Solvang School District

Solvang School District Continuing Disclosure Filing For the Period Ending June 30, 2014 Prepared by Solvang School District 565 Atterdag Road Solvang, CA 93463

Table of Contents A. Introduction... 1 B. Annual Report... 2 1. Audited Financial Statements... 2 2. Current Year Budget... 2 3. Average Daily Attendance... 3 4. Information Relating to the District s Outstanding Debt History... 3 5. History of Assessed Valuations of Taxable Property Within the District... 4 6. History of Secured Tax Charges and Delinquencies... 4 7. Top Taxpayers... 5 8. History of Tax Rates... 5 9. Ratings... 6 C. Contacts for Further Information... 7 D. Debt Service Schedules... 8 E. Official Statement Cover Pages and Continuing Disclosure Certificates... 10

Solvang School District 2013-14 Continuing Disclosure Annual Report A. Introduction The Solvang School District ( District ) hereby provides the continuing disclosure annual report pursuant to the Continuing Disclosure Certificates in connection with the following financings for the fiscal year ended June 30, 2014 ( Annual Report ): Dated Date CUSIP-6 (a) Issue Original Par Amount 9/13/2006 83438V General Obligation Bonds, Election of 2006, Series 2006A $5,637,669.00 12/13/2011 834402 2011 General Obligation Bond Anticipation Notes $2,204,005.00 (a) CUSIP identifiers have been provided by CUSIP Global Services. CUSIP is a registered trademark of the American Bankers Association. CUSIP Global Services (CGS) is managed on behalf of the American Bankers Association by S&P Capital IQ. Copyright 2015 CUSIP Global Services. All rights reserved. Use of CUSIP identifiers provided herein is for personal, non-commercial use only. Neither the District nor the Underwriter takes any responsibility for the accuracy of such identifiers. Page 1

Solvang School District 2013-14 Continuing Disclosure Annual Report B. Annual Report The following Annual Report is submitted pursuant to the Continuing Disclosure Certificates for the financings referenced in Section A. Each disclosure item is listed below with the required information or reference to the location of the required information. For background information on each item, please refer to the official statement for each issue (cover pages are included in Section E). 1. Audited Financial Statements Fiscal Year 2013-14 Audited Financials are filed separately to EMMA. Please refer to this document for the following information: General Fund revenues, expenditures and ending balances for the prior fiscal year can be found on pages 10 and 29. Outstanding debt and lease information can be found under Note 7 on page 24, under Note 8 on page 25, and under Note 10 on page 25. Pension plan contributions can be found under Note 9 on page 25, under Note 13 on page 26, and under Note 14 on page 27. 2. Current Year Budget Fiscal Year 2014-15 Adopted Budget and the Second Interim Report are filed separately to EMMA. Please refer to these documents for the following information: General Fund information for the current fiscal year can be found on PDF pages 5 and 6 of the Adopted Budget and PDF pages 1 through 7 of the Second Interim. As of Fiscal Year 2013-14, the District transitioned from accounting related to Revenue Limit to the Local Control Funding Formula (LCFF) pursuant to California state law. Total revenue limit information as required by the Series 2006A Bonds and 2011 BANs is no longer available. Page 2

Solvang School District 2013-14 Continuing Disclosure Annual Report 3. Average Daily Attendance The following table summarizes the District's historical and current year estimated average daily attendance as reported at P-2: Academic Year P-2 ADA (a) 2005-06 556 2006-07 548 2007-08 557 2008-09 567 2009-10 545 2010-11 547 2011-12 561 2012-13 574 2013-14 600 2014-15 (b) 543 (a) Data from Audited Financial Statements. Includes K-8. (b) Projection from the 2014-15 Second Interim. 4. Information Relating to the District s Outstanding Debt History General Obligation Bonds On September 13, 2006, the Solvang Elementary School District issued General Obligation Bonds, Election of 2006, Series 2006 A (the "Bonds"), in the aggregate principal amount of $5,637,669. The Bonds consisted of $4,775,000 aggregate principal amount of Current Interest Bonds and $862,669 initial aggregate principal amount of Capital Appreciation Bonds. The Bonds were authorized at an election of the registered voters of the District held on June 6, 2006, which authorized the issuance of $11,600,000 principal amount of general obligation bonds for the purpose of financing the addition and modernization of school facilities. The Bonds are the first series of bonds to be issued under this authorization, leaving $5,962,331 of principal amount unissued. On December 13, 2011, the District issued bond anticipation notes in the amount of $2,204,005 with an interest rate of 4.7%. The notes are capital appreciation notes with interest and principal due on December 1, 2015. The 2011 Notes were issued in anticipation of the issuance of a series of General Obligation Bonds. The outstanding general obligation bonded debt as of June 30, 2014 is: Dated Date Issue Original Par Amount Outstanding June 30, 2014 (a) 9/13/2006 General Obligation Bonds, Election of 2006, Series 2006A $5,637,669 $4,957,669 12/13/2011 2011 General Obligation Bond Anticipation Notes $2,204,005 $2,204,005 Total $7,841,674 $7,161,674 (a) Amount outstanding is shown as original denominational amount for capital appreciation bonds. The debt service schedules for all outstanding general obligation bonds are included in Section D. Page 3

Solvang School District 2013-14 Continuing Disclosure Annual Report 5. History of Assessed Valuations of Taxable Property Within the District The following is a table summarizing the assessed valuation of the District: Fiscal Year Local Secured Utilities Unsecured Total Annual Growth Rate 2005-06 $931,798,219 - $20,697,665 $952,495,884 N/A 2006-07 $1,007,911,371 - $22,306,920 $1,030,218,291 8.16% 2007-08 $1,069,385,792 - $21,664,320 $1,091,050,112 5.90% 2008-09 $1,132,762,714 - $23,169,018 $1,155,931,732 5.95% 2009-10 $1,120,736,747 - $23,002,868 $1,143,739,615-1.05% 2010-11 $1,122,244,545 - $18,959,223 $1,141,203,768-0.22% 2011-12 $1,122,664,909 - $19,037,208 $1,141,702,117 0.04% 2012-13 $1,129,498,365 - $19,377,721 $1,148,876,086 0.63% 2013-14 $1,143,813,035 - $20,005,315 $1,163,818,350 1.30% 2014-15 $1,190,345,381 - $19,409,042 $1,209,754,423 3.95% Averages 3-year Average 1.96% 5-year Average 1.14% Source: California Municipal Statistics, Inc. (a) 6. History of Secured Tax Charges and Delinquencies The historical secured tax levy and year-end delinquencies for the District are shown in the following table: Fiscal Year Secured Tax Charge (a) as of June 30 as of June 30 Amount Delinquent Percent Delinquent 2006-07 $253,911 $4,790 1.89% 2007-08 $264,931 $4,188 1.58% 2008-09 $280,824 $10,062 3.58% 2009-10 $277,585 $8,976 3.23% 2010-11 $277,792 $3,694 1.33% 2011-12 $291,711 $2,813 0.96% 2012-13 $307,874 $3,888 1.26% 2013-14 $311,990 $4,373 1.40% District s general obligation bond debt service levy. Prior years not available as bonds were issued in 2006. Note: Santa Barbara County utilizes the Teeter Plan for assessment levy and distribution. This method guarantees distribution of 100% of the assessments levied to the taxing entity, with the County retaining all penalties and interest. However, under statute creating the Teeter Plan, the Board of Supervisors could under certain circumstances terminate the Teeter Plan in its entirety or terminate the Teeter Plan as to the District if the delinquency rate for all ad valorem property taxes levied within the District in any year exceeds 3%. Source: California Municipal Statistics, Inc. Page 4

Solvang School District 2013-14 Continuing Disclosure Annual Report 7. Top Taxpayers The following table shows the top 2014-15 local secured taxpayers in the District: Property Owner Primary Land Use Assessed Valuation Percent of Total (a) Santa Ynez Band of Mission Indians Hotel $26,226,001 2.20% Worldmark the Club Resort $17,542,777 1.47% Palmer G. Jackson, Trustee Resort/Golf Course $15,759,976 1.32% SYBCI California Hotel No. 2 LLC Hotel $13,078,327 1.10% Alisal Guest Ranch Hotel $12,540,706 1.05% Solvang Hotel Group LP Hotel $10,189,820 0.86% NWK1 Inc. Residential $7,740,329 0.65% Kabir Bluestar LLC Hotel $7,375,000 0.62% NSHE Lake Arrowhead LLC Agricultural $7,172,088 0.60% Alisal Oaks LLC Apartments $7,147,979 0.60% Skytt Properties LLC Residential $7,116,462 0.60% Timothy W. Crist Residential $6,342,656 0.53% Rancho Rio Robles LLC Agricultural $6,293,296 0.53% Gale Anne Hurd Agricultural $5,250,000 0.44% Copper Alisal Holdings LLC Commercial $5,223,606 0.44% Virgil Elings Agricultural $5,201,384 0.44% MP Paso LLC Office Building $5,021,010 0.42% Lacerte Family Trust Residential $4,964,000 0.42% 1980S Old Mission Drive LLC Commercial $4,795,790 0.40% Wine Country Hospitality Inc. Hotel $4,604,156 0.39% $179,585,363 15.09% (a) 2014-15 Local Secured Assessed Valuation: $1,190,345,381 Source: California Municipal Statistics, Inc. 8. History of Tax Rates The following table summarizes the historical and current property tax rates per $100,000 of Assessed Valuation levied on behalf of the District to repay general obligation bond debt obligations: Fiscal Year Tax Rate 2006-07 $25.41 2007-08 $25.00 2008-09 $25.00 2009-10 $25.00 2010-11 $25.00 2011-12 $26.25 2012-13 $27.56 2013-14 $27.56 2014-15 $27.56 Source: California Municipal Statistics, Inc. Page 5

Solvang School District 2013-14 Continuing Disclosure Annual Report 9. Ratings The most current underlying rating on the District s general obligation bonds is A+ by Standard and Poor s (affirmed February 2015). To the best of the District s knowledge, current underlying and insurer ratings on the District s bonds are shown in the table below: Dated Date Issue Original Par Amount Original Insurer Underlying Rating (Moody's/S&P/Fitch) Insurer Rating (Moody's/S&P/Fitch) 9/13/2006 GO Bonds, Election of 2006, Series 2006A $5,637,669 FSA (a) NR/A+/NR A2/AA/NR 12/13/2011 2011 GO Bond Anticipation Notes $2,204,005 N/A NR/SP-1/NR N/A (a) Financial Security Assurance, Inc. (FSA) was acquired by Assured Guaranty Ltd. on July 1, 2009. In November of 2009, Assured Guaranty Ltd. changed the name of FSA to Assured Guaranty Municipal Corp. (AGM). Page 6

Solvang School District 2013-14 Continuing Disclosure Annual Report C. Contacts for Further Information District: Disclosure Consultant: County: Dr. John Karbula Superintendent/Principal Solvang School District 565 Atterdag Road Solvang, CA 93463 Tel: 805-697-4454 Fax: 805-688-6410 E-mail: johnk@solvangschool.org Blake Boehm Director KNN Public Finance 17901 Von Karman Avenue, Suite 600 Irvine, CA 92614 Tel: 949-556-8759 Fax: 949-568-8881 E-mail: bboehm@knninc.com Web: www.knninc.com Harry E. Hagen, CPA Treasurer-Tax Collector-Public Administrator County of Santa Barbara 105 East Anapamu Street Room 109 Post Office Box 579 Santa Barbara, CA 93102-0579 Tel: 805-568-2920 Fax: 805-568-2488 E-mail: hhagen@co.santa-barbara.ca.us Page 7

Solvang School District 2013-14 Continuing Disclosure Annual Report D. Debt Service Schedules General Obligation Bonds, Election of 2006, Series 2006A (CIBs) Payment Date Principal Interest Debt Service Bond Year Debt Service (a) 8/1/2014 $150,000 $82,553 $232,553 $232,553 2/1/2015 - $79,553 $79,553-8/1/2015 $170,000 $79,553 $249,553 $329,106 2/1/2016 - $76,153 $76,153-8/1/2016 $200,000 $76,153 $276,153 $352,306 2/1/2017 - $72,153 $72,153-8/1/2017 $230,000 $72,153 $302,153 $374,306 2/1/2018 - $67,553 $67,553-8/1/2018 $260,000 $67,553 $327,553 $395,106 2/1/2019 - $62,353 $62,353-8/1/2019 $245,000 $62,353 $307,353 $369,706 2/1/2020 - $57,453 $57,453-8/1/2020 $280,000 $57,453 $337,453 $394,906 2/1/2021 - $51,853 $51,853-8/1/2021 $315,000 $51,853 $366,853 $418,706 2/1/2022 - $45,553 $45,553-8/1/2022 $355,000 $45,553 $400,553 $446,106 2/1/2023 - $38,453 $38,453-8/1/2023 $400,000 $38,453 $438,453 $476,906 2/1/2024 - $30,453 $30,453-8/1/2024 $445,000 $30,453 $475,453 $505,906 2/1/2025 - $21,553 $21,553-8/1/2025 $495,000 $21,553 $516,553 $538,106 2/1/2026 - $11,344 $11,344-8/1/2026 $550,000 $11,344 $561,344 $572,688 Total $4,095,000 $1,311,409 $5,406,409 $5,406,409 (a) Annual payment for the bond year ending August 1, 2014, reflects the August 1, 2014, payment only. Page 8

Solvang School District 2013-14 Continuing Disclosure Annual Report Payment Date General Obligation Bonds, Election of 2006, Series 2006A (CABs) Compounded Principal Interest Debt Service Bond Year Debt Service 8/1/2027 $172,667 $432,333 $605,000 $605,000 2/1/2028 - - - - 8/1/2028 $173,357 $471,643 $645,000 $645,000 2/1/2029 - - - - 8/1/2029 $172,115 $507,885 $680,000 $680,000 2/1/2030 - - - - 8/1/2030 $172,811 $552,189 $725,000 $725,000 2/1/2031 - - - - 8/1/2031 $171,720 $593,280 $765,000 $765,000 Total $862,669 $2,557,331 $3,420,000 $3,420,000 Payment Date 2011 General Obligation Bond Anticipation Notes Compounded Principal Interest Debt Service Bond Year Debt Service 12/1/2014 - - - - 6/1/2015 - - - - 12/1/2015 $2,204,005 $445,995 $2,650,000 $2,650,000 Total $2,204,005 $445,995 $2,650,000 $2,650,000 Page 9

Solvang School District 2013-14 Continuing Disclosure Annual Report E. Official Statement Cover Pages and Continuing Disclosure Certificates Page 10

NEW ISSUE -- FULL BOOK-ENTRY INSURED RATING: S&P: AAA UNDERLYING RATING: S&P: A See RATINGS herein In the opinion of Jones Hall, A Professional Law Corporation, San Francisco, California, Bond Counsel, subject, however to certain qualifications described herein, under existing law, the interest on the Bonds is excluded from gross income for federal income tax purposes, such interest is not an item of tax preference for purposes of the federal alternative minimum tax imposed on individuals and corporations, although for the purpose of computing the alternative minimum tax imposed on certain corporations, such interest is taken into account in determining certain income and earnings, and the Bonds are "qualified tax-exempt obligations" within the meaning of section 265(b)(3) of the Internal Revenue Code of 1986. In the further opinion of Bond Counsel, such interest is exempt from California personal income taxes. See "TAX MATTERS" herein. $5,637,669 SOLVANG ELEMENTARY SCHOOL DISTRICT (Santa Barbara County, California) General Obligation Bonds Election of 2006, Series 2006 A (Bank Qualified) Dated: Date of Delivery Due: August 1, as shown on the inside front cover The Solvang Elementary School District General Obligation Bonds, Election of 2006, Series 2006 A (the "Bonds"), in the aggregate principal amount of $5,637,669 are being issued by the Solvang Elementary School District (the "District"). The Bonds consist of $4,775,000 aggregate principal amount of Current Interest Bonds and $862,669.00 initial aggregate principal amount of Capital Appreciation Bonds. The Bonds were authorized at an election of the registered voters of the District held on June 6, 2006, which authorized the issuance of $11,600,000 principal amount of general obligation bonds for the purpose of financing the addition and modernization of school facilities. The Bonds are the first series of bonds to be issued under this authorization. The Bonds represent a general obligation of the District. The Board of Supervisors of Santa Barbara County has the power and is obligated to annually levy ad valorem taxes upon all property subject to taxation by the District without limitation of rate or amount (except certain personal property which is taxable at limited rates) for the payment of principal of and interest on the Bonds. By resolution, the County has authorized the District to issue and sell bonds without further action of the County. The Bonds will be issued in book-entry form only and will be initially issued and registered in the name of Cede & Co., as nominee for The Depository Trust Company, New York, New York ( DTC ). DTC will act as securities depository of the Bonds. Individual purchases of the Bonds will be made in book-entry form only. Purchasers will not receive physical delivery of the Bonds purchased by them. Payments of the principal and accreted value (collectively, Principal ) of and interest on the Bonds will be made by U.S. Bank National Association, as the designated paying agent, registrar and transfer agent (the Paying Agent ), to DTC for subsequent disbursement through DTC Participants (defined herein) to the beneficial owners of the Bonds. See THE BONDS Book-Entry-Only System herein. The Bonds are comprised of Current Interest Bonds and Capital Appreciation Bonds. Interest on the Current Interest Bonds accrues from the dated date and is payable semiannually on February 1 and August 1 of each year, commencing February 1, 2007. The Current Interest Bonds will be issued in denominations of $5,000 or any integral multiple thereof. The Capital Appreciation Bonds are dated the date of delivery of the Bonds and accrete interest from such date, compounded semiannually on February 1 and August 1 of each year, commencing February 1, 2007. The Capital Appreciation Bonds will be issued in denominations of $5,000 Maturity Value or any integral multiple thereof. The Bonds are subject to redemption prior to maturity as described herein (See THE BONDS Redemption ). The payment of the principal of (or, in the case of Capital Appreciation Bonds, the accreted value) and interest on the Bonds when due will be insured by a financial guaranty insurance policy to be issued concurrently with the delivery of the Bonds by FINANCIAL SECURITY ASSURANCE INC. (See BOND INSURANCE herein and APPENDIX E Specimen Municipal Bond Insurance Policy ). MATURITY SCHEDULE (See inside front cover) This cover page contains certain information for reference only. It is not a summary of this issue. Investors must read the entire Official Statement to obtain information essential to the making of an informed investment decision. The Bonds are offered when, as and if issued, subject to the approval as to their legality by Jones Hall, A Professional Law Corporation, San Francisco, California, Bond Counsel. Jones Hall is also serving as Disclosure Counsel. Certain legal matters will be passed upon for the Underwriter by Hawkins Delafield & Wood LLP, Los Angeles, California. It is anticipated that the Bonds in book-entry form will be available for delivery through the facilities of DTC in New York, New York, on or about September 13, 2006. Dated: August 30, 2006 Banc of America Securities LLC

P MATURITY SCHEDULE Base CUSIP : 83438V $4,775,000 Current Interest Bonds Maturity Date (August 1) Principal Amount Interest Rate Yield CUSIP 2007 $ 40,000 4.000% 3.450% AA 7 2008 35,000 4.000 3.480 AB 5 2009 90,000 4.000 3.510 AC 3 2010 110,000 4.000 3.530 AD 1 2011 130,000 4.000 3.560 AE 9 2012 150,000 4.000 3.600 AF 6 2013 125,000 4.000 3.650 AG 4 2014 150,000 4.000 3.700 AH 2 2015 170,000 4.000 3.750 AJ 8 2016 200,000 4.000 3.800 AK 5 2017 230,000 4.000 3.880 C AL 3 2018 260,000 4.000 3.950 C AM 1 2019 245,000 4.000 4.000 AN 9 2020 280,000 4.000 4.040 AP 4 2021 315,000 4.000 4.070 AQ 2 2022 355,000 4.000 4.100 AR 0 2023 400,000 4.000 4.120 AS 8 2024 445,000 4.000 4.150 AT 6 2025 495,000 4.125 4.170 AU 3 2026 550,000 4.125 4.190 AV 1 C Priced to par call on August 1, 2016. $862,669.00 Initial Principal Amount Capital Appreciation Bonds Maturity Date (August 1) Initial Principal Amount Final Maturity Value Reoffering Yield CUSIP 2027 $172,667.00 $605,000 4.650% AW 9 2028 173,356.65 645,000 4.670 AX 7 2029 172,114.80 680,000 4.690 AY 5 2030 172,811.00 725,000 4.710 AZ 2 2031 171,719.55 765,000 4.730 BA 6 Copyright 2006, American Bankers Association. CUSIP data herein are provided by Standard & Poor's CUSIP Service Bureau, a division of The McGraw-Hill Companies, Inc., and are provided for convenience of reference only. Neither the District nor the Underwriter assumes any responsibility for the accuracy of these CUSIP data.

APPENDIX D FORM OF CONTINUING DISCLOSURE CERTIFICATE $5,637,669.00 SOLVANG ELEMENTARY SCHOOL DISTRICT (Santa Barbara County, California) General Obligation Bonds Election of 2006, Series 2006 A (Bank Qualified) CONTINUING DISCLOSURE CERTIFICATE This Continuing Disclosure Certificate (the Disclosure Certificate ) is executed and delivered by the Solvang Elementary School District (the District ) in connection with the issuance of $5,637,669.00 aggregate principal amount of Solvang Elementary School District (Santa Barbara County, California) General Obligation Bonds Election of 2006, Series 2006 A (the Bonds ). The Bonds are being issued pursuant to a Resolution adopted by the District on July 26, 2006 (the Bond Resolution ). The District covenants and agrees as follows: Section 1. Purpose of the Disclosure Certificate. This Disclosure Certificate is being executed and delivered by the District for the benefit of the holders and beneficial owners of the Bonds and in order to assist the Participating Underwriters in complying with S.E.C. Rule 15c2-12(b)(5). Section 2. Definitions. In addition to the definitions set forth in the Bond Resolution, which apply to any capitalized term used in this Disclosure Certificate unless otherwise defined in this Section, the following capitalized terms shall have the following meanings: Annual Report shall mean any Annual Report provided by the District pursuant to, and as described in, Sections 3 and 4 of this Disclosure Certificate. "CPO" means the Internet-based filing system currently located at www.disclosureusa.org, or such other similar filing system approved by the Securities and Exchange Commission. Dissemination Agent shall mean the District or any successor Dissemination Agent designated in writing by the District and which has filed with the District a written acceptance of such designation. Listed Events shall mean any of the events listed in Section 5(a) of this Disclosure Certificate. National Repository shall mean any Nationally Recognized Municipal Securities Information Repository for purposes of the Rule. Any filing under this Disclosure Agreement with a National Repository may be made solely by transmitting such filing to the Texas Municipal Advisory Council (the MAC ) as provided at http://www.disclosureusa.org unless the United States Securities and Exchange Commission has withdrawn the interpretive advice in its letter to the MAC dated September 7, 2004 D-1

Participating Underwriter shall mean any of the original underwriters of the Bonds required to comply with the Rule in connection with offering of the Bonds. Repository shall mean each National Repository and each State Repository. Rule shall mean Rule 15c2-12(b)(5) adopted by the Securities and Exchange Commission under the Securities Exchange Act of 1934, as the same may be amended from time to time. State Repository shall mean any public or private repository or entity designated by the State of California as a state repository for the purpose of the Rule and recognized as such by the Securities and Exchange Commission. As of the date of this Disclosure Certificate, there is no State Repository. Section 3. Provision of Annual Reports. (a) The District shall, or shall cause the Dissemination Agent to provide to any person who requests it or at least annually to the State Repository, if any, an Annual Report which is consistent with the requirements of Section 4 of this Disclosure Certificate. An Annual Report shall consist of the most recently available documents of the type to be included in the Annual Report (see Section 4) at the time the request is received. Section 4. Content of Annual Reports. The Annual Report shall contain or incorporate by reference the following: (a) Audited financial statements prepared in accordance with generally accepted accounting principles as promulgated to apply to governmental entities from time to time by the Governmental Accounting Standards Board. If the District s audited financial statements are not available by the time the Annual Report is required to be filed pursuant to Section 3(a), the Annual Report shall contain unaudited financial statements in a format similar to the financial statements contained in the final Official Statement, and the audited financial statements shall be filed in the same manner as the Annual Report when they become available. (b) To the extent not contained in the audited financial statements filed pursuant to the preceding clause (a), the Annual Report shall contain information showing: (i) the average daily attendance in District schools on an aggregate basis for the preceding fiscal year; (ii) pension plan contributions made by the District for the preceding fiscal year; (iii) aggregate principal amount of short-term borrowings, lease obligations and other long-term borrowings of the District as of the end of the preceding fiscal year; (iv) description of amount of general fund revenues and expenditures which have been budgeted for the current fiscal year, together with audited actual budget figures for the preceding fiscal year; D-2

(v) the District s total revenue limit for the preceding fiscal year; (vi) prior fiscal year total secured property tax levy and collections, showing current collections as a percent of the total levy; and (vii) current fiscal year assessed valuation of taxable properties in the District, including assessed valuation of the top ten properties. (c) In addition to any of the information expressly required to be provided under paragraphs (a) and (b) of this Section, the District shall provide such further information, if any, as may be necessary to make the specifically required statements, in the light of the circumstances under which they are made, not misleading. Any or all of the items listed above may be included by specific reference to other documents, including official statements of debt issues of the District or related public entities, which have been submitted to each of the Repositories or the Securities and Exchange Commission. If the document included by reference is a final official statement, it must be available from the Municipal Securities Rulemaking Board. The District shall clearly identify each such other document so included by reference. Section 5. Reporting of Significant Events. (a) Pursuant to the provisions of this Section 5, the District shall give, or cause to be given, notice of the occurrence of any of the following events with respect to the Bonds, if material: (1) Principal and interest payment delinquencies. (2) Non-payment related defaults. (3) Unscheduled draws on debt service reserves reflecting financial difficulties. (4) Unscheduled draws on credit enhancements reflecting financial difficulties. (5) Substitution of credit or liquidity providers, or their failure to perform. (6) Adverse tax opinions or events affecting the tax-exempt status of the security. (7) Modifications to rights of security holders. (8) Contingent or unscheduled bond calls. (9) Defeasances. (10) Release, substitution, or sale of property securing repayment of the securities. (11) Rating changes. (b) Whenever the District obtains knowledge of the occurrence of a Listed Event, the District shall as soon as possible determine if such event would be material under applicable Federal securities law. (c) If the District determines that knowledge of the occurrence of a Listed Event would be material under applicable Federal securities law, the District shall promptly file a notice of such occurrence with the Municipal Securities Rulemaking Board and each State Repository. Notwithstanding the foregoing, notice of Listed Events described in subsections (a)(8) and (9) need not be given under this subsection any earlier than the notice (if any) of the underlying event is given to holders of affected Bonds pursuant to the Bond Resolution. D-3

(d) In lieu of filing the notice of Listed Event with each Repository in accordance with the preceding paragraph, the District or the Dissemination Agent may file such notice of a Listed Event with the CPO. Section 6. Termination of Reporting Obligation. The District s obligations under this Disclosure Certificate shall terminate upon the legal defeasance, prior redemption or payment in full of all of the Bonds. If such termination occurs prior to the final maturity of the Bonds, the District shall give notice of such termination in the same manner as for a Listed Event under Section 5(c). Section 7. Dissemination Agent. The District may, from time to time, appoint or engage a Dissemination Agent to assist it in carrying out its obligations under this Disclosure Certificate, and may discharge any such Agent, with or without appointing a successor Dissemination Agent. Section 8. Amendment; Waiver. Notwithstanding any other provision of this Disclosure Certificate, the District may amend this Disclosure Certificate, and any provision of this Disclosure Certificate may be waived, provided that the following conditions are satisfied: (a) if the amendment or waiver relates to the provisions of Sections 3(a), 4 or 5(a), it may only be made in connection with a change in circumstances that arises from a change in legal requirements, change in law, or change in the identity, nature, or status of an obligated person with respect to the Bonds, or type of business conducted; (b) the undertakings herein, as proposed to be amended or waived, would, in the opinion of nationally recognized bond counsel, have complied with the requirements of the Rule at the time of the primary offering of the Bonds, after taking into account any amendments or interpretations of the Rule, as well as any change in circumstances; and (c) the proposed amendment or waiver either (i) is approved by holders of the Bonds in the manner provided in the Bond Resolution for amendments to the Bond Resolution with the consent of holders, or (ii) does not, in the opinion of nationally recognized bond counsel, materially impair the interests of the holders or beneficial owners of the Bonds. If the annual financial information or operating data to be provided in the Annual Report is amended pursuant to the provisions hereof, the first annual financial information filed pursuant hereto containing the amended operating data or financial information shall explain, in narrative form, the reasons for the amendment and the impact of the change in the type of operating data or financial information being provided. If an amendment is made to the undertaking specifying the accounting principles to be followed in preparing financial statements, the annual financial information for the year in which the change is made shall present a comparison between the financial statements or information prepared on the basis of the new accounting principles and those prepared on the basis of the former accounting principles. The comparison shall include a qualitative discussion of the differences in the accounting principles and the impact of the change in the accounting principles on the presentation of the financial information, in order to provide information to investors to enable them to evaluate the ability of the District to meet its obligations. To the extent reasonably feasible, the comparison shall be quantitative. A notice of the change in the D-4

accounting principles shall be sent to the Repositories in the same manner as for a Listed Event under Section 5(c). Section 9. Additional Information. Nothing in this Disclosure Certificate shall be deemed to prevent the District from disseminating any other information, using the means of dissemination set forth in this Disclosure Certificate or any other means of communication, or including any other information in any Annual Report or notice of occurrence of a Listed Event, in addition to that which is required by this Disclosure Certificate. If the District chooses to include any information in any Annual Report or notice of occurrence of a Listed Event in addition to that which is specifically required by this Disclosure Certificate, the District shall have no obligation under this Disclosure Certificate to update such information or include it in any future Annual Report or notice of occurrence of a Listed Event. Section 10. Default. In the event of a failure of the District to comply with any provision of this Disclosure Certificate, any holder or beneficial owner of the Bonds may take such actions as may be necessary and appropriate, including seeking mandate or specific performance by court order, to cause the District to comply with its obligations under this Disclosure Certificate. A default under this Disclosure Certificate shall not be deemed an Event of Default under the Bond Resolution, and the sole remedy under this Disclosure Certificate in the event of any failure of the District to comply with this Disclosure Certificate shall be an action to compel performance. Section 11. Duties, Immunities and Liabilities of Dissemination Agent. The Dissemination Agent shall have only such duties as are specifically set forth in this Disclosure Certificate, and the District agrees to indemnify and save the Dissemination Agent, its officers, directors, employees and agents, harmless against any loss, expense and liabilities which it may incur arising out of or in the exercise or performance of its powers and duties hereunder, including the costs and expenses (including attorneys fees) of defending against any claim of liability, but excluding liabilities due to the Dissemination Agent s negligence or willful misconduct. The obligations of the District under this Section shall survive resignation or removal of the Dissemination Agent and payment of the Bonds. Section 12. Beneficiaries. This Disclosure Certificate shall inure solely to the benefit of the District, the Dissemination Agent, the Participating Underwriters and holders and beneficial owners from time to time of the Bonds, and shall create no rights in any other person or entity. Date: September 13, 2006 SOLVANG ELEMENTARY SCHOOL DISTRICT By: Superintendent D-5

EXHIBIT A NOTICE OF FAILURE TO FILE ANNUAL REPORT Name of Obligor: Solvang Elementary School District Name of Bond Issue: Date of Issuance: September 13, 2006 $5,637,669.00 aggregate principal amount of Solvang Elementary School District (Santa Barbara County, California) General Obligation Bonds, Election of 2006, Series 2006 A NOTICE IS HEREBY GIVEN that the District has not provided an Annual Report with respect to the above-named Bonds as required by the District s Bond Resolution authorizing the issuance of the Bonds. The District anticipates that the Annual Report will be filed by. Dated: SOLVANG ELEMENTARY SCHOOL DISTRICT By Superintendent D-6

NEW ISSUE FULL BOOK-ENTRY Bank Qualified RATING: Standard & Poor s: SP-1 See Rating herein In the opinion of Jones Hall, A Professional Law Corporation, San Francisco, California, Bond Counsel, subject, however to certain qualifications described herein, under existing law, the interest on the 2011 Notes is excluded from gross income for federal income tax purposes and such interest is not an item of tax preference for purposes of the federal alternative minimum tax imposed on individuals and corporations, and the 2011 Notes are qualified tax-exempt obligations within the meaning of section 265(b)(3) of the Internal Revenue Code of 1986. In the further opinion of Bond Counsel, such interest is exempt from California personal income taxes. See TAX MATTERS herein. $2,204,005.00 SOLVANG SCHOOL DISTRICT (Santa Barbara County, California) 2011 General Obligation Bond Anticipation Notes Dated: Date of Delivery Due: December 1, 2015 Issuance. The Solvang School District 2011 General Obligation Bond Anticipation Notes (the 2011 Notes ) are being issued by the Solvang School District (the District ) pursuant to a resolution adopted by its Board of Trustees on November 8, 2011 (the Resolution ). The 2011 Notes are being issued for the purpose of financing the acquisition and construction of educational facilities and projects which were described in the ballot measure approved by the electors of the District on June 6, 2006, which authorized the issuance of general obligation bonds in the maximum aggregate principal amount of $11,600,000 (the General Obligation Bonds ). The District issued its $5,637,669 General Obligation Bonds, Election of 2006, Series 2006A under this authorization. The 2011 Notes are being issued in anticipation of the issuance of a future series of the General Obligation Bonds. Security. The Accreted Value (defined herein) of the 2011 Notes is payable from the proceeds of General Obligation Bonds issued for that purpose, and from amounts held in the funds and accounts established under the Resolution. Accreted Value on the 2011 Notes is also payable from any ad valorem taxes levied upon all property within the District subject to taxation, to the extent levied and available for that purpose. See SECURITY FOR THE 2011 NOTES and RISK FACTORS herein. District Covenant to Issue General Obligation Bonds. The 2011 Notes are secured by a pledge of the proceeds of General Obligation Bonds. The District has covenanted in the Resolution, on or before thirty days prior to the maturity of the Notes, to institute proceedings for the issuance and sale of General Obligation Bonds, an additional series of bond anticipation notes or other obligations, including the issuance of certificates of participation, or any combination of the foregoing, in an amount sufficient to pay the full maturity value of the 2011 Notes coming due and payable at maturity, taking into account original issue premium received on such sale. See SECURITY FOR THE 2011 NOTES Covenant to Issue General Obligation Bonds and RISK FACTORS herein. Book-Entry Only. The 2011 Notes will be issued in book-entry form only and will be initially issued and registered in the name of Cede & Co., as nominee for The Depository Trust Company, New York, New York ( DTC ). DTC will act as securities depository of the 2011 Notes. Individual purchases of the 2011 Notes will be made in book-entry form only. Purchasers will not receive physical delivery of the 2011 Notes purchased by them. Payments of the accreted value on the 2011 Notes will be made by U.S. Bank National Association, as the designated paying agent, registrar and transfer agent (the Paying Agent ), to DTC for subsequent disbursement through DTC Participants (defined herein) to the beneficial owners of the 2011 Notes. See APPENDIX F Book-Entry Only System herein. Payments. The 2011 Notes are issued as capital appreciation notes. The 2011 Notes are dated the date of delivery of the 2011 Notes and accrete interest from such date, compounded semiannually on June 1 and December 1 of each year, commencing June 1, 2012. The 2011 Notes will be issued in denominations of $5,000 Maturity Value or any integral multiple thereof. Redemption. The 2011 Notes are not subject to optional redemption prior to maturity. Maturity Date Denominational Amount MATURITY SCHEDULE Accretion Rate Accreted Amount at Maturity Yield to Maturity CUSIP December 1, 2015 $2,204,005.00 4.70% $2,650,000 3.150% 834402 AA7 This cover page contains certain information for reference only. It is not a summary of this issue. Investors must read the entire Official Statement to obtain information essential to the making of an informed investment decision. The 2011 Notes are offered when, as and if issued by the District, subject to the approval as to their legality by Jones Hall, A Professional Law Corporation, San Francisco, California, Bond Counsel, and certain other conditions. Certain legal matters will be passed upon for the District by Jones Hall, A Professional Law Corporation, San Francisco, California, Disclosure Counsel and for the Underwriter, by Nossaman LLP, Irvine, California. It is anticipated that the 2011 Notes will be available for delivery to DTC in New York, New York on or about December 13, 2011. The date of this Official Statement is November 29, 2011 CUSIP Copyright American Bankers Association. CUSIP data herein is provided by Standard & Poor s CUSIP Service Bureau, a division of the McGraw Hill Companies, Inc.

APPENDIX D FORM OF CONTINUING DISCLOSURE CERTIFICATE SOLVANG SCHOOL DISTRICT (SANTA BARBARA, CALIFORNIA) 2011 GENERAL OBLIGATION BOND ANTICIPATION NOTES This Continuing Disclosure Certificate (the Disclosure Certificate ) is executed and delivered by the Solvang School District (the District ) in connection with the issuance of $2,204,005 aggregate principal amount of 2011 General Obligation Bond Anticipation Notes (the Notes ). The Notes are being issued under a resolution adopted by the Board of Trustees of the District on November 8, 2011, as amended (the Resolution ). The District covenants and agrees as follows: Section 1. Purpose of the Disclosure Certificate. This Disclosure Certificate is being executed and delivered by the District for the benefit of the holders and beneficial owners of the Notes and in order to assist the Participating Underwriters in complying with S.E.C. Rule 15c2-12(b)(5). Section 2. Definitions. In addition to the definitions set forth in the Resolution, which apply to any capitalized term used in this Disclosure Certificate unless otherwise defined in this Section, the following capitalized terms have the following meanings: Annual Report means any Annual Report provided by the District pursuant to, and as described in, Sections 3 and 4 of this Disclosure Certificate. Annual Report Date means the date not later than nine months (currently March 31) after the end of each fiscal year of the District (currently June 30 th ). Dissemination Agent means the District or any successor Dissemination Agent designated in writing by the District and which has filed with the District and the Paying Agent a written acceptance of such designation. Listed Events means any of the events listed in Section 5(a) of this Disclosure Certificate. MSRB means the Municipal Securities Rulemaking Board, which has been designated by the Securities and Exchange Commission as the sole repository of disclosure information for purposes of the Rule. Official Statement means the final official statement executed by the District in connection with the issuance of the Notes. Paying Agent means U.S. Bank National Association or any successor thereto. Participating Underwriter means the original underwriter of the Notes required to comply with the Rule in connection with offering of the Notes. Rule means Rule 15c2-12(b)(5) adopted by the Securities and Exchange Commission under the Securities Exchange Act of 1934, as the same may be amended from time to time. D-1

Section 3. Provision of Annual Reports. (a) The District shall, or shall cause the Dissemination Agent to, not later than nine months after the end of the District's fiscal year (which currently would be March 31), commencing March 31, 2012 with the report for the 2010-11 Fiscal Year, provide to the MSRB, in an electronic format as prescribed by the MSRB, an Annual Report that is consistent with the requirements of Section 4 of this Disclosure Certificate, with a copy to the Paying Agent and the Participating Underwriter. Not later than 15 Business Days prior to the Annual Report Date, the District shall provide the Annual Report to the Dissemination Agent (if other than the District). If by 15 Business Days prior to the Annual Report Date the Dissemination Agent (if other than the District) has not received a copy of the Annual Report, the Dissemination Agent shall contact the District to determine if the District is in compliance with the previous sentence. The Annual Report may be submitted as a single document or as separate documents comprising a package, and may include by reference other information as provided in Section 4 of this Disclosure Certificate; provided that the audited financial statements of the District may be submitted separately from the balance of the Annual Report, and later than the Annual Report Date, if not available by that date. If the District s fiscal year changes, it shall give notice of such change in the same manner as for a Listed Event under Section 5(c). The District shall provide a written certification with each Annual Report furnished to the Dissemination Agent to the effect that such Annual Report constitutes the Annual Report required to be furnished by the District hereunder. (b) If the District does not provide (or cause the Dissemination Agent to provide) an Annual Report by the Annual Report Date, the District shall provide (or cause the Dissemination Agent to provide) to the MSRB, in an electronic format as prescribed by the MSRB, a notice in substantially the form attached as Exhibit A, with a copy to the Paying Agent and the Participating Underwriter. (c) With respect to the Annual Report, the Dissemination Agent shall: (i) determine each year prior to the Annual Report Date the then-applicable rules and electronic format prescribed by the MSRB for the filing of annual continuing disclosure reports; and (ii) if the Dissemination Agent is other than the District, file a report with the District, with a copy to the Paying Agent and the Participating Underwriter, certifying that the Annual Report has been provided pursuant to this Disclosure Certificate, and stating the date it was provided. Section 4. Content of Annual Reports. The Annual Report shall contain or incorporate by reference the following: (a) Audited financial statements prepared in accordance with generally accepted accounting principles as promulgated to apply to governmental entities from time to time by the Governmental Accounting Standards Board. If the District's audited financial statements are not available by the Annual Report Date, the Annual Report shall contain unaudited financial statements in a format similar to the financial statements contained in the final Official Statement, and the audited financial statements shall be filed in the same manner as the Annual Report when they become available. D-2

(b) Unless otherwise provided in the audited financial statements filed on or before the Annual Report Date, financial information and operating data with respect to the District for the preceding fiscal year, substantially similar to that provided in the corresponding tables in the Official Statement: (i) the average daily attendance in District schools on an aggregate basis for the preceding fiscal year; (ii) pension plan contributions made by the District for the preceding fiscal year; (iii) aggregate principal amount of short-term borrowings, lease obligations and other long-term borrowings of the District as of the end of the preceding fiscal year; (iv) description of amount of general fund revenues and expenditures which have been budgeted for the current fiscal year, together with audited actual budget figures for the preceding fiscal year; year; (v) the District's total revenue limit for the preceding fiscal (vi) prior fiscal year total secured property tax levy and collections, showing current collections as a percent of the total levy; and (vii) current fiscal year assessed valuation of taxable properties in the District, including assessed valuation of the top ten properties. (c) In addition to any of the information expressly required to be provided under paragraphs (a) and (b) of this Section, the District shall provide such further information, if any, as may be necessary to make the specifically required statements, in the light of the circumstances under which they are made, not misleading. (d) Any or all of the items listed above may be included by specific reference to other documents, including official statements of debt issues of the District or related public entities, which are available to the public on the MSRB s Internet web site or filed with the Securities and Exchange Commission. Section 5. Reporting of Significant Events. (a) The District shall give, or cause to be given, notice of the occurrence of any of the following Listed Events with respect to the Notes: (1) Principal and interest payment delinquencies. (2) Non-payment related defaults, if material. (3) Unscheduled draws on debt service reserves reflecting financial difficulties. D-3

(4) Unscheduled draws on credit enhancements reflecting financial difficulties. (5) Substitution of credit or liquidity providers, or their failure to perform. (6) Adverse tax opinions, the issuance by the Internal Revenue Service of proposed or final determinations of taxability, Notices of Proposed Issue (IRS Form 5701-TEB) or other material notices or determinations with respect to the tax status of the security, or other material events affecting the tax-exempt status of the security. (7) Modifications to rights of security holders, if material. (8) Bond calls, if material, and tender offers. (9) Defeasances. (10) Release, substitution, or sale of property securing repayment of the securities, if material. (11) Rating changes. (12) Bankruptcy, insolvency, receivership or similar event of the obligated person. (13) The consummation of a merger, consolidation or acquisition involving an obligated person or the sale of all or substantially all of the assets of the obligated person, other than in the ordinary course of business, the entry into a definitive agreement to undertake such an action or the termination of a definitive agreement relating to any such actions, other than pursuant to its terms, if material. (14) Appointment of a successor or additional trustee or the change of name of a trustee, if material. (b) Whenever the District obtains knowledge of the occurrence of a Listed Event, and, if the Listed Event is described in sections (a)(2), (a)(6), (a)(7), (a)(8) (if the event is a bond call), (a)(10), (a)(13) or (a)(14) above, the District determines that knowledge of the occurrence of a Listed Event would be material under applicable Federal securities law, the District shall, or shall cause the Dissemination Agent (if not the District) to file a notice of such occurrence with the MSRB, in an electronic format as prescribed by the MSRB, in a timely manner not in excess of 10 business days after the occurrence of the Listed Event. Notwithstanding the foregoing, notice of Listed Events described in subsections (a)(8) and (9) above need not be given under this subsection any earlier than the notice (if any) of the underlying event is given to holders of affected Notes. Section 6. Identifying Information for Filings with the MSRB. All documents provided to the MSRB under the Disclosure Certificate shall be accompanied by identifying information as prescribed by the MSRB. Section 7. Termination of Reporting Obligation. The District s obligations under this Disclosure Certificate shall terminate upon the legal defeasance, prior redemption or payment in full of all of the Notes. If such termination occurs prior to the final maturity of the Notes, the District shall give notice of such termination in the same manner as for a Listed Event under Section 5(c). D-4