the call premium, if applicable, for the next available call date. 7. Determine the Reserve Fund Share for the Full Prepayment Parcel by multiplying the Reserve Fund Requirement by the Benefit Share. 8. Determine the Full Prepayment amount by adding the amounts calculated in Steps 6.b.4, 6.b.5, and 6.b.6 and then subtracting the Reserve Fund Share calculated in Step 6.b.7, provided the amount in the Reserve Fund equals the Reserve Fund Requirement after reduction. Add to the amount just determined any interest to the next Bond call date not covered by Special Taxes already levied and collected for the prepaying Parcel, plus any expenses incurred by the City in connection with the Full Prepayment calculation or the application of the proceeds of the Full Prepayment to the call of Outstanding Bonds. 9. If the Special Taxes have already been levied, but not collected, the Parcel shall not become a Full Prepayment Parcel until the owner of the Parcel has paid the Special Taxes included on the current property tax bill in addition to the Full Prepayment amount. c. Partial Prepayments are only allowed for Parcels owned by a property owner before the issuance of the initial Building Permit. A Partial Prepayment can occur only once per Assessor s Parcel. The City may allow a Partial Prepayment if it is determined that the Partial Prepayment will not jeopardize its ability to make timely payments of Debt Service and maintain a 110-percent Special Tax coverage of Debt Service plus Administrative Expenses in all years where there will be Outstanding Bonds. The amount of any Partial Prepayment must be either 25 percent or 50 percent of the Full Prepayment amount determined in Step 6.b.8. A Partial Prepayment may be made in an amount equal to 25 percent or 50 percent of the Full Prepayment desired by the party making a Partial Prepayment, except that the full amount of administrative fees and expenses determined in Step 6.b.8 shall be included in the Partial Prepayment. The Maximum Annual Special Tax that can be levied on a Parcel after a Partial Prepayment is made is equal to the Maximum Annual Special Tax that could have been levied before the Prepayment, reduced by the percentage of the Full Prepayment that the Partial Prepayment represents, all as determined by or at the direction of the Administrator. For example, if the Partial Prepayment is equal to 25 percent, the Maximum Annual Special Tax applied to the Parcel would be 75 percent of the Maximum Annual Special Tax. Page 31 of 118 Economic & Planning Systems, Inc. (EPS) D-11 P:\172000\ Sacramento Railyards CFD Formation\Rate and Method\ rm6.docx

32 Rate, Method of Apportionment, and Manner of Collection of Special Tax Exhibit D June 27, Interpretation, Application, and Appeal of Special Tax Formula and Procedures Any taxpayer who feels the amount of the Special Tax assigned to a Parcel is in error may file a notice with the Administrator appealing the levy of the Special Tax. The Administrator then will promptly review the appeal and, if necessary, discuss it with the applicant. If the Administrator verifies that the tax should be modified or changed, the Special Tax levy will be corrected and, if applicable, a credit or refund will be granted. Interpretations may be made by the City, without resolution or ordinance of the Council, 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. Without Council approval, the Administrator may make minor, non-substantive administrative and technical changes to the provisions of this RMA that do not materially affect the rate, method of apportionment, and manner of collection of the Special Tax for purposes of administrative efficiency or convenience or to comply with new applicable federal, state, or local law. 8. Manner of Collection The Special Tax will be collected in the same manner and at the same time as ad valorem property taxes, provided, however, the Administrator or their designee may directly bill the Special Tax and may collect the Special Tax at a different time, such as on a monthly or other periodic basis, or in a different manner, if necessary, to meet the City s financial obligations. Page 32 of 118 Economic & Planning Systems, Inc. (EPS) D-12 P:\172000\ Sacramento Railyards CFD Formation\Rate and Method\ rm6.docx

33 Attachment 1 Railyards Community Facilities District No (Improvements) Maximum Annual Special Tax per Original Parcel - Base Year (Fiscal Year ) Page 1 of 4 Maximum Annual Maximum Annual Lot Taxable Special Tax Special Tax Number Original Parcel Acres per Acre Lot Number [1] 458 N B $18, $2, N B $18, $1, N B $18, $1, e portion ** 0.77 $18, $14, f portion ** 0.85 $18, $16, g portion ** 2.41 $18, $45, h $18, $23, Subtotal 5.29 $100, $18, $0.00 2a $18, $21, b $18, $66, c portion * 3.31 $18, $62, d portion * 4.17 $18, $79, a $18, $17, b $18, $17, c $18, $14, d $18, $14, a portion * 0.83 $18, $15, b portion * 0.94 $18, $17, c $18, $15, d $18, $17, e $18, $ portion * 0.66 $18, $12, a portion * 0.00 $18, $0.00 6a $18, $21, b portion * 1.13 $18, $21, c $18, $19, d $18, $19, a $18, $17, b $18, $16, c $18, $16, d $18, $14, a $18, $14, b $18, $22, c $18, $16, a $18, $16, b $18, $15, c $18, $4, Prepared by EPS 8/2/2018 D-13 Page 33 of 118 P:\172000\ Sacramento Railyards CFD Formation\Models\ m5 CFD.xlsx

34 Attachment 1 Railyards Community Facilities District No (Improvements) Maximum Annual Special Tax per Original Parcel - Base Year (Fiscal Year ) Page 2 of 4 Maximum Annual Maximum Annual Lot Taxable Special Tax Special Tax Number Original Parcel Acres per Acre Lot Number [1] $18, $ a $18, $17, b $18, $15, a $18, $14, b $18, $12, c $18, $14, d $18, $12, $18, $32, $18, $7, $18, $5, $18, $29, a $18, $ b $18, $ c $18, $ $18, $3, $18, $5, $18, $11, $18, $19, $18, $8, $18, $16, $18, $ $18, $ $18, $ $18, $ a $18, $13, b $18, $22, c $18, $20, d $18, $19, e $18, $ $18, $ $18, $59, $18, $ a $18, $27, b $18, $30, a $18, $54, b $18, $ a $18, $17, b $18, $50, $18, $28, Prepared by EPS 8/2/2018 D-14 Page 34 of 118 P:\172000\ Sacramento Railyards CFD Formation\Models\ m5 CFD.xlsx

35 Attachment 1 Railyards Community Facilities District No (Improvements) Maximum Annual Special Tax per Original Parcel - Base Year (Fiscal Year ) Page 3 of 4 Maximum Annual Maximum Annual Lot Taxable Special Tax Special Tax Number Original Parcel Acres per Acre Lot Number [1] 51a $18, $63, b $18, $ a $18, $56, b $18, $43, c $18, $42, d $18, $79, e $18, $55, $18, $ a $18, $10, b $18, $13, c $18, $13, d $18, $16, a $18, $ b $18, $8, c $18, $14, d $18, $13, e $18, $14, a $18, $ b $18, $16, c $18, $17, a $18, $11, b $18, $12, c $18, $11, d $18, $12, $18, $ $18, $ $18, $ a $18, $13, b $18, $21, c $18, $10, d $18, $16, a $18, $20, b $18, $20, c $18, $ d $18, $25, $18, $34, $18, $ a $18, $25, b $18, $29, Subtotal $1,926, Prepared by EPS 8/2/2018 D-15 Page 35 of 118 P:\172000\ Sacramento Railyards CFD Formation\Models\ m5 CFD.xlsx

36 Attachment 1 Railyards Community Facilities District No (Improvements) Maximum Annual Special Tax per Original Parcel - Base Year (Fiscal Year ) Page 4 of 4 Maximum Annual Maximum Annual Lot Taxable Special Tax Special Tax Number Original Parcel Acres per Acre Lot Number [1] $18, $35, a $18, $23, b $18, $25, $18, $31, $18, $ a $18, $36, b $18, $27, Subtotal 9.49 $179, n/a $18, $0.00 Totals $2,211, [1] The Maximum Annual Special Tax shall be escalated by the Tax Escalation Factor in each year following the Base Year. * Portion of Lot Number may be within ** Portion of Lot Number may be within "att1" Prepared by EPS 8/2/2018 D-16 Page 36 of 118 P:\172000\ Sacramento Railyards CFD Formation\Models\ m5 CFD.xlsx

37 Attachment 2 Railyards Community Facilities District No (Improvements) Maximum Annual Special Tax Per Acre - Base Year (Fiscal Year ) Maximum Annual Special Tax Item Acres per Taxable Acre Amount [1] Total Taxable Acres $18, $2,211, Allowable Tax-Exempt Acreage 5.00 $18, $94, Maximum Annual Special Tax for Debt Service $2,116, [1] The Maximum Annual Special Tax shall be escalated by the Tax Escalation Factor in each year following the Base Year. att2 Prepared by EPS 8/2/2018 D-17 Page 37 of 118 P:\172000\ Sacramento Railyards CFD Formation\Models\ m5 CFD.xlsx

38 MAP 1 D-18 Page 38 of 118

39 MAP 2 D-19 Page 39 of 118

40 Table 1 Railyards Community Facilities District No (Improvements) Full Prepayment Calculation Before Bond Issuance (with Pay-As-You-Go Example) Item RMA Reference Formula Amount Parcel Maximum Annual Special Tax [1] 6.a.1 a $18, Maximum Annual CFD Special Tax Revenue [2] 6.a.2 b $2,117, Benefit Share for the Prepayment Parcel 6.a.2 c = a / b 0.895% Base Year Anticipated Construction Proceeds Definition d $30,000, Pay-As-You Go Funded Authorized Facilities [3] Definition e $50, Remaining Facilities Costs Definition f=d-e $29,950, Base Year ENR-CCI Definition g 9, ENR-CCI in Example Fiscal year n/a h 9, ENR-CCI Adjustment Factor n/a i=g/h 103.1% Adjusted Remaining Facilities Cost n/a j=f*i $30,865, Total Facility Cost Share for Prepayment Parcel 6.a.3 k=c*j $276, City Costs 6.a.4 l $ Total Prepayment n/a m=j+k+l $276, no bonds [1] Example assumes prepaying Parcel is 1.0 acres. [2] Maximum Annual CFD Revenue is amount from Attachment 2 net of Allowable Tax-Exempt Acreage. [3] Example assumes $50,000 has been levied for authorized facilities on a pay-as-you-go basis. Prepared by EPS 6/27/2018 D-20 Page 40 of 118 P:\172000\ Sacramento Railyards CFD Formation\Models\ RMA Sample Tables.xlsx

41 Table 2 Railyards Community Facilities District No (Improvements) Full Prepayment Calculation After Bond Issuance (with Pay-As-You-Go Example) Item RMA Reference Formula Amount Parcel Maximum Annual Special Tax [1] 6.b.1 a $18, Maximum Annual CFD Special Tax Revenue [2] 6.b.2 b $2,117, Benefit Share for the Prepayment Parcel 6.b.2 c = a / b 0.895% Base Year Anticipated Construction Proceeds Definition d $30,000, Total Bonds Issued n/a e $20,000, Proceeds from CFD Bonds Issued to Date n/a f $16,500, Pay-As-You Go Funded Authorized Facilities [3] Definition g $50, Bond Principal Paid [4] n/a h $100, Total Bonds Outstanding n/a i=e-h $19,900, Outstanding Bond Share for Prepayment Parcel 6.b.3 j=c*i $178, Remaining Facility Costs Definition k=d-f-g $13,450, Base Year ENR-CCI Definition l 9, ENR-CCI in Example Fiscal year n/a m 9, ENR-CCI Adjustment Factor n/a n=m/l 105.6% Adjusted Anticipated Remaining Construction Proceeds n/a o=k*n $14,197, Remaining Facility Cost Share for the Prepayment Parcel 6.b.4 p=c*o $127, Bonds called due to prepayment 6.b.5 q= Rounddown(j/5000,0)*5000 $175, Bond Call Premium [5] 6.b.6 r=q*.02 $3, Reserve Fund Requirement Definition s $2,500, Less Reserve Fund Share 6.b.7 t=s*c ($22,369.36) City Costs 6.b.8 u Total Prepayment 6.b.8 v=p+q+r+t+u $283, [1] Example assumes prepaying parcel is 1.0 acres. [2] Maximum Annual CFD Revenue is amount from Attachment 2 net of Allowable Tax-Exempt Acreage. [3] Example assumes $50,000 has been levied for authorized facilities on a pay-as-you-go basis. [4] Assumes principal amount of $100,000 has been paid. [5] Assumes two percent bond call premium, see the bond documents for the premium to apply at the time of prepayment. Remaining Facilities Cost calculation needs to net out the Pay-as-you-go levy amounts bonds out Prepared by EPS 6/27/2018 D-21 Page 41 of 118 P:\172000\ Sacramento Railyards CFD Formation\Models\ RMA Sample Tables.xlsx

42 Hearing Report Railyards Community Facilities District No (Improvements) Prepared for: City of Sacramento Prepared by: Economic & Planning Systems, Inc. (EPS) August 2018 EPS # Page 42 of 118

43 Table of Contents 1. INTRODUCTION... 1 Background... 1 Purpose of the CFD... 1 Organization of the Report LAND USES AUTHORIZED FACILITIES AND FACILITY COST... 7 Authorized Facilities of the CFD... 7 Incidental Expenses and Bond Issuance Costs of the CFD Authorized Facilities Estimated Costs PROPOSED BOND ISSUE AND MAXIMUM ANNUAL SPECIAL TAX Maximum CFD Bond Authorization Estimated CFD Bond Issuances and Net Proceeds Value-to-Lien Ratios/Property Appraisal Maximum Annual Special Tax Overall Tax Burden for Parcels STRUCTURE OF THE CFD Description of the CFD Determining the Maximum Annual Special Tax CFD Parcels at ROI Base Year Annual Tax Escalation Factor Termination of the Special Tax Definition of Annual Costs Unique Features of the CFD Conversion of a Tax-Exempt Parcel to a Taxable Parcel Taxable Parcels Acquired by a Public Agency Determining Parcels Subject to the Special Tax Page 43 of 118

44 Setting the Special Tax Levy for Taxable Parcels Prepayment of the Special Tax Obligation Partial Prepayment Manner of Collection Interpretation, Application, and Appeal of Special Tax Formula and Procedures Exhibits: Exhibit A: Exhibit B: Exhibit C: Rate, Method of Apportionment, and Manner of Collection of Special Tax List of Authorized Facilities Incidental Expenses and Bond Issuance Costs List of Maps Map 1 CFD Boundary Map... 3 Map 2 Large Lot Map Exhibit... 5 List of Tables Table 1 CFD Parcels... 6 Table 2 Estimated CFD Facilities Costs and Sources of Funding Table 3 Estimated Bonds and Net Bond Proceeds Table 4 Estimated Annual Debt Service and Special Tax Coverage Table 5 CFD Maximum Annual Special Tax in the Base Year Table 6 Maximum Annual Special Tax per Original Parcel Base Year (3 pages) Table 7 Full Prepayment Calculation before Bond Issuance Table 8 Full Prepayment Calculation after Bond Issuance Page 44 of 118

45 1. INTRODUCTION Background The City of Sacramento (City) retained Economic & Planning Systems, Inc. (EPS) to support its efforts to create a Mello-Roos Community Facilities District (CFD) for the Railyards (Project) development, located just north of Downtown Sacramento and south of the River District. Downtown Railyards Ventures, Inc (Developer) has applied to the City to form a CFD. Approval of the CFD will authorize the City to sell bonds and to levy the special tax to pay for the bonds and public infrastructure. The objective of establishing a CFD is to create a land-secured funding mechanism to be used to fund construction of authorized CFD facilities. The bond proceeds partially will reimburse the Developer for the cost of public infrastructure and the payment of certain fees. The Railyards is a 244-acre site proposed for mixed-use, transit-oriented development. The Project is entitled for the following land uses: 6,000 to 10,000 dwelling units 514,270 square feet of retail 2.8 to 3.9 million square feet of office space 1,228,000 square feet of medical campus 1,100 hotel rooms 485,390 square feet of historic and cultural uses 33 acres of open space A soccer stadium Portions of the Railyards, such as the Sacramento Valley Station, are not included in the boundaries of the proposed CFD. The proposed CFD consists of approximately 182 gross developable acres. The Developer proposes to construct the financed improvements in phases, with more than one bond sale being possible. The financing program under the CFD anticipates that pay-as-you-go expenditures will be used to acquire certain portions of authorized facilities. Formation of the Railyards CFD No (Improvements) has been initiated with adoption of the Resolution of Intention (ROI) to form the CFD. The City Council (Council) adopted the ROI on July 3, The Resolution of Formation (ROF) will be considered by the Council on August 14, Purpose of the CFD The CFD is being formed to fund major road improvements, water system improvements, sewer system improvements, solid waste improvements, park and open space improvements, certain development impact fees, and other authorized facilities under the Mello-Roos Act, serving the Project as a condition of the City s approval of the development Project. Page 45 of 118 Economic & Planning Systems, Inc. (EPS) 1 P:\172000\ Sacramento Railyards CFD Formation\Reports\ rd docx

46 Railyards CFD No (Improvements) Hearing Report August 2018 Authorized to issue up to $75.0 million in bonds through one or multiple bond issuances under the CFD, it is estimated to provide approximately $38.8 million in net bond proceeds of the approximately $237.7 million in total authorized facilities costs of the CFD. Of this total $237.7 million in authorized facilities costs, the CFD might primarily finance improvements within the proposed Railyards Impact Fee Program. Map 1 shows the proposed boundaries of the CFD. Organization of the Report This report consists of five chapters including this introductory chapter. Chapter 2 describes the land uses in the CFD. Chapter 3 describes the authorized facilities to be funded in the CFD, the costs, and the cost allocations. Chapter 4 describes the proposed bond issue and the maximum annual special tax. Chapter 5 describes the structure of the CFD. Three exhibits are attached to this report. Exhibit A is the Rate, Method of Apportionment, and Manner of Collection of Special Tax (RMA). Exhibit B is the List of Authorized Facilities. Exhibit C is the Incidental Expenses and Bond Issuance Costs. Page 46 of 118 Economic & Planning Systems, Inc. (EPS) 2 P:\172000\ Sacramento Railyards CFD Formation\Reports\ rd docx

47 MAP 1 Page 47 of 118 3

48 2. LAND USES The Sacramento Railyards Specific Plan (RSP) document establishes the planning and development standards for redevelopment of the 244-acre Plan Area immediately north of downtown Sacramento. The Plan Area is east of the Sacramento River, south of the River District, and west of the Alkali Flat neighborhood. The approved 2016 Specific Plan updated a prior specific plan prepared in According to the Specific Plan, the Project provides for high-density mixed-use development. The RSP describes the land use designations and the maximum allowable development program as follows: 6,000-10,000 dwelling units 514,270 square feet of retail 2,757,027 to 3,857,027 square feet of office use 771,405 square feet of flexible mixed-use 1,228,003 square feet of medical facilities 1,100 hotel rooms (keys) 485,390 square feet of historic and cultural uses 30 acres of open space Soccer stadium with up to a maximum of 25,000 seats For the purpose of CFD analysis (derived from the Financing Plan), the Project envisions 6,000 residential units, approximately 3.5 million square feet of new office space, nearly 900,000 square feet of new retail, nearly 700,000 square feet of flexible mixed-use space, a 538,000-square-foot courthouse, 1.2 million square feet of medical facilities, 1,100 hotel rooms, as well as other historic and cultural spaces across nearly 158 acres. These historic and cultural spaces include parks and open space, transportation, public parking, a 25,000 seat MLS stadium, and a proposed Railroad Technology Museum. The remainder will be dedicated for public rights-of-way. Map 2 shows the proposed large lots for the Project once a large lot subdivision map is recorded. There may be slight variations to the configuration of lots shown in Map 2 once maps are recorded. Page 48 of 118 Economic & Planning Systems, Inc. (EPS) 4 P:\172000\ Sacramento Railyards CFD Formation\Reports\ rd docx

49 MAP 2 Page 49 of 118 5

50 Table 1 Railyards Community Facilities District No (Improvements) CFD Parcels at Formation Assessor's Parcel Gross Taxable Number Acres Acres Totals Source: Sacramento County Assessor and EPS. "cfd_parcels" Prepared by EPS 8/2/ Page 50 of 118 P:\172000\ Sacramento Railyards CFD Formation\Models\ m5 CFD.xlsx

51 3. AUTHORIZED FACILITIES AND FACILITY COST This chapter describes the authorized facilities eligible to be financed or otherwise funded through the CFD with the proceeds of CFD bonds and on a pay-as-you-go basis from special taxes levied under the CFD. Authorized Facilities of the CFD The CFD is authorized to fund certain facilities required to serve the Project. Authorized facilities are identified in the List of Authorized Facilities (Exhibit B of this report) and briefly are discussed below. Transportation Improvements Authorized facilities include any and all transportation improvements designed to meet the needs of development within the Railyards Community Facilities District No (Improvements), including, but not limited to: acquisition of land and easements; roadway design; project management; bridge crossings and culverts; clearing, grubbing, and demolition; grading, soil import/export, paving (including slurry seal), and decorative/enhanced pavement concrete and/or pavers; joint trenches, underground utilities and undergrounding of existing utilities; dry utilities and appurtenances; curbs, gutters, sidewalks, bike trails (including onsite and off-site), other pedestrian improvements; enhanced fencing, and access ramps; street lights, signalization, and traffic signal control systems; bus turnouts; signs and striping; erosion control; median and parkway landscaping and irrigation; entry monumentation; bus shelters, masonry walls; traffic control and agency fees; and other improvements related thereto. Eligible improvements for the roads listed above also include any and all necessary underground potable and recycled water, sanitary sewer, and storm drainage system improvements. Authorized facilities include, but are not limited to, the following transportation improvements: 5th Street (between Railyards and North B Street) 6th Street Bike Lanes 6th Street (between Railyards and North B Street). 7th Street Widening 8th Street (between Railyards and North B Street) 10th Street (between Railyards Boulevard and Northern Project Boundary) 10th Street (extension to North B Street) Bercut Drive (from south of the drainage pump station to South Park Drive) Camille Street (between 5th Street and 6th Street) Camille Street (between Bercut Drive and 5th Street) Judah from Railyards to South Park Street. North B Street (between 5th and 6th) North B Street (between 6th and 7th Street) North B Street (between 7th and 8th Street. North B Street (between 8th and 10th Street) Railyards Boulevards (between 7th Street and 10th Street) Page 51 of 118 Economic & Planning Systems, Inc. (EPS) 7 P:\172000\ Sacramento Railyards CFD Formation\Reports\ rd docx

52 Railyards CFD No (Improvements) Hearing Report August 2018 Railyards Boulevard (between 10th Street and 12th Street). Railyards Boulevard (lane shift) Richards/I-5 Interchange (Railyards contribution) South Park Drive (between Bercut Drive and 5th Street) South Park Drive (between 5th and 6th Street) South Park Paseo (between 6th and 7th Street) Stanford Street (between Stevens Street and Railyards Boulevard) Stevens Street (between 6th Street and Stanford Street) Stevens Street (between 5th Street and 6th Street) Huntington Street (between Camille Street and Railyards Boulevard) Class 1 Bike Trail (between Railyards and 6th). Interim Traffic Signal at Railyards Boulevard and Jiboom Street. Intersection Improvements at 7th Street and Railyards Boulevard. Intersection Improvements at 7th Street and North B Street. Transit Improvements Authorized facilities include any and all improvements to transit facilities designed to meet the needs of development in the Railyards Community Facilities District No (Improvements). 7th Street Light Rail Transit (LRT) station. West LRT Station Wastewater System Improvements Authorized facilities include any and all wastewater facilities designed to meet the needs of development within Railyards Community Facilities District No (Improvements). These facilities include, but may not be limited to pipelines and all appurtenances thereto; manholes; tie-in to existing main line; force mains; lift stations; odor-control facilities; and permitting related thereto; and related sewer system improvements, including: Sewer lines in all authorized facility transportation facilities 3rd Street Sewer (offsite) Trunk Sewer (Railyards to 3rd Street) Trunk Sewer (7th Street to the end of 10th Street) Storm Drain Improvements Authorized facilities include any and all onsite and off-site backbone drainage and storm drainage improvements designed to meet the needs of development of the development within Railyards Community Facilities District No (Improvements). These facilities include, but are not limited to mains, pipelines and appurtenances, outfalls and water quality measures, temporary drainage facilities, detention/retention basins and drainage pretreatment facilities; drainage ways/channels, pump stations, landscaping and irrigation; access roads, gates, and fencing; and striping and signage. All storm drain lines and facilities within authorized facility roadways Storm Drainage detention facility (cistern), pump station, and outfall Page 52 of 118 Economic & Planning Systems, Inc. (EPS) 8 P:\172000\ Sacramento Railyards CFD Formation\Reports\ rd docx

53 Railyards CFD No (Improvements) Hearing Report August 2018 Interim retention facilities Flood Wall and Gate Drain Line Replacement (Railyards Boulevard) Drain line SOTA Water Improvements Authorized facilities include any and all on- and off-site backbone water facilities designed to meet the needs of development of the development within Railyards Community Facilities District No (Improvements). These facilities include, but are not limited to, potable and nonpotable mains, valves, services and appurtenances. Water lines in all authorized facility roads 7th Street Water Line Park and Open Space Improvements Authorized facilities include any and all improvements to parks and open space designed to meet the needs of development in Railyards Community Facilities District No (Improvements). Vista Park Under I-5 Lot 1 Open Space Lot 2E Kaiser Plaza. Market Plaza (Parcels 21a and 21b) between Car Shop #3 and the Paint Shop Lot 30 Plaza (State Parks footprint) Park Lot 31 Lot 32 Plaza (State Parks Museum) Riverfront Park Lot 34 Sacramento River Connection Lot 35 Lot 53 Open Space (along Railyards Boulevard from 10th Street to 12th Street) Park Lot 57A Park Lot 58A Vista Connector Lot 60 MLS Promenade Lot 65 Park Lot 68 Park Lot 70 Other Public Facilities Authorized facilities includes any and all public facilities or infrastructure including, but not limited to, land acquisition, vertical construction, site clearing, grading, utility connections, street frontage improvements including curbs, gutters: Community Center/Library Facilities. Police Station Fire Station Intermodal Tunnel Gateway Structure (Parcel 22) Page 53 of 118 Economic & Planning Systems, Inc. (EPS) 9 P:\172000\ Sacramento Railyards CFD Formation\Reports\ rd docx

54 Railyards CFD No (Improvements) Hearing Report August 2018 Pedestrian Access Improvements between the 5th and 6th Street Public Parking Garage and the Intermodal Tunnel North Entrance 5th and 6th Street Public Parking Garage Development Impact Fees and Other Eligible Fees Authorized development impact fees and other fees that may be funded include the following fees: Railyards Plan Area Fee Park Development Impact Fees Park Quimby Land Fee Water Fee Water Meter Fee SAFCA fee Construction Excise Tax Transportation Development Impact Fee I-5 Subregional Corridor Mitigation Program Combined Sewer/Storm Drainage Fee SRCSD (Regional Sewer) Sacramento Transportation Authority Sacramento City Unified School District Sacramento Metro Air Quality Management District Fees Formation, Administrative and Incidental Expenses In addition to the above facilities, other expenses incidental to the above and authorized by the Mello-Roos Community Facilities Act of 1982, including but not limited to: the cost of planning, permitting, and designing the facilities (including the cost of environmental evaluation, orthophotography, environmental remediation/mitigation, (associated with Authorized Facilities); SWPPP; land acquisition and easement payment for the facilities; project management; construction staking; engineering studies and reports; utility relocation and demolition costs incidental to construction of the facilities, wetland/species mitigation purchase; reimbursements to other areas for infrastructure facilities or planning serving development in the CFD; planning, legal, engineering, and technical studies costs related to the facilities and any other expenses incidental to the construction, completion, and inspection of the facilities. In addition, costs eligible to be financed by the CFD shall include all costs associated with the formation and ongoing administration of the CFD and issuance of bonds; determination of the amount of taxes and collection of taxes; inspection, plan check and other costs related to acceptance of the facilities by the City, payment of taxes; and any other costs incurred to carry out the authorized purposes of the CFD. Incidental Expenses and Bond Issuance Costs of the CFD It is anticipated the following incidental expenses (also shown in Exhibit C) may be incurred in the proposed legal proceedings for formation of the CFD, construction or acquisition of the Page 54 of 118 Economic & Planning Systems, Inc. (EPS) 10 P:\172000\ Sacramento Railyards CFD Formation\Reports\ rd docx

55 Railyards CFD No (Improvements) Hearing Report August 2018 authorized public facilities, and related bond financing, and these expenses are eligible to be paid from bonds proceeds or directly from the special tax proceeds: Special tax consultant services. City, participating CFD staff review, oversight, and administrative services. Bond counsel and disclosure counsel services. Financial advisor services. Special tax administrator services. Appraiser/market absorption consultant services. Bond transfer agent, fiscal agent, registrar and paying agent services, and rebate calculation service. Bond printing, and Preliminary Official Statement and Official Statement printing and mailing. Publishing, mailing, and posting of notices. Recording fees. Underwriter s discount. Bond reserve fund. Capitalized interest. Governmental notification and filing fees. Credit enhancement costs. Rating agency fees. Continuing disclosure services. The expenses of certain recurring services pertaining to the CFD may be included in each annual special tax levy, and these expenses are described in the definition of the term Administrative Expenses, as set forth in the RMA, attached hereafter as Exhibit A. The foregoing enumeration shall not be regarded as exclusive and shall be deemed to include any other incidental expenses of a like nature that may be incurred from time to time with respect to the CFD. Authorized Facilities Estimated Costs The Updated Railyards Finance Plan prepared in July 2018 includes estimated costs for each authorized facility. The List of Authorized Facilities is shown in detail in Exhibit B. The summary of these costs by facility type is shown in Table 2. Based on estimates provided by the Developer, the total estimated costs for authorized facilities are approximately $237.7 million. Items that are eligible to be funded from CFD bond or special tax proceeds are identified in Table 2. Page 55 of 118 Economic & Planning Systems, Inc. (EPS) 11 P:\172000\ Sacramento Railyards CFD Formation\Reports\ rd docx

56 Table 2 Railyards Community Facilities District No (Improvements) Estimated CFD Facilities Costs and Sources of Funding Potential Buildout CFD Item Cost (2018 $s) Funding Transportation On-Site Roadways $79,369,000 x I-5/Richards Interchange $8,200,000 x Freeways $23,312,200 x Other Roadway Contributions $1,476,000 Total Transportation $112,357,200 Storm Drainage $20,333,000 x Sanitary Sewer On-Site Sanitary Sewer $1,721,000 x Off-Site Sanitary Sewer $11,550,000 Other Sanitary Sewer $16,000,000 x Total Sanitary Sewer $29,271,000 Water $895,000 x Total Infrastructure Improvements $162,856,200 Public Facility Improvements LRT Stations $2,315,000 x Other Transit Facilities $3,628,000 Community Center/Library $6,842,000 x Parks and Open Space $20,408,000 x Surface and Structured Parking TBD Schools $28,383,000 x Police Station $7,672,000 x Fire Station $5,576,000 x Total Public Facility Improvements $74,824,000 Total Infrastructure and Public Facilities $237,680,200 "cfd_costs" Source: Sacramento Railyards Land Use/Density Allocation EIR Analysis Scenario Option 1 - No Berm.; DKS SCMP Nexus Study; May 2016 Kimley-Horn and Assoc. Sanitary Sewer Master Plan; City of Sacramento cost estimates; EPS. Page 56 of 118 Prepared by EPS 7/26/ P:\172000\ Sacramento Railyards CFD Formation\Models\ m5 CFD.xlsx

57 4. PROPOSED BOND ISSUE AND MAXIMUM ANNUAL SPECIAL TAX This chapter will discuss the CFD bond authorization amount and bond issuance assumptions prepared by EPS; the maximum bond capacity; and the likely bonding scenario, given current conditions in the bond market. This chapter also will discuss the maximum annual special tax as proposed by the Developer for each taxable land use type. Maximum CFD Bond Authorization The CFD is authorized to issue up to $75.0 million in bonds. It is uncertain whether a single or multiple bond issuances will be used within this CFD. Estimated CFD Bond Issuances and Net Proceeds Using the estimated total maximum annual special tax revenue stream over the proposed term of the CFD bonds, Stifel prepared an analysis of estimated gross amount of CFD bonds that could be issued based upon the base year maximum special tax revenues and determined the estimated net amount of bond proceeds that would be available for the bond issuance. Table 3 summarizes the bond estimate, assuming an average coupon rate of 4.5-percent and a 30-year bond term. Stifel estimated that total bond proceeds, including a bond premium, would generate approximately $43.3 million in gross CFD bonds. Stifel estimates that such a bond issuance could generate approximately $38.8 million in construction proceeds for the Project fund. Table 3 shows the estimated debt service reserve fund ($3.3 million), capitalized interest fund ($455,000), and cost of issuance ($705,000). Table 4 shows an estimated debt service for the sample bond issuance from Table 3 and also shows estimated special tax coverage of annual debt service for the proposed 30-year bond term. Note that the special tax coverage was targeted at an estimated 115-percent in all years in which CFD bonds are outstanding (prior to accounting for the allowable tax-exempt acreage ). When such allowable tax-exempt acreage is considered, coverage falls below 115-percent but remains above 110-percent in all years. Market conditions at the time of the bond issuance will determine the actual interest rates and resulting bond proceeds. Value-to-Lien Ratios/Property Appraisal To issue bonds in the CFD, the overall district property value-to-lien ratio shall be at least 3:1 after calculating the value of the financed infrastructure and public facilities to be installed and considering any prior or pending special taxes or improvement liens. The City may require a higher value-to-lien ratio, at its discretion, in consideration of current market and related conditions. The actual value-to-lien ratio required will be established by the City Treasurer. Page 57 of 118 Economic & Planning Systems, Inc. (EPS) 13 P:\172000\ Sacramento Railyards CFD Formation\Reports\ rd docx

58 Table 3 Railyards Community Facilities District No (Improvements) Estimated Bonds and Net Bond Proceeds Item Amount Bond Proceeds Par Amount $40,515,000 Premium $2,750,465 Total Bond Proceeds $43,265,465 Uses Project Fund $38,797,617 Debt Service Reserve Fund $3,307,255 Capitalized Interest Fund $455,444 Cost of Issuance $705,150 Total Uses $43,265,465 Bond Assumptions Average Coupon 4.5% Bond Term 30 Years Source: Stifel. "bonds" Prepared by EPS 7/26/ Page 58 of 118 P:\172000\ Sacramento Railyards CFD Formation\Models\ m5 CFD.xlsx

59 Table 4 Railyards Community Facilities District No (Improvements) Estimated Annual Debt Service and Special Tax Coverage Period Ending Total Max Special 1-Sep Principal Interest Debt Service Difference Tax Coverage [1] 2019 $0 $455,444 $455,444 $1,661,494 $2,116, % 2020 $140,000 $1,821,775 $1,961,775 $197,501 $2,159, % 2021 $185,000 $1,816,875 $2,001,875 $200,587 $2,202, % 2022 $230,000 $1,808,550 $2,038,550 $207,961 $2,246, % 2023 $285,000 $1,798,200 $2,083,200 $208,241 $2,291, % 2024 $335,000 $1,785,375 $2,120,375 $216,895 $2,337, % 2025 $395,000 $1,770,300 $2,165,300 $218,716 $2,384, % 2026 $455,000 $1,752,525 $2,207,525 $224,171 $2,431, % 2027 $520,000 $1,732,050 $2,252,050 $228,280 $2,480, % 2028 $590,000 $1,708,650 $2,298,650 $231,286 $2,529, % 2029 $660,000 $1,682,100 $2,342,100 $238,435 $2,580, % 2030 $740,000 $1,652,400 $2,392,400 $239,746 $2,632, % 2031 $820,000 $1,619,100 $2,439,100 $245,689 $2,684, % 2032 $905,000 $1,582,200 $2,487,200 $251,285 $2,738, % 2033 $995,000 $1,541,475 $2,536,475 $256,779 $2,793, % 2034 $1,090,000 $1,496,700 $2,586,700 $262,419 $2,849, % 2035 $1,195,000 $1,447,650 $2,642,650 $263,452 $2,906, % 2036 $1,300,000 $1,393,875 $2,693,875 $270,349 $2,964, % 2037 $1,410,000 $1,335,375 $2,745,375 $278,133 $3,023, % 2038 $1,530,000 $1,271,925 $2,801,925 $282,053 $3,083, % 2039 $1,655,000 $1,203,075 $2,858,075 $287,583 $3,145, % 2040 $1,785,000 $1,128,600 $2,913,600 $294,971 $3,208, % 2041 $1,925,000 $1,048,275 $2,973,275 $299,468 $3,272, % 2042 $2,070,000 $961,650 $3,031,650 $306,547 $3,338, % 2043 $2,225,000 $868,500 $3,093,500 $311,461 $3,404, % 2044 $2,390,000 $768,375 $3,158,375 $314,686 $3,473, % 2045 $2,560,000 $660,825 $3,220,825 $321,697 $3,542, % 2046 $2,740,000 $545,625 $3,285,625 $327,747 $3,613, % 2047 $2,925,000 $422,325 $3,347,325 $338,315 $3,685, % 2048 $3,125,000 $290,700 $3,415,700 $343,652 $3,759, % 2049 $3,335,000 $150,075 $3,485,075 $349,464 $3,834, % [1] Reflects the maximum annual special tax revenue available for debt service (See Table 3). "coverage" Sources: Stifel and EPS. Prepared by EPS 8/2/ Page 59 of 118 P:\172000\ Sacramento Railyards CFD Formation\Models\ m5 CFD.xlsx

60 Railyards CFD No (Improvements) Hearing Report August 2018 The value of the property in the district, for purposes of establishing the value-to-lien ratio, likely would be determined by an appraisal process, conducted by a California State Licensed Appraiser who holds the MAI (Member Appraisal Institute) Designation, under contract with the City. All appraisals for land-secured debt financing shall be prepared in conformance with the most recent publication of Appraisal Standards for Land-Secured Financing, prepared by the California Debt and Investment Advisory Committee. The appraisal criteria and methodology will follow the guidelines as specified by the City in its contract with the appraiser. In instances where the individual parcel value-to-lien ratio is less than 3:1, or less than some higher ratio selected by the City in its discretion, credit enhancement may be required in accordance with the provisions of City procedures. The actual form of the credit enhancement shall be at the discretion of the City Treasurer. Maximum Annual Special Tax The Developer provided the City with recommended assigned maximum annual special taxes per taxable acre to be assigned to all taxable parcels. Table 5 shows the maximum annual special tax per taxable acre in the base year of Fiscal Year (FY) The assigned maximum annual special tax rates do not differ by land use category. Table 5 also shows the maximum annual special tax rate assigned to allowable tax-exempt acreage of the CFD. The location or locations for these five acres have not been designated at the time of this report. The concept of allowable tax-exempt acreage is described in more detail in the next report section. The total maximum annual special tax revenue for the CFD in the base year of FY is $2.2 million. However, the net maximum annual special tax revenue for the purposes of calculating annual debt service coverage is $2.1 million (i.e., the total maximum annual special tax revenue less the five allowable tax-exempt acres at $18, in the base year). Overall Tax Burden for Parcels City policy limits tax burdens to 2 percent of the sales price. While estimated price points for finished real estate products (residential and nonresidential) within the CFD have not been identified at this time, the overall CFD tax burden, at $18, in the base year, equates to $0.435 per land square foot. As an example, Project entitlements allow densities that may result in parcels with 50 units per acre. In this example, if each unit were modestly valued at $250,000 per unit, the maximum annual special tax for each unit would equate to less than percent of the value of each unit ($18,949/50/$250,000). Page 60 of 118 Economic & Planning Systems, Inc. (EPS) 16 P:\172000\ Sacramento Railyards CFD Formation\Reports\ rd docx

61 Table 5 Railyards Community Facilities District No (Improvements) Maximum Annual Special Tax Per Acre - Base Year (Fiscal Year ) Maximum Annual Special Tax Item Acres per Taxable Acre Amount [1] Total Taxable Acres $18, $2,211, Allowable Tax-Exempt Acreage 5.00 $18, $94, Maximum Annual Special Tax for Debt Service $2,116, [1] The Maximum Annual Special Tax shall be escalated by the Tax Escalation Factor in each year following the Base Year. att2 Prepared by EPS 8/2/ Page 61 of 118 P:\172000\ Sacramento Railyards CFD Formation\Models\ m5 CFD.xlsx

62 5. STRUCTURE OF THE CFD Description of the CFD The CFD is being formed to fund backbone infrastructure and other facilities that will serve the Project. The structure of the CFD will be discussed in detail in this chapter. The attached exhibits are documents contained in the ROF. Exhibit A is the CFD RMA. Exhibit B is the List of Authorized Facilities. Exhibit C is the Incidental Expenses and Bond Issuance Costs. Determining the Maximum Annual Special Tax The maximum annual special tax is assigned to all taxable parcels at formation of the CFD. Determining the maximum annual special tax for each tax category is discussed below. Table 6 shows the maximum annual special tax rates per taxable acre. CFD Parcels at ROI As of the adoption of the ROI there were no final maps recorded for the CFD. As such, all parcels within the boundaries of the CFD are currently classified as undeveloped parcels. Table 6 shows all APNs and the taxable acreage shown for each by the Sacramento County Assessor. Under each APN, Table 6 shows large lot numbers corresponding to Map 2. Table 6 shows a maximum annual special tax per taxable acre in the base year ($18,948.60) and the maximum annual special tax assigned to large lot parcels at ROI (as shown in Map 2). The maximum annual special tax for all taxable parcels is $2.2 million in the base year (as shown in Table 6). Table 6 does not show the maximum annual special tax revenue reduction once the allowable tax-exempt acreage has been assigned to taxable areas currently shown as taxable under Table 6 (Attachment 1 of the RMA). The RMA has been designed to ensure that there is no net loss of maximum annual CFD special taxes as the Project develops. Page 62 of 118 Economic & Planning Systems, Inc. (EPS) 18 P:\172000\ Sacramento Railyards CFD Formation\Reports\ rd docx

63 Table 6 Railyards Community Facilities District No (Improvements) Maximum Annual Special Tax per Original Parcel - Base Year (Fiscal Year ) Page 1 of 4 Maximum Annual Maximum Annual Lot Taxable Special Tax Special Tax Number Original Parcel Acres per Acre Lot Number [1] 458 N B $18, $2, N B $18, $1, N B $18, $1, e portion ** 0.77 $18, $14, f portion ** 0.85 $18, $16, g portion ** 2.41 $18, $45, h $18, $23, Subtotal 5.29 $100, $18, $0.00 2a $18, $21, b $18, $66, c portion * 3.31 $18, $62, d portion * 4.17 $18, $79, a $18, $17, b $18, $17, c $18, $14, d $18, $14, a portion * 0.83 $18, $15, b portion * 0.94 $18, $17, c $18, $15, d $18, $17, e $18, $ portion * 0.66 $18, $12, a portion * 0.00 $18, $0.00 6a $18, $21, b portion * 1.13 $18, $21, c $18, $19, d $18, $19, a $18, $17, b $18, $16, c $18, $16, d $18, $14, a $18, $14, b $18, $22, c $18, $16, a $18, $16, b $18, $15, c $18, $4, Prepared by EPS 8/2/ Page 63 of 118 P:\172000\ Sacramento Railyards CFD Formation\Models\ m5 CFD.xlsx

64 Table 6 Railyards Community Facilities District No (Improvements) Maximum Annual Special Tax per Original Parcel - Base Year (Fiscal Year ) Page 2 of 4 Maximum Annual Maximum Annual Lot Taxable Special Tax Special Tax Number Original Parcel Acres per Acre Lot Number [1] $18, $ a $18, $17, b $18, $15, a $18, $14, b $18, $12, c $18, $14, d $18, $12, $18, $32, $18, $7, $18, $5, $18, $29, a $18, $ b $18, $ c $18, $ $18, $3, $18, $5, $18, $11, $18, $19, $18, $8, $18, $16, $18, $ $18, $ $18, $ $18, $ a $18, $13, b $18, $22, c $18, $20, d $18, $19, e $18, $ $18, $ $18, $59, $18, $ a $18, $27, b $18, $30, a $18, $54, b $18, $ a $18, $17, b $18, $50, $18, $28, Prepared by EPS 8/2/ Page 64 of 118 P:\172000\ Sacramento Railyards CFD Formation\Models\ m5 CFD.xlsx

65 Table 6 Railyards Community Facilities District No (Improvements) Maximum Annual Special Tax per Original Parcel - Base Year (Fiscal Year ) Page 3 of 4 Maximum Annual Maximum Annual Lot Taxable Special Tax Special Tax Number Original Parcel Acres per Acre Lot Number [1] 51a $18, $63, b $18, $ a $18, $56, b $18, $43, c $18, $42, d $18, $79, e $18, $55, $18, $ a $18, $10, b $18, $13, c $18, $13, d $18, $16, a $18, $ b $18, $8, c $18, $14, d $18, $13, e $18, $14, a $18, $ b $18, $16, c $18, $17, a $18, $11, b $18, $12, c $18, $11, d $18, $12, $18, $ $18, $ $18, $ a $18, $13, b $18, $21, c $18, $10, d $18, $16, a $18, $20, b $18, $20, c $18, $ d $18, $25, $18, $34, $18, $ a $18, $25, b $18, $29, Subtotal $1,926, Prepared by EPS 8/2/ Page 65 of 118 P:\172000\ Sacramento Railyards CFD Formation\Models\ m5 CFD.xlsx

66 Table 6 Railyards Community Facilities District No (Improvements) Maximum Annual Special Tax per Original Parcel - Base Year (Fiscal Year ) Page 4 of 4 Maximum Annual Maximum Annual Lot Taxable Special Tax Special Tax Number Original Parcel Acres per Acre Lot Number [1] $18, $35, a $18, $23, b $18, $25, $18, $31, $18, $ a $18, $36, b $18, $27, Subtotal 9.49 $179, n/a $18, $0.00 Totals $2,211, [1] The Maximum Annual Special Tax shall be escalated by the Tax Escalation Factor in each year following the Base Year. * Portion of Lot Number may be within ** Portion of Lot Number may be within "att1" Prepared by EPS 8/2/ Page 66 of 118 P:\172000\ Sacramento Railyards CFD Formation\Models\ m5 CFD.xlsx

67 Railyards CFD No (Improvements) Hearing Report August 2018 Base Year The base year is FY Identifying the base year factors into calculating the maximum annual special tax over time using the annual tax escalation factor. Annual Tax Escalation Factor The maximum annual special tax is increased by the tax escalation factor of 2 percent in all fiscal years following the base year. Termination of the Special Tax The special tax will be levied and collected for as long as needed to pay annual costs; however, in no event shall the special tax be levied on any parcel in the CFD after FY When all authorized facilities and other annual costs incurred by the CFD have been paid, the special taxes under the special tax program shall cease to be levied. The City shall direct the County Recorder to record a Notice of Cessation of Special Tax. Such notice will state that the obligation to pay the special tax has ceased, and the lien imposed by the Notice of Special Tax Lien is extinguished. In addition, the Notice of Cessation of Special Tax shall 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. Definition of Annual Costs The maximum annual special tax established under the RMA is the maximum exposure to an annual special tax levy for a given parcel of land. The actual amount of the levy is derived through determining the annual costs of the CFD. The RMA identifies the annual cost components as these: a. Debt service that is due in the subsequent calendar year (i.e., January 1 to December 31) following the beginning of a Fiscal Year (i.e., July 1). b. The amount needed to replenish the reserve fund for the bonds to the level required under the bond indenture, to the extent not included in a computation of annual costs in a previous fiscal year. c. Administrative expenses for such fiscal year. d. To the extent permitted by the Mello-Roos Act, the amount needed to fund (1) unpaid special tax delinquencies from previous Fiscal Years, to the extent not previously levied, and (2) anticipated delinquencies for the current fiscal year on any parcel that has no outstanding delinquent special taxes. Collections from prior delinquencies should be used to offset the amount needed for current and future delinquencies if available. e. Authorized facilities funded on a pay-as-you-go basis. Page 67 of 118 Economic & Planning Systems, Inc. (EPS) 23 P:\172000\ Sacramento Railyards CFD Formation\Reports\ rd docx

68 Railyards CFD No (Improvements) Hearing Report August 2018 Debt Service Debt service would be the annual principal and interest payments due each calendar year for the term of the CFD bonds. Amount Needed to Replenish Reserve Fund In the event the reserve fund is drawn on to pay debt service or expenses of the CFD, a special tax may be levied to replenish the bond reserve fund to required funding levels. A special tax should be levied once for each draw on the bond reserve fund, to the extent the bond reserve fund can be brought back to required funding levels with just one such levy. If for any reason the bond reserve fund remains underfunded in a fiscal year following the fiscal year in which special taxes were levied to replenish the fund, a second special tax levy should not be required to replenish the bond reserve fund. Once the special tax is levied to replenish the reserve fund, it is assumed this amount will be collected at some point in time. Administrative Expenses These are some examples of administrative expenses of the CFD that are the reasonable costs of administering the CFD each fiscal year: a. Costs of computing special taxes and preparing annual special taxes collection schedules (whether by the City or any City designee). b. Costs of collecting, auditing, and accounting for the special taxes (whether by the County, the City, or otherwise), including costs related to collection of delinquent special taxes and foreclosure proceedings. c. Costs of remitting the special taxes to the trustee. d. Costs of any trustee (including its legal counsel) in the discharge of the duties required of it under any indenture for any bonds. e. Costs to the City or to any City designee of complying with arbitrage rebate requirements. f. Costs to the City or to any City designee of complying with ongoing continuing disclosure requirement with respect to the bonds for the City or any obligated persons. g. Costs associated with preparing disclosure statements for any bonds. h. Costs incurred in responding to public inquiries regarding the special tax. i. Costs to the City or to any City designee related to any appeal of the special tax. j. Costs associated with the release of funds from an escrow account, if any. k. Costs to the City for the issuance and sale of bonds authorized by the CFD that are not recovered through the proceeds of the bond sale. Such costs may include some of the cost of services provided by City staff. l. Costs to the City for any other administrative purposes, including attorney s fees for legal advice and attorney s fees and other costs related to collection of the special taxes and Page 68 of 118 Economic & Planning Systems, Inc. (EPS) 24 P:\172000\ Sacramento Railyards CFD Formation\Reports\ rd docx

69 Railyards CFD No (Improvements) Hearing Report August 2018 commencing and pursuing to completion any foreclosure of delinquent special taxes. Such costs include the cost of services provided by City staff. Amounts for Unpaid Special Taxes and Anticipated Delinquencies The RMA allows for the levy of a special tax to fund costs of unpaid special taxes from a previous fiscal year or to fund anticipated special tax delinquencies that may occur in the current fiscal year for which special taxes are being levied. To the extent an amount is levied for a past delinquency, a second special tax levy should not be levied for a special tax delinquency that has already been accounted for in a previous-year special tax levy. Generally, special taxes eventually are brought current, either through payment by a property owner or through judicial foreclosure proceedings. When special tax installments are paid current, the amount needed to fund debt service and CFD administration will have been collected for previous years, including additional amounts that were needed only to cover delinquencies that are now current. As such, these additional amounts should be considered as being available by the CFD to fund annual costs in the following fiscal year. Authorized Facilities Funded on a Pay-As-You-Go Basis Special tax revenues, as part of the annual costs described above, may be used to fund authorized facilities of the CFD. Earnings on Reserve Funds, Special Tax Funds, and Other Funds All interest earnings on bond reserve funds, special tax funds, or other funds should be used to offset annual costs when determining the amount required for the annual special tax levy. Unique Features of the CFD Allowable Tax-Exempt Uses The RMA stipulates that five acres of taxable land shown as taxable in Table 6 may be reassigned as tax-exempt under the provisions of the RMA. At the formation of the CFD several tax-exempt uses were identified for potential sites within the Project, but specific sites had not been designated. The allowable tax-exempt uses will allow for these potential uses to be in the Project area with up to five acres of uses being tax-exempt. Condominium Structures The maximum annual special tax is assigned to taxable land area for all taxable parcels. If condominium structures are built upon taxable parcels, the ad valorem taxes for land values are assigned to condominium structures. The land below such structures has a unique APN but is assigned zero assessed value for property taxation purposes. The RMA instructs the administrator to calculate the maximum annual special tax for taxable parcels with condominium structures based upon the taxable acreage of the parcel, and then to reallocate the maximum annual special tax to each condominium structure based on a pro-rata Page 69 of 118 Economic & Planning Systems, Inc. (EPS) 25 P:\172000\ Sacramento Railyards CFD Formation\Reports\ rd docx

70 Railyards CFD No (Improvements) Hearing Report August 2018 share of the square footage of the condominium structure to all condominium structures created for a taxable parcel. Conversion of a Tax-Exempt Parcel to a Taxable Parcel If a tax-exempt parcel is converted to a taxable use or transferred to a private owner as a single-family parcel or another land use parcel, it shall become subject to the special tax. The assigned special tax and maximum annual special tax for the newly assigned tax category for such a parcel shall be determined using the provisions of Section 4.b or Section 4.c. of the RMA (Exhibit A). Taxable Parcels Acquired by a Public Agency A taxable parcel that is acquired by a public agency after the CFD is formed will remain subject to the applicable special tax unless the special tax obligation is satisfied pursuant to Section of the Mello-Roos Act. An exception to this may be made if a public parcel is relocated to a taxable parcel, in which case, the previously tax-exempt parcel of comparable acreage becomes a taxable parcel, and the assigned special tax and maximum annual special tax from the previously taxable parcel is transferred to the new taxable parcel. This trading of a parcel from a taxable parcel to a public parcel will be permitted to the extent there is no net loss in maximum CFD special tax revenue and the transfer is agreed to by the owners of the parcels involved in the transfer and the CFD Administrator. If a taxable parcel is converted to uses that meet the definitions of a senior housing parcel or multifamily for-rent parcel after being classified as a developed parcel, such parcel shall remain a taxable parcel. Determining Parcels Subject to the Special Tax By July 31 of each fiscal year, using the definitions in Section 2 of the RMA, the parcel records of the assessor s secured tax roll as of July 1, and other City development approval records, the CFD Administrator shall cause: Each parcel to be classified as a taxable parcel or tax-exempt parcel. Each taxable parcel to be classified as a developed parcel or an undeveloped parcel. Setting the Special Tax Levy for Taxable Parcels To determine the annual levy, the CFD Administrator will use the process presented in Section 6 of the RMA. In general, the provisions of Section 6 describe the following procedures to set the annual special tax levy for each taxable parcel. First, the CFD Administrator must compute the annual costs using the definitions in Section 2 of the RMA. The CFD Administrator then will determine the maximum annual special tax revenue for all developed parcels in CFD. A developed parcel is a parcel with a building permit, as defined in Section 2 of the RMA. Page 70 of 118 Economic & Planning Systems, Inc. (EPS) 26 P:\172000\ Sacramento Railyards CFD Formation\Reports\ rd docx

71 Railyards CFD No (Improvements) Hearing Report August 2018 If there is not sufficient maximum annual special tax revenue from developed parcels, the CFD Administrator will levy the special tax up to the maximum amount for taxable parcels in the following order of categories: Developed Parcels Undeveloped Parcels Once the special tax levy is determined for a fiscal year, the CFD Administrator will create the tax schedule to deliver to the County Auditor-Controller. Prepayment of the Special Tax Obligation A property owner may permanently or partially satisfy the maximum annual special tax for a taxable parcel by a full or partial prepayment as permitted under Government Code Section Prepayment is permitted only under the following conditions: Full prepayment is allowed only for developed parcels. The City determines that prepayment of the special tax does not jeopardize its ability to make timely payments of debt service on outstanding bonds. The property owner prepaying the special tax on a parcel has paid any delinquent special tax and penalties on that parcel before prepayment. Amounts in the reserve fund are equal to or greater than the reserve fund requirement. The full and partial prepayment calculations are described in detail in Section 6 of the RMA. An example of the full prepayment calculation before the issuance of CFD bonds is shown in Table 7. Under this example, prepaying parcels are paying their fair share of the estimated construction proceeds, as defined in the RMA. Any special tax revenues that have been collected and used for pay-as-you-go expenditures are deducted from the anticipated construction proceeds. Anticipated construction proceeds are increased by the Engineering News Record Construction Cost Index (ENR-CCI) for San Francisco in the prior calendar year, as determined on July 1 of the current fiscal year. The City also may add to the prepayment amount any City expenses incurred in calculating the prepayment. Table 8 shows an example of a full prepayment following the issuance of CFD bonds. Under this example, a prepaying parcel is paying a proportionate share of the outstanding bonds and remaining facility costs, less any pay-as-you-go-basis funding for authorized facilities. Page 71 of 118 Economic & Planning Systems, Inc. (EPS) 27 P:\172000\ Sacramento Railyards CFD Formation\Reports\ rd docx

72 Table 7 Railyards Community Facilities District No (Improvements) Full Prepayment Calculation Before Bond Issuance (with Pay-As-You-Go Example) Item RMA Reference Formula Amount Parcel Maximum Annual Special Tax [1] 6.a.1 a $18, Maximum Annual CFD Special Tax Revenue [2] 6.a.2 b $2,117, Benefit Share for the Prepayment Parcel 6.a.2 c = a / b 0.895% Base Year Anticipated Construction Proceeds Definition d $30,000, Pay-As-You Go Funded Authorized Facilities [3] Definition e $50, Remaining Facilities Costs Definition f=d-e $29,950, Base Year ENR-CCI Definition g 9, ENR-CCI in Example Fiscal year n/a h 9, ENR-CCI Adjustment Factor n/a i=g/h 103.1% Adjusted Remaining Facilities Cost n/a j=f*i $30,865, Total Facility Cost Share for Prepayment Parcel 6.a.3 k=c*j $276, City Costs 6.a.4 l $ Total Prepayment n/a m=j+k+l $276, [1] Example assumes prepaying Parcel is 1.0 acres. [2] Maximum Annual CFD Revenue is amount from Attachment 2 net of Allowable Tax-Exempt Acreage. [3] Example assumes $50,000 has been levied for authorized facilities on a pay-as-you-go basis. no bonds Prepared by EPS 7/26/ Page 72 of 118 P:\172000\ Sacramento Railyards CFD Formation\Models\ RMA Sample Tables.xlsx

73 Table 8 Railyards Community Facilities District No (Improvements) Full Prepayment Calculation After Bond Issuance (with Pay-As-You-Go Example) Item RMA Reference Formula Amount Parcel Maximum Annual Special Tax [1] 6.b.1 a $18, Maximum Annual CFD Special Tax Revenue [2] 6.b.2 b $2,117, Benefit Share for the Prepayment Parcel 6.b.2 c = a / b 0.895% Base Year Anticipated Construction Proceeds Definition d $30,000, Total Bonds Issued n/a e $20,000, Proceeds from CFD Bonds Issued to Date n/a f $16,500, Pay-As-You Go Funded Authorized Facilities [3] Definition g $50, Bond Principal Paid [4] n/a h $100, Total Bonds Outstanding n/a i=e-h $19,900, Outstanding Bond Share for Prepayment Parcel 6.b.3 j=c*i $178, Remaining Facility Costs Definition k=d-f-g $13,450, Base Year ENR-CCI Definition l 9, ENR-CCI in Example Fiscal year n/a m 9, ENR-CCI Adjustment Factor n/a n=m/l 105.6% Adjusted Anticipated Remaining Construction Proceeds n/a o=k*n $14,197, Remaining Facility Cost Share for the Prepayment Parcel 6.b.4 p=c*o $127, Bonds called due to prepayment 6.b.5 q= Rounddown(j/5000,0)*5000 $175, Bond Call Premium [5] 6.b.6 r=q*.02 $3, Reserve Fund Requirement Definition s $2,500, Less Reserve Fund Share 6.b.7 t=s*c ($22,369.36) City Costs 6.b.8 u Total Prepayment 6.b.8 v=p+q+r+t+u $283, [1] Example assumes prepaying parcel is 1.0 acres. [2] Maximum Annual CFD Revenue is amount from Attachment 2 net of Allowable Tax-Exempt Acreage. [3] Example assumes $50,000 has been levied for authorized facilities on a pay-as-you-go basis. [4] Assumes principal amount of $100,000 has been paid. [5] Assumes two percent bond call premium, see the bond documents for the premium to apply at the time of prepayment. Remaining Facilities Cost calculation needs to net out the Pay-as-you-go levy amounts bonds out Prepared by EPS 7/26/ Page 73 of 118 P:\172000\ Sacramento Railyards CFD Formation\Models\ RMA Sample Tables.xlsx

74 Railyards CFD No (Improvements) Hearing Report August 2018 Partial Prepayment A partial prepayment of the maximum annual special tax is available to the builder/developer of a project and is intended to provide a tool by which the builder/developer can reduce the overall tax burden on a parcel or parcels if the market determines that such burdens should be reduced to make the development and buildout of the project more feasible. Such a partial prepayment can be made to reduce the overall maximum annual special tax by either 25 percent or 50 percent. A partial prepayment may become mandatory if the City determines that overall maximum annual special tax revenue has been decreased such that the levy of the maximum annual special tax in all years in which CFD bonds are outstanding does not provide 110-percent special tax coverage of debt service in any given year. This partial prepayment will be structured such that the amount of the partial prepayment assures 110-percent special tax coverage of debt service in all years in which CFD bonds are outstanding. Manner of Collection The special tax will be collected in the same manner and at the same time as ad valorem property taxes. As specified in Section 9 of the RMA (Exhibit A), the CFD Administrator or its designee may directly bill the special tax and may collect the special tax at a different time, such as on a monthly or other periodic basis, or in a different manner, if necessary, to meet the City s financial obligations. Interpretation, Application, and Appeal of Special Tax Formula and Procedures Any taxpayer who feels the amount of the special tax assigned to a parcel is in error may file a notice with the administrator appealing the levy of the special tax. The administrator then will promptly review the appeal and, if necessary, discuss it with the applicant. If the administrator verifies that the tax should be modified or changed, the special tax levy will be corrected and, if applicable, a credit or refund will be granted. Interpretations may be made by the City, without resolution or ordinance of the Council, 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. Without Council approval, the administrator may make minor, non-substantive administrative and technical changes to the provisions of this RMA that do not materially affect the rate, method of apportionment, and manner of collection of the special tax for purposes of administrative efficiency or convenience or to comply with new applicable federal, state, or local law. Page 74 of 118 Economic & Planning Systems, Inc. (EPS) 30 P:\172000\ Sacramento Railyards CFD Formation\Reports\ rd docx

75 EXHIBITS: Exhibit A: Rate, Method of Apportionment, and Manner of Collection of Special Tax Exhibit Exhibit B: C: List of Authorized Facilities Incidental Expenses and Bond Issuance Costs Page 75 of 118

76 E EXHIBIT A: Rate, Method of Apportionment, and Manner of Collection of Special Tax Page 76 of 118

77 EXHIBIT A City of Sacramento Railyards Community Facilities District No (Improvements) Sacramento County, California RATE, METHOD OF APPORTIONMENT, AND MANNER OF COLLECTION OF SPECIAL TAX 1. Basis of Special Tax Levy A Special Tax authorized under the Mello-Roos Community Facilities Act of 1982 applicable to the land in the City of Sacramento Railyards Community Facilities District No (Improvements) of the City of Sacramento shall be levied and collected according to the tax liability determined by the City through the application of the appropriate amount or rate, as described below. 2. Definitions Acre or Acreage means the land area of an Assessor s Parcel as shown on an Assessor s Parcel Map or, if the land area is not shown on an Assessor s Parcel Map, the land area shown on the applicable records of the City or the County. Act means the Mello-Roos Community Facilities Act of 1982, as amended, Sections and following of the California Government Code. Administrative Expenses mean the actual or reasonably estimated costs related to the administration of the CFD, including, but not limited to, the following items: a. Costs of computing Special Taxes and preparing annual Special Tax collection schedules (whether by the City or any City designee). b. Costs of collecting, auditing, and accounting for the Special Taxes (whether by the County, the City, or otherwise), including costs related to collection of delinquent Special Taxes and foreclosure proceedings. c. Costs of remitting the Special Taxes to the Trustee. d. Costs of any Trustee (including its legal counsel) in the discharge of the duties required of it under any indenture for any Bonds. e. Costs to the City or to any City designee of complying with arbitrage rebate requirements. f. Costs to the City or to any City designee of complying with ongoing continuing-disclosure requirements with respect to the Bonds for the City or any obligated persons. Page 77 of 118 Economic & Planning Systems, Inc. (EPS) A-1 P:\172000\ Sacramento Railyards CFD Formation\Rate and Method\ rm6.docx

78 Rate, Method of Apportionment, and Manner of Collection of Special Tax Exhibit A June 27, 2018 g. Costs associated with preparing disclosure statements for any Bonds. h. Costs incurred in responding to public inquiries regarding the Special Tax. i. Costs to the City or to any City designee related to any appeal of the Special Tax. j. Costs associated with the release of funds from an escrow account, if any. k. Costs to the City for the issuance and sale of Bonds authorized by the CFD that are not recovered through the proceeds of the Bond sale. Such costs may include some of the cost of services provided by City staff. l. Costs to the City for any other administrative purposes, including attorney s fees for legal advice and attorney s fees and other costs related to collection of the Special Taxes and commencing and pursuing to completion any foreclosure of delinquent Special Taxes. Such costs include the cost of services provided by City staff. Administrator means the official of the City, or designee thereof, responsible for determining the Annual Costs and providing for the levy and collection of the Special Tax. Annual Costs mean, for any Fiscal Year, the total of the following after excluding any capitalized interest available to pay Debt Service that is due in the subsequent calendar year (i.e., January 1 to December 31) following the beginning of a Fiscal Year (i.e., July 1); any available earnings on, or surplus balances in, the reserve fund for Bonds or the Special Tax fund for the CFD; and any other available revenues of the City that relate to the CFD and may be lawfully used to pay Annual Costs for such Fiscal Year: a. Debt Service that is due in the subsequent calendar year (i.e., January 1 to December 31) following the beginning of a Fiscal Year (i.e., July 1). b. The amount needed to replenish the reserve fund for Bonds to the level required under any indenture for any Bonds, to the extent not included in a computation of Annual Costs in a previous Fiscal Year. c. Administrative Expenses for the Fiscal Year. d. To the extent permitted by the Act, the amount needed to fund (1) unpaid Special Tax delinquencies from previous Fiscal Years, to the extent not previously levied, and (2) anticipated delinquencies for the current Fiscal Year on any Parcel which has no outstanding delinquent Special Taxes. Collections from prior delinquencies should be used to offset the amount needed for current and future delinquencies if available. e. Authorized Facilities funded on a Pay-As-You-Go Basis. Anticipated Construction Proceeds mean the amount anticipated to be available through the CFD for acquiring or constructing Authorized Facilities, which is equal to $30 million at formation of the CFD. This amount is increased on July 1 of the current Fiscal Year by the increase in the ENR-CCI. In the event there is a decrease or no change in the ENR-CCI between Fiscal Years, there shall be no change in the updated Anticipated Construction Proceeds. As determined by the City, once all Authorized Facilities costs, including Authorized Facilities costs Page 78 of 118 Economic & Planning Systems, Inc. (EPS) A-2 P:\172000\ Sacramento Railyards CFD Formation\Rate and Method\ rm6.docx

79 Rate, Method of Apportionment, and Manner of Collection of Special Tax Exhibit A June 27, 2018 funded on a Pay-As-You-Go Basis, have been funded, the City may stop escalating the Anticipated Construction Proceeds. Assessor s Parcel or Parcel means a lot or Parcel with an assigned Assessor s Parcel Number and which is shown on an Assessor s Parcel Map. Assessor s Parcel Map means an official map of the County Assessor designating Parcels by Assessor s Parcel Number. Assessor's Parcel Number means the number assigned to a Parcel by the County Assessor on the equalized tax roll. Authorized Facilities mean those facilities to be financed, as identified in the resolution forming the CFD. Base Year means the Fiscal Year beginning July 1, 2018, and ending June 30, Benefit Share means, for any Fiscal Year, the Maximum Annual Special Tax for a Parcel divided by the Maximum Annual CFD Special Tax Revenue. Bond Share means the share of Outstanding Bonds assigned to a Parcel as the term is used in Section 6 hereof. Bond(s) mean(s) any bond(s) issued by the City for the CFD under the Act and any other debt, as defined in the Act, used to acquire or construct Authorized Facilities. Building Permit means a permit issued by the City or other permitting agency, such as the State of California, for the construction of a structure on a Taxable Parcel. CFD means the City of Sacramento Railyards Community Facilities District No (Improvements) of the City of Sacramento, Sacramento County, California. City means the City of Sacramento in Sacramento County, California. Condominium Plan means the plan created for each Condominium Structure that is defined in Civil Code Section 4120 and described in Civil Code Section Condominium Structure means a residential, commercial, or mixed-use structure consisting of two or more units that share common walls and are capable of being offered as for-sale residential condominium units or for-sale nonresidential condominium units, with each such unit having its own separate Assessor s Parcel Number. Condominium Structures include such structures that met the statutory definition of a condominium contained in Civil Code Section Condominium Unit means an airspace residential unit or nonresidential unit in a Condominium Structure which has been assigned its own separate Assessor s Parcel Number. Condominium Unit Building Area means the square footage of a Condominium Unit as shown on the Condominium Plan. Council means the City Council of the City acting for the CFD under the Act. County means the County of Sacramento, California. Page 79 of 118 Economic & Planning Systems, Inc. (EPS) A-3 P:\172000\ Sacramento Railyards CFD Formation\Rate and Method\ rm6.docx

80 Rate, Method of Apportionment, and Manner of Collection of Special Tax Exhibit A June 27, 2018 County Auditor-Controller means the Auditor-Controller of the County. Debt Service means, for any period, the total amount of principal of, interest on, scheduled sinking fund payments for, and other regularly scheduled payments on the Outstanding Bonds for the period. Developed Parcel means, in any Fiscal Year, a Parcel for which a Building Permit for residential use or nonresidential use has been issued before June 1 of the preceding Fiscal Year. Once a Parcel is classified as a Developed Parcel, it shall remain a Developed Parcel. ENR-CCI means the year-over-year change in the Engineering News Record Construction Cost Index for San Francisco (March to March). Fiscal Year means the period starting July 1 and ending the following June 30. Full Prepayment means the complete fulfillment of a Parcel s Special Tax obligation, as determined by following the procedures in Section 6. Lot Number means a numbered lot identified on Map 2, which illustrates the anticipated Parcels to be created upon further subdivision of Original Parcels. Maximum Annual Special Tax means the greatest amount of Special Tax that can be levied against a Parcel in a given Fiscal Year, as shown in Attachments 1 and 2. Maximum Annual Special Tax Rate means the rate of Maximum Annual Special Tax charged per Acre, as shown in Attachments 1 and 2. Maximum Annual Special Tax Revenue means the greatest amount of revenue that can be collected in total from a group of Parcels (such as Developed Parcels) by levying the Maximum Annual Special Tax. Maximum Annual CFD Special Tax Revenue means the sum of the Maximum Annual Special Tax levied on all Taxable Parcels in the CFD in a Fiscal Year. Original Parcel means a Parcel identified in Attachment 1 at formation of the CFD and shown on Map 1. Outstanding Bonds mean the total principal amount of Bonds that have been issued and not fully repaid, optionally redeemed, or legally defeased. Partial Prepayment means the partial fulfillment of a Parcel s Special Tax obligation, as determined by following the procedures in Section 6. Pay-As-You-Go Basis means the use of Special Tax revenues to directly fund the acquisition, construction, and improvement of Authorized Facilities as part of an acquisition agreement with the City. Prepayment means the complete or partial fulfillment of a Parcel s Special Tax obligation, as determined by following the procedures in Section 6. Proportionately means that the ratio of the actual Special Tax levy to the Maximum Annual Special Tax is equal for all Developed Parcels. For Undeveloped Parcels, Proportionately means Page 80 of 118 Economic & Planning Systems, Inc. (EPS) A-4 P:\172000\ Sacramento Railyards CFD Formation\Rate and Method\ rm6.docx

81 Rate, Method of Apportionment, and Manner of Collection of Special Tax Exhibit A June 27, 2018 that the ratio of the actual Special Tax levy to the Maximum Annual Special Tax is equal for all Undeveloped Parcels. Public Agency means the City, State of California, the County, the federal government, other governmental agencies, the Sacramento City Unified School District, or other special district. Public Parcel means any Parcel, in its entirety, that is or is intended to be publicly owned that is normally exempt from the levy of general ad valorem property taxes under California law, including public streets, schools, parks, public drainageways, public landscaping, wetlands, greenbelts, and public open space. Any such Parcel is a Tax-Exempt Parcel. Remaining Facilities Funding Requirement means the amount of Anticipated Construction Proceeds less construction proceeds from previous CFD Bond issuances and costs of Authorized Facilities funded on a Pay-As-You-Go Basis from the levy of the Special Tax. Remaining Facilities Funding Requirement Share means the Remaining Facilities Funding Requirement multiplied by the Benefit Share. Reserve Fund means any Debt Service reserve fund established pursuant to the indenture for the Bonds. Reserve Fund Requirement means the amount required to be held in any Reserve Fund in accordance with the indenture for the Bonds. Reserve Fund Share means the amount on deposit in any Reserve Fund, but in any event not to exceed the Reserve Fund Requirement, multiplied by the Benefit Share for a given Parcel. RMA means this Rate, Method of Apportionment, and Manner of Collection of Special Tax. Special Tax(es) mean(s) any tax levy under the Act in the CFD. Subdivision or Subdivided means a division of a Parcel into two or more Parcels through the Subdivision Map Act process. A Subdivision may also include the merging of two or more Parcels to create new Parcels. Successor Parcel means a Parcel created by the Subdivision of an Original Parcel or a Successor Parcel. Tax Collection Schedule means the document prepared by the Administrator for the County Auditor-Controller to use in levying and collecting the Special Taxes each Fiscal Year. Tax Escalation Factor means a factor of 2 percent in each Fiscal Year following the Base Year by which the Maximum Annual Special Tax for the previous Fiscal Year will be increased. Taxable Acreage means that area of a Parcel determined by the Administrator anticipated to become a Taxable Parcel or Parcels upon Subdivision. Taxable Parcel means any Parcel that is not a Tax-Exempt Parcel. Tax-Exempt Parcel means any Public Parcel and any other Parcel that in its entirety, is or is intended to be, publicly owned that is normally exempt from the levy of general ad valorem property taxes under California law, including public streets, schools, parks, public drainageways, public landscaping, wetlands, greenbelts, common areas, and public open space. Page 81 of 118 Economic & Planning Systems, Inc. (EPS) A-5 P:\172000\ Sacramento Railyards CFD Formation\Rate and Method\ rm6.docx

82 Rate, Method of Apportionment, and Manner of Collection of Special Tax Exhibit A June 27, 2018 Total Condominium Unit Building Area means the sum of all Condominium Unit Building Areas for all Condominium Units in a Condominium Structure as shown on a Condominium Plan. Trustee means a national banking association organized and existing under the laws of the United States. Undeveloped Parcel means a Taxable Parcel that is not a Developed Parcel. 3. Duration of the Special Tax The Special Tax will be levied and collected for as long as it is needed to pay Annual Costs; however, in no event shall the Special Tax be levied on any Parcel in the CFD after Fiscal Year When the costs of all Authorized Facilities have been funded (as determined by the Administrator) and other Annual Costs incurred by the CFD have been paid, the Special Taxes shall cease to be levied. The City shall direct the County Recorder to record a Notice of Cessation of Special Tax. Such notice will state that the obligation to pay the Special Tax has ceased and that the lien imposed by the Notice of Special Tax Lien is extinguished. In addition, the Notice of Cessation of Special Tax shall 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. 4. Administrative Tasks Tasks required annually of the Administrator are discussed below: a. Classification of Parcels. By June 30 of each Fiscal Year, for purposes of the next Fiscal Year tax levy, the Administrator shall use the Parcel records of the Assessor s Secured Tax Roll as of January 1 of the preceding Fiscal Year, and other City development approval records, and cause: 1. Each Parcel to be classified as a Taxable Parcel or a Tax-Exempt Parcel. 2. Each Taxable Parcel to be classified as a Developed Parcel or an Undeveloped Parcel. b. Annual Special Tax Escalation. The Administrator shall increase the Maximum Annual Special Tax by the Tax Escalation Factor in each Fiscal Year following the Base Year. c. Assignment of the Maximum Annual Special Tax to Original Parcels. All Original Parcels at formation of the CFD are identified by Assessor s Parcel Number and are shown in Attachment 1 and Map 1. A Maximum Annual Special Tax is assigned to each Original Parcel in Attachment 1 by multiplying the Taxable Acreage for each Lot Number within such Original Parcel anticipated to include Taxable Acreage by the Maximum Annual Special Tax per Acre. The sum of the Maximum Annual Special Tax calculated for Lot Numbers anticipated to include Taxable Acreage within each Original Parcel equals the Maximum Annual Special Tax for that Original Parcel. Each Original Parcel has one or more Lot Numbers assigned corresponding to the Lot Numbers shown in Map 2 and Attachment 1. As Parcels are Subdivided, Successor Parcels are anticipated to be created similar to the Lot Numbers shown in Map 2. Using the procedures described below, the Maximum Annual CFD Special Tax Revenue shall not be reduced because of Subdivision. Page 82 of 118 Economic & Planning Systems, Inc. (EPS) A-6 P:\172000\ Sacramento Railyards CFD Formation\Rate and Method\ rm6.docx

83 Rate, Method of Apportionment, and Manner of Collection of Special Tax Exhibit A June 27, 2018 As noted in Attachment 1, there are several Lot Numbers that are located within two Assessor s Parcels and At CFD formation, the Maximum Annual Special Tax on these two Assessor s Parcels has been assigned to the Original Parcels as shown on Attachment 1. If these two Assessor s Parcels Subdivide as anticipated, the Maximum Annual Special Tax would be assigned to each Successor Parcel as indicated by for each Lot Number shown on Attachment 1. d. Assignment of the Maximum Annual Special Tax to Successor Parcels if Original Parcels are Subdivided into Parcels like Lot Numbers displayed on Attachment 1. If Original Parcels are Subdivided and Successor Parcels are created substantially in the size and configuration as shown in Map 2 and in Attachment 1, assign the Maximum Annual Special Tax to each Successor Parcel as shown in Attachment 1. e. Assignment of the Maximum Annual Special Tax to Successor Parcels if Original Parcels are Subdivided in a manner different than anticipated by Lot Numbers in Attachment 1. As Original Parcels and Successor Parcels are Subdivided creating new Successor Parcels, the Maximum Annual Special Tax per Successor Parcel will be assigned using the following procedures: 1. The Administrator shall identify the Taxable Acreage for each Successor Parcel created from an Original Parcel. 2. Multiply the Taxable Acreage of each Successor Parcel by the Maximum Annual Special Tax Rate per Acre (as escalated by the Tax Escalation Factor). 3. If the sum of Maximum Annual Special Taxes from all Successor Parcels from an Original Parcel equals or exceeds the Maximum Annual Special Tax for that Original Parcel, assign the Maximum Annual Special Tax for each Successor Parcel as calculated in Section 4.e If the sum of Maximum Annual Special Taxes from all Successor Parcels from an Original Parcel is less than the Maximum Annual Special Tax for that Original Parcel being Subdivided, use the procedures below to assign the Maximum Annual Special Tax to each Successor Parcel. A. Identify the Maximum Annual Special Tax (as increased by the Tax Escalation Factor) assigned to the Taxable Parcel(s) being Subdivided. B. Determine the Taxable Acreage assigned to each Successor Parcel. C. Sum the Taxable Acreage for all Successor Parcels determined in Section 4.e.4.B. D. Divide the Taxable Acreage for each Successor Parcel determined in Section 4.e.4.B by the sum of the Taxable Acreage for all Successor Parcels of an Original Parcel determined in Section 4.e.4.C. E. Multiply the result for each Successor Parcel from Section 4.e.4.D by the Maximum Annual Special Tax identified in Section 4.e.4.A. F. Assign the Maximum Annual Special Tax calculated in Section 4.e.E to each Successor Parcel. Page 83 of 118 Economic & Planning Systems, Inc. (EPS) A-7 P:\172000\ Sacramento Railyards CFD Formation\Rate and Method\ rm6.docx

84 Rate, Method of Apportionment, and Manner of Collection of Special Tax Exhibit A June 27, 2018 f. Assignment of the Maximum Annual Special Tax to Each Condominium Unit Within a Condominium Structure. For Condominium Units, the Maximum Annual Special Tax must be assigned to improvements on the Parcel rather than the land. Assign the Maximum Annual Special Tax to Condominium Units using the following procedures: 1. Identify the Maximum Annual Special Tax (as increased by the Tax Escalation Factor) assigned to the Taxable Parcel(s) being subdivided by the Condominium Plan. 2. Determine the Total Condominium Unit Building Area for the applicable Successor Parcel as identified on the Condominium Plan. 3. Determine the Condominium Unit Building Area for each Condominium Unit. 4. Divide the Condominium Unit Building Area determined in Section 4.f.3 by the Total Condominium Unit Building Area determined in Section 4.f Multiply the result for each Condominium Unit from Section 4.f.4 by the Maximum Annual Special Tax identified in Section 4.f Assign the Maximum Annual Special Tax calculated in Section 4.f.5 to each Condominium Unit. 7. Once a Condominium Unit has been assigned the Maximum Annual Special Tax identified in Section 4.f.6, this amount shall not change for future building permits or for additions or changes to the Condominium Unit. g. Conversion of a Tax-Exempt Parcel to a Taxable Parcel. If a Tax-Exempt Parcel is converted to a taxable use or transferred to a private owner as a Taxable Parcel, it shall become subject to the Special Tax. The Maximum Annual Special Tax for such a Parcel shall be determined using the provisions of Section 4.c. through 4.f. Once a Parcel has been identified as a Taxable Parcel, it shall remain a Taxable Parcel, except for Parcels transferred under Section 4.h. h. Taxable Parcels Acquired by a Public Agency. A Taxable Parcel that is acquired by a Public Agency after the CFD is formed will remain subject to the applicable Special Tax unless the Special Tax obligation is satisfied pursuant to Section of the Act. An exception to this may be made if a Public Parcel, such as a school site, is relocated to a Taxable Parcel, in which case the previously Tax-Exempt Parcel of comparable Acreage becomes a Taxable Parcel and the Maximum Annual Special Tax from the previously Taxable Parcel is transferred to the new Taxable Parcel. This transfer of a Parcel from a Taxable Parcel to a Public Parcel will be permitted to the extent there is no net loss in Maximum CFD Special Tax Revenue and the transfer is agreed to by the owners of the Parcels involved in the transfer and the Administrator. At CFD formation, the City has identified the possibility of up to, but not to exceed, 5 acres of land that initially is considered Taxable Acreage that may become Tax-Exempt Parcels. In priority order, 5 acres of Taxable Acreage may be converted to Tax-Exempt parcels for (1) a fire station, (2) a police station, and (3) a public school site without requiring any transfers of Maximum Annual Special Tax or Prepayment of the obligation. Attachment 2 shows the adjusted Maximum Annual CFD Revenue for the Base Year if up to 5 Taxable Acres Page 84 of 118 Economic & Planning Systems, Inc. (EPS) A-8 P:\172000\ Sacramento Railyards CFD Formation\Rate and Method\ rm6.docx

85 Rate, Method of Apportionment, and Manner of Collection of Special Tax Exhibit A June 27, 2018 were to be converted to Tax-Exempt Parcels. In whole or in part, the City, in its sole discretion, can release this reservation to permit up to 5 acres to be converted from Taxable Acreage to Tax Exempt Parcels. The Administrator shall annually document whether any of this reservation of up to 5 Taxable Acres has been converted to one or more Tax-Exempt Parcels. i. Transfer of the Maximum Annual Special Tax amongst Taxable Parcels. As Taxable Parcels are Subdivided, the Maximum Annual Special Tax (on a per Taxable Acreage basis) may become greater or less than other similar Parcels. As long as no vertical construction has occurred on Parcels proposed for a transfer of Maximum Annual Special Tax, owners of such Parcels may request that the City allow a transfer of the Maximum Annual Special Tax amongst two or more Taxable Parcels to remedy such differences between Taxable Parcels. All allowed transfers shall only occur such that there is no reduction in the Maximum Annual Special Tax Revenue of all Taxable Parcels included in such transfers and the Administrator and property owner agree to the transfer(s). j. Release of Special Tax Lien for Lot Number 51b. At CFD formation, the planned Lot Number 51b, with a Maximum Annual Special Tax of $0, was included in a larger Assessor s Parcel and therefore could not be excluded from the CFD boundary. If a Parcel is created consistent with the Lot Number 51b identified in Map 2 and Attachment 1, the City shall file a Notice of Release of the Special Tax lien for that Parcel. Once the notice is filed, that Parcel will no longer be subject to a Maximum Annual Special Tax under this RMA. 5. Calculating Annual Special Taxes Each Fiscal Year, the Administrator will compute the Annual Costs and determine the annual Special Tax levy for each Taxable Parcel based on the assignment of the Special Tax in Section 4. The Administrator then will determine the Special Tax levy for each Taxable Parcel using the following process: a. Compute the Annual Costs of the CFD. b. For all Taxable Parcels, calculate the Special Tax levy for each using the following steps: Step 5.b.1. The Special Tax shall be levied Proportionately on all Parcels of Developed Property up to the amount of the Annual Costs or up to 100 percent of the Maximum Special Tax for each Developed Parcel, whichever is lower. Step 5.b.2. If additional revenue is needed after Step 5.b.1, the Special Tax shall be levied Proportionately on each Undeveloped Parcel until the revenue from the Special Tax levy in this step, when added to the levy amounts determined in Step 5.b.1, equals the Annual Costs, or up to 100 percent of the Maximum Annual Special Tax for all Undeveloped Parcels. c. Levy on each Taxable Parcel the amount calculated above. d. Prepare the Tax Collection Schedule and, unless an alternative method of collection has been selected pursuant to Section 8, send it to the County Auditor-Controller requesting that it be placed on the general, secured property tax roll for the Fiscal Year. The Tax Collection Page 85 of 118 Economic & Planning Systems, Inc. (EPS) A-9 P:\172000\ Sacramento Railyards CFD Formation\Rate and Method\ rm6.docx

86 Rate, Method of Apportionment, and Manner of Collection of Special Tax Exhibit A June 27, 2018 Schedule will not be sent later than the date required by the County Auditor-Controller for such inclusion. The Administrator will make every effort to calculate the Special Tax correctly for each Parcel. It will be the burden of the taxpayer to correct any errors in determining which Parcels are subject to the tax and the Special Tax assignments. 6. Prepayment of the Special Tax Obligation A property owner may permanently or partially satisfy the Maximum Annual Special Tax for a Taxable Parcel by a Prepayment as permitted under Government Code Section An owner of an Assessor s Parcel intending to prepay the Special Tax obligation shall provide the City with written notice of intent to prepay. Within 45 days of receipt of such written notice and payment of any required fee, the City or its designee shall notify such owner of the Prepayment amount for such Parcel. Prepayment must be made no fewer than 75 days before any redemption date for Bonds to be redeemed with the proceeds of such prepaid Special Taxes. Full Prepayment is permitted only under the following conditions: The City determines that the Full Prepayment of the Special Tax does not jeopardize its ability to make timely payments of Debt Service on Outstanding Bonds and maintain a 110-percent Special Tax coverage of Debt Service plus Administrative Expenses in all years where there will be Outstanding Bonds. The property owner prepaying the Special Tax on a Parcel has paid any delinquent Special Taxes and penalties on that Parcel before Full Prepayment. Amounts in the Reserve Fund are equal to or greater than the Reserve Fund Requirement. When permitted, the Administrator shall calculate Full Prepayment using the following steps: a. The Full Prepayment amount before any issuance of CFD Bonds shall be calculated using the following procedures (see Table 1 for a sample of Full Prepayment): 1. Determine the Maximum Annual Special Tax for the Taxable Parcel for which the Special Tax is to be prepaid using the provisions of Section Divide the amount from Step 6.a.1 by the Maximum CFD Annual Special Tax Revenue to determine the Benefit Share for the Full Prepayment Parcel. 3. Multiply the Remaining Facilities Funding Requirement by the Benefit Share to determine the Full Prepayment amount. 4. Add to the amount determined in Step 6.a.3 any costs to the City associated with the preparation of the Full Prepayment calculation. b. The Full Prepayment amount after issuance of the initial CFD Bonds shall be calculated using the following procedures (see Table 2 for a sample of Full Prepayment): 1. Determine the Maximum Annual Special Tax for the Taxable Parcel for which the Special Tax is to be prepaid using the provisions of Section 4. Page 86 of 118 Economic & Planning Systems, Inc. (EPS) A-10 P:\172000\ Sacramento Railyards CFD Formation\Rate and Method\ rm6.docx

87 Rate, Method of Apportionment, and Manner of Collection of Special Tax Exhibit A June 27, Divide the amount from Step 6.b.1 by the Maximum CFD Annual Special Tax Revenue to determine the Benefit Share for the Parcel. 3. Multiply the Benefit Share by the total amount of Outstanding Bonds to determine the Bond Share for the Full Prepayment Parcel. 4. Multiply the Benefit Share by the Remaining Facilities Funding Requirement to determine the Remaining Facilities Funding Requirement Share for the Full Prepayment Parcel. 5. Determine the total amount of Bonds to be called by rounding the amount summed in Step 6.b.3 down to the nearest $5, Multiply the amount calculated in Step 6.b.5 by the call premium, if applicable, for the next available call date. 7. Determine the Reserve Fund Share for the Full Prepayment Parcel by multiplying the Reserve Fund Requirement by the Benefit Share. 8. Determine the Full Prepayment amount by adding the amounts calculated in Steps 6.b.4, 6.b.5, and 6.b.6 and then subtracting the Reserve Fund Share calculated in Step 6.b.7, provided the amount in the Reserve Fund equals the Reserve Fund Requirement after reduction. Add to the amount just determined any interest to the next Bond call date not covered by Special Taxes already levied and collected for the prepaying Parcel, plus any expenses incurred by the City in connection with the Full Prepayment calculation or the application of the proceeds of the Full Prepayment to the call of Outstanding Bonds. 9. If the Special Taxes have already been levied, but not collected, the Parcel shall not become a Full Prepayment Parcel until the owner of the Parcel has paid the Special Taxes included on the current property tax bill in addition to the Full Prepayment amount. c. Partial Prepayments are only allowed for Parcels owned by a property owner before the issuance of the initial Building Permit. A Partial Prepayment can occur only once per Assessor s Parcel. The City may allow a Partial Prepayment if it is determined that the Partial Prepayment will not jeopardize its ability to make timely payments of Debt Service and maintain a 110-percent Special Tax coverage of Debt Service plus Administrative Expenses in all years where there will be Outstanding Bonds. The amount of any Partial Prepayment must be either 25 percent or 50 percent of the Full Prepayment amount determined in Step 6.b.8. A Partial Prepayment may be made in an amount equal to 25 percent or 50 percent of the Full Prepayment desired by the party making a Partial Prepayment, except that the full amount of administrative fees and expenses determined in Step 6.b.8 shall be included in the Partial Prepayment. The Maximum Annual Special Tax that can be levied on a Parcel after a Partial Prepayment is made is equal to the Maximum Annual Special Tax that could have been levied before the Prepayment, reduced by the percentage of the Full Prepayment that the Partial Prepayment represents, all as determined by or at the direction of the Administrator. For example, if the Partial Prepayment is equal to 25 percent, the Maximum Annual Special Tax applied to the Parcel would be 75 percent of the Maximum Annual Special Tax. Page 87 of 118 Economic & Planning Systems, Inc. (EPS) A-11 P:\172000\ Sacramento Railyards CFD Formation\Rate and Method\ rm6.docx

88 Rate, Method of Apportionment, and Manner of Collection of Special Tax Exhibit A June 27, Interpretation, Application, and Appeal of Special Tax Formula and Procedures Any taxpayer who feels the amount of the Special Tax assigned to a Parcel is in error may file a notice with the Administrator appealing the levy of the Special Tax. The Administrator then will promptly review the appeal and, if necessary, discuss it with the applicant. If the Administrator verifies that the tax should be modified or changed, the Special Tax levy will be corrected and, if applicable, a credit or refund will be granted. Interpretations may be made by the City, without resolution or ordinance of the Council, 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. Without Council approval, the Administrator may make minor, non-substantive administrative and technical changes to the provisions of this RMA that do not materially affect the rate, method of apportionment, and manner of collection of the Special Tax for purposes of administrative efficiency or convenience or to comply with new applicable federal, state, or local law. 8. Manner of Collection The Special Tax will be collected in the same manner and at the same time as ad valorem property taxes, provided, however, the Administrator or their designee may directly bill the Special Tax and may collect the Special Tax at a different time, such as on a monthly or other periodic basis, or in a different manner, if necessary, to meet the City s financial obligations. Page 88 of 118 Economic & Planning Systems, Inc. (EPS) A-12 P:\172000\ Sacramento Railyards CFD Formation\Rate and Method\ rm6.docx

89 Attachment 1 Railyards Community Facilities District No (Improvements) Maximum Annual Special Tax per Original Parcel - Base Year (Fiscal Year ) Page 1 of 4 Maximum Annual Maximum Annual Lot Taxable Special Tax Special Tax Number Original Parcel Acres per Acre Lot Number [1] 458 N B $18, $2, N B $18, $1, N B $18, $1, e portion ** 0.77 $18, $14, f portion ** 0.85 $18, $16, g portion ** 2.41 $18, $45, h $18, $23, Subtotal 5.29 $100, $18, $0.00 2a $18, $21, b $18, $66, c portion * 3.31 $18, $62, d portion * 4.17 $18, $79, a $18, $17, b $18, $17, c $18, $14, d $18, $14, a portion * 0.83 $18, $15, b portion * 0.94 $18, $17, c $18, $15, d $18, $17, e $18, $ portion * 0.66 $18, $12, a portion * 0.00 $18, $0.00 6a $18, $21, b portion * 1.13 $18, $21, c $18, $19, d $18, $19, a $18, $17, b $18, $16, c $18, $16, d $18, $14, a $18, $14, b $18, $22, c $18, $16, a $18, $16, b $18, $15, c $18, $4, Prepared by EPS 8/2/2018 A-13 Page 89 of 118 P:\172000\ Sacramento Railyards CFD Formation\Models\ m5 CFD.xlsx

90 Attachment 1 Railyards Community Facilities District No (Improvements) Maximum Annual Special Tax per Original Parcel - Base Year (Fiscal Year ) Page 2 of 4 Maximum Annual Maximum Annual Lot Taxable Special Tax Special Tax Number Original Parcel Acres per Acre Lot Number [1] $18, $ a $18, $17, b $18, $15, a $18, $14, b $18, $12, c $18, $14, d $18, $12, $18, $32, $18, $7, $18, $5, $18, $29, a $18, $ b $18, $ c $18, $ $18, $3, $18, $5, $18, $11, $18, $19, $18, $8, $18, $16, $18, $ $18, $ $18, $ $18, $ a $18, $13, b $18, $22, c $18, $20, d $18, $19, e $18, $ $18, $ $18, $59, $18, $ a $18, $27, b $18, $30, a $18, $54, b $18, $ a $18, $17, b $18, $50, $18, $28, Prepared by EPS 8/2/2018 A-14 Page 90 of 118 P:\172000\ Sacramento Railyards CFD Formation\Models\ m5 CFD.xlsx

91 Attachment 1 Railyards Community Facilities District No (Improvements) Maximum Annual Special Tax per Original Parcel - Base Year (Fiscal Year ) Page 3 of 4 Maximum Annual Maximum Annual Lot Taxable Special Tax Special Tax Number Original Parcel Acres per Acre Lot Number [1] 51a $18, $63, b $18, $ a $18, $56, b $18, $43, c $18, $42, d $18, $79, e $18, $55, $18, $ a $18, $10, b $18, $13, c $18, $13, d $18, $16, a $18, $ b $18, $8, c $18, $14, d $18, $13, e $18, $14, a $18, $ b $18, $16, c $18, $17, a $18, $11, b $18, $12, c $18, $11, d $18, $12, $18, $ $18, $ $18, $ a $18, $13, b $18, $21, c $18, $10, d $18, $16, a $18, $20, b $18, $20, c $18, $ d $18, $25, $18, $34, $18, $ a $18, $25, b $18, $29, Subtotal $1,926, Prepared by EPS 8/2/2018 A-15 Page 91 of 118 P:\172000\ Sacramento Railyards CFD Formation\Models\ m5 CFD.xlsx

92 Attachment 1 Railyards Community Facilities District No (Improvements) Maximum Annual Special Tax per Original Parcel - Base Year (Fiscal Year ) Page 4 of 4 Maximum Annual Maximum Annual Lot Taxable Special Tax Special Tax Number Original Parcel Acres per Acre Lot Number [1] $18, $35, a $18, $23, b $18, $25, $18, $31, $18, $ a $18, $36, b $18, $27, Subtotal 9.49 $179, n/a $18, $0.00 Totals $2,211, [1] The Maximum Annual Special Tax shall be escalated by the Tax Escalation Factor in each year following the Base Year. * Portion of Lot Number may be within ** Portion of Lot Number may be within "att1" Prepared by EPS 8/2/2018 A-16 Page 92 of 118 P:\172000\ Sacramento Railyards CFD Formation\Models\ m5 CFD.xlsx

93 Attachment 2 Railyards Community Facilities District No (Improvements) Maximum Annual Special Tax Per Acre - Base Year (Fiscal Year ) Maximum Annual Special Tax Item Acres per Taxable Acre Amount [1] Total Taxable Acres $18, $2,211, Allowable Tax-Exempt Acreage 5.00 $18, $94, Maximum Annual Special Tax for Debt Service $2,116, [1] The Maximum Annual Special Tax shall be escalated by the Tax Escalation Factor in each year following the Base Year. att2 Prepared by EPS 8/2/2018 A-17 Page 93 of 118 P:\172000\ Sacramento Railyards CFD Formation\Models\ m5 CFD.xlsx

94 MAP 1 A-18 Page 94 of 118

95 MAP 2 A-19 Page 95 of 118

96 Table 1 Railyards Community Facilities District No (Improvements) Full Prepayment Calculation Before Bond Issuance (with Pay-As-You-Go Example) Item RMA Reference Formula Amount Parcel Maximum Annual Special Tax [1] 6.a.1 a $18, Maximum Annual CFD Special Tax Revenue [2] 6.a.2 b $2,117, Benefit Share for the Prepayment Parcel 6.a.2 c = a / b 0.895% Base Year Anticipated Construction Proceeds Definition d $30,000, Pay-As-You Go Funded Authorized Facilities [3] Definition e $50, Remaining Facilities Costs Definition f=d-e $29,950, Base Year ENR-CCI Definition g 9, ENR-CCI in Example Fiscal year n/a h 9, ENR-CCI Adjustment Factor n/a i=g/h 103.1% Adjusted Remaining Facilities Cost n/a j=f*i $30,865, Total Facility Cost Share for Prepayment Parcel 6.a.3 k=c*j $276, City Costs 6.a.4 l $ Total Prepayment n/a m=j+k+l $276, no bonds [1] Example assumes prepaying Parcel is 1.0 acres. [2] Maximum Annual CFD Revenue is amount from Attachment 2 net of Allowable Tax-Exempt Acreage. [3] Example assumes $50,000 has been levied for authorized facilities on a pay-as-you-go basis. Prepared by EPS 6/27/2018 A-20 Page 96 of 118 P:\172000\ Sacramento Railyards CFD Formation\Models\ RMA Sample Tables.xlsx

97 Table 2 Railyards Community Facilities District No (Improvements) Full Prepayment Calculation After Bond Issuance (with Pay-As-You-Go Example) Item RMA Reference Formula Amount Parcel Maximum Annual Special Tax [1] 6.b.1 a $18, Maximum Annual CFD Special Tax Revenue [2] 6.b.2 b $2,117, Benefit Share for the Prepayment Parcel 6.b.2 c = a / b 0.895% Base Year Anticipated Construction Proceeds Definition d $30,000, Total Bonds Issued n/a e $20,000, Proceeds from CFD Bonds Issued to Date n/a f $16,500, Pay-As-You Go Funded Authorized Facilities [3] Definition g $50, Bond Principal Paid [4] n/a h $100, Total Bonds Outstanding n/a i=e-h $19,900, Outstanding Bond Share for Prepayment Parcel 6.b.3 j=c*i $178, Remaining Facility Costs Definition k=d-f-g $13,450, Base Year ENR-CCI Definition l 9, ENR-CCI in Example Fiscal year n/a m 9, ENR-CCI Adjustment Factor n/a n=m/l 105.6% Adjusted Anticipated Remaining Construction Proceeds n/a o=k*n $14,197, Remaining Facility Cost Share for the Prepayment Parcel 6.b.4 p=c*o $127, Bonds called due to prepayment 6.b.5 q= Rounddown(j/5000,0)*5000 $175, Bond Call Premium [5] 6.b.6 r=q*.02 $3, Reserve Fund Requirement Definition s $2,500, Less Reserve Fund Share 6.b.7 t=s*c ($22,369.36) City Costs 6.b.8 u Total Prepayment 6.b.8 v=p+q+r+t+u $283, [1] Example assumes prepaying parcel is 1.0 acres. [2] Maximum Annual CFD Revenue is amount from Attachment 2 net of Allowable Tax-Exempt Acreage. [3] Example assumes $50,000 has been levied for authorized facilities on a pay-as-you-go basis. [4] Assumes principal amount of $100,000 has been paid. [5] Assumes two percent bond call premium, see the bond documents for the premium to apply at the time of prepayment. Remaining Facilities Cost calculation needs to net out the Pay-as-you-go levy amounts bonds out Prepared by EPS 6/27/2018 A-21 Page 97 of 118 P:\172000\ Sacramento Railyards CFD Formation\Models\ RMA Sample Tables.xlsx

98 E EXHIBIT B: List of Authorize ed Facilities Page 98 of 118

99 EXHIBIT B City of Sacramento Railyards Community Facilities District No (Improvements) Sacramento County, California LIST OF AUTHORIZED FACILITIES AND FEES Authorized facilities that may be funded through Railyards Community Facilities District No (Improvements) include the following public improvements: Transportation Improvements Authorized facilities include any and all transportation improvements designed to meet the needs of development within the Railyards Community Facilities District No (Improvements), including, but not limited to: acquisition of land and easements; roadway design; project management; bridge crossings and culverts; clearing, grubbing, and demolition; grading, soil import/export, paving (including slurry seal), and decorative/enhanced pavement concrete and/or pavers; joint trenches, underground utilities and undergrounding of existing utilities; dry utilities and appurtenances; curbs, gutters, sidewalks, bike trails (including onsite and off-site), other pedestrian improvements; enhanced fencing, and access ramps; street lights, signalization, and traffic signal control systems; bus turnouts; signs and striping; erosion control; median and parkway landscaping and irrigation; entry monumentation; bus shelters, masonry walls; traffic control and agency fees; and other improvements related thereto. Eligible improvements for the roads listed above also include any and all necessary underground potable and recycled water, sanitary sewer, and storm drainage system improvements. Authorized facilities include, but are not limited to, the following transportation improvements: 5th Street (between Railyards and North B Street) 6th Street Bike Lanes 6th Street (between Railyards and North B Street). 7th Street Widening 8th Street (between Railyards and North B Street) 10th Street (between Railyards Boulevard and Northern Project Boundary) 10th Street (extension to North B Street) Bercut Drive (from south of the drainage pump station to South Park Drive) Camille Street (between 5th Street and 6th Street) Camille Street (between Bercut Drive and 5th Street) Judah from Railyards to South Park Street. North B Street (between 5th and 6th) North B Street (between 6th and 7th Street) North B Street (between 7th and 8th Street. North B Street (between 8th and 10th Street) Railyards Boulevards (between 7th Street and 10th Street) Railyards Boulevard (between 10th Street and 12th Street). Railyards Boulevard (lane shift) Richards/I-5 Interchange (Railyards contribution) South Park Drive (between Bercut Drive and 5th Street) South Park Drive (between 5th and 6th Street) South Park Paseo (between 6th and 7th Street) B-1 Page 99 of 118

100 Stanford Street (between Stevens Street and Railyards Boulevard) Stevens Street (between 6th Street and Stanford Street) Stevens Street (between 5th Street and 6th Street) Huntington Street (between Camille Street and Railyards Boulevard) Class 1 Bike Trail (between Railyards and 6 th ). Interim Traffic Signal at Railyards Boulevard and Jiboom Street. Intersection Improvements at 7th Street and Railyards Boulevard. Intersection Improvements at 7th Street and North B Street. Transit Improvements Authorized facilities include any and all improvements to transit facilities designed to meet the needs of development in the Railyards Community Facilities District No (Improvements). 7th Street Light Rail Transit (LRT) station. West LRT Station Wastewater System Improvements Authorized facilities include any and all wastewater facilities designed to meet the needs of development within Railyards Community Facilities District No (Improvements). These facilities include, but may not be limited to pipelines and all appurtenances thereto; manholes; tie-in to existing main line; force mains; lift stations; odor-control facilities; and permitting related thereto; and related sewer system improvements, including: Sewer lines in all authorized facility transportation facilities 3rd Street Sewer (offsite) Trunk Sewer (Railyards to 3 rd Street) Trunk Sewer (7 th Street to the end of 10 th Street) Storm Drain Improvements Authorized facilities include any and all onsite and off-site backbone drainage and storm drainage improvements designed to meet the needs of development of the development within Railyards Community Facilities District No (Improvements). These facilities include, but are not limited to mains, pipelines and appurtenances, outfalls and water quality measures, temporary drainage facilities, detention/retention basins and drainage pretreatment facilities; drainage ways/channels, pump stations, landscaping and irrigation; access roads, gates, and fencing; and striping and signage. All storm drain lines and facilities within authorized facility roadways Storm Drainage detention facility (cistern), pump station, and outfall Interim retention facilities Flood Wall and Gate Drain Line Replacement (Railyards Boulevard) Drain line SOTA Water Improvements Authorized facilities include any and all on- and off-site backbone water facilities designed to meet the needs of development of the development within Railyards Community Facilities District No (Improvements). These facilities include, but are not limited to, potable and nonpotable mains, valves, services and appurtenances. B-2 Page 100 of 118

101 Water lines in all authorized facility roads 7th Street Water Line Park and Open Space Improvements Authorized facilities include any and all improvements to parks and open space designed to meet the needs of development in Railyards Community Facilities District No (Improvements). Vista Park Under I-5 Lot 1 Open Space Lot 2E Kaiser Plaza. Market Plaza (Parcels 21a and 21b) between Car Shop #3 and the Paint Shop Lot 30 Plaza (State Parks footprint) Park Lot 31 Lot 32 Plaza (State Parks Museum) Riverfront Park Lot 34 Sacramento River Connection Lot 35 Lot 53 Open Space (along Railyards Boulevard from 10 th Street to 12 th Street) Park Lot 57A Park Lot 58A Vista Connector Lot 60 MLS Promenade Lot 65 Park Lot 68 Park Lot 70 Other Public Facilities Authorized facilities includes any and all public facilities or infrastructure including, but not limited to, land acquisition, vertical construction, site clearing, grading, utility connections, street frontage improvements including curbs, gutters: Community Center/Library Facilities. Police Station Fire Station Intermodal Tunnel Gateway Structure (Parcel 22) Pedestrian Access Improvements between the 5th and 6th Street Public Parking Garage and the Intermodal Tunnel North Entrance 5th and 6th Street Public Parking Garage Development Impact Fees and Other Eligible Fees Authorized development impact fees and other fees that may be funded include the following fees: Railyards Plan Area Fee Park Development Impact Fees Park Quimby Land Fee Water Fee Water Meter Fee SAFCA fee Construction Excise Tax Transportation Development Impact Fee I-5 Subregional Corridor Mitigation Program Combined Sewer/Storm Drainage Fee B-3 Page 101 of 118

102 SRCSD (Regional Sewer) Sacramento Transportation Authority Sacramento City Unified School District Sacramento Metro Air Quality Management District Fees Formation, Administrative and Incidental Expenses In addition to the above facilities, other expenses incidental to the above and authorized by the Mello-Roos Community Facilities Act of 1982, including but not limited to: the cost of planning, permitting, and designing the facilities (including the cost of environmental evaluation, orthophotography, environmental remediation/mitigation, (associated with Authorized Facilities); SWPPP; land acquisition and easement payment for the facilities; project management; construction staking; engineering studies and reports; utility relocation and demolition costs incidental to construction of the facilities, wetland/species mitigation purchase; reimbursements to other areas for infrastructure facilities or planning serving development in the CFD; planning, legal, engineering, and technical studies costs related to the facilities and any other expenses incidental to the construction, completion, and inspection of the facilities. In addition, costs eligible to be financed by the CFD shall include all costs associated with the formation and ongoing administration of the CFD and issuance of bonds; determination of the amount of taxes and collection of taxes; inspection, plan check and other costs related to acceptance of the facilities by the City, payment of taxes; and any other costs incurred to carry out the authorized purposes of the CFD. B-4 Page 102 of 118

103 E EXHIBIT C: Incidental Expenses and Bond Issuance Costs Page 103 of 118