new issue-book-entry only not rated in the opinion of …cdiacdocs.sto.ca.gov/2013-1449.pdf ·...

NEW ISSUE-BOOK-ENTRY ONLY NOT RATED In the opinion of Lewis Brisbois Bisgaard & Smith LLP, Los Angeles, California, Bond Counsel, under existing law, the interest on the Bonds received by the owners of the Bonds is INCLUDED in gross income for federal income tax purposes. In the farther opinion of Bond Counsel interest on the Bonds is not subject to California personal income taxes. See "TAX MATTERS" herein.

$809,900 CALIFORNIA ENTERPRISE DEVELOPMENT AUTHORITY

WATER EFFICIENCY AND PROPERTY ASSESSED CLEAN ENERGY (PACE) AND JOB CREATION PROGRAM

LIMITED OBLIGATION IMPROVEMENT BONDS SERIES 2013A (FEDERALLY TAXABLE)

Dated: Date of Delivery Due: September 2, 2032 The California Enterprise Development Authority (the "Authority") is issuing its California Enterprise Development

Authority Water Efficiency aud Property Assessed Clean Energy (PACE) aud Job Creation Program Limited Obligation Improvement Bonds, Series 2013A (the "Bonds") to (i) finance the acquisition aud construction of certain energy efficiency equipment of benefit to certain property within the Cities of Fresno aud Palm Springs, California (the "Project"), (ii) fund a reserve fund for the Bonds in an amount equal to the Reserve Requirement, (iii) fund capitalized interest on the Bonds through September 2, 2013, aud (iv) to pay the costs of issuance associated with the Bonds. The Bonds are limited obligation bonds authorized pursuant to Reso]ution No. 13-10 dated March 28, 2013 (the "Resolution"), the Master Indenture dated as of July I, 2013 (the "Master Indenture") by aud between the Authority aud The Bank of New York Mellon Trust Compauy, N.A., as Trustee (the "Trustee") and a First Supplemental Indenture dated as of July I, 2013 (the "Supplemental Indenture" aud referred to herein with the Master Indenture as the "Indenture").

The Bonds will be issued as fully registered bonds, without coupons, in denominations of $!00,000 or integral multiples of $5000 in excess thereof; provided, however, one Bond may have a principal amount that is not in an integral multiple of $5,000. Notwithstanding anything herein to the contrary, to the extent the outstanding principal amount of any Bond has been reduced below $100,000 as a result of the partial redemption of such Bond, the Bond may be transferred, but only in whole, pursuant to Section 2.02 of the Master Indenture notwithstauding the fact that the principal amount of such Bond is less thau $!00,000. The principal or redemption price of each Bond will be payable when due or redeemed, as applicable, without presentation or surrender of the Bonds. Interest on the Bonds will be payable on March 2 and September 2 of each year (the "Interest Payment Dates"), commencing September 2, 2013. The Bonds will be issued in certificated form aud be delivered to the purchasers thereof on the closing date. The Bonds are subject to optional special and mandatory redemption as described herein. See "THE BONDS - Redemption."

The Bonds are being issued pursuant to Article 4 of Chapter 5 of Division 7 of Title 1 of the California Government Code (commencing with Section 6584), Chapter 29 of Part 3 of Division 7 of the California Streets and Highways Code (commencing with Section 5898.12 et seq.) and the Improvement Act of 1915 codified at Chapter 29 Part 1 of Division JO of the California Streets and Highways Code (commencing with Section 8500 et seq.) (collectively, the "Assessment Law"). Under the provisions of the Assessment Law, installments of principal and interest sufficient to meet annual bond debt service are to be included on the regular secured county property tax bills in the Cities of Fresno and Palm Springs within which an Assessment District has been formed and are to be sent to owners of property against which there are unpaid assessments. These annual installments are to be paid into a redemption fund (the "Redemption Fund'') established for the Bonds which shall be created and held by the Trustee under and pursuant to the Supplemental Indenture. Amounts in the Redemption Fund shall be applied to pay debt service on the Bonds as aud when due. See "SECURITY AND SOURCES OF PAYMENT FOR TIIE BONDS" herein.

THE BONDS ARE OFFERED ONLY TO PERSONS WHO MEET THE DEFINITION OF "QUALIFIED INSTITUTIONAL BUYER" (WITHIN THE MEANING OF RULE 144A UNDER THE SECURITIES ACT OF 1933) OR "ACCREDITED INVESTORS" (WITHIN THE MEANING OF APPLICABLE STATE AND FEDERAL SECURITIES LAWS), THE RESALE OF THE BONDS IS SUBJECT TO RESTRICTIONS AS DESCRIBED HEREIN, SEE APPENDIX D - "QUALIFIED INVESTOR LETTER" HEREIN, The Bonds are special limited obligations of the Authority, and as such, are not a debt of any Member JurisdJction, including the City of Fresno, the City of Palm Springs, or the State of California (the "State") or any of its political subdivisions, and neither the Member Jurisdictions, the State nor any of its political subdivisions is liable for the payment thereof. The Bonds are special obligations of the Authority payable exclusively from the Assessment Installments, and amounts held in certain funds and accounts created pursuant to the Indenture, including the Reserve Fund. The Bonds will not be payable from any other revenues or other assets of the Authority. The Authority does not have any taxing power. The Bonds do not constitute indebtedness within the meaning of any constitutional or statutory limitation or restriction. Neither the Authority, nor any of its members, directors or officers, is liable personally on the Bonds.

This cover page of the Private Placement Memorandum contains information for quick reference only. It is not a complete summary of the Bonds. Investors should read the entire Private Placement Memorandum to obtain information essential to the making of an informed investment decision. Attention is hereby directed to certain risk factors more fully described herein. See "RISK FACTORS" herein.

The Bonds are offered when, as and if issued and accepted by the Placement Agent, subject to the approval as to legality by Lewis Brisbois Bisgaard & Smith LLP, Los Angeles, California, Bond Counsel. Certain legal matters will be passed on for the Authority by Lewis Bn·sbois Bisgaard & Smith LLP, Los Angeles, California, Disclosure Counsel.

BRANDIS TALLMAN LLC

Dated: July9,2013

4844-5572-6100.l i

cwalline

Typewritten Text

#2013-1449


WATER EFFICIENCY AND PROPERTY ASSESSED CLEAN ENERGY (PACE) AND JOB CREATION PROGRAM LIMITED OBLIGATION IMPROVEMENT BONDS

SERIES 2013A (FEDERALLY TAXABLE)

MATURITY SCHEDULE

Maturity Date September2

2032

* Final Maturity

4844-5572-6100.l

Principal Amount

$809,900*

Interest Rate

7.00%

USE OF PRIVATE PLACEMENT MEMORANDUM

For purposes of compliance with Rule 15c2-12 of the Securities and Exchange Act, as amended ("Rule 15c2-12"), and in effect on the date of this Private Placement Memorandum, this document constitutes an "official statement" of the Issuer with respect to the Bonds that has been deemed "final" by the Issuer as of its date except for the omission of no more than the information permitted by Rule l 5c2-12.

This Private Placement Memorandum does not constitute an offer to sell the Bonds in any jurisdiction to any person to whom it is uulawful to make such offer in such jurisdiction. No dealer, salesman, or other person has been authorized by the Issuer, or the Placement Agent to give any such other information or to make any representations other than those contained herein and, if given or made, such other information or representations must not be relied upon as having been authorized by the Issuer, the Placement Agent, or any other person.

IN MAKING AN INVESTMENT DECISION INVESTORS MUST RELY ON TIIEIR OWN EXAMINATION OF THE SECURITIES OFFERED HEREBY, INCLUDING THE MERITS AND RISKS INVOLVED. TIIE BONDS HA VE NOT BEEN REGISTERED WITH TIIE SECURITIES AND EXCHANGE COMMISSION UNDER THE SECURITIES ACT OF 1933 OR UNDER TIIE SECURITIES ACTS OF ANY STATE DUE TO EXEMPTIONS FROM REGISTRATION, NOR HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES AUTHORITY ENDORSED THE MERITS OF THIS OFFERING OR PASSED UPON THE ACCURACY OR ADEQUACY OF THIS MEMORANDUM; ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.

The information set forth herein has been obtained from the Issuer, FIGTREE, and other sources, that are believed to be reliable, but it is not guaranteed as to accuracy or completeness by, and is not to be construed as a representation of the Placement Agent or the Issuer, as to information from other sources. References herein to laws, rules, regulations, resolutions, agreements, reports, and other documents do not purport to be comprehensive or definitive. All references to such documents are qualified in their entirety by reference to the particular document, the full text of which may contain qualifications of an exception to statements made herein. The information and the expressions of opinion herein are subject to change without notice, and neither the delivery of this Private Placement Memorandum nor any sale made hereunder shall, under any circumstances, create any information that there has been no change in the information presented herein since the date hereof or the earliest date as of which such information is given.

This Private Placement Memorandum has been prepared solely for an offering to certain "qualified institutional buyers" or "accredited investors" without general solicitation or advertising. The purchaser will be required to sign an investor letter stating that such buyer is a "qualified institutional buyer" as defined in Rule 144A of the Securities Act of 1933. Any transfer from the initial purchase shall be to an "accredited investor" or a "qualified institutional buyer," within the meanings of applicable state and federal securities laws, that delivers an executed investor letter. A form of the investor letter is attached to this Private Placement Memorandum as APPENDIX 0.

The Placement Agent has provided the following sentence for inclusion in this Private Placement Memorandum. The Placement Agent has reviewed the information in this Private Placement Memorandum in accordance with, and as part of, its responsibilities to investors under the federal securities laws as applied to the facts and circumstances of this transaction, but the Placement Agent does not guarantee the accuracy or completeness of such information.

4844-5572-6100.1


WATER EFFICIENCY AND PROPERTY ASSESSED CLEAN ENERGY (PACE) AND JOB CREATION PROGRAM LIMITED OBLIGATION IMPROVEMENT BONDS

SERIES 2013A (FEDERALLY TAXABLE)

4844-5572-6100.l

AUTHORITY BOARD OF DIRECTORS AND STAFF

Gurbax Sahota, Chairperson Cindy Trobitz-Thomas, Vice Chairperson

Larry Cope, Secretary/Treasurer Kevin Ham, Member DB Heusser, Member

Kathy Millison, Member Randy Starbuck, Member Bruce Stenslie, Member

Michelle Stephens, Assistant Secretary

SPECIAL SERVICES

PLACEMENT AGENT Brandis Tallman, LLC

San Francisco, California

BOND COUNSEL AND DISCLOSURE COUNSEL Lewis Brisbois Bisgaard & Smith LLP

Los Angeles, California

PROGRAM ADMINISTRATOR Figtree Company, Inc. San Diego, California

FINANCIAL ADVISOR TO PROGRAM ADMINISTRATOR Del Rio Advisors, LLC

Modesto, California

TRUSTEE The Bank of New York Mellon Trust Company, N.A.

Los Angeles, California

TABLE OF CONTENTS

INTRODUCTION .......................................................................................................................... 1 Authorization ................................................................................................................................................... I The Authority .................................................................................................................................................. 2 Water Efficiency and Property Assessed Clean Energy (PACE) Program ...................................................... 3 The Parcels ..................................................................................................................................................... .4 Assessment District Financing ....................................................................................................................... .4 Security for the Bonds ..................................................................................................................................... 5 Bond Owners' Risks ........................................................................................................................................ 6 No Continuing Disclosure ............................................................................................................................... 6 Further Information ......................................................................................................................................... 6

ANNUAL DEBT SERVICE SCHEDULE ................................................................................... 7 THE PROJECT ............................................................................................................................. 8 ESTIMATED SOURCES AND USES OF FUNDS .................................................................... 9 THE BONDS ................................................................................................................................ 10

General .......................................................................................................................................................... 10 Redemption ................................................................................................................................................... 11

SECURITY AND SOURCES OF PAYMENT FOR THE BONDS ........................................ 13 Assessment Installments ................................................................................................................................ 13 Priority of Assessments ................................................................................................................................. 14 Limited Authority Obligation ........................................................................................................................ 15 Reserve Fund ................................................................................................................................................. 15 Covenant to Commence Superior Court Foreclosure .................................................................................... 16 Other Obligations of the Authority ................................................................................................................ 17

THE PARCELS ........................................................................................................................... 17 Parcel 1- 5200 N. Palm Avenue, Fresno, California 93704 ......................................................................... 19 Parcel 2- 5250 N. Palm Avenue, Fresno, California 93704 ......................................................................... 23 Parcel 3 -5260 N. Palm Avenue, Fresno, California 93704 ......................................................................... 27 Parcel 4 - 1546 W. Pine Avenue, Fresno, California 93728 ......................................................................... 31 Parcel 5 -2700 Golf Club Drive, Palm Springs, California 92264 ............................................................... 34 Parcel 6 - 526 S. Warm Sands Drive, Palm Springs, California 92264 ........................................................ 36 Parcel 7 - 19024 Ruppert Street, Palm Springs, California 92264 ................................................................ 39 Assessed Valuation and Total Annual Tax Burden ....................................................................................... 42 Assessed Value to Assessment Lien Ratio .................................................................................................... 4 3 Parcel Profiles ................................................................................................................................................ 44 Concentration of Assessments ....................................................................................................................... 45 Property Tax Rate .......................................................................................................................................... 46

THE AUTHORITY ..................................................................................................................... 47 THE PROGRAM ADMINISTRATOR ..................................................................................... 48

Figtree Energy Financing ............................................................................................................................. .48 Key Personnel.. .............................................................................................................................................. 50

THE PACE PROGRAM ............................................................................................................. 52 Program Registered Contractors .................................................................................................................... 52

AUTHORIZATION OF ENERGY AND WATER EFFICIENCY ASSESSMENT DISTRICT FINANCING IN CALIFORNIA ........................................................................... .53

Implementing Legislation .............................................................................................................................. 53 Federal Housing Finance Authority Statement Concerning Property Assessed Clean Energy (PACE) Prograrns .......................................................................................................................................... 54 Judicial Validation of Commercial PACE Program ...................................................................................... 55 Assessment Collection Procedures ................................................................................................................ 57 Tax Collection & Program Administration Costs and Fees ........................................................................... 58 Future Additional State Initiative Measures .................................................................................................. 58

RISK FACTORS .......................................................................................................................... 59 General.. ........................................................................................................................................................ 59 Assessments Run with the Land .................................................................................................................... 60

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Real Estate Investment Risks ........................................................................................................................ 60 Property Values ............................................................................................................................................. 61 Concentration of Ownership .......................................................................................................................... 61 Mortgage Company Actions .......................................................................................................................... 61 Foreclosure Shortfalls .................................................................................................................................... 62 No Authority Funds ....................................................................................................................................... 62 Bankruptcy and Foreclosure .......................................................................................................................... 62 Seismic Risk .................................................................................................................................................. 63 Hazardous Substances ................................................................................................................................... 64 Parity Taxes and Assessments ....................................................................................................................... 64 Limited Secondary Market/Transfer Restrictions .......................................................................................... 65 No Acceleration ............................................................................................................................................. 65 Investor Suitability Standards ........................................................................................................................ 65

NO LITIGATION ........................................................................................................................ 66 TAX MATTERS .......................................................................................................................... 66 CERTAIN LEGAL MATTERS ................................................................................................. 67 FINANCIAL ADVISOR ............................................................................................................. 67 PLACEMENT OF THE BONDS ............................................................................................... 67 FORWARD LOOKING STATEMENTS .................................................................................. 68 NO RA TING ................................................................................................................................. 68 MISCELLANEOUS .................................................................................................................... 69 AUTHORIZATION OF PRIVATE PLACEMENT MEMORANDUM ................................ 69 APPENDIX A SUMMARY OF LEGAL DOCUMENTS DEFINITIONS ............................. 1 APPENDIX B SUMMARY OF MASTER INDENTURE ........................................................ 1 APPENDIX C FORM OF OPINION OF BOND COUNSEL .................................................. 1 APPENDIX D ................................................................................................................................. 1 QUALIFIED INVESTOR LETTER ............................................................................................ 1 APPENDIX E ECONOMIC AND DEMOGRAPIDC INFORMATION FOR THE CITY

OF FRESNO AND FRESNO COUNTY ..................................................................................... 1 General ............................................................................................................................................................ 1 Population ........................................................................................................................................................ 2 Employment and Industry ............................................................................................................................... 3 Major Employers ............................................................................................................................................ .4 Median Household Income ............................................................................................................................. -5 Commercial Activity ....................................................................................................................................... 6

APPENDIX F ECONOMIC AND DEMOGRAPHIC INFORMATION FOR THE CITY OF PALM SPRINGS AND RIVERSIDE COUNTY .................................................................. 1

General ............................................................................................................................................................ 1 Population ........................................................................................................................................................ 2 Employment and Industry ............................................................................................................................... 3 Major Employers ............................................................................................................................................ .4 Median Household Income ............................................................................................................................. -5 Commercial Activity ....................................................................................................................................... 6

4844-5572-6100.l

PRIVATE PLACEMENT MEMORANDUM




INTRODUCTION

Authorization

The purpose of this Private Placement Memorandum is to provide certain information concerning the issuance and sale by the California Enterprise Development Authority (the "Authority") of its $809,900 California Enterprise Development Authority Water Efficiency and Property Assessed Clean Energy (PACE) and Job Creation Program Limited Obligation Improvement Bonds, Series 2013A (the "Bonds"). The Bonds are being issued pursuant to the Constitution and laws of the State of California (the "State"), particularly the provisions of(i) the Marks-Roos Local Bond Pooling Act of 1985, constituting Chapter 5 of Division 7 of Title 1 (commencing with Section 6500) of the California Government Code (the "Bond Law"), and (ii) (a) Chapter 29 of Part 3 of Division 7 of the California Streets and Highways Code (commencing with Section 5898.12, et seq.) and (b) the Improvement Act of 1915 codified at Chapter 29 Part 1 of Division 10 of the California Streets and Highways Code (commencing with Section 8500, et seq.) (collectively, the "Assessment Law"). The Bonds are authorized pursuant to resolutions duly adopted by the Authority on March 28, 2013 (the "Resolution"), a Master Indenture of Trust dated as of July 1, 2013 (the "Master Indenture"), by and between the Authority and The Bank of New York Mellon Trust Company, N.A., as Trustee (the "Trustee") and a First Supplemental Indenture dated as of July 1, 2013 between the Authority and the Trustee (the "Supplemental Indenture" and referred to herein with the Master Indenture as the "Indenture").

Proceeds of the Bonds will be used to (i) finance the acquisition and construction of certain energy efficiency improvements of benefit to seven parcels within the Cities of Fresno and Palm Springs, California (the "Project"), (ii) to fund the reserve fund initially in an amount equal to $41,464.11, (iii) to fund capitalized interest on the Bonds through September 2, 2013, and (iv) to pay the costs of issuance associated with the Bonds. See "THE PARCELS" and "THE PROJECT."

This Introduction is not a summary of this Private Placement Memorandum. It is only a brief description of and guide to, and is qualified by, more complete and detailed information contained in the entire Private Placement Memorandum, including the appendices hereto, and the documents summarized or described herein. A full review should be made of the entire Private Placement Memorandum. The offering of Bonds to potential investors is made only by means of the entire Private Placement Memorandum.

This Private Placement Memorandum has been prepared solely for an offering to certain "qualified institutional buyer" or "accredited investors" without general

4844-5572-6100.l 1

solicitation or advertising. Each purchaser will be required to sign an investor letter stating that such buyer is a "qualified institutional buyer" as defmed in Rule 144A of the Securities Act of 1933, as amended, or an "accredited investor" within the meanings of applicable state and federal securities laws. A form of the investor letter is attached to this Private Placement Memorandum as APPENDIX D.

Any resale of the Bonds shall be made only to "qualified institutional buyers" or "accredited investors" and each subsequent purchaser shall also be required to sign an investor letter in the form set forth in APPENDIX D attached hereto.

THE BONDS ARE SPECIAL, LIMITED OBLIGATIONS OF THE AUTHORITY AND AS SUCH ARE NOT A DEBT OF ANY CITY, THE MEMBER JURISDICTIONS, THE STATE OF CALIFORNIA OR ANY OF ITS POLITICAL SUBDIVISIONS (OTHER THAN THE AUTHORITY FROM THE LIMITED SOURCES SET FORTH IN THE INDENTURE AND NEITHER THE MEMBER JURISDICTIONS, ANY CITY, THE STATE, NOR ANY OF ITS POLITICAL SUBDIVISIONS (OTHER THAN THE AUTHORITY FROM THE LIMITED SOURCES SET FORTH IN THE INDENTURE) IS LIABLE FOR THE PAYMENT THEREOF. IN NO EVENT SHALL THE BONDS BE PAYABLE OUT OF ANY FUNDS OR PROPERTIES OTHER THAN THOSE OF THE AUTHORITY FROM THE LIMITED SOURCES SET FORTH IN THE INDENTURE. THE AUTHORITY HAS NO TAXING POWER.

For the definitions of capitalized terms used in this Private Placement Memorandum and not otherwise defined herein, see "APPENDIX A - SUMMARY OF LEGAL DOCUMENTS."

The Authority

The California Enterprise Development Authority (the "Authority") is a joint powers financing agency organized and existing pursuant to the Bond Law. The Authority has the powers to issue bonds and notes, enter into agreements and create programs for the public purposes of the Authority and the member jurisdictions of the Authority (the "Member Jurisdictions"). A Member Jurisdiction participating in a specific program is a "Participating Member Jurisdiction," as are the City of Fresno and City of Pahn Springs for this issuance.

The Authority was established in 2006, pursuant to the Joint Exercise of Powers Agreement Creating the California Enterprise Development Authority dated June 1, 2006 (the "Joint Powers Agreement"). The Authority was created by the City of Sehna, California, the City of Lancaster, California and the City of Eureka, California.

The Authority is authorized to exercise all powers common to its voting Member Jurisdictions. See ''THE AUTHORITY" herein.

4844-5572-6100. I 2

Water Efficiency and Property Assessed Clean Energy (PACE) Program

The Authority has established a water efficiency and property assessed clean energy program (the "PACE Program") to finance renewable energy and energy efficient and water conservation improvements located on commercial properties. Each improvement financed under the PACE Program will be affixed to real property upon the request of an owner of said property and approval of the property by the Authority based upon certain program guidelines.

These improvements include the installation of various renewable energy and energy efficient improvements located on commercial, industrial and certain residential properties for which the owners thereof have voluntarily consented to be included within the various assessment districts as discussed herein and to participate in the PACE Program. The improvements are to be constructed or installed by licensed and certified contractors approved by the Authority. The financed improvements must become affixed to the related real property and the financing term shall not exceed the average useful life of the improvements. The estimated costs of the improvements are based upon bids or written estimates provided by contractors to the owners of the parcels who have agreed to the voluntary assessments and resulting liens to finance the improvements to those parcels (the "Property Owners" and the "Parcel" respectively). Those bids are thereafter provided to the program administrator appointed by the Authority (the "Program Administrator") by the Property Owners. Prior to the issuance of the Bonds, an assessment lien (the "Assessment lien") is recorded against each Parcel, and the contractors will commence work on the subject Parcels after the sale of Bonds. Upon completion of an improvement, the Property Owner shall obtain an executed certificate of completion from the contractor, and if the improvement project required city or county permits, a certificate of inspection from the public entity which issued the permit. In addition, the Program Administrator, or its authorized representative, on behalf of the Authority shall make a site visit to confirm that the improvements are on the Parcels. The Authority will not conduct an inspection as to the warranty and fitness of the improvements. After receipt of the aforementioned certificates and the site visit, the Authority will permit disbursement of Bond proceeds to pay the contractor for the services rendered.

The Assessment Law provides that qualifying energy and water improvements are those improvements which are "distributed generation renewable energy sources or energy or water efficiency improvements that are permanently fixed to real property." The Program Administrator has developed guidelines for energy and water efficiency improvements which qualify for the PACE Program based upon published material sourced from the United States Department of Energy and the California Energy Commission. The Authority has adopted those guidelines and therefore determined that the following, among other items, are qualifying Improvements which may be financed with the proceeds of the Bonds: eligible renewable energy improvements which produce energy from renewable sources that are installed behind the meter of a property and include installation of solar hot water heating and solar photovoltaics; and custom biomass, small wind, and geothermal electric fuel cells systems. In addition, eligible energy efficient improvements include but are not limited to modifications to a property which are designed to reduce energy consumption, including, but not limited to, heating systems and/or heating systems improvements such as new high-efficiency furnaces, boiler tune-ups with programmable thermostats, new boiler systems, and burner controls; energy recovery and

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redistribution systems; energy efficient motors and drives, upgrade of lighting systems; refrigeration recommissioning or repair; and, energy efficient gas, electric or tankless water heaters; passive solar storefront systems; cool or green roofs; energy use monitoring and submetering; energy management systems, systems level metering, direct digital and/or automated controls; cooling systems such as rooftop air conditioning units, ground and water source heat pumps, cooling towers, custom chillers, and evaporative coolers; air sealing and ventilation; insulation; insulated windows, doors and pipes; custom energy efficient loading dock curtains; low-e films and permanent automated blinds; and irrigation pumps and other water efficiency pumps. The Program Administrator will update the Authority's list of qualifying Improvements from time to time. The current list is available on the Program Administrator's website: www.figtreecompany.com.

The Parcels

In furtherance of the PACE Program, an Assessment Lien will be recorded against seven Parcels located within either the City of Fresno or the City of Palm Springs, each a Participating Member Jurisdiction of the Authority. As of January 1, 2013, the aggregate assessed value of all of the Parcels was $52,031,563. The total Assessment Lien is $809,965.19. The aggregate assessed value to Assessment Lien ratio is 64 to 1. While the aggregate assessed value to Assessment Lien ratio is 64 to 1, the value to lien ratio of individual Parcels varies greatly (see the section titled "THE PARCELS" herein). For overlapping governmental taxes see the section titled "THE PARCELS." The value of the Parcels is an important factor in determining whether to invest in the Bonds. See "RISK FACTORS - Property Values."

Assessment District Financing

A Water Efficiency and Property Assessed Clean Energy (PACE) and Job Creation District has been created by the City of Fresno and the City of Palm Springs (the "District"), each a Participating Member Jurisdiction pursuant to Chapter 29 Part 3 of Division 7 of the California Streets and Highways Code ( commencing with Section 5898.12, et seq.) (Chapter 29 Part 1 of Division 10 of the California Streets and Highways Code ( commencing with Section 8500, et seq.) (collectively, the "Assessment Law"). The District is a contractual assessment district. Each owner who voluntarily participates in the PACE Program has executed an Assessment Contract and approved the recording of a Notice of Assessment lien representing the unpaid Assessments on the Parcel assessed. The Assessment lien does not constitute a personal indebtedness of the respective owners of each Parcel. See "SECURITY AND SOURCES OF PAYMENT OF THE BONDS."

The Assessments will be recorded against each Parcel prior to the issuance of the Bonds. Under the provisions of the Assessment Law, installments of principal and interest sufficient to meet annual debt service on the Bonds ("Assessment Installments") are to be included on the regular county tax bills sent to the owner of each Parcel. Assessment liens on a particular Parcel are based upon the benefits to that Parcel as determined by the Property Owner. The Assessment Installments shall be transferred from the County of Fresno Auditor-Controller or County of Riverside Auditor-Controller, as applicable, to the Trustee for payment of debt service on the Bonds by January 31 for the December property tax collection by the applicable AuditorController and June 30 for the April property tax collection.

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Security for the Bonds

The Bonds are issued upon and are secured by the unpaid assessments (the "Assessment Installments") on the Parcels together with interest thereon, and such unpaid Assessment Installments together with interest thereon constitute a trust fund for the redemption and payment of the principal of the Bonds and the interest thereon. The Authority may issue other series of bonds under the Master Indenture pursuant to separate supplemental indentures. Such bonds, if any are issued, will be separate from the Bonds offered hereby and the funds and accounts established under each Supplemental Indenture will not be cross-collateralized. The Bonds are secured by the monies in the Redemption Fund and the Reserve Fund held under the Supplemental Indenture. The Assessments are levied pursuant to the assessment proceedings creating the District.

The Assessments shall be collected in semi-annual installments, together with interest on the declining balances, on the secured tax roll on which general taxes on real property are collected, and are payable and become delinquent at the same time and in the same proportionate amounts and bear the same proportionate penalties and interest after delinquency as to general taxes. For Parcels receiving financing up to 10% of the assessed value, the Assessments will reflect a Program Administrator fee that exceeds the interest rate on the Bonds by up to 0.75% for the purpose of paying the administrative costs of the Authority and the PACE Program. For properties receiving financing in excess of 10% of the assessed value, the Assessments will reflect a Program Administrator fee that exceeds the interest rate on the Bonds by up to 1 %. The Parcels are subject to the same provisions for sale and redemption as are properties for nonpayment of general taxes. However, the Authority has covenanted in the Indenture for the benefit of the Bond owners that (i) on each August 30 commencing the first August after the Closing Date, the Authority shall review the County assessment roll to determine whether all Assessment Installments are current and in the event there are delinquencies, within 7 days, the Authority shall direct the Program Administrator to commence a foreclosure action; and (ii) a foreclosure action against parcels with delinquent assessments shall be commenced prior to the December 1 following the June 30th delinquency. The City of Fresno and the City of Palm Springs have provided authorization to the Authority to commence all necessary foreclosure proceedings and actions as may be required under the Indenture. The Authority shall not be obligated to advance funds from any source of legally available funds in order to maintain the Reserve Fund at the Reserve Requirement. See "SECURITY FOR THE BONDS - Covenant to Commence Superior Court Foreclosure."

There is no assurance that the Property Owners will be financially able to pay the Assessment Instalhnents or that they will pay such installments even though financially able to do so. See "BONDHOLDERS RISKS."

The unpaid Assessments represent fixed liens on the Parcels. They do not, however, constitute a personal indebtedness of the respective owners of said Parcels. See "SECURITY AND SOURCES OF PAYMENT FOR THE BONDS," "ASSESSMENT DISTRICT REVENUES AND DEBT SERVICE COVERAGE," and "APPENDIX A - SUMMARY OF LEGAL DOCUMENTS."

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THE BONDS ARE SPECIAL, LIMITED OBLIGATIONS OF THE AUTHORITY AND AS SUCH ARE NOT A DEBT OF ANY CITY, THE MEMBER JURISDICTIONS, THE STATE OF CALIFORNIA OR ANY OF ITS POLITICAL SUBDIVISIONS (OTHER THAN THE AUTHORITY AND NEITHER THE MEMBER JURISDICTIONS, ANY CITY, THE STATE, NOR ANY OF ITS POLITICAL SUBDIVISIONS (OTHER THAN THE AUTHORITY) IS LIABLE FOR THE PAYMENT THEREOF. IN NO EVENT SHALL THE BONDS BE PAYABLE OUT OF ANY FUNDS OR PROPERTIES OTHER THAN THE LIMITED REVENUES OF THE AUTHORITY SET FORTH IN THE INDENTURE. THE AUTHORITY HAS NO TAXING POWER. THE DIRECTORS, OFFICERS AND EMPLOYEES OF THE STATE, THE AUTHORITY OR ITS MEMBERS SHALL NOT BE INDIVIDUALLY LIABLE FOR THE BONDS.

Bond Owners' Risks

Assessment Installments must be timely paid in order for payments of principal, premium and interest on the Bonds to be timely paid. This discussion does not purport to be comprehensive or definitive and does not purport to be a complete statement of all factors which may be considered as risks in evaluating the credit quality of the Bonds. The occurrence of one or more of the events discussed herein could adversely affect the ability or the willingness of property owners participating in the PACE Program to pay their Assessments when due. Any such failure to pay Assessments could result in the inability of the Authority to make full and punctual payments of debt service on the Bonds. In addition, the occurrence of one or more of the events discussed herein could adversely affect the value of the property within the Assessment District. See "BONDHOLDERS RISKS" herein.

No Continuing Disclosure

The Bonds are being offered in an aggregate principal amount less than $1,000,000 and are exempt from the provisions of Rule 15c2-12 of the Securities and Exchange Act, as amended, that require the Authority or any other party to provide continuing disclosure to owners of the Bonds. Neither the Authority, Program Administrator any Member Jurisdiction, nor property owner has agreed to or is obligated to provide any information concerning the Bonds after the initial sale.

Further Information

Brief descriptions of the Bonds, the Parcels, the Project, the Indenture, the Authority and other information are included in this Private Placement Memorandum. Such descriptions and information do not purport to be comprehensive or definitive. The descriptions herein of the Bonds, the Indenture and other documents are qualified in their entirety by reference to the forms thereof. All such descriptions are further qualified in their entirety by reference to laws and to principles of equity relating to or affecting generally the enforcement of creditors' rights. For definitions of certain terms relating to the Bonds see "APPENDIX A - SUMMARY OF LEGAL DOCUMENTS."

4844-5572-{;IO0.l 6

ANNUAL DEBT SERVICE SCHEDULE

The following is the annual debt service schedule for the Bonds.

Date Capitalized Annual (September 2) Principal Interest Interest Total

2013 $8,188.99 (8,188.99)

2014 $22,400 56,693.00 $79,093.00

2015 24,000 55,125.00 79,125.00

2016 25,600 53,445.00 79,045.00

2017 27,400 51,653.00 79,053.00

2018 29,400 49,735.00 79,135.00

2019 31,400 47,677.00 79,077.00

2020 33,600 45,479.00 79,079.00

2021 36,000 43,127.00 79,127.00

2022 38,500 40,607.00 79,107.00

2023 41,200 37,912.00 79,112.00

2024 44,100 35,028.00 79,128.00

2025 47,100 31,941.00 79,041.00

2026 50,400 28,644.00 79,044.00

2027 54,000 25,116.00 79,116.00

2028 53,000 21,336.00 74,336.00

2029 56,700 17,626.00 74,326.00

2030 60,700 13,657.00 74,357.00

2031 64,900 9,408.00 74,308.00

2032 69,500 4,865.00 74,365.00

$809,900 $677,262.99 (8,188.99) $1,478,974.00

4844-5572-6100.l 7

THE PROJECT

The Project consists of the acquisition and construction of certain renewable energy, energy efficient and water conservation improvements to be made in connection with the Parcels. For a description of the improvements to be financed with Bond proceeds with respect to the Parcels, see "THE PARCELS."

All improvements are to be permanently fixed to the buildings located on the Parcels and include HV AC, lighting, and control system retrofits to reduce overall energy usage and solar photovoltaic systems to produce renewable energy for use on-site.

(INTENTIONALLY LEFT BLANK)

4844-5572-6100.1 8

ESTIMATED SOURCES AND USES OF FUNDS

SOURCE OF FUNDS: Principal amount of the bonds

Original Issue Premium (Discount)

TOTAL SOURCES

USES OF FUNDS:

Improvement Fund

Reserve Fund 1

Capitalized Interest Fund2

Costs oflssuance Fund3

Administration Costs Fund4

TOTAL USES

SOURCES AND USES

$ 809,900.00

$ 809,900.00

$ 727,079.23

41,464.ll

8,188.99

23,889.42

9 278.25

$ 809,900.00

1 Equal to the initial Reserve Fund Requirement. 2 Represents interest due and payable on the bonds through September 2, 2013. 3 Costs oflssuance amount includes legal, financial advisor and trustee fees, placement agent fee, and

related expenses of offering the Bonds. 4 Administrative costs amount includes CEDA and Program Administration Costs and related expenses

of offering the Bonds:

4844-5572-6100.l 9

THE BONDS

General

The Bonds will be issued as fully registered bonds, without coupons, in denominations of $100,000 or integral multiples of $5,000 in excess thereof; provided, however, one Bond may have a principal amount that is not in an integral multiple of $5,000. Notwithstanding anything herein to the contrary, to the extent the outstanding principal amount of any Bond has been reduced below $100,000 as a result of the partial redemption of such Bond, the Bond may be transferred, but only in whole, pursuant to Section 2.02 of the Master Indenture notwithstanding the fact that the principal amount of such Bond is less than $100,000. The Bonds will be issued in certificated form and delivered to the purchaser thereof on the Closing Date. The Bonds will be dated the Closing Date and will bear interest at the rates per annum and will mature, subject to redemption provisions set forth below, on the dates and in the principal amounts, all as set forth on the inside cover page hereof.

Interest on the Bonds will be payable on March 2 and September 2 of each year, commencing on the date as specified in a Supplemental Indenture (the "Interest Payment Dates"), except as may be provided in a Supplemental Indenture. Interest on the Bonds will be computed on the basis of a 360-day year consisting of twelve 30-day months. Each Bond will bear interest from the Interest Payment Date next preceding the date of authentication thereof unless (a) it is authenticated after the fifteenth calendar day of the month preceding an Interest Payment Date (the "Record Date") and on or before such Interest Payment Date, in which event it shall bear interest from such Interest Payment Date; or (b) it is authenticated on or before the 15th day preceding the first Interest Payment Date, in which event it shall bear interest from the Closing Date; provided, however, that if, as of the date of authentication of any Bond, interest thereon is in default, such Bond shall bear interest from the Interest Payment Date to which interest has previously been paid or made available for payment thereon.

The principal or redemption price of the Bonds and interest thereon at the maturity or earlier redemption is payable by check, mailed on the Interest Payment Date to each Owner of the Bonds as of the Record Date immediately preceding an Interest Payment Date, or by wire transfer to an account in the United States at the request of the Owner of outstanding bonds filed with the Trustee prior to any such Record Date and shall be made without the necessity of presentation and surrender of the Bonds.

4844-5572-6100.l 10

Redemption

The Bonds shall be subject to Optional, Mandatory Sinking Fund, and Special Mandatory Redemption as provided in the Supplemental Indenture.

Optional Redemption. The Bonds are subject to optional call and redemption prior to maturity on any March 2 or September 2 on or after September 2, 2013, as a whole or in part, in a manner determined by the Authority from sources other than prepayment of Assessments at the following redemption prices plus accrued interest to the date set for redemption:

September 2, 2013 to September 1, 2020 September 2, 2020 to September 1, 2022 September 2, 2022 to September 1, 2024 September 2, 2024 to maturity

Percent

103% 102% 101% 100%

Special Mandatory Redemption for Non-utilization of Funds. The Bonds are subject to special mandatory redemption in whole or in part, at a redemption price equal to 100% of the principal amount of the Bonds not expended including accrued and unpaid interest thereon, on the next Interest Payment Date, in the event that (i) the construction of the Project (including, but not limited to commencing the permit process) has not commenced within 180 days of the issuance of the Bonds or (ii) all or a portion of the proceeds of the Bonds are not utilized to fund Program Costs within 2 years of the issuance of the Bonds. The Bonds shall be selected by lot within the same series and shall only be redeemed in minimum denomination of $5,000 thereof.

In the event that a Bond is of a denomination larger than $5,000, a portion of such Bond may be redeemed, but only in the principal amount of $5,000 or any multiple thereof. All Bonds called for redemption will cease to bear interest after the specified redemption date, provided funds for their redemption are on deposit at the place of payment at that time.

Special Mandatory Redemption from Prepayment of Assessments. If the owner of any of the Parcels prepays its Assessment, the Bonds are subject to special mandatory redemption in whole or in part, at the following redemption price plus accrued interest to the date set for redemption:

September 2, 2013 to September 1, 2020 September 2, 2020 to September 1, 2022 September 2, 2022 to September 1, 2024 September 2, 2024 to maturity

Percent

103% 102% 101% 100%

The Trustee shall deposit the Assessment prepayment to the Redemption Account for prepayment of the Bonds of such series. Bonds shall be selected by lot within the same series and shall only be redeemed in minimum denomination of $5,000 and in integral multiples of $5,000 in excess thereof.

4844-5572-6100.l 11

In the event that a Bond is of a denomination larger than $5,000, a portion of such Bond may be redeemed, but only in the principal amount of $5,000 or any multiple thereof. All Bonds called for redemption will cease to bear interest after the specified redemption date, provided funds for their redemption are on deposit at the place of payment at that time.

Mandatory Sinking Fund Redemption. The Bonds are subject to mandatory redemption in part prior to maturity, from sinking fund payments made on the following dates at a redemption price equal to 100% of the principal amount plus accrued interest, if any, to the redemption date, without premium, as set forth in the following table:

Bonds Maturing September 2, 2032

Sinking Fund Principal Redemption Date Amount To

(S§1tember 2} Be Redeemed 2014 $22,400

2015 24,000

2016 25,600

2017 27,400

2018 29,400

2019 31,400

2020 33,600

2021 36,000

2022 38,500

2023 41,200

2024 44,100

2025 47,100

2026 50,400

2027 54,000

2028 53,000

2029 56,700

2030 60,700

2031 64,900

2032* 69,500

*Maturity

4844-5572-6100.l 12

Redemption Procedures. The Trustee on behalf and at the expense of the Authority shall mail (by first class mail) notice of any redemption to the respective Owners of any Bonds designated for redemption at their respective addresses appearing on the Registration Books, to the Securities Depositories and to one or more Information Services, at least thirty (30) but not more than sixty (60) days prior to the date fixed for redemption. Neither failure to receive any such notice so mailed nor any defect therein shall affect the validity of the proceedings for the redemption of such Bonds or the cessation of the accrual of interest thereon. Such notice shall state the date of the notice, the redemption date, the redemption place and the redemption price, the Bond numbers (but only ifless than all of the Outstanding Bonds are to be redeemed) and the maturity of the Bonds to be redeemed, and shall require that such Bonds be then surrendered at the Trust Office of the Trustee for redemption at the redemption price, giving notice also that further interest on such Bonds will not accrue from and after the redemption date.

In addition to the foregoing notice, further notice shall be given by the Trustee in said form by first class mail to any Bond Owner whose Bond has been called for redemption but who has failed to tender his Bond for payment by the date which is sixty days after the redemption date, but no defect in said further notice nor any failure to give all or any portion of such further notice shall in any manner defeat the effectiveness of a call for redemption.

Upon the payment of the redemption price of Bonds being redeemed, each check or other transfer of funds issued for such purpose shall, to the extent practicable, by issue and maturity, the Bonds being redeemed with the proceeds of such check or other transfer.

SECURITY AND SOURCES OF PAYMENT FOR THE BONDS

Assessment Installments

The Bonds are issued upon and are secured by the unpaid Assessments Installments secured by the liens on the Parcels, together with interest thereon for the redemption and payment of the principal of the Bonds and the interest thereon. The Bonds are further secured by the monies in the Redemption Fund and the Reserve Fund created under the Supplemental Indenture. The Assessment liens are recorded on the Parcels pursuant to the assessment proceedings creating the District established by the Cities of Fresno and Palm Springs, each a Participating Member Jurisdiction of the Authority.

The Assessment Installments shall be collected in semi-annual installments, together with interest on the declining balances, on the secured tax roll on which general taxes on real property are collected and are payable, and said installments shall become delinquent at the same time and in the same proportionate amounts and bear the same proportionate penalties and interest after delinquency as do general taxes. For Parcels receiving :financing up to 10% of the assessed value, the Assessments will reflect a Program Administrator fee that exceeds the interest rate on the Bonds by up to 0.75% for the purpose of paying the administrative costs of the Authority and the PACE Program. For properties receiving financing in excess of 10% of the assessed value, the Assessments will reflect a Program Administrator fee that exceeds the interest rate on the Bonds by up to 1 %. The Program Administration Costs are charged and payable annually as part of the Assessment Installment. The Parcels upon which the Assessments are levied are subject to the same provisions for sale and redemption as are properties for nonpayment of general secured

4844-5572-6100.l 13

property taxes. However, the Authority has covenanted in the Indenture for the benefit of the Bond owners that, (i) on each August 30 commencing the first August after the Closing Date, the Authority shall review the County assessment roll to determine whether all Assessment Installments are current and in the event there are delinquencies, within 7 days, the Authority shall direct the Program Administrator to commence a foreclosure action; and (ii) a foreclosure action against parcels with delinquent assessments shall be commenced prior to the December I following the June 30th delinquency.

There is no assurance that the Property Owners will be financially able to pay the Assessment Installments or that they will pay such installments even though financially able to do so. See "BONDHOLDERS RISKS." The unpaid assessments represent fixed liens on the Parcels. They do not, however, constitute a personal indebtedness of the respective owners of the Parcels. See "SECURITY AND SOURCES OF PAYMENT FOR THE BONDS," and "APPENDIX A- SUMMARY OF LEGAL DOCUMENTS."

THE BONDS ARE SPECIAL LIMITED OBLIGATIONS OF THE AUTHORITY PAYABLE SOLELY FROM AND SECURED SOLELY BY THE ASSESSMENT INSTALLMENTS AND THE FUNDS CREATED UNDER THE INDENTURE. THE BONDS ARE NOT A DEBT OF ANY CITY, THE MEMBER JURISDICTIONS, THE STATE OF CALIFORNIA OR ANY OF ITS POLITICAL SUBDIVISIONS, AND NONE OF THE MEMBER JURISDICTIONS, THE STATE OR ANY OF ITS POLITICAL SUBDIVISIONS (OTHER THAN THE AUTHORITY TO THE LIMITED EXTENT DESCRIBED HEREIN) IS LIABLE FOR THE PAYMENT THEREOF. IN NO EVENT SHALL THE BONDS BE PAYABLE FROM ANY FUNDS OR PROPERTIES OTHER THAN THOSE OF THE AUTHORITY CREATED UNDER THE INDENTURE. THE BONDS DO NOT CONSTITUTE AN INDEBTEDNESS OF ANY CITY, THE MEMBER JURISDICTIONS, THE AUTHORITY OR THE STATE WITHIN THE MEANING OF ANY CONSTITUTIONAL OR STATUTORY DEBT LIMIT OR RESTRICTION. THE AUTHORITY HAS NO TAXING POWER.

Priority of Assessments

The Assessment Installments do not constitute a personal indebtedness of the respective owners of the Parcels. The Assessments (and any reassessment) and each installment thereof and any interest and penalties thereon represent fixed liens on the Parcels in the respective amounts to be apportioned by the Parcel owner based upon the respective improvement on the Parcel until paid in full. Such lien is subordinate to all fixed special assessment liens previously imposed upon the same Parcel, but has priority over all private liens and over all fixed special assessment liens which may subsequently be created against such Parcel. Such lien has the same priority as and is independent of the lien for general taxes and special taxes. Each Property Owner will deliver to the Program Administrator prior to the issuance of the Bonds either (i) a FIGTREE PACE Property Owner Disclosure & Acknowledgement stating that said owner has the authority, without the consent of any third party which has not been previously obtained, to execute and deliver the Assessment Contract authorizing the recording of the Assessment lien, or (ii) a Lender Consent representing the acknowledgement and approval of the respective lender holding a lien on the subject property.

4844-5572-6100.l 14

Limited Authority Obligation

Neither the Authority, nor any Member Jurisdiction, is obligated to pay Bond debt service other than from the specific limited sources set forth in the Supplemental Indenture. Delinquent Assessment Installments shall be paid from the moneys available in the Reserve Fund, if any. Bond owners should not rely upon the Authority or the Member Jurisdictions to advance moneys to the Redemption Fund should the Reserve Fund ever be depleted, and in fact, the Authority has made the express election under Section 8769(b) of the Assessment Law not to do so. Neither the faith and credit nor the taxing power of the Member Jurisdictions, the Authority, the State of California or any political subdivision thereof is pledged to the payment of the Bonds.

Reserve Fund

The reserve requirement (the "Reserve Requirement") shall be equal to the sum of the individual reserve requirement contribution of each Property (the "Individual Reserve Requirement"). The initial deposit to the Reserve Fund shall be equal to $41,464.11 (the "Initial Reserve Requirement") which is the sum of the initial individual reserve requirement contribution of each Property (as set forth in Exhibit "A" hereto (the "Initial Individual Reserve Requirement")).

In the event that Assessment Installments are insufficient to pay amounts coming due on the Series 2013A Bonds on the next Interest Payment Date, on or before the Business Day preceding any Interest Payment Date, the Trustee shall transfer from the Reserve Fund to Series 2013A Interest Account and Series 2013A Principal Account an amount equal to the deficiency. The amounts so advanced from the Reserve Fund shall be reimbursed from, in the amounts identified by the Program Administrator in writing, future surplus in the Collections Fund and the proceeds of the collection of delinquent assessments on the redemption or sale of the parcels for which payment of delinquent installments of assessments and interest thereon has been made from the Reserve Fund.

Reserve Requirement Calculation. The Reserve Fund shall be replenished as necessary in the manner set forth herein such that at all times the Reserve Fund is equal to the sum of the Individual Reserve Requirements.

Individual Reserve Requirement Calculation. Tue Individual Reserve Requirement shall be recalculated each time upon partial or full prepayment. Any such calculations shall be provided to the Trustee in writing by the Program Administrator and shall identify the Property that is prepaying.

In the event of prepayment by a Property Owner, the Individual Reserve Requirement for such Property shall be reduced by an amount equal to the Initial Individual Reserve Requirement for such Property multiplied by the ratio of the prepayment amount of the Assessment to the total amount originally assessed (the "Individual Reserve Credit"). Tue prepayment amount of the Assessment shall be reduced by the Individual Reserve Credit for such Property, and shall be transferred by the Trustee from the Reserve Fund to the Redemption Fund, provided that the Reserve Requirement is met. The Program Administrator shall provide written instructions to the

4844-5572-<il00.l 15

Trustee specifying the Property to which the prepayment is attributable, the amount of the Individual Reserve Fund Credit, and the new Individual Reserve Requirement for such Property. In case the Reserve Fund is below the Reserve Requirement, then the Individual Reserve Credit shall not be paid to the Property Owner until the Reserve Fund meets the Reserve Requirement, at whlch time such Individual Reserve Credit shall be paid tothe Property Owner of record, in accordance with the address or wire instructions provided to the Trustee by the Program Administrator

In the event the Property reaches the final year of its Assessments, then the final assessment levy for the Property shall be reduced by the amount of the applicable Individual Reserve Requirement amount. The Individual Reserve Requirement amount shall be transferred by the Trustee from the Reserve Fund to the Redemption Fund, provided that the Reserve Requirement is met. In case the Reserve Fund is below the Reserve Requirement, then the Individual Reserve Requirement amount shall be paid to the Property Owner of record at the time the Reserve Fund meets the Reserve Requirement.

All moneys in each of such accounts shall be held in trust by the Trustee and shall be applied, used and withdrawn only for the purposes authorized hereunder and in Article V of the Master Indenture. See "ESTIMATED SOURCES AND USES OF FUNDS" and "APPENDIX A - SUMMARY OF LEGAL DOCUMENTS.

Covenant to Commence Superior Court Foreclosure

The Assessment Law provides that in the event that any installment on an assessment is not paid when due, the jurisdiction imposing the assessment may order the institution of a court action to foreclose the lien of the unpaid assessment. In such an action, the real property subject to the unpaid assessment may be sold at judicial foreclosure sale. Each Member Jurisdiction has provided authorization to the Authority and the Trustee to commence all necessary foreclosure proceedings and actions on behalf of the Member Jurisdiction and the Assessment District as may be required under the Master Indenture.

The Authority has covenanted in the Indenture for the benefit of the Bond owners that, (i) on each August 30 commencing the first August after the Closing Date, the Authority shall review the County assessment roll to determine whether all Assessment Installments are current and in the event there are delinquencies, withln 7 days, the Authority shall direct the Program Administrator to commence a foreclosure action; and (ii) a foreclosure action against parcels with delinquent assessments shall be commenced prior to the December 1 following the June 30th delinquency.

The Authority shall not be obligated to, advance funds from any source of legally available funds in order to maintain the Reserve Fund at the Reserve Requirement. See "SECURITY FOR THE BONDS - Covenant to Commence Superior Court Foreclosure."

A Participating Member Jurisdiction may, but is not obligated to, supplement a delinquency from its jurisdiction with its own funds prior to foreclosure. Neither the Participating Member Jurisdictions nor the Authority has committed to the payment of delinquent Assessments in the event of a default. In fact, the Authority has affirmatively set

4844-5572-6100. ! 16

forth in the Indenture that it will not advance any funds for the payment of a default other than from the Reserve Fund.

If the Reserve Fund has been depleted, there could be a default or a delay in payments to the Bond owners pending prosecution of foreclosure proceedings and receipt by the Authority of foreclosure sale proceeds, if any.

Under current law, a judgment debtor (property owner) has at least 140 days from the date of service of the notice of levy in which to redeem the property to be sold and may have other redemption rights afforded by law. If a judgment debtor fails to redeem and the property is sold, his or her only remedy is an action to set aside the sale, which must be brought within 90 days of the date of sale if the purchaser is the judgment creditor. If, as a result of such an action, a foreclosure sale is set aside, the judgment is revived and the judgment creditor (i.e., the Authority) is entitled to interest on the revived judgment as if the sale had not been made.

Foreclosure by court action is subject to normal litigation delays, the nature and extent of which are largely dependent upon the nature of the defense, if any, put forth by the debtor and the condition of the calendar of the Superior Court. Such foreclosure actions can be stayed by the Superior Court on generally accepted equitable grounds or as the result of the debtor's filing for relief under the federal bankruptcy laws. In any case, there can be no assurance that foreclosure proceedings will occur in a timely manner so as to avoid depletion of the Reserve Fund, and thereby a delay in payments of debt service on the Bonds.

In the event of a foreclosure sale, there can be no assurance that the Authority will recover the full amount of the delinquency. However, since the maximum amount of the Assessment shall not exceed (i) 10% of the Total Assessed Value of the assessed property or (ii) 20% of the Total Assessed Value of the property (with higher administrative expenses), the likelihood of the Authority not recovering the full value of the delinquency is lessened.

Other Obligations of the Authority

The Authority is permitted to incur indebtedness that is secured by revenues other than the Assessment Installments. Also, the Authority is permitted to incur indebtedness that is secured by a pledge of, or lien upon, the Assessment Installments which is subordinate to the pledge of, and lien upon, the Assessment Installments. However, the Authority is not permitted to incur indebtedness that is secured by a pledge of or lien upon the Assessment Installments which is superior or on parity with the pledge of, and lien upon, the Assessment Installments.

THE PARCELS

In accordance with the PACE Program, the Assessment Contracts will be recorded against seven parcels of property located within the Cities of Fresno and Palm Springs, California (the "Parcels"). While the Parcels are located within the Cities of Fresno and Palm Springs, the City of Fresno or the City of Palm Springs has no liability for any payment on the Bonds and is not responsible for levying or collecting the Assessments. For informational purposes only, a brief description of certain demographic information concerning the City of Fresno, the County of Fresno, the City of Palm Springs, and the County of Riverside is attached

4844-5572-6100.l 17

as APPENDIX "F" hereto. See "APPENDIX E - ECONOMIC AND DEMOGRAPHIC INFORMATION FOR THE CITY OF FRESNO, THE COUNTY OF FRESNO, THE CITY OF PALM SPRINGS, AND THE COUNTY OF RIVERSIDE." The value of the Parcels is an important consideration in determining whether to invest in the Bonds as the Parcels represent security for the Bonds should the Property Owners fail to pay Installment Assessments when due. See "RISK FACTORS - Property Values." Descriptions of the Parcels and the Property Owners of the Parcels are provided below.

An appraisal was not undertaken with respect to the Parcels. All property values reflect the assessed value of the Parcels as of the latest date of assessment. There is no guarantee that the Parcels could be sold for an amount equal to their assessed values.

4844-5572-6100.l 18

Parcel 1- 5200 N. Palm Avenue, Fresno, California 93704

4844-5572-6100.l 19


Parcel I Financial Characteristics County Assessed Value: $14,856,407 (as of January 1, 2013)

Cost of Improvements: $125,628

Assessment Lien: $139,749.71

Assessed Value to Assessment Lien Ratio: 106.3:1

Parcel Description Parcel 1 is located at 5200 N. Palm Avenue, City of Fresno, County of Fresno, State of California. Parcel 1 is approximately 2.44 acres or 106,286 square feet.

l.ise Description A 4-story commercial office building with underground parking occupies Parcel 1. The building entails 88,859 square feet (84,725 rentable square feet). The office park is anchored by tenants in the financial and legal services industries. (See Parcel 1 -List of Tenants). Occupancy is at 99%.

Property Owner Parcel 1 is owned by George Andros and Richard V. Gunner and Margaret S. Gunner and is part of a real estate portfolio Gunner and Andros. The current property owners developed the parcel in 1990. Gunner and Andros are in the business of owning and operating commercial projects throughout the State of California and currently own commercial properties with a total estimated value of over $100,000,000.

Improvements The Bond financed improvements to the property include a roof membrane providing energy savings and preventative measures against maintenance issues.

Tax and Debt Status Owner is current with respect to all taxes and payments associated with Parcel 1 and all outstanding indebtedness secured by Parcel I.

Parcel 1 is subject to a mortgage provided by Northwestern Mutual Life Insurance Company ("Northwestern"). Northwestern has consented to the Assessment lien.

4844-5572-6100.l 20

Parcel 1 - 5200 N. Palm A venue, Fresno, California 93704

List of Tenants

Tenant Business Type Rented Sqft Start Date of Lease

UBS Financial Stockbrokers 8,194 4/1/93 Kelly Services, Employment 1,427 5/13/94 Inc. Service US Legal Legal 2,278 12/1/11

Transcription Wells Fargo Insurance 3,932 6/1/08 Insurance Services Elliot Attorneys 2,269 6/20/92 Chielpegian Berberian Attorneys 2,573 7/1/96 Brothers ATF Government 2,742 7/31/09

Office ATF Government 3,890 7/31/09

Office Secret Service Government 2,684 9/1/07

Office Caswell Bell & Attorneys 8,816 6/19/92 Hillison Koligian& Attorneys 1,303 1/1/99 Edgington Littler Attorneys 9,432 1/1/01 Mendelson Aegon USA Real Estate 1,293 5/1/07 Realty New England Insurance 873 7/1/11 Life Insurance Company Brad Gleason/ Ag 2,856 12/1/10 West Hills Services/lnsuranc Financial, LLC e Comerica Bank Banking - Real 7,551 6/1/96

Estate Lang Richert & Attorneys 20,312 5/2/93 Patch Shahbazian, Attorneys 1,927 10/1/98 Bacon & Miles

4844-5572-6100.l 21

Lease Term Expiration

279 6/30/16 253 5/31/15

99 2/29/20

120 5/31/18

332 2/29/20

233 11/30/15

145 7/31/21

145 7/31/21

120 8/31/17

333 2/29/20

180 12/31/13

180 12/31/15

97 5/31/15

62 8/31/16

120 11/30/20

230 7/31/15

317 9/30/19

184 1/31/14


In addition to the PACE Assessment, Parcel 1 is subject to other governmental liens and assessments at parity with respect to the PACE Assessment as follows:

Table 1 Parcel 1 Overlapping Governmental Liens

TAXING AGENCIESNOTER APPROVED BONDS/SPECIAL ASSESSMENTS RATE/$100 AMOUNT

FR COUNTYWIDE TAX I $148,564.06

FRES PEN OVERRIDE 0.03244 $4,819.12

FRESNO USD 10 B 0.01176 $1,747.40

FRESNO USD 10 C 0.03124 $4,641.72

FRESNO USD 12 A RE 0.01549 $2,301.54

FRESNO USD 12 B RE 0.01368 $2,031.76

STATE CC 2012 REF 0.00203 $301.28

FRESNO USD 99C 0.01664 $2,472.40

FRESNO USD 07REF 0.00398 $590.98

FRESNO USD 01D 0.00646 $960.30

FRESNO USD 0IE 0.00472 $701.80

FRESNO USD 02A 0.03141 $4,666.68

FRESNO USD 04B 0.02148 $3,191.74

FRESNO USD 0IF 0.01538 $2,285.20

FRESNO USD 98B 0.00978 $1,452.94

FRESNO USD 98A 0.00017 $25.54

FRESNO USD 10 REF 0.00297 $441.22

FRESNOUSD 10, !IA 0.00368 $546.40

STATE CENTER GO BD 0.00081 $119.74

ST CNTR 04 GO BOND 0.00081 $120.62

ST COL 2002 2007 A 0.00421 $624.86

ST COLL 02 S 09A 0.00075 $112.00

ST COLL 02 S 09B 0.00075 $111.72

TOTAL TAX RATE 1.23066

MET FLOOD ASSMT $280.96

FRES MOSQ & VECTR $2.10

TOTAL ANNUAL TAX $183.114.08

4844-5572-6100.l 22

Parcel 2 - 5250 N. Palm Avenue, Fresno, California 93704

4844-5572-6100.l 23


Parcel 2 Financial Characteristics County Assessed Value: $17,268,791 (as ofJanuary I, 2013)




Parcel Description Parcel 2 is located at 5250 N. Palm Avenue, City of Fresno, County of Fresno, State of California. Parcel 2 is approximately 5.31 acres or 231,303 square feet.

Use Description A 4-story conunercial office building occupies Parcel 2. A parking lot is adjacent to this building and 5260 N. Palm Avenue. The building comprises 126,346 square feet (117,046 rentable square feet) and has a mix of tenants in the financial and legal services industries. Union Bank has been a tenant since the building opened in 1984. (See Parcel 2 - List of Tenants). Occupancy is at 82%.

Property Owner Parcel 2 also is owned by George Andros and Richard V. Gunner and Margaret S. Gunner and is part of the Gunner Andros real estate portfolio. The current owner developed Parcel 2 in 1984. The owner of Parcel 2 was current with respect to all govermnental charges and obligations secured by Parcel 2.

Improvements The Bond financed improvements to the property include a roof membrane providing energy savings and preventative measures against maintenance issues.

Tax and Debt Status Owner is current with respect to all taxes and payments associated with Parcel 2 and all outstanding indebtedness secured by Parcel 2.

Mortgage Parcel 2 is subject to a mortgage provided by Northwestern Mutual Life Insurance Company ("Northwestern"). Northwestern has consented to the Assessment lien.

4844-5572-6100.1 24


List of Tenants

Tenant Business Type Rented Sqft Start Date of Lease

Union Bank Banking 11,939 4/1/85 RBCDain Stockbrokers 8,221 5/1/93 Rauscher Blue Shield of Insurance 2,849 9/10/97 California Zurich Insurance 6,368 6/1/04 American Life Insurance Company Biggs Cardosa Civil Engineers 1,631 4/1/08 Associates, Inc. ThomasH. Attorney 1,147 3/1/05 Armstrong Robert Half Employment 3,191 11/9/98 International Service Morgan Stockbrokers 4,091 12/1/11 Stanley Smith Bamev Deloitte LLP Accounting 9,688 1/1/10 Liebert Attorneys 6,207 4/1/11 Cassidy Whitmore, PLC Morgan Stockbrokers 16,272 3/1/99 Stanley Smith Bamev Dietrich, Attorneys 8,818 6/14/86 Glasrude, Mallek& Aune Union Bank Banking 2,265 4/1/85 Starbucks Regional 7,804 3/1/06 Corporation Corporate

Office Fresno Non Profit 2,733 6/1/09 Regional Foundation Julia Brungess Attorney 2,448 6/1/07

Lease Term

396 263

242

147

60

99

211

122

126 96

275

331

396 120

68

117 (I) Tenant still occupies space and is currently on a month-to-month lease.

4844-5572-6100.l 25

Expiration

3/31/18 3/31/15

10/31/17

8/31/16

3/31/13 ,,,

5/31/16

5/31/16

1/31/22

6/30/20 3/31/19

1/31/22

12/31/13

3/31/18 2/29/16

1/31/15

2/28/17



Table2 Parcel 2 Overlapping Governmental Liens


FR COUNTYWIDE TAX 1 $172,687.90


FRESNO USD IO B 0.01176 $2,031.14

FRESNO USD 10 C 0.03124 $5,395.46

FRESNO USD 12 A RE 0.01549 $2,675.28

FRESNO USD 12 B RE 0.01368 $2,361.66

STATE CC 2012 REF 0.00203 $350.20

FRESNO USD 99C 0.01664 $2,873.86

FRESNO USD 07REF 0.00398 $686.94

FRESNO USD 01D 0.00646 $1,116.24

FRESNO USD 0lE 0.00472 $815.76

FRESNO USD 02A 0.03141 $5,424.46

FRESNO USD 04B 0.02148 $3,710.02

FRESNO USD 0lF 0.01538 $2,656.28

FRESNO USD 98B 0.00978 $1,688.88

FRESNO USD 98A 0.00017 $29.70

FRESNO USD 10 REF 0.00297 $512.88

FRESNO USD 10, llA 0.00368 $635.14


ST CNTR 04 GO BOND 0.00081 $140.22

ST COL 2002 2007A 0.00421 $726.32

ST COLL 02 S 09A 0.00075 $130.20

ST COLL 02 S 09B 0.00075 $129.86




TOTAL ANNUAL TAX $213,223.72

4844-5572-6100.l 26


4844-5572-{;J00.1 27


Parcel 3 Financial CharacterL,tics County Assessed Value: $16,375,523 (as ofJanuary I, 2013)



Assessed Value to Assessment Lien Ratio: 73.0:l

Parcel De,·cription Parcel 3 is located at 5260 N. Palm Avenue, City of Fresno, County of Fresno, State of California. Parcel 3 is approximately 5.49 acres or 239,143 square feet.

C:se Description A 4-story commercial office building occupies Parcel 3. A parking lot is adjacent to the building and 5250 N. Palm Avenue. The building comprises 126,346 square feet(! 15,109 rentable square feet) and a mix of tenants in the financial and legal services industries. The law firm of Baker, Manock & Jensen PC has been the anchor tenant since the building opened in 1986. (See Parcel 3 - List of Tenants). Occupancy is at 83%.

Property Owner Parcel 3 is also owned by George Andros and Richard V. Gunner and Margaret S. Gunner and is part of the Gunner and Andros portfolio of properties. The current property owner developed Parcel 3 in 1986. As of January I, 2013, the owner of Parcel 3 was current with respect to all governmental charges and other obligations secured by Parcel 3.

Improvement:,,., The Bond financed improvements to the property include a roof membrane providing energy savings and preventative measures against maintenance issues.


Jfortgage Parcel 3 is subject to a mortgage provided by Northwestern Mutual Life Insurance Company ("Northwestern"). Northwestern has consented to the Assessment lien.

4844-5572"5100.l 28


List of Tenants

Tenant Business T_1pe Rented Sqft Start Date of Lease

Merrill Lynch Stockbrokers 12,625 1/1/87 Boos& Accountancy 5,119 2/1/07 Associates Klein DeNatale Attorneys 6,693 1/1/10 Goldner Moss Tucker Attorneys 3,095 4/1/11 Chiu Hebesha &Ward PC Berry& Accountancy 1,479 11/1/90 Homen Accountancy Corporation Blue Cross of Insurance 2,010 3/1/10 California Boos& Accountancy 3,075 2/1/12 Associates Pinnacle Commodities 1,086 4/1/11 TradingLLC Atkinson Attorneys 7,693 6/1/10 Andelson Loya Ruud&Romo Aon Service Insurance 4,525 5/1/87 Cornoration Baker Manock Attorneys 15,065 11/1/86 &Jensen PC Aon Service Insurance 12,985 5/1/87 Comoration Baker Manock Attorneys 13,216 11/1/86 &Jensen PC

4844-5572-6100.l 29

Lease Term Expiration

327 3/31/14 145 2/28/19

120 12/31/19

66 9/30/16

291 1/31/15

72 2/29/16

85 2/28/19

51 6/30/15

90 11/30/17

377 9/30/18

433 11/30/22

377 9/30/18

433 11/30/22







FRESNO USD 10 B 0.01176 $1,926.08

FRESNO USD 10 C 0.03124 $5,116.36

FRESNO USD 12 A RE 0.01549 $2,536.88

FRESNO USD 12 B RE 0.01368 $2,239.50

STATE CC 2012 REF 0.00203 $332.08

FRESNO USD 99C 0.01664 $2,725.20

FRESNO USD 07REF 0.00398 $651.40

FRESNO USD 01D 0.00646 $1,058.50

FRESNO USD 0lE 0.00472 $773.56

FRESNO USD 02A 0.03141 $5,143.86

FRESNO USD 04B 0.02148 $3,518.10 FRESNO USD 0lF 0.01538 $2,518.88

FRESNO USD 98B 0.00978 $1,601.52

FRESNO USD 98A 0.00017 $28.16 FRESNO USD 10 REF 0.00297 $486.34

FRESNO USD 10, llA 0.00368 $602.28

STATE CENTER GO BD 0.00081 $131.98 ST CNTR 04 GO BOND 0.00081 $132.96

ST COL 2002 2007A 0.00421 $688.74

ST COLL 02 S 09A 0.00075 $123.46 ST COLL 02 S 09B 0.00075 $123.14

TOTAL TAX RATE 1.23066 MET FLOOD ASSMT $702.40



4844-5572-6100.1 30

Parcel 4 -1546 W. Pine Avenue, Fresno, California 93728

4844-5572-6100.l 31

Parcel 4 Financial Characteristics County Assessed Value: $235,559 (as of January 1, 2013)




Parcel Description Parcel 4 is located at 1546 W. Pine Avenue, City of Fresno, County of Fresno, State of California. Parcel 4 is approximately 0.0867 acres or 37,800 square feet.

C,e Description Parcel 4 is being used as industrial property and is currently home to a 4,900 square foot industrial building which the owner uses as part of an anodizing business. The facility serves as storage for equipment, vehicles and maintenance supplies for the anodizing business the owner operates next door.

Proper(i' Owner Parcel 4 was acquired in 2000 by W & M Investments, Inc. and occupied by Pacific Anodizing, both of which are owned and operated by Miller Living Trust. Pacific Anodizing anodizes a variety of materials such as aluminum for airplane parts, submarine cleaning tools and the Space Program. Pacific Anodizing was founded in 1992.

Owner is current with respect to all taxes and payments associated with Parcel 4 and all outstanding indebtedness secured by Parcel 4.

:Wortgage Parcel 4 is subject to a mortgage provided by Westamerica Bank ("Westamerica"). Westamerica has consented to the Assessment lien.

Jfortgage Principal Balance $125,128.36 (as of April 1, 2013)

4844-5572-6100.l 32

Parcel 4-1546 W. Pine Avenue, Fresno, California 93728



TAXING AGENCIES/VOTER APPROVED BONDS/SPECIAL ASSESSMENTS RATE/$100 AMOUNT


FRES PEN OVERRIDE 0.03244 $76.40

FRESNO USD 10 B 0.01176 $27.70

FRESNO USD 10 C 0.03124 $73.58

FRESNOUSD 12ARE 0.01549 $36.48

FRESNO USD 12 B RE 0.01368 $32.20

STATE CC 2012 REF 0.00203 $4.76

FRESNO USD 99C 0.01664 $39.20

FRESNO USD 07REF 0.00398 $9.36

FRESNO USD 01D 0.00646 $15.22

FRESNO USD 0lE 0.00472 $11.12

FRESNO USD 02A 0.03141 $73.98

FRESNO USD 04B 0.02148 $50.60

FRESNO USD 0lF 0.01538 $36.22

FRESNO USD 98B 0.00978 $23.02

FRESNO USD 98A 0.00017 $0.40

FRESNO USD 10 REF 0.00297 $6.98 .

FRESNO USD 10, llA 0.00368 $8.66


ST CNTR 04 GO BOND 0.00081 $1.90

ST COL 2002 2007A 0.00421 $9.90

ST COLL 02 S 09A 0.00075 $1.76

ST COLL 02 S 09B 0.00075 $1.76


CALIFORNIA PACE BD $1,392.20


PRES MOSQ & VECTR $2.10


4844-5572-6100.l 33

Parcel 5 - 2700 Golf Club Drive, Palm Springs, California 92264

Parcel 5 Financial Characteri,tics County Assessed Value: $140,283 (as of January 1, 2013)




4844-5572-6100.l 34

Parcel 5 - 2700 Golf Club Drive, Palm Springs, California 92264

Parcel Description Parcel 5 is located at 2700 Golf Club Drive, City of Palm Springs, County of Riverside, State of California. Parcel 5 is approximately 0.02 acres or 871 square feet.

[1:"e Description Parcel 5 is an owner-occupied residential property. The property is a condominium located in a gated community. The condominium is 885 square feet.

Property Onmer Parcel 5 is owned by Melvin and Roselle B. Goldberg. This home was purchased by the current owner in 1990.


Tables Parcel 5 Overlapping Governmental Liens

TAXING AGENCIES I VOTER APPROVED BONDS I SPECIAL ASSESSMENTS.

RIVERSIDE COUNTYWIDE TAX CSA 152-PLM SPRINGS STORMWATER

CITY OF PALM SPRINGS SEWER CHG TOTAL

. 4844-5572-6100.l 35

I AMOUNT. $ 1,702.26

$ 9.50 $ 144.00

$ 1,855.76

Parcel 6- 526 S. Warm Sands Drive, Palm Springs, California 92264

4844-5572-{;100.l 36

Parcel 6- 526 S. Warm Sands Drive, Palm Springs, California 92264

Parcel 6 Financial Characteristics County Assessed Value: $2,730,000 (as of January 1, 2013)




Parcel Description Parcel 6 is located at 526 S. Warm Sands Drive, City of Palm Springs, County of Riverside, State of California. Parcel 6 is approximately 1.64 acres or 71,438 square feet.

Cse Description Parcel 6 is used as a 39-room hotel and resort built in the 1960s and expanded in the 1970s. The hotel is fully booked every weekend of the year with average yearly occupancy of76%. Guests can also check in to use the resort facilities on a daily basis separate from registering as hotel occupants.

Property Owner Parcel 6 has been owned by Jorge Chaparro and Austin Basford since 2007 and has been remodeled. The current owners operate a resort facility on the property. The resort provides the owners a 86.8% rate of return.

Owner is current with respect to all taxes and payments associated with Parcel 7 and all outstanding indebtedness secured by Parcel 6.

Parcel 6 is subject to a mortgage provided by Hamni Bank ("Hanmi"). Hamni has consented to the Assessment lien.

4844-5572-6100.1 37

In addition to the PACE Assessment, Parcel 6 is subject to other governmental liens and

assessments at parity with respect to the PACE Assessment as follows:

Table 6 Parcel 6 Overlapping Governmental Liens

TAXING AGENCIES/ VOTER APPROVED BONDS/ SPECIAL ASSESSMENTS. I AMOUNT.

RIVERSIDE COUNTYWIDE TAX FLD CNTL STORMW ATER/CLEANW ATER

CSA 152-PLM SPRINGS STORMWATER

CITY OF PALM SPRINGS SEWER CHG COACHELLA VALLEY MOSQUITO & RIP A

TOTAL

4844-5572--0!00.l 38

$

$ $

$ $

$

33,127.44

71.42

186.96 3,227.40

12.58

36,625.80

Parcel 7 - 19024 Ruppert Street, Palm Springs, California 92264

4844-5572-6100.I 39

Parcel 7 - 19024 Ruppert Street, Palm Springs, California 92264

Parcel 7 Financial Characteristic., County Assessed Value: $425,000 (as ofJanuary 1, 2013)

Cost of Improvements: $72,446.23



Parcel Description Parcel 7 is located at 19024 Ruppert Street, City of Palm Springs, County of Riverside, State of California. Parcel 8 is approximately 0.39 acres or 16,988 square feet.

L'se Description Parcel 7 comprises a 5,000 square foot building and is the home office of Access Solar, Inc., an engineering, procurement and construction contractor of solar energy systems.

Propert.r Owner Parcel 7 is owned by Jack Pryor, the owner of Access Solar, Inc., which was started in 2005. Parcel 7 was purchased by the current owner in 2011.

Improvement,, Bond proceeds will be used to. finance a solar photovoltaic system. The system is in place and proceeds of the Bonds will reimburse the property owner for the cost of the improvements.


J4ortgage Parcel 7 is subject to a private mortgage provided by Jack and Marion Haddad. Jack and Marion Haddad have consented to the Assessment lien.

4844-5572-6100.l 40

In addition to the PACE Assessment, Parcel 7 is subject to other governmental liens and

assessments at parity with respect to the PACE Assessment as follows:

Table? Parcel 7 Overlapping Governmental Liens

TAXING AGENCIES I VOTER APPROVED BONDS I SPECIAL ASSESSMENTS. I AMOUNT.

RIV COAD 167NOPALM SP FLD CNTL STORMW ATER/CLEANW ATER CSA 152-PLM SPRINGS STORMWATER

COACHELLA VALLEY MOSQUITO & RlF A TOTAL

4844-5572-6100.l

$ $ $ $ $ $

41

5,157.20

1,660.06

16.98 44.46

2.98 6,881.68

Assessed Valuation and Total Annual Tax Burden

Table 8 shows the assessed values of the Parcels as of January 1, 2013 and the total annual tax burden with respect to each

Parcel.

Table 8

Assessed Valuation and Total Annual Tax Burden

Parcel and Total Annual

Assessment Assessed Total Assessment Annual Annual Tax Governmental

No. Project APN Valuation Lien Assessment Levy Amount<'> Charges <2l

2013-1 5200N. Palm 417-231-19 $ 14,856,407 $ 139,749.71 $ 14,187.37 $ 183,114.08 $ 197,301.45

2 2013-2 5250N. Palm 417-140-27 $ 17,268,791 $ 101,884.42 $ 10,343.29 $ 213,223.72 $ 223,567.01

3 2013-3 5260N. Palm 417-140-26 $ 16,375,523 $ 224,276.10 $ 22,768.47 $ 202,230.58 $ 224,999.05

4 2013-4 1546 W. Pine 449-180-03 $ 235,559 $ 32,567.47 $ 3,893.16 $ 4,454.44 $ 8,347.60

5 2013-5 2700 Golf Club 009-611-4 7 4 $ 140,283 $ 7,096.44 $ 848.32 $ 1,855.76 $ 2,704.08

6 2013-6 526 S. Wann Sauds 508211017-9 $ 2,730,000 $ 223,311.16 $ 22,836.25 $ 36,625.80 $ 59,462.05

7 2013-7 19024 Ruppert 666-402-001 $ 425,000 $ 81,079.89 $ 8,412.31 $ 6,881.68 $ 15,293.99

Totals $ 52,031,563 $ 809,965.19 $ 83,289.17 $ 648,386.06 $ 731,675.23

Source: Fresno County Tax Rolls, Riverside County Tax Rolls and Figtree Energy Financing

(1) Annual tax amounts due to all other governmental liens. See the Overlapping Governmental Lien tables in "THE PARCELS" for a specific listing of other

annual tax amounts.

(2) Amounts shown are the sum of the Annual Assessment Levy and all other annual tax amounts.

4844-5572-6100.1 42

~- . .,,..,

.J

•· ?!·:·(,.~· t.·* ;,:>;;. , • . _,,,v

Assessed Value to Assessment Lien Ratio ··-·•,,¢ .. _,,.

Table 9 shows the assessed value to Assessment lien ratio for the Parcels. Table 9 does not include Overlapping Governmental

Liens. See the Overlapping Governmental Lien tables in "THE PARCELS" for a specific listing of other annual tax amounts.

Table 9

Assessed Value to Assessment Lien Ratio

Parcel and Assessment Member FY 2012/13 Assessed Total Assessment Lien No. Parcel Number Jurisdiction Valuation Value to Lien

1 2013-1 417-231-19 Fresno $ 14,856,407 $ 139,749.71 106.3 : 1

2 2013-2 417-140-27 Fresno $ 17,268,791 $ 101,884.42 169.5 :1

3 2013-3 417-140-26 Fresno $ 16,375,523 $ 224,276.10 73.0 :1

4 2013-4 449-180-03 Fresno $ 235,559 $ 32,567.47 7.2 :1

5 2013-5 009-611-474 Palm Springs $ 140,283 $ 7,096.44 19.8 :1

6 2013-6 508211017-9 Palm Spdngs $ 2,730,000 $ 223,311.16 12.2 :1

7 2013-7 666-402-001 Palm Springs $ 425,000 $ 81,079.89 5.2 : 1

$ 52,031,563 $ 809,965.19 64.2 : 1


4844-5572-6100.l 43

•,,q ,~

Parcel Profiles

Table IO shows the location, land use, improvement description, assessed valuation and the percentage of the assessment lien compared to property values.

Table 10

Parcel Profiles

Parcel and FY 2012/13 ¾of Assmnt Parcel Member Parcel Land Improvement Improvement Assessed Assessment Lien Total Number Number Jurisdiction Use Descrietion Cost Valuation (I) AV

Commercial 2013-1 417-231-19 Fresno (Office) Cool roof, Lighting $

Commercial 125,628 $ 14,856,407 $ 139,749.71 0.94%

2 2013-2 417-140-27 Fresno (Office) Cool roof, Lighting Commercial

$ 91,589 $ 17,268,791 $ 101,884.42 0.59%

3 2013-3 417-140-26 Fresno (Office) Cool roof, Lighting $ 201,614 $ 16,375,523 $ 224,276.10 1.37% Light

4 2013-4 449-180-03 Fresno Industrial Elec. Upgrade 009-611-

$ 28,995 $ 235,559 $ 32,567.47 13.83%

5 2013-5 474 Palm Springs Residential HVAC $ 6,318 $ 140,283 $ 7,096.44 5.06% 508211017 Solar Photovoltaic

6 2013-6 -9 Palm Springs Hotel System $ 200,490 $ 2,730,000 $ 223,3 I 1.16 8.18% 666-402- Commercial Solar Photovoltaic

7 2013-7 001 Palm Springs (Office) System $ 72,446 $ 425,000 $ 81,079.89 19.08%

ASSESSMENT DISTRICT TOTALS $ 727,080 $ 52,031,563 $ 809,965.19 1.56%

(1) Does not include any overlapping govermnental liens. See the Overlapping Govermnental Lien tables in "THE PARCELS" for a specific listing of other annual tax amounts.


4844-5572-6100.l 44

Concentration of Assessments

Tables 1 lA-11 C show percentage of concentration by location, property ownership and total lien.

Table llA Concentration of Assessments by Location

Member Number of Parcels Jurisdiction FY 2012/13 Assessed Valuation

Total Assessment Lien

4 Fresno

3 Palm Springs

ASSESSMENT DISTRICT TOTALS

$ 48,736,280

$3,295,283

$ 52,031,563


Table 11B Concentration of Assessments by Owner

$ 465,910.23

$ 344,054.96

$809,965.19

Total Assessment Number of Parcels Owner FY 2012/13 Assessed Valuation Lien

3 Gunner & Andros $ 48,500,721 $

I All Worlds Resort $ 2,730,000 $

I Pryor $ 425,000 $

I Miller $ 235,559 $

1 Goldberg $ 140,283 $

ASSESSMENT DISTRICT TOTALS $ 52,031,563 $


4844-5572-6100.l

Table llC Concentration of Assessments by Parcel

% of Total Assessment Parcel Number Lien

I 17.25%

2 12.58%

3 27.69%

4 4.02%

5 0.88%

6 27.57%

7 10.01% ASSESSMENT DISTRICT TOTALS 100.00%

Source: Figtree Energy Financing

45

465,910.23

223,311.16

81,079.89

32,567.47

7,096.44

809,965.19(l)

% of Total Assessment Lien

57.52%

42.48%

100.00%

% of Total Assessment Lien

57.52%

27.57%

10.01%

4.02%

0.88%

100.00%

Property Tax Rate

Table 12 shows each Parcel's tax rate before and after issuance of the Bonds.

Table 12 Property Tax Rates

Proposed Parcel and FY 2012/13 County FY 2012/13 Tax FY 2012/13 Tax FY 2014/15 Assessment Proposed 2014/15 Tax 2014/15 Tax AssmntNo. Assessed Valuation Amount Rate <1J Levy Amount Amount<2J Rate <3l

1 2013-1 $ 14,856,407 $ 183,114.08 1.23% $ 14,187.37 $ 197,301.45 1.33%

2 2013-2 $ 17,268,791 $ 213,223.72 1.23% $ 10,343.29 $ 223,567.01 1.29%

3 2013-3 $ 16,375,523 $ 202,230.58 1.23% $ 22,768.47 $ 224,999.05 1.37%

4 2013-4 $ 235,559 $ 4,454.44 1.89% $ 3,893.16 $ 8,347.60 3.54% l4)

5 2013-5 $ 140,283 $ 1,855.76 1.32% $ 848.32 $ 2,704.08 1.93%

6 2013-6 $ 2,730,000 $ 36,625.80 1.34% $ 22,836.25 $ 59,462.05 2.18%

7 2013-7 $ 425,000 $ 6,881.68 1.62% $ 8,412.31 $ 15,293.99 3.60% (4)

TOTAL $ 52,031,563.00 $ 648,386.06 1.25% $ 83,289.17 $ 731,675.23 1.41%

( 1) County property taxes. (2) County property taxes plus assessment levy amount. (3) Total tax rate for each Parcel after the addition of the Assessment lien. (4) Total Assessment lien exceeds 10% of assessed valuation due to improvement costs. Annual assessment levy amount remains within statutory limit of 5% of property value.

Source: Fresno County Tax Rolls, Riverside County Tax Rolls and Figtree Energy Financing.

4844-5572-6100.l 46

THE AUTHORITY

The Authority is a joint powers financing agency organized and existing under California Government Code Section 6500 et. seq. The Authority has the power to issue bonds and notes, enter into agreements and to create programs for the public purposes of the Authority, which include stimulating or expanding local economies, promoting opportunities for the creation or retention of employment and stimulating economic activity.

The Authority was created in 2006 under the terms of a Joint Exercise of Powers Agreement by and among the City of Selma, the City of Lancaster and the City of Eureka (the "Joint Powers Agreement"). The Joint Powers Agreement provides for other public agencies to become a Member Jurisdiction of the Authority. The following were Member Jurisdictions of the Authority as of June 1, 2013: City of Anaheim, City of Bakersfield City of Clovis, City of Commerce, City of Duarte, City of Dublin, City of Elk Grove, City of Fairfield, City of Freemont, City of Fresno, City of Grand Terrace, City of Greenfield, City of Industry, City of King City, City of Kingsburg, City of Lincoln, City of Long Beach, City of Milpitas, City of Montebello, City of Oakdale, City of Orange, City of Oroville, City of Oxnard, City of Palms Springs, City of Palo Alto, City of Pasadena, City of Pittsburg, City of Rancho Cordova, City of Redlands, City of Redondo Beach, City of Riverside, City of Roseville, City of San Diego, City of San Jose, City of Santee, City of South San Francisco, City of Torrance, City of Upland, City of Vernon, City of Yuba City, County of Alameda, County of Butte, County of Contra Costa, County of Imperial, County of Kern, County of Madera, County of Marin, County of Merced, County of Monterey, County of Napa, County of Placer, County of Riverside, County of Sacramento, County of San Bernardino, County of San Diego, City & County of San Francisco, .County of San Luis Obispo, County of Santa Barbara, County of Santa Clara, County of Sonoma, County of Stanislaus, County of Ventura, County of Yolo, Ukiah Redevelopment Agency.

The Authority is governed by a Board of Directors consisting of the Executive Board of Directors of CALED, a California non-profit corporation. CALED's corporate purpose is to support economic developers within California by providing information, education, and advocacy.

The Authority may see and deliver obligations other than the Bonds. These obligations will be secured by instruments separate and apart from the Indenture and Supplemental Indenture, and the holders of such other obligations of the Authority will have no claim on the security for the Bonds. Likewise, the Holders of the Bonds will have no claim on the security for such other obligations that may be issued by the Authority.

THE BONDS ARE SPECIAL, LIMITED OBLIGATIONS OF THE AUTHORITY. THE BONDS SHALL NOT CONSTITUTE OR GIVE RISE TO A GENERAL OBLIGATION OR LIABILITY OF THE AUTHORITY OR A CHARGE AGAINST ITS GENERAL CREDIT. NEITHER THE FAITH AND CREDIT NOR THE TAXING POWER OF THE STATE, ANY PUBLIC AGENCY THEROF OR ANY MEMBER OF THE AUTHORITY IS PLEDGED TO THE PAYMENT OF THE PRINCIPAL OR PURCHASE PRICE OF OR INTEREST OR ANY REDEMPTION PREMIUM ON THE BONDS. THE AUTHORITY HAS NO TAXING POWER. PAYMENT OF THE PRINCIPAL OR PURCHASE PRICE OF OR INTEREST OR

47

ANY REDEMPTION PREMIUM ON THE BONDS DOES NOT CONSTITUTE A DEBT, LIABILITY OR OBLIGATION OF THE STATE, ANY PUBLIC AGENCY THEREOF OR ANY MEMBER OF THE AUTHORITY (OTHER THAN THE AUTHORITY TO THE LIMITED EXTENT SET FORTH HEREIN). THE DIRECTORS, OFFICERS AND EMPLOYEES OF THE STATE OR OF THE AUTHORITY SHALL NOT BE INDIVIDUALLY LIABLE ON THE BONDS OR IN RESPECT OF ANY UNDERTAKINGS BY THE AUTHORITY UNDER THE INDENTURE.

THE PROGRAM ADMINISTRATOR

Figtree Energy Financing

The Authority has contracted with Figtree Energy Financing ("FIGTREE") to develop and administer the PACE Program. FIGTREE is a San Diego, California based finance company providing Property Assessed Clean Energy ("PACE") financing of money-saving energy efficiency, renewable energy and water conservation upgrades for property owners.

The Authority entered into the professional services contract with FIGTREE on December 8, 2011. Under this contract, FIGTREE provides program administration services including assessment district formation, marketing, assessment financing and delinquency monitoring at no cost to the Authority or its member agencies.

FIGTREE assists with obtaining lender acknowledgment on behalf of the property owners, advises them on potential tax incentives, utility rebates and other program incentives, and assists them with various financial analysis. In 2011, FIGTREE successfully completed the first and only multi-city pooled PACE bond to date.

The contract shall remain in effect from the effective date, December 8, 2011, for five years (the "Initial Term") and will automatically renew for successive three year terms to December 8, 2025 unless terminated in accordance with the terms of the contract.

The contract provides that FIGTREE shall defend, indemnify and hold harmless the Authority, its officers, employees, representatives, and agents from and against any and all actions, suits, proceedings, claims, demands, losses, costs and expenses, including legal costs and attorney's fees, for injury or damage due to negligence or malfeasance of any type claimed as a result of the acts or omissions of FIGTREE, its officers, employees, subcontractors and agents, arising from or related to negligent performance by FIGTREE or the work required under the agreement.

The contract provides that FIGTREE shall maintain insurance during throughout the term of the agreement. Insurance requirements include: Commercial General Liability Insurance, Automobile Insurance, Worker's Compensation Insurance and Professional Liability (Errors and Omissions) Coverage.

FIGTREE has designed the FIGTREE PACE program which is currently offered as a turn-key financing solution to cities and counties in the State of California at no cost.

4844-5572-6100.1 48

FIGTREE's financing model is designed to accommodate various financing structures including owner-arranged financing, a specific project financing, pooled financing to financing through a credit facility. FIGTREE's program is designed to enable the lowest source of capital for the PACE projects and to allow PACE projects with different sizes and complexities to get funded.

FIGTREE has successfully obtained lender consent from multiple national and regional lenders including Wells Fargo, US Bank, Bank of the West, West America Bank, SBA Financing,

Currently only commercial properties (including residential properties with 5 or more units) and only single family homes (with either a jumbo loan or no mortgage) are eligible to participate in the FIGTREE PACE program. All PACE transactions must receive lender consent from the mortgage lienholders.

The underwriting criteria for qualifying Current Program participants include:

• Applicant(s) is/are the legal owner(s) of the Parcel described in the Application

• Property Owner is current on property taxes for the Parcel and has not been delinquent in the past three (3) years or since owning the Parcel, ifless than 3 years

• Property Owner is current on private property debt and has not been delinquent in the past three (3) years or since owning the Parcel, ifless than 3 years

• Mortgage lender(s) has/have been provided the Notice of Request for Lender Consent and Acknowledgement and have affirmatively consented to the PACE lien

• Property Owner has not declared bankruptcy in the past five ( 5) years • Parcel is not listed as an asset in bankruptcy • The lien-to-value ratio ( excluding assessed financing amount) does not exceed one

hundred percent (i.e. no negative equity) • Parcel is developed and located within the jurisdiction of a Participating Member

Jurisdiction Parcel is classified as commercial (including Industrial, multifamily, etc.) or residential (single family or multi-family up to 4 units and do not have conforming mortgage)

FIGTREE's principals have experience in corporate, project, and municipal finance and have been involved in the formation and ongoing administration of Special Financing Districts that include 1911/1913/1915 Act Assessment Districts, 1972 Act Landscaping and Lighting Maintenance Districts, Business Improvement Districts and Mello-Roos Community Facilities Districts.

4844-5572-6100.l 49

FIGTREE is responsible for the daily operations of the PACE Program including the following functions on behalf of the Authority:

• Process applications for financing

• Verify property eligibility ( check title reports)

• Verify contractor eligibility ( check license, insurance and bond)

• Obtain lender consent (if applicable)

• Record assessment liens

• Place annual special assessment charges on county tax rolls

• Administer contractor and property owner disbursements

• Delinquency monitoring

• Commence foreclosure process and oversee foreclosure process to completion (in case of event of default)

Key Personnel

Mahesh Shah is a seasoned financial and business executive with M.B.A., CPA and FCA designations and 25 years of accomplishments in the management and financing of earlystage and emerging growth companies. Mr. Shah is experienced as CEO, CFO, financial and strategy consulting and investment banker and skilled at accounting, financing, financial analysis and financial reporting. Mr. Shah has an extensive experience with financial transactions as well as mergers/acquisitions, strategic alliances/ business partnerships, business development, strategic planning, and road shows/investor relations.

At FIGTREE, Mr. Shah leads the company as the Chief Executive officer and oversees the development and adoption of the FIGTREE PACE program and leads the company's efforts to develop business and financial alliances. His considerable knowledge of the finance industry and familiarity with the investment community are put to good use each day.

Before joining FIGTREE, he was CFO of Pipeline Software, Inc., CEO of Signet Technologies, Inc., CFO of GroupComm Systems, Inc., Founder and Principal of Strategic Planning Group, and a senior consultant at Coopers & Lybrand Financial Advisory Services Group.

Mr. Shah earned his Bachelor's degree in Business Commerce from St. Xavier's College in Calcutta, India. His Masters came from the University of Rhode Island. Mr. Shah is a licensed CPA in the state of California and holds a Chartered Accountant designation from the Institute of Chartered Accountants of India.

Joe Flores is Vice President of Municipal Finance for FIGTREE. Mr. Flores serves as the project lead in municipal relations and bond administration at FIGTREE. Mr. Flores has extensive experience in administering special financing districts, with an emphasis in 1913 and 1915 Act Assessment Districts. His experience in assessment district administration provides an essential core competency for successful PACE financing administration.

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Mr. Flores' expertise in special financing district administration comes from his direct involvement in all aspects of district administration operations. He has managed over 62 agencies and 200 districts. He was involved in the preparation of the monthly reporting and related special projects for his clients. Mr. Flores has experience in a broad range of capital markets including stocks, bonds, mutual funds and options. He has helped public agencies throughout California raise revenue for local capital improvements and new housing developments.

Mr. Flores holds a Bachelor of Arts in Psychology and Computer Programming/Business Administration from the University of California, Los Angeles (UCLA).

James Stout is Director of Finance at FIGTREE. Mr. Stout oversees project-level financial analysis and leads special capital markets and program validation projects. Mr. Stout's experience in the fields of clean energy and program management provides FIGTREE with quality controls in the administration of the PACE Program.

Mr. Stout has experience in the economics of clean energy and renewable energy projects, having worked in commercialization of clean energy technology with a growth-mode firm in Houston, Texas. He has also worked in program management with Northrop Gmmman. With FIGTREE, he performs financial analysis of projects to identify cost effective financing solutions for participating property owners.

Mr. Stout holds an International Master of Business Administration from Pepperdine University and Hong Kong University of Science and Technology and a Bachelor of Science in Business Administration from Pepperdine University.

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THE PACE PROGRAM

The PACE Program was introduced to the board of directors of the Authority at a meeting of the Board on January 25, 2010. As of March 25, 2013 the following Participating Member Jurisdictions have established a citywide ( or countywide, as applicable) Assessment District to authorize the Authority to finance qualifying improvements pursuant to the Assessment Law:

County of Alameda County of Kem City of Clovis City of Commerce City of Dublin City of Elk Grove City of Fresno

City of Palm Springs City of Pittsburg City of Rancho Cordova City of Redlands City of San Diego City of South San Francisco City of Yuba City

For a current list of Participating Member Jurisdictions in the PACE Program, please visit www .figtreecompany.com.

Prospective participants in the PACE Program initially interface with the Program Administrator, which is responsible for the daily operations of the PACE Program. On behalf of the Authority, FIGTREE handles applications, contractor eligibility and bids, records the Assessment liens, administers contractor and property owner disbursements, places the annual Assessment charges on the County Tax Rolls, reviews County Tax Rolls to determine delinquencies and commences the foreclosure process.

Participating property owners bear sole responsibility for choosing a qualified contractor to work on any project funded through the PACE Program. Although FIGTREE verifies contractors' licensing, insurance, and bonding pursuant to the standards for participating contractors outlined in the Program Report, property owners must select a contractor( s) based on independent verification of qualifications and merits.

Program Registered Contractors

The contractors chosen by the Property Owners submit license information and work experience in order to qualify to participate in the PACE Program. The PACE Program requires that all contractors:

1. Are licensed to work as a contractor in the State of California;

2. Have a minimum of 5 years work experience;

3. Have a minimum of$1,000,000 in general liability insurance; and

4. Sign a Code of Conduct to participate in the PACE Program.

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AUTHORIZATION OF ENERGY AND WATER EFFICIENCY ASSESSMENT DISTRICT FINANCING IN CALIFORNIA

Implementing Legislation

In 2008 and 2009, the California Legislature adopted Assembly Bill 811 ("AB 811 ") and Assembly Bill 474 ("AB 474"), respectively, which authorize a legislative body of any city to determine, in the public interest, to designate the entire city or an area within the city as an assessment district for the financing of energy efficient and water efficient projects. The bills amended Sections 5898.12, 5898.20, 5898.22, and 5898.30 of, and added Sections 5898.14 and 5898.21 of, the Streets and Highways Code. Pursuant to AB 811, the legislature declared there was urgency in the state to commence conversion to energy conservation and efficiency, and thus AB 811 creates a streamlined process by which assessment districts may be established by contractual agreement with property owners to finance such conversions. The bills permit the installation of distributed generation renewable energy sources, such as solar power, or energy efficiency improvements that are permanently affixed to real property. Assessment financing is not available to finance facilities for parcels which are undergoing development.

Qualified property owners may enter into contractual assessments to finance the installation of various equipment and improvements by contracting with certified licensed contractors approved by the PACE Program for installation on their Parcel. The contractual assessment will be recorded as a lien against the property owner's property and said lien shall be paid with the property taxes on said property for the duration determined by the Authority.

Under the PACE Program, Property Owner participants may not have liens (including trust deed mortgages and involuntary liens) in excess of the value of the Parcel and must be current on all Parcel related debt (including property taxes).

Each Assessment District is authorized by resolution after holding a public hearing and the preparation of a report stating the following:

(a) A map showing the boundaries of the territory within which the Assessment District is located.

(b) A plan for raising contractual assessments.

( c) A draft contract specifying the terms and conditions that would be agreed to by a property owner within the contractual assessment area and the District.

(d) following:

A statement of policies concerning contractual assessments including all of the

(1) Identification of types of facilities, distributed generation renewable energy sources, energy efficiency, or water conservation improvements that may be financed through the use of contractual assessments.

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(2) Identification of the authorized official to enter into contractual assessments on behalf of the City which established the Authority.

(3) A maximum aggregate dollar amount of contractual assessments.

(4) A method for setting a capital amount required to pay for work performed pursuant to contractual assessments.

( e) A report on the results of the consultations with the county auditor's office or county controller's office concerning the additional fees, if any, that will be charged to the city or county for incorporating the proposed contractual assessments into the assessments of the general taxes of the city or county on real property, and a plan for financing the payment of those fees.

Each Participating Member Jurisdiction has granted the Authority the authority to: (i) finance Improvements within each Participating Member Jurisdiction's Assessment District by the issuance of the Bonds under the PACE Program, and (ii) in the event of default, proceed with foreclosure or other actions authorized under the Indenture.

Federal Housing Finance Authority Statement Concerning Property Assessed Clean Energy (PACE) Programs

On July 30, 2008, President George Bush signed the Housing and Economic Recovery Act of 2008 (the "2008 Recovery Act") which created the Federal Housing Finance Authority (FHF A). The 2008 Recovery Act authorized oversight by FHF A of vital components of the secondary mortgage markets within the United States, including Fannie Mae, Freddie Mac, and the Federal Home Loan Banks ("GSEs"). It was designed to oversee housing finance and affordable housing, and support a stable and liquid mortgage market.

Fannie Mae and Freddie Mac together own or guarantee about half of all residential home mortgages in the United States. Fannie Mae and Freddie Mac purchase home loans from banks and other lenders. On May 5, 2010, Fannie Mae and Freddie Mac each issued advice letters to all lending institutions stating that mortgages for residences that also have Property Assessed Clean Energy (PACE) "loans" with first lien priority are not allowed under the Fannie Mae and Freddie Mac standardized mortgage documents. On July 6, 2010, the FHFA affirmed Fannie Mae and Freddie Mac loan purchase restrictions for residences with PACE funding in the form of a Statement and directive to Fannie Mae, Freddie Mac, and the Federal Home Loan Banks. In the directive the FHFA states that "First liens established by PACE loans are unlike routine tax assessments and pose unusual and difficult risk management challenges for lenders, servicers and mortgage securities investors." FHF A urged "state and local governments to reconsider these programs and continues to call for a pause in such programs so concerns can be addressed."

The advice letters and directive of the FHF A resulted in the temporary termination of residential financings in most of the PACE programs throughout the United States. In response to the FHFA statement, on July 14, 2010, the State of California, Sonoma and Placer Counties, the City of Palm Desert and the Sierra Club ("Plaintiffs") filed actions which were consolidated

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into the People of the State of California, et al v. Federal Housing Finance Authority, et al (Case No. 4: 1 0-cv-03084-CW). In the action the Plaintiffs seek declaratory and equitable relief that under California law: (a) PACE programs operate by assessments, not loans, and such assessments are valid; (b) liens that may result from PACE assessments, like those resulting from other types of assessments, have priority over mortgages; and ( c) participation in PACE programs is compatible with, and not in violation of, Fannie Mae's and Freddie Mac's standardized mortgage documents.

The FHFA, Fannie Mae, Freddie Mac and their directors ("Defendants") moved to dismiss all claims filed by the Plaintiffs in the action. The Plaintiffs jointly opposed the motion to dismiss and Sonoma County also moved for a preliminary injunction. On August 26, 2011, Defendants' motions to dismiss were granted in part and denied in part, and Sonoma County's motion for a preliminary injunction was granted in part. The Court determined that Sonoma County did not demonstrate a likelihood that it will prevail on the merits to obtain the sweeping relief it initially requested. However, the court granted Sonoma County's motion for a preliminary injunction requiring the FHF A, without changing its current policy, to proceed with the notice and comment process relating to its policy on PACE-related debts.

Furthermore, the Court concluded that Plaintiffs have Article III of the Constitution standing, and the provisions of the Safety and Soundness Act do not preclude judicial review of Plaintiffs' claims. Thus, Plaintiffs, except for the Sierra Club, may pursue their claims for violations of the Administrative Procedures Act ("AP A"). In addition, the Court concluded that Plaintiffs have satisfied the requirements necessary to pursue claims for violation of the National Environmental Policy Act (''NEPA"). However, Placer County's claims under the Tenth Amendment and the Spending Clause, Plaintiffs' claims for declaratory relief and Plaintiffs' state law claims were determined to be preempted by federal law and were dismissed without leave to amend. This matter is ongoing.

Notwithstanding the foregoing, the Assessment liens are comprised of commercial, industrial properties and one residential property with no mortgage debt that do not require the consent of any federal housing agency. Each Property Owner will deliver to the Program Administrator prior to the issuance of the Bonds either (i) a FIGTREE PACE Property Owner Disclosure & Acknowledgement stating that said owner has the authority, without the consent of any third party which has not been previously obtained, to execute and deliver the Assessment Contract authorizing the recording of the Assessment lien, or (ii) a Lender Consent representing the acknowledgement and approval of the respective lender holding a lien on the subject Parcel.

Judicial Validation of Commercial PACE Program

To legally validate the establishment of the commercial PACE program, CEDA filed a validation action in Sacramento Superior Court, the proper venue for such statewide action, on September 13, 2012. On October 30, 2012, the Court issued its order for publication of the summons. Thereafter, CEDA, through its Program Administrator, published the summons and mailed notice to a number of commercial lenders. There was no response to the summons within the allotted 60 day period for response. An entry of default was signed on February 8, 2013, which ends the proceeding. A 30 day period for appeals is allowed after the entry of default has been signed, and such 30 day period has expired with no appeals. In order to document the

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court's findings, a long form of judgment has been requested from the court. The long form of judgment will reaffirm that the procedural requirements of the establishment of the PACE program, including related documents to issue bonds to fund the purchase and installation of distributed generation renewable energy sources and energy efficiency and water efficiency improvements, are in conformity with applicable laws and that the court has acquired jurisdiction over all persons and the subject matter of this in rem validation action. Due to a backlog of cases from decreased funding, all default judgments, including the "long form" of judgment are delayed. In response, the Program Administrator on behalf of the Authority, filed an ex parte application to shorten time to have the judgment executed and has been granted the time to shorten the execution of judgment. However, no judgment has been executed yet.

The long form of judgment specifically requests:

1. That this Court has jurisdiction over all persons and the subject matter of this action;

2. A determination that this action is properly brought under Government Code Section 53511 and the Validation Statute in the Superior Court for the County of Sacramento;

3. A determination that the power to conduct the Program is a power common to the Participating Agencies, and CEDA is legally authorized to implement the Program under California Government Code Section 6502, including enforcing foreclosure provisions, with no liability to the Participating Agencies, and to carry out the Program through its third-party administrator;

4. A determination that all proceedings by and for CEDA, the Participating Agencies in connection with the Program, the Program Report and Program Documents, the Resolutions, Bonds, Bond Contracts, and Assessments were, are and will be in conformity with the applicable provisions of all laws and enactments at any time in force or controlling upon such proceedings, whether imposed by law, constitution, statute, charter or ordinance, and whether federal, state or municipal, and were, are and will be in conformity with all applicable requirements of regulatory bodies, agencies or officials having or asserting authority over said proceedings or any part thereof;

5. A determination that all conditions, things and acts required by law to exist, happen or be performed precedent to the adoption of the Program, Program Reports and Program Documents, all Resolutions, the Bonds and Bond Contracts, the Assessments and the terms and conditions thereof, including the authorization for the execution, delivery and performance of the Bond Contracts and the Program Report and Program Documents, the issuance of the Bonds, the execution of Assessment Contracts and ,the levy of the assessments have existed, happened and been performed in the time, form and manner required by law;

6. A determination that upon issuance, levy, or execution and delivery thereof, as applicable, the Bonds, Bond contracts, Assessments, Assessment Contracts, Program Report and Program Documents will be and are valid, legal and binding obligations of the parties thereto in accordance with their terms;

7. A determination that the Assessments are valid assessments under California law, including, without limitation, under Article XIIID of the California Constitution;

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8. A determination that the Assessments possess senior lien status as provided in Chapter 29 and the lien priority laws incorporated therein;

9. A determination that the Assessments and provisions for lender consent are valid and do not constitute a taking of private property without due process of law in violation of the Fifth and Fourteenth Amendments to the United States Constitution or Article 1, Section 19 of the California Constitution;

10. A determination that the recordation of the Notice of Assessment with the County Clerk/Recorder of the respective Counties imparts notice to all persons of the Assessment to be levied on the applicable Participating Property, and the 30-day statute of limitations established by Streets & Highways Code Section 5660 runs from the date on which the Notice of Assessment is recorded;

11. A determination that the implementation of the Program and the Program Report and Program Documents in the respective Participating Agencies and future agencies, including without limitation the issuance of the Bonds, the levy of the Assessments, and the execution and delivery of the Bond Contracts and Program Report and Program Documents, serves a valid public purpose;

12. A determination that the implementation of the Program in the respective Counties and the Cities, including without limitation the issuance of the Bonds, the levy of the Assessments, and the execution and delivery of the Bond Contracts and Program Report and Program Documents does not constitute a gift of public funds or the lending of public credit in violation of the California Constitution;

13. A determination that the implementation of the Program in the respective Participating Agencies, including without limitation the issuance of the Bonds, the levy of the Assessments, and the execution and delivery of the Bond Contracts, Program Report and Program Documents does not constitute an unlawful impairment of contract in violation of Article 1, Section 10 of the United States Constitution or Article 1, Section 9 of the California Constitution;

14. A determination that that the Court permanently enjoin and restrain all persons from the institution of any action or proceeding challenging, inter alia, the validity of the Program, the Program Report and Program Documents, the Resolutions, the Bonds, the Bond Contracts, the Assessments and any other agreements or actions authorized by CEDA, the Participating Agencies in connection with the Program, or any matters herein adjudicated or which at this time could have been adjudicated against CEDA, Participating Agencies and against all other persons;

15. For costs incurred in preparation of the validation action; and 16. For such other and further relief as the Court may deem just and proper.

Assessment Collection Procedures

Assessments levied and the interest and any penalties thereon shall constitute a lien against the property on which they are made, until they are paid. Division 10 ( commencing with Section 8500) of the California Streets and Highways Code applies to the levy and collection of assessments levied pursuant to Chapter 29, insofar as those provisions are not in conflict with other provisions of Chapter 29, including, but not limited to, the collection of assessments in the same manner and at the same time as the general taxes of the city on real property are collected

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and payable, and any penalties and remedies and lien priorities in the event of delinquency and default.

However, the Authority has covenanted in the Indenture for the benefit of the Bond owners that, (i) on each August 30 connnencing the first August after the Closing Date, the Authority shall review the County assessment roll to determine whether all Assessment Installments are current and in the event there are delinquencies, within 7 days, the Authority shall direct the Program Administrator to commence a foreclosure action; and (ii) a foreclosure action against parcels with delinquent assessments shall be connnenced prior to the December 1 following the June 30th delinquency.

At a foreclosure sale, the Authority may not recover more than the delinquent Assessment Installments plus penalties and interest. Thus, in most circumstances the Parcel value of the Parcel subject to foreclosure will exceed the value that the Authority may recover. As a result, the starting bid price for the sale of the Parcel should be substantially lower than the value of the Parcel, thus creating a larger market for the purchase of the Parcel. Although the outcome of any foreclosure sale is unknown, the Authority should be able to sell properties quickly and recover the balances due plus penalties and interest. In the event that there are outstanding delinquent ad valorem property taxes on the Parcel, said taxes shall be the responsibility of the purchaser at foreclosure sale.

Tax Collection & Program Administration Costs and Fees

California SB 2557 enacted in 1990 (Statutes of 1990, Chapter 466), authorized county auditors to determine property tax administration costs proportionately attributable to local jurisdictions and to submit invoices to the jurisdictions for such costs. The Program Administrator may instruct the auditor to add to the Assessment a maximum of 5 percent of the amount of the installments for the recovery of costs incurred in the administration of the Assessment Installments. In addition, the auditor of the county in which the Parcel is located may charge up to $40 annually for processing assessment installments through the property tax bill. The administrative costs relate to costs incurred directly or for the subcontractor services in providing the auditor with current information regarding the ownership of land to ensure the proper entry by the auditor in his or her assessment roll of the Assessment Installments coming due during the fiscal year, managing delinquency, reporting, etc. No other percentage or amount may be claimed by the Authority for the collections. The Program Administrator fees are equal to a yield spread ofup to 75 basis points (for properties receiving up to 10% of total assessed value in financing) or up to 100 basis points (for properties receiving in excess of 10% of total assessed value in financing) and are calculated based upon the difference between the interest rate paid by the property owner and the bond yield rate. The Program Administrator fees are included in the Assessment Installments.

Fnture Additional State Initiative Measures

Under the California Constitution, the power of initiative is reserved to the voters for the purpose of enacting statutes and constitutional amendments. For example, the voters have exercised this power through the adoption of Proposition 13 ( adding Article XIIIA to the California Constitution in 1978, and a number of subsequent propositions, including but not

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limited to Proposition 4 (addition Article XIIIB), Proposition 218 (adding Article XIIIC and XIIID, and most recently Propositions 22 and 26. From time to time other initiative measures could be adopted, adversely affecting revenues of the Member Jurisdiction or the Authority or the Authority's ability to expend revenues. The nature and impact of these measures, if any, cannot be anticipated by the Authority.

RISK FACTORS

PURCHASE OF THE BONDS WILL CONSTITUTE AN INVESTMENT SUBJECT TO CERTAIN RISKS, INCLUDING THE RISK OF NONPAYMENT OF PRINCIPAL AND INTEREST. BEFORE PURCHASING ANY OF THE BONDS, PROSPECTIVE INVESTORS SHOULD CAREFULLY CONSIDER, AMONG OTHER THINGS, THE RISK FACTORS DESCRIBED BELOW.

The purchase of the Bonds involves certain investment risks. The following is a discussion of certain risk factors which should be carefully considered, in addition to other matters set forth herein, in evaluating the investment quality of the Bonds. This discussion does not purport to be comprehensive or definitive and does not purport to be a complete statement of all factors which may be considered as risks in evaluating the credit quality of the Bonds. The occurrence of one or more of the events discussed herein could adversely affect the ability or willingness of Property Owners in the Assessment District to pay their Assessment Installments when due. Any such failure to pay Assessments Installments could result in the inability of the Authority to make full and punctual payments of debt service on the Bonds. In addition, the occurrence of one or more of the events discussed herein could adversely affect the value of the property in each Assessment District.

General

To provide for the payment of debt service on the Bonds, it is necessary that unpaid Assessment Installments be paid in a timely manner. Although the unpaid assessments constitute fixed liens on the Parcels within the District, they do not constitute a personal indebtedness of the respective owners of such Parcels. There is no assurance that such owners will be financially able to pay the Assessment Installments or that they will pay such installments even though financially able to do so.

Failure by the owners of the parcels within the District to pay Assessment Installments when due, depletion of the Reserve Fund, or the inability to sell the Parcels within the District at foreclosure proceedings for amounts sufficient to cover delinquent Assessment Installments levied against such Parcels would result in the inability to make full or punctual payments of debt service to the Bond owners.

Transfers of property ownership and certain other circumstances could result in the prepayment of Assessments at the option of the seller or buyer. Such prepayment could result in the redemption of all or a portion of the Bonds prior to the stated maturity.

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Assessments Run with the Land

The current and future owners of property within the Assessment District are not personally liable for the payment of the Assessment Installments. Rather, the Assessment Installments are a lien secured only by the Parcel within the Assessment District. Thus, the only collection mechanism available to the Authority upon default is a foreclosure proceeding. At a foreclosure sale, the Authority may not recover more than the delinquent Assessment Installments plus penalties and interest. Thus, in most circumstances the value of the Parcel subject to foreclosure will exceed the value that the Authority may recover. As a result, the starting bid price for the sale of the Parcel may be substantially lower than the value of the Parcel, thus creating a larger market for the purchase of the Parcel. Although the outcome of any foreclosure sale is unknown, the Authority may be able to sell properties quickly and recover the balances due plus penalties and interest. In the event that there are outstanding delinquent ad valorem property taxes on the Parcel, said taxes shall be the responsibility of the purchaser at foreclosure sale.

Real Estate Investment Risks

The Bond owners will be subject to the risks generally incident to an investment secured by real estate, including, without limitation, (i) adverse changes in local market conditions, such as changes in the market value of real property in the vicinity of the District, the supply of or demand for competitive properties in such area, and the market value of homes and/or sites in the event of sale or foreclosure; (ii) changes in real estate tax rate and other operating expenses, governmental rules (including, without limitation, zoning laws) and fiscal policies; and (iii) natural disasters (including, without limitation, earthquakes and floods), which may result in uninsured losses.

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Property Values

The value of Parcels within an Assessment District is a critical factor in determining the investment quality of the Bonds. If a Property Owner defaults in the payment of Assessment Installments, the Bond owners' only remedy is to request the Authority to commence foreclosure proceedings in an attempt to obtain funds to pay the delinquent Assessment. See the caption "Bankruptcy and Foreclosure" herein.

The assessed values used in this Private Placement Memorandum for the Parcels do not represent market values arrived at through the appraisal process and generally reflect only the sales price of a Parcel when acquired by its current owner, adjusted annually by an amount determined by the county assessor, generally not to exceed more than 2% per fiscal year. No assurance can be given that a Parcel could be sold for its assessed value.

Prospective purchasers of the Bonds should not assume that the Parcels could be sold for either the assessed value or the amount of the Assessment with respect to the Parcels at a foreclosure sale.

Reductions in District property values could occur due to a downturn in the economy, occurrences such as earthquakes, landslides or flooding or other events, all of which will adversely impact the value of the security underlying the Assessments. The amount of the Assessment shall not exceed 10 percent of the Total Assessed Value or 20 percent of the Total Assessed Value (at a greater administrative cost) and, as required by the Assessment Law, in no event shall the Assessment cause the annual property tax rate to exceed 5 percent of the market value at the time of approval of the Assessment.

Concentration of Ownership

Unlike residential assessment district financings where the debt service burden is shared by numerous properties, Assessment liens securing the Bonds will only be recorded against seven parcels based upon benefit attributed by the Property Owners. See "THE PARCELS."

See "THE PARCELS." A default in the payment of assessments on any one of the Parcels could jeopardize the ability of the Authority to pay debt service on the Bonds.

Mortgage Company Actions

The Authority finances commercial properties, industrial properties and residential properties, with certain conditions.

In many cases upon notice of failure of a mortgagee to pay property taxes or assessments the lender will bring the payments current to protect its interest. In the event that there is no mortgage lien on the property, there is a risk that upon default by the owner, there is no other source to bring the payments current. Notwithstanding, in any case there is no guaranty that the lender will pay any deficiency and Bondholders must assume that upon default, the remedy for the Bondholders is foreclosure.

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Foreclosure Shortfalls

Pursuant to the Assessment Law, if a parcel which is included in an Assessment District is foreclosed upon and cannot be sold at the foreclosure sale at a price equal to the amount of the judgment for delinquent Assessment Installments with costs and interest thereon, the Authority may petition a court to authorize the sale of such parcel at a lower price upon the consent of Bond owners owning 75% or more in principal amount of the Bonds and certain other conditions as provided in the Assessment Law. Any such sale would produce a shortfall in the aggregate Assessment Installments payable with respect to such parcel and, ultimately, a default in the payment of principal on the Bonds.

No Authority Funds

If a delinquency occurs in the payment of any Assessment Installment, the Trustee is required to transfer the amount of such delinquent instalhnent from the Reserve Fund to the Redemption Fund. If the Reserve Fund is depleted and if there are additional delinquencies, the Authority is not required to transfer into the Redemption Fund the amount of the delinquency from any other moneys of the Authority. The Authority has made a specific election in the Indenture not to make such transfers.

Bankruptcy and Foreclosure

The payment of Assessment Instalhnents and the ability of Bond owners to foreclose on a delinquent unpaid Assessment Installment, as discussed in the section entitled "SECURITY FOR THE BONDS - Covenant to Commence Superior Court Foreclosure," may be limited by bankruptcy, insolvency or other laws generally affecting creditors' rights or by the law of the State relating to judicial foreclosure. In addition, the prosecution of a foreclosure proceeding could be delayed due to crowded local court calendars or procedural delays.

In addition, potential investors should be aware that judicial foreclosure proceedings are not summary remedies and can be subject to significant procedural and other delays caused by crowded court calendars and other factors beyond the control of the Authority. Potential investors should assume that, under current conditions, it is estimated that a judicial foreclosure of the lien of Assessment Installments may take two or three years from initiation to the lien foreclosure sale. At an assessment lien foreclosure sale, each parcel will be sold for not less than the "minimum bid amount" which is equal to the sum of all delinquent Assessment Installments, penalties and interest thereon, costs of collection (including reasonable attorney's fees), postjudgment interest and costs of sale. Each parcel is sold at foreclosure for the amounts secured by the assessment lien on such parcel and multiple parcels may not be aggregated in a single "bulk" foreclosure sale. If any parcel fails to obtain a "minimum bid," pursuant to the Assessment Law, the Authority may, but is not obligated to, seek superior court approval to sell such parcel at an amount less than the minimum bid. Such Superior Court approval requires the consent of the owners of75% of the aggregate principal amount of the outstanding Bonds.

Delays and uncertainties in the assessment lien foreclosure process create significant risks for Bond owners. High rates of special tax payment delinquencies which continue during the pendency of protracted assessment lien foreclosure proceedings could result in the rapid, total

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depletion of the Reserve Fund prior to replenishment of the Reserve Fund from the resale of property upon foreclosure. In that event, there could be a delay or default in payment of the principal and premium on, and interest on, the Bonds.

The various legal opinions to be delivered concurrently with the delivery of the Bonds (including Bond Counsel's approving legal opinion) will be qualified as to the enforceability of the various legal instruments by bankruptcy, reorganization, insolvency or other similar laws affecting the rights of creditors generally.

Although bankruptcy proceedings would not cause the obligation to pay the Assessment Installments to become extinguished, bankruptcy of a property owner or of a partner or other equity owner of a property owner, could result in a stay of enforcement of the lien for the Assessment Installments, a delay in prosecuting Superior Court foreclosure proceedings or adversely affect the ability or willingness of a property owner to pay the Assessment Installments and could result in the possibility of delinquent Assessment Installments not being paid in full. In addition, the amount of any lien on property securing the payment of delinquent Assessment Installments could be reduced if the value of the property were determined by the bankruptcy court to have become less than the amount of the lien, and the amount of the delinquent Assessment Installments in excess of the reduced lien could then be treated as an unsecured claim by the court. Any such stay of the enforcement of the lien of the Assessment, or any such delay or non-payment, would increase the likelihood of a delay or default in payment of the principal of and interest on the Bonds and the possibility of delinquent Assessments not being paid in full. Moreover, amounts received upon foreclosure sales may not be sufficient to fully discharge delinquent installments.

Seismic Risk

Any natural disaster or other physical calamity, including earthquake, within the boundaries of an assessment district may have the effect of reducing assessment district revenues.

Earthquake faults capable of producing earthquakes strong enough to damage surface structures underlie California in a manner which puts most of the region at some risk of earthquake damage. Liquefaction is a secondary effect from earthquakes that occurs when water is trapped in pores of certain sized granular soils and forced upward by strong vibrations. This causes the soil to temporarily transform into a liquid-like mass with no ability to sustain loads. In the event of a natural disaster there can be no assurance that due to the destruction of infrastructure and property, property owners will be willing to continue to make their assessment payments. Furthermore, the diminution of property values may also affect the property owners' willingness to pay assessments and the value of sale at foreclosure. No assurance can be given as to the effects of natural disasters or other physical calamities, including earthquakes, on structures within any of the Assessment Districts or the ability of the Property Owners therein to make payments.

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Hazardous Substances

One of the most serious risks in terms of the potential reduction in the value of a parcel is a claim with regard to a hazardous substaoce. In general, the owners of a parcel may be required by law to remedy conditions of the parcel relating to release or threatened releases of hazardous substaoces. The federal Comprehensive Environmental Response, Compensation aod Liability Act of 1980, sometimes referred to as "CERCLA" or the "Superfund Act," is the most well known aod widely applicable of these laws, but California laws with regard to hazardous substaoces are also similarly stringent. Under maoy of these laws, the owner is obligated to remedy a hazardous substaoce condition of the property whether or not the owner had aoything to do with creating or haodling the hazardous substaoce. The effect, therefore, should aoy of the parcels be affected by a hazardous substaoce, will be to reduce the marketability aod value of the parcel by the costs of remedying the condition, because the prospective purchaser, upon becoming owner, will become obligated to remedy the condition just as is the seller.

Further, it is possible that liabilities may arise in the future with respect to aoy of the parcels resulting from the current existence on the parcel of a substaoce currently classified as hazardous but which has not been released or the release of which is not presently threatened, or may arise in the future resulting from the current existence on the parcel of a substaoce not presently classified as hazardous but which may in the future be so classified. Further, such liabilities may arise not simply from the existence of a hazardous substaoce but from the method in which it is haodled. All of these possibilities could significaotly affect the value of a parcel that is realizable upon a delinquency.

Parity Taxes and Assessments

The assessments aod aoy penalties thereon will constitute liens against the property on which they will be annually imposed until they are paid. Such lien is on parity with all special taxes levied by the other agencies aod is coequal to aod independent of the lien for general property taxes regardless of when they are imposed upon the same property. The assessment has priority over all existing aod future private liens aod all future fixed special assessment liens imposed on the property. The Authority, however, has no control over the ability of other entities aod districts to issue indebtedness secured by special taxes or assessments payable from all or a portion of the Parcel within the Assessment Districts. In addition, the Property Owners within the each Assessment District may, without the consent or knowledge of the Authority, petition other public agencies to issue public indebtedness secured by special taxes or assessments. Any such special taxes or assessments may have a lien on such property on parity with the Assessment.

The Authority has no control over the amount of indebtedness that could be issued by other public agencies in the future; aod the liens on the Parcel within the Assessment Districts could greatly increase, without aoy corresponding increase in the value of the Parcels within the Assessment District, thereby severely reducing the ratio that exists at the time the Bonds are issued between the value of the Parcel aod the debt secured by all taxes and assessments thereon. The imposition of such additional indebtedness could also reduce the willingness and ability of the Property Owners within the Assessment Districts to pay the Assessments when due.

4844-5572-6100.1 64

Moreover, in the event of a delinquency in the payment of the Assessment levy, no assurance can be given that the proceeds of any foreclosure sale would be sufficient to pay the delinquent Assessments and any other delinquent assessments, special taxes or taxes. See "Property Values" below.

Limited Secondary Market/Transfer Restrictions

There can be no assurance that there will be a secondary market for purchase or sale of Bonds or, if a secondary market exists, that such Bonds can be sold for any particular price. Occasionally, because of general market conditions or because of adverse history or economic prospects connected with a particular issue, secondary marketing practices in connection with a particular issue are suspended or terminated. Additionally, prices of issues for which a market is being made will depend upon then prevailing circumstances. Such prices could be substantially different from the original purchase price. From time to time, there may be no secondary market for the Bonds, depending upon prevailing market conditions, the financial condition or market position of firms (if any) who may make the secondary market in the Bonds and the financial condition of the owners of property within the Assessment District. The Bonds should therefore be considered long-term investments in which funds are committed to maturity, subject to redemption prior to maturity as described herein. In addition, the Bonds may only be sold to qualified institutional buyers or accredited investors as evidenced by a signed Investor Letter attached hereto as Exhibit "D." Another factor that may limit the sale of Bonds in the secondary market is the lack of continuing obligation on the part of the Authority to provide continuing disclosure. Because the securities are being sold in a principal amount less than $1,000,000 the requirement to provide continuing disclosure under Rule 15c2-12 of the Securities and Exchange Act of 1934 does not apply to the Bonds.

No Acceleration

The Bonds do not contain a provision allowing for the acceleration of the Bonds in the event of a payment default or other default under the terms of the Bonds or the Indenture. There is no provision in the Act or the Indenture for acceleration of the Assessment Installments in the event of a payment default by an owner of a parcel within the Assessment District or otherwise, or upon any adverse change in the tax status of interest on the Bonds. Pursuant to the Indenture, a Bond Owner is given the right for the equal benefit and protection of all Bond owners to pursue certain remedies described in the Indenture.

As stated herein, investment in the Bonds poses certain economic risks which may not be appropriate for certain investors and only persons with substantial financial resources who understand the risk of investment in the Bonds should consider such investment. There can be no guarantee that there will be a secondary market for purchase or sale of the Bonds or, if a secondary market exists, that the Bonds can or could be sold for any particular price.

Investor Suitability Standards

Investment in the Bonds involves risk. An investment is suitable, therefore, only for persons having substantial resources who understand the nature of the Bonds as well as the risk factors associated with the investment. Each investor, either alone or together with the investor's

4844-5572-6100.I 65

advisors, should have sufficient knowledge and experience in financial and business matters to be capable of evaluating the merits and risks of investing in the Bonds and of protecting the investor's interests in connection with the investment, and each investor should have sufficient net worth or net worth and income to be able to bear the economic risk of the investment.

NO LITIGATION

There is no action, suit or proceeding known to the Authority to be pending or threatened against the Authority, restraining or enjoining the execution or delivery of the Bonds or the Indenture or in any way contesting or affecting the validity of the foregoing or any proceedings of the Authority taken with respect to any of the foregoing.

TAXMATTERS

In the opinion of Lewis Brisbois Bisgaard & Smith LLP, Bond Counsel, under existing law, interest on the Bonds is exempt from personal income taxes of the State of California. No opinion is provided as to income tax treatment in any other state. Interest on the Bonds is included in the gross income of the owners thereof for federal income tax purposes. The summary does not purport to address all aspects of federal or state income taxation that may affect particular investors in light of their individual circumstances, nor certain types of investors subject to special treatment under the federal or state income tax laws. Potential purchasers of the Bonds should consult their own tax advisors in determining the federal, state or local tax consequences to them of the purchase, holding and disposition of the Bonds.

Although there are not any Regulations, published rulings, or judicial decisions involving the characterization for federal income tax purposes of securities with terms substantially the same as the Bonds, Bond Counsel has advised that the Bonds will be treated for federal income tax purposes as evidences of indebtedness of the Authority and not as an ownership interest in the Assessments and other revenues securing the Bonds or as an equity interest in the Authority or any other party, or in a separate association taxable as a corporation. Although the Bonds are issued by the Authority, interest on the Bonds (including original issue discount), is not excludable from gross income for federal income tax purposes under Code. Interest on the Bonds will be fully subject to federal income taxation. Thus, owners of the Bonds generally must include interest (including original issue discount) on the Bonds in gross income for federal income tax purposes.

In general, interest paid on the Bonds, original issue discount, if any, and market discount, if any, will be treated as ordinary income to the owners of the Bonds, and principal payments ( excluding the portion of such payments, if any, characterized as original issue discount) will be treated as a return of capital.

Bond Counsel has not undertaken to advise in the future whether any events after the date of issuance of the Bonds may affect the tax status of interest on the Bonds or the tax consequences of the ownership of the Bonds. No assurance can be given that future legislation, if enacted into law, will not contain provisions that could directly or indirectly reduce the benefit of the exemption of interest on the Bonds from personal income taxation by the State of Califoruia. Furthermore, Bond Counsel expresses no opinion as to any federal, state or local tax law consequences with respect to the Bonds, or the interest thereon, if any action is taken with respect to the Bonds or the proceeds thereof predicated or permitted upon the advice or approval of bond counsel if such advice or approval is given by counsel other than Bond Counsel.

4844-5572-6100.1 66

Although Bond Counsel is of the opinion that interest on the Bonds is exempt from California state personal income tax, an owner's federal, state or local tax liability may be otherwise affected by the ownership or disposition of the Bonds. The nature and extent of these other tax consequences will depend upon the owner's other items of income or deduction. No opinion is provided as to income tax treatment in any other state.

Bond Counsel's opinion is not a guarantee of a result, but represents its legal judgment based upon its review of existing statutes, regulations, published rulings and court decisions and the representations and covenants of the Authority described above as of the date of issuance.

Investment in the Bonds poses certain economic risks. No dealer, broker, salesman, or other person has been authorized by the Placement Agent to give any information or make any representations, other than those contained in this Private Placement Memorandum. Additional information will be made available to each prospective investor, as such prospective investor deems necessary in order to make an informed decision with respect to the purchase of Bonds. Prospective investors are encouraged to request such additional information and to ask such questions. Such requests should be directed to the Placement Agent at Brandis Tallman, LLC, 22 Battery Street, Suite 500, San Francisco, California 94111.

CERTAIN LEGAL MATTERS

Legal matters incident to the authorization and issuance of the Bonds are subject to the approving opinion of Lewis Brisbois Bisgaard & Smith LLP, Los Angeles, California, Bond Counsel. The form of the approving opinion of Bond Counsel is attached hereto as Appendix C. Lewis Brisbois Bisgaard & Smith LLP, Los Angeles, California, is also serving as Disclosure Counsel to the Authority. Fees payable to Bond Counsel and Disclosure Counsel are contingent upon the sale and delivery of the Bonds.

FINANCIAL ADVISOR

Del Rio Advisors, LLC, Modesto, California, (the "Financial Advisor") has served as Financial Advisor to the Authority with respect to the sale of the Bonds. The Financial Advisor has assisted the Authority in the review of this Official Statement and in other matters relating to the planning, structuring, execution and delivery of the Bonds. The Financial Advisor has not independently verified any of the data contained herein or conducted a detailed investigation of the affairs of the Authority to determine the accuracy or completeness of this Official Statement. Due to its limited participation, the Financial Advisor assumes no responsibility for the accuracy or completeness of any of the information contained herein. The Financial Advisor will receive compensation from the Authority contingent upon the sale and delivery of the Bonds.

PLACEMENT OF THE BONDS

Brandis Tallman LLC, San Francisco, California, serves as Placement Agent (the "Placement Agent") for the sale and delivery of the Bonds. The Placement Agent will receive a fee for placement of the Bonds, which fee will be payable from the proceeds of the Bonds. The Placement Agent has assisted the Authority in the review of this Private Placement

4844-5572-!i 100. I 67

Memorandum and has not independently verified any of the information contained herein or conducted a detailed investigation of the affairs of the Authority or the Program Administrator. Brandis Tallman LLC assumes no responsibility for the accuracy or completeness of any of the information contained herein. The Placement Agent will receive compensation from the Authority contingent upon the sale and delivery of the Bonds. The Placement Agent makes no representation that it will be able to provide a secondary market in the Bonds. The Placement Agent is placing the Bonds with certain "qualified institutional buyers" (within the meaning of Rule 144A of the Securities and Exchange Commission) and "accredited investors" within the meaning of applicable state and federal securities laws.

While the Bonds are not subject to registration under the Securities Act of 1933, as amended (the "Securities Act"), the Placement Agent has determined that the Bonds are not suitable for investment by persons other than "Qualified Institutional Buyers" ("QlB") within the meaning of Rule 144A of the Securities Act or "Accredited Investors" within the meaning of the applicable state and federal securities laws. Prospective investors should have such knowledge and experience in financial and business matters as to be capable of evaluating the merits and risks of an investment in the Bonds and should have the ability to bear the economic risks of such prospective investment, including a complete loss of such investment. Each purchaser of Bonds, by its acceptance thereof, will be required to execute an investor letter attached hereto as APPENDIXD.

FORWARD LOOKING STATEMENTS

This Private Placement Memorandum contains certain "forward-looking statements" concerning the Authority's and Authority's operations, performance and financial condition, including its future economic performance, plans and objectives and the likelihood of success in developing and expanding. These statements are based upon a number of assumptions and estimates which are subject to significant uncertainties, many of which are beyond the control of the Authority. The words "may," "would," "could," "will," "expect," "anticipate," "believe," "intend," "plan," "estimate" and similar expressions are meant to identify these forward-looking statements. Actual results may differ materially from those expressed or implied by these forward-looking statements.

NO RATING

The Authority has not made, and does not contemplate making, application to any rating agency for the assignment of a rating to the Bonds. No such rating should be assumed based upon rated obligations of Participating Member Jurisdictions. Prospective purchasers of the Bonds are required to make independent determinations as to the credit quality of the Bonds and their appropriateness as an investment. See "BOND OWNERSS' RISKS - Investor Suitability Standards," and "Secondary Market."

4844-5572-6100.1 68

MISCELLANEOUS

This Private Placement Memorandum does not constitute a contract with the purchasers of the Bonds.

All information included herein has been provided by the Authority, except where attributed to other sources. Any statements made in this Private Placement Memorandum involving matters of opinion or of estimates, whether or not so expressly stated, are set forth as such and not as representations of fact, and no representation is made that any of the estimates will be realized.

All of the preceding descriptions and summaries of certain legal documents, other applicable legislation, agreements, reports and other documents are made subject to the provisions of such documents respectively, and do not purport to be complete statements of any or all of such provisions. Reference is hereby made to such documents available from the Placement Agent and following delivery of the Bonds, on file at the offices of the Trustee in Los Angeles, California, for further information in connection therewith. The information contained herein has been compiled from official and other resources and, while not guaranteed by the Authority, is believed to be correct.

AUTHORIZATION OF PRIVATE PLACEMENT MEMORANDUM

4844-5572-6100.l

CALIFORNIA ENTERPRISE DEVELOPMENT AUTHORITY

By: ---------------Chair

69

AUTHORIZATION OF PRIVATE PLACEliE:N'f MEMORANDUM

CALIFORNIA ENTERPRISE DEVELOPMENT

AUTHORJTY1

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482'>-3036-1876.4

APPENDIX A

SUMMARY OF LEGAL DOCUMENTS

DEFINITIONS

The following is a brief summary of the terms of the Master Indenture dated as of Jnly 1, 2013, by and between the California Enterprise Development Authority (the "Authority'') and The Bank of New York Mellon Trust Company, N.A., as Trustee (the "Trustee"). Such Summary is not intended to be complete or definitive, is supplemental to the summary of the other provisions of the Master Indenture contained elsewhere in this Private Placement Memorandum, and is qualified in its entirety by reference to the full terms of the Master Indenture as shall be supplemented by a Supplemental Indenture delivered for a series of Bonds ( collectively, the "Indenture"). All capitalized terms used and not otherwise defined in this Official Statement shall have the meaning assigned to such terms in the Indenture.

"Act" means Articles 1 through 4 ( commencing with Section 6500) of Chapter 5, Division 7, Title 1 of the Government Code of the State, as in existence on the Closing Date or as thereafter amended from time to time.

"Administration Costs Fund." Fund established to account for Program administration costs and fees and for the benefit of the Program Administrator.

"Assessed Value" means the value of a Parcel as determined by the County Assessor as listed on the rolls of the County in which the Parcel is located.

"Assessment(s)" or "Assessment lien(s)" means the lien which shall be recorded against each of the Parcels for which an Assessment Contract has been executed.

"Assessment Contract" means the contract(s) between the Authority and the Property Owner pursuant to which the Property Owner agrees to finance the installation of Improvements on the Parcel.

"Assessment District(s)" means the Water Efficiency and Property Assessed Clean Energy (PACE) and Job Creation Districts which have been formed by Participating Member Jurisdictions pursuant to the Assessment Law.

"Assessment Installment(s)" means the unpaid contractual assessment(s) levied on the Parcel(s) pursuant to an Assessment Contract(s), but does not include either (i) penalties or (ii) interest on delinquent contractual assessments in excess of the interest rate of the Bonds.

"Assessment Law" means Chapter 29 of Part 3 of Division 7 of the California Streets and Highways Code (commencing with Section 5898.12 et seq.) and the Improvement Act of 1915 codified at Chapter 29 Part 1 of Division 10 of the California Streets and Highways Code (commencing with Section 8500 et seq.).

A-1

"Authority'' means the California Enterprise Development Authority, a joint powers authority organized and existing under the constitution and laws of the State of California.

"Authority Administration Costs" means the Authority costs incurred to administer the Program.

"Authority Representative" means the Chairperson, Vice Chairperson, Executive Director, Secretary, Controller or Treasurer of the Authority, or any other authorized representative of the Authority as evidenced by a certificate of the Chairperson or Executive Director.

"Board" means the Board of Directors of the Authority.

"Bond Counsel" means any attorney or firm of attorneys appointed by or acceptable to the Authority of nationally-recognized experience in the issuance of obligations the interest on which is excludable from gross income for federal income tax purposes under the Code.

"Bonds" means the September 6, 2012 authorization of $500,000,000 aggregate principal amount California Enterprise Development Authority Water Efficiency and Property Assessed Clean Energy (PACE) and Job Creation Program Limited Obligation Improvement Bonds authorized by and at any time Outstanding pursuant to the Assessment Law, the Master Indenture and a Supplemental Indenture.

"Business Day" means a day of the year, other than a Saturday or Sunday, on which banks in Los Angeles, California, or New York, New York, and the city in which the Trustee is located are not required or authorized to remain closed and on which The New York Stock Exchange is not closed.

"Certificate" and "Written Request" of the Authority means, a written certificate or written request signed in the name of the Authority, as applicable, by an authorized representative. Any such certificate or request may, but need not, be combined in a single instrument with any other instrument, opinion or representation, and the two or more so combined shall be read and construed as a single instrument.

"Closing Date" means the date of delivery of the Bonds to the original purchasers thereof.

"Code" means the Internal Revenue Code of 1986 as in effect on the date of issuance of the Bonds or (except as otherwise referenced in the Indenture) as it may be amended to apply to obligations issued on the date of issuance of the Bonds, together with applicable proposed, temporary and final regulations promulgated, and applicable official public guidance published, under the Code.

"Contractor( s )" means the vendors authorized to provide energy and water saving equipment within the Assessment Districts of a Participating Member under the PACE Program.

"Costs of Issuance" means all expenses incurred in connection with the authorization, issuance, sale and delivery of the Bonds, including but not limited to all compensation, fees and

4844-5572-6100.l A-2

expenses (including but not limited to fees and expenses for legal counsel) of the Authority and the Trustee, costs and fees relating to any bond insurance policy, compensation to any financial consultants or underwriters, legal fees and expenses, filing and recording costs, rating agency fees, costs of preparation and reproduction of documents and costs of printing.

"Costs of Issuance Fund" means the fund established and held by the Trustee pursuant to the Indenture.

"County or Counties" means the County or Counties in which the Participating Member Jurisdictions are located.

"Event of Default" means any of the events described in the Indenture.

"Federal Securities" means any of the following which are non-callable and which at the time of investment are legal investments under the laws of the State of California for funds held by the Trustee:

(i) direct general obligations of the United States of America (including obligations issued or held in book entry form on the books of the United States Department of the Treasury) and obligations, the timely payment of principal of and interest of which are, directly or indirectly, fully and unconditionally guaranteed by the United States of America, including, without limitation, such of the foregoing which are commonly referred to as stamped obligations and coupons; or

(ii) America:

any of the following obligations of the following agencies of the United States of

(a) direct obligations of the Export-Import Bank,

(b) certificates of beneficial ownership issued by the Farmers Home Administration,

( c) participation certificates issued by the General Services Administration,

( d) mortgage-backed bonds or pass-through obligations issued and guaranteed by the Government National Mortgage Association,

(e) project notes issued by the United States Department of Housing and Urban Development, and

(f) public housing notes and bonds guaranteed by the United States of America.

"Fiscal Year" means any twelve-month period extending from July 1 in one calendar year to June 30 of the succeeding calendar year, both dates inclusive, or any other twelve-month period selected and designated by the Authority as its official fiscal year period and certified to the Trustee in writing by an Authority Representative.

4844-5572-6100.l A-3

"Improvement(s)" means distributed renewable energy and energy efficiency and water conservation equipment to be affixed to improved commercial, industrial and certain residential property within Participating Member Jurisdictions as authorized pursuant to the Assessment Law.

"Indenture" means the Indenture of Trust, as originally executed or as it may from time to time be supplemented, modified or amended by any Supplemental Indenture pursuant to the provisions hereof.

"Independent Accountant" means any certified public accountant or firm of certified public accountants appointed and paid by the Authority, and who, or each of whom (a) is in fact independent and not under the dominion of the Authority; (b) does not have any substantial interest, direct or indirect, in the Authority; and ( c) is not connected with the Authority as an officer or employee of the Authority, but who may be regularly retained to make annual or other audits of the books of or reports to the Authority.

"Information Services" means Financial Information, Inc. 's "Daily Called Bond Service," 30 Montgomery Street, 10th Floor, Jersey City, New Jersey 07302, Attention: Fitch "Called Bond Department," 5250 Center Drive, Suite 150, Charlotte, NC 28217; S&P "Called Bond Record," 65 Broadway, 16th Floor, New York, New York 10004; and, in accordance with then current guidelines of the Securities and Exchange Commission, such other addresses and/or such other services providing information with respect to called bonds as the Authority may designate in a Certificate of the Authority delivered to the Trustee.

"Interest Account" means the account by that name established and held by the Trustee in the Redemption Fund pursuant to a Supplemental Indenture.

"Interest Payment Date" means payment March 2 and September 2, of each year commencing on the date designated in a Supplemental Indenture.

"Member Jurisdictions" means the public agency members comprising the Authority.

"Moody's" means Moody's Investors Service, its successors and assigns.

"Outstanding," when used as of any particular time with reference to Bonds, means all Bonds theretofore executed, issued and delivered by the Authority under the Indenture except (a) Bonds theretofore cancelled by the Trustee or surrendered to the Trustee for cancellation, (b) Bonds paid or deemed to have been paid within the meaning of the Indenture, and (c) Bonds in lieu of or in substitution for which other Bonds shall have been executed, issued and delivered pursuant to the Indenture or any Supplemental Indenture.

"Parcel" or "Parcels" means the real property which is subject to the Assessment lien and upon which the Improvements shall be constructed.

"Participation Agreement(s)" means the agreements by that name between the Authority and each of the Participating Member Jurisdictions and any amendments or supplements thereto.

4844-5572-6100.l A-4

"Participating Member Jurisdictions" means the Member Jurisdictions which have created Districts pursuant to the Assessment Law in order to participate in the PACE Program.

"Permitted Investments" mean any of the following which at the time of investment are legal investments under the laws of the State for the moneys proposed to be invested therein:

(a) Federal Securities

(b) Federal Housing Administration debentures

( c) Unsecured certificates of deposit, time deposits, demand deposits, overnight bank deposits, trust funds, trust accounts, interest-bearing deposits, interest-bearing money market accounts, and bankers' acceptances (having maturities of not more than 30 days) of any bank (including those of the Trustee and its affiliates) the short-term obligations of which are rated "A-1" or better by S&P.

( d) Deposits the aggregate amount of which is fully insured by the Federal Deposit Insurance Corporation (FDIC), in banks which have capital and surplus of at least $5 million (including those of the Trustee and its affiliates).

( e) Commercial paper (having original maturities of not more than 270 days) rates "A-1" by S&P and "Prime-!" by Moody's.

(f) State Obligations, which means:

(i) Direct general obligations of any state of the United States or any subdivision or agency thereof to which is pledged the full faith and credit of a state the unsecured general obligations debt of which is rates "A3" by Moody's and "A" by S&P, or better, or any obligation fully and unconditionally guaranteed by any state, subdivision or agency whose unstructured general obligation debt is so rated.

(ii) Direct, general short-term obligations of any state agency or subdivision described in (i) above and rated "A-1 +" by S& and "Prime-!" by Moody's.

(iii) Special Revenue Bonds ( as defined in the United States Bankruptcy Code) of any state, state agency or subdivision described in (i) above and rated "AA" or better by S&P and "Aa" or better by Moody's.

(g) Pre-refunded municipal obligations rated "AAA" by S&P and Aaa" by Moody's meeting the following requirements:

(i) the municipal obligations are (A) not subject to redemption prior to maturity or (B) the trustee for the municipal obligations has been given irrevocable instructions concerning their call and redemption and the issuer of the municipal obligations has covenanted not to redeem such municipal obligations other than as set forth in such instructions;

4844-5572-6100.l A-5

(ii) the municipal obligations are secured by cash or United States Treasury Obligations which may be applied only to payment of the principal of, interest and premium on such municipal obligations;

(iii) the principal of and interest on the United States Treasury Obligations (plus any cash in the escrow) has been verified by the report of independent certified public accountants to be sufficient to pay in full all principal of, interest, and premium, if any, due and to become due on the municipal obligations ("Verification");

(iv) the cash or United States Treasury Obligations serving as security for the municipal obligations are held by an escrow agent or trustee in trust for owners of the municipal obligations;

(v) no substitution of a United States Treasury Obligation will be permitted except with another United States Treasury Obligation and upon delivery of a new Verification; and

(vi) the cash or the United States Treasury obligations are not available to satisfy any other claims, including those by or against the trustee or escrow agent.

(h) Investments in a money market fund rated "AAm" or "AAAm-G" or better by S&P and having a rating in the highest investment category granted thereby from Moody's, including, without limitation any mutual fund for which the Trustee or an affiliate of the Trustee serves as investment manager, administrator, shareholder servicing agent, or custodian or subcustodian, notwithstanding that (i) the Trustee or an affiliate of the Trustee receives fees from funds for services rendered, (ii) the Trustee collects fees for services rendered pursuant to the Indenture, which fees are separate from the fees received from such funds, and (iii) services performed for such funding and pursuant to the Indenture may at times duplicate those provided to such funds by the Trustee or an affiliate of the Trustee.

"Placement Agent" means Brandis Tallman, LLC and its successors and assigns.

"Principal Account" means the account by that name established and held by the Trustee in the Redemption Fund pursuant to a Supplemental Indenture.

"Principal Office" means the corporate trnst office of the Trustee at the address set forth in the Indenture, provided, however for transfer, registration, exchange, payment and surrender of Bonds means care of the corporate trust office of The Bank of New York Mellon Trust Company, N.A. in Los Angeles, California or such other office designated by the Trustee from time to time and such office as the Trustee may designate in writing to the Authority from time to time as the place for transfer, registration, surrender, exchange or payment of the Bonds.

"Program" means the California Enterprise Development Authority Water Efficiency and Property Assessed Clean Energy (PACE) and Job Creation Program.

"Program Administration Costs" means the costs directly related to the administration of the Bonds and the Assessment Liens, as determined by the Program Administrator or the Authority in its sole discretion, including but not limited to: the Program Administrator fees, the

4844-5572-6100.l A-6

actual costs of preparing the annual Assessment Installment collection schedules (whether by the Program Administrator or a third party) and the actual costs of collecting the Assessment Installments (whether by the Program Administrator or otherwise); the actual costs of remitting the Assessment Installments to the Trustee; the actual costs of the Trustee (including its legal counsel) in the discharge of its duties under the Indenture; the actual costs of the Authority or its designee of complying with the disclosure provisions of the Assessment Law, the Bond Law, federal securities laws and the Indenture, including those related to public inquiries regarding the Assessment Liens and disclosure to Owners of the Bonds; the actual costs of the Authority or its designee related to an appeal or challenge of the Assessment; any amount required to be rebated to the federal government, if any; and allocable share of salaries of the Authority staff directly related to the foregoing including a proportional amount of Authority general administrative overhead related thereto.

"Program Administrator" means the company hired by the Executive Director of the Authority to administer the PACE Program.

"Program Costs" means the acquisition and construction and/or installation costs of the Improvements within a District financed under this Master Indenture and a Supplemental Indenture, including but not limited to Program application fees, energy audit or consulting fees, and incidental title insurance, appraisal and legal fees.

"Program Report" means the policies and procedures governing the administration of the PACE Program as may be amended or supplemented from time to time.

"Property Owner{s}" means the owners of the real property which is subject to the Assessment lien(s).

"Record Date" means, with respect to any Interest Payment Date, the fifteenth (15th) calendar day of the month preceding such Interest Payment Date.

"Redemption Fund" means the fund established for each series of Bonds and held by the Trustee pursuant to a Supplemental Indenture.

"Registration Books" means the records maintained by the Trustee pursuant to the Indenture for the registration and transfer of ownership of the Bonds.

"Reserve Fund" means the account established for each series of Bonds and held by the Trustee pursuant to a Supplemental Indenture.

"Reserve Requirement" means the amount determined under a Supplemental Indenture to be set aside for reserves for the payment of the Bonds.

"S&P" means Standard & Poor's, its successors and assigns.

"Securities Depositories" means The Depository Trust Company, 55 Water Street, 50th Floor, New York, New York 10041-0099, Attn: Call Notification Department, Fax (212) 855-7232; and, in accordance with then current guidelines of the Securities and Exchange

4844-5572-6100.l A-7

Commission, such other addresses and/or such other securities depositories as the Authority may designate in a Certificate of the Authority delivered to the Trustee.

"State" means the State of California.

"Trustee" means The Bank of New York Mellon Trust Company, N.A, and its successors and assigns, and any other corporation or association which may at any time be substituted in its place as provided in the Indenture.

"Trustee Fee" means the annual amount charged by the Trustee to the Authority for services under the Indenture.

4844-5572-{; I 00.1 A-8

APPENDIXB

SUMMARY OF MASTER INDENTURE

The following is a brief summary of the provisions of the Master Indenture. Such Summary is not intended to be definitive and is subject to all of the terms and provisions of the Master Indenture. Reference is made to the complete documents for the complete terms thereof.

Pledge and Assignment

The Bonds are issued upon and are secured by the unpaid Assessments (the "Assessment Installments") together with interest thereon and such unpaid Assessment Installments together with interest thereon constitute a trust fund for the redemption and payment of the principal of the Bonds and the interest thereon. The Bonds shall be equally secured by a pledge and charge upon the Assessment Installments and such moneys without priority for number, date of Bonds, date of execution or date of delivery; and the payment of the interest on and principal of the Bonds and any premiums upon the redemption of any thereof shall be and are secured by the Assessment Installments and such moneys. So long as any of the Bonds are Outstanding, the Assessment Installments and such moneys shall not be used for any other purpose.

Application of Proceeds; Funds and Accounts

Improvement Fund. The Trustee may establish a special fund designated as the "Improvement Fund," and shall keep such funds separate and apart from all other funds and moneys held by the Trustee and shall administer such fund as provided herein and in a Supplemental Indenture. There shall be deposited in the Improvement Fund the proceeds of sale of each series of the Bonds required to be deposited therein pursuant to Section 2.06 hereof and a Supplemental Indenture, and any other funds from time to time deposited with the Trustee for such purpose.

Costs oflssuance Fund. The Trustee may establish a special fund designated as the Costs of Issuance Fund which shall keep such fund separate and apart from all other funds and moneys held by the Trustee and shall administer such Fund as provided herein and in a Supplemental Indenture. The moneys in the Costs of Issuance Fund shall be disbursed by the Trustee to pay the Costs oflssuance for each series of the Bonds and after one hundred twenty (120) days after the issuance of each series of the Bonds the remaining moneys shall be transferred as provided in the Section 3.03 of the Master Indenture.

Reserve Fund. There may be established under each Supplemental Indenture a separate fund to be known as the Reserve Fund, which shall be held by the Trustee for benefit of the bondholders of the respective Series of Bonds. Said fund shall keep separate and apart from all other funds and moneys held by the Trustee. The Trustee shall deposit the Reserve Requirement to the respective Reserve Fund upon the issuance of each series of Bonds. The Reserve Fund shall constitute a trust fund for the benefit of the owners of the respective series of Bonds and shall be maintained, used, transferred, reimbursed and liquidated according to Section 3.06 of the Master Indenture and the Supplemental Indenture.

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Collections Fund. The Trustee shall establish a special fund pursuant to a Supplemental Indenture designated as the "Collections Fund." All moneys at any time deposited by the Trustee in the Collections Fund shall be held in trust for the benefit of the Owners of the Bonds and the Program Administrator. So long as any Bonds are Outstanding, the Program Administrator shall not have any beneficial right or interest in the Collections Fund or the moneys deposited therein, except only as provided in this Indenture, and such moneys shall be used and applied by the Trustee as hereinafter set forth.

Application of Moneys.

(a) All amounts on deposit in the Collections Fund (which are Assessment Installments, prepayment moneys, Program Administration Costs, and penalties, interest and fees) shall be allocated first to the Redemption Fund, then to the Reserve Fund for the amount required to bring the Reserve Fund to the Reserve Requirement. Any excess funds shall be deposited at the end of each Fiscal Year into the Administration Costs Fund for payment of Program Administration Costs and Authority Administration Costs and as further provided in a Supplemental Indenture.

(b) All amounts in the Redemption Fund, including prepayment premiums, shall be used and withdrawn by the Trustee solely for the purpose of paying principal and interest with respect to the Bonds in the following order of priority, and as further provided in a Supplemental Indenture:

First, to the payment of interest with respect to the Bonds;

Second, to the payment of principal and the premium thereon with respect to the Bonds;

( c) Interest Account. On or before each Interest Payment Date, the Trustee shall deposit in the Interest Account created under a Supplemental Indenture an amount required to cause the aggregate amount on deposit in the Interest Account to equal the amount of interest becoming due and payable on such Interest Payment Date on all Outstanding Bonds. No deposit need be made into the Interest Account if the amount contained therein is at least equal to the interest becoming due and payable upon all Outstanding Bonds on such Interest Payment Date. All moneys in the Interest Account shall be used and withdrawn by the Trustee solely for the purpose of paying the interest on the Bonds as it shall become due and payable (including accrued interest on any Bonds redeemed prior to maturity).

( d) Principal Account. On or before each date on which the principal of the Bonds shall be payable, the Trustee shall deposit in the Principal Account created under a Supplemental Indenture an amount required to cause the aggregate amount on deposit in the Principal Account to equal the aggregate amount of principal coming due and payable on such date on the Bonds pursuant to Section 2.03, or the redemption price of the Bonds ( consisting of the principal amount thereof and any applicable redemption premiums) required to be redeemed on such date pursuant to any of the provisions of Section 4.01. All moneys in the Principal Account shall be used and withdrawn by the Trustee solely for the purpose of (A) paying the principal of the

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Bonds at the maturity thereof, or (B) paying the principal of and premium (if any) on any Bonds upon the redemption thereof as provided by a Supplemental Indenture.

(e) Administration Costs Fund. The moneys in the Administration Costs Fund shall be used solely for the purpose of paying any and all applicable Program Administration Costs and Authority Administration Costs; and applicable prepayment premium, and penalties, interest and fees due to the Program Administrator. Amounts shall be deposited into the Administration Costs Fund (i) from the proceeds of each series of Bonds; (ii) from the Program Administration Costs portion of the Assessment Installments; (iii) from the Authority Administration Costs portion of the Assessment Installments; (iv) from the prepayment penalties above the premium, if any, owing and due to the Program Administrator as provided in Section 4.0l(d) and Section 5.04 hereof; and (v) from the delinquency charges and other fees, if any. The Trustee shall disburse moneys in the Administration Costs Fund only upon a receipt of a certificate and requisition in substantially the form as set forth in Exhibit B, on which the Trustee may conclusively rely, with bills, invoices or statements attached (which supporting documentation the Trustee has no duty or obligation to review), signed by Program Administrator or the Authority setting forth the amounts to be disbursed for payment or reimbursement of Program Administration Costs and Authority Administration Costs and the name and address of the person or persons to whom said amounts are to be disbursed.

(f) Sources of funds for the payment of the Bonds shall be from Assessment Installments and any voluntary contributions made by the Participating Member Jurisdictions, if any, and such amounts shall be applied to pay principal and interest with respect to the Bonds on any Interest Payment Date or on any Redemption Date.

Investments

Except as provided in the Indenture, moneys held by the Trustee under the Indenture shall, upon written order of an Authority Representative delivered to the Trustee, be invested and reinvested by the Trustee, to the extent practicable, in Permitted Investments. If an Authority Representative shall fail to so direct investments, the Trustee shall invest the affected moneys in Permitted Investments described in paragraph (f) of the definition thereof. An Authority Representative may, by written order filed with the Trustee, direct investment of moneys held by the Trustee in specific Permitted Investments. Investments, if registrable, shall be registered in the name of and held by the Trustee or its nominee. The Trustee may purchase or sell to itself or any affiliate, as principal or agent, investments authorized by the Indenture. Such investments and reinvestments shall be made giving full consideration to the time at which funds are required to be available. The Trustee and its affiliates may act as sponsor, advisor, depository, principal or agent in the making or disposing of any investment or the holding of funds under the Indenture. The Trustee shall not be responsible or liable for any loss suffered in connection with any investment of funds made by it in accordance with the Indenture.

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Redemption of the Bonds

(a) Optional Redemption from Prepayments of Assessments. The Bonds are subject to optional call and redemption prior to maturity on any date as provided in a Supplemental Indenture.

(b) Mandatory Sinking Funding Redemption. The Bonds are subject to mandatory sinking fund redemption as provided in a Supplemental Indenture.

(c) Special Mandatory Redemption. The Bonds of a Series are subject to special mandatory redemption in whole or in part, at a redemption price equal to 100% of the principal amount such Series of Bonds and accrued and unpaid interest thereon, on a Redemption Date (which shall be an Interest Payment Date), in the event (i) the construction of the Improvements to be financed by such Series of Bonds (including but not limited to commencing the permit process) has not commenced within 180 days of the issuance of the Series of Bonds or (ii) Bond proceeds of such series of the Bonds are not utilized for any reason to fund Program Costs within 2 years of the issuance of the applicable series of the Bonds.

(d) Special Mandatory Redemption from Prepayment of Assessments. The Bonds of a Series are subject to special mandatory redemption in whole or in part, at a redemption price equal to 103% of the principal amount of such Series of Bonds and accrued and unpaid interest thereon, on any March 2 or September 2 which is not less than 90 days following receipt by the Trustee of an Assessment prepayment. The Trustee shall apply the prepayment to: any delinquent installments of principal and interest, penalties accrued to the date of prepayment, unpaid principal of the Assessment, interest to the next Interest Payment Date which is not less than 90 days after the date of prepayment, redemption premium, and administration fees. The Trustee shall deposit the Assessment prepayment to the Redemption Account for prepayment of the Bonds of such series. Bonds shall be selected by lot within the same series and shall only be redeemed in integral multiples of $5,000. In the event that a Bond is of a denomination larger than $5,000, a portion of such Bond may be redeemed, but only in the principal amount of $5,000 or any multiple thereof. All Bonds called for redemption will cease to bear interest after the specified redemption date, provided funds for their redemption are on deposit at the place of payment at that time.

Selected Covenants

Compliance With and Enforcement of the Indenture and the Assessment Law. The Authority covenants and agrees with, and for the benefit of, the Trustee and the Owners of the Bonds to perform on all Bonds and all duties imposed under the Indenture. The Authority further covenants and agrees to comply with the provisions of the Assessment Law. The Authority shall only finance such Parcel and Improvements as are permitted under the Assessment Law and any amendments thereto.

Collection of Assessments. The Authority will comply with all requirements of the Assessment Law, the Act and the Indenture to assure the timely collection of Assessment Installments including without limitation, the enforcement of delinquent Assessment Installments. To that end, the following shall apply:

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(a) The Assessments shall be collected in semi-annual installments, together with interest on the declining balances, on the tax roll on which general taxes on real property are collected, and are payable and become delinquent at the same time and in the same proportionate amounts and bear the same proportionate penalties and interest after delinquency as do general taxes. The procedures for foreclosure and sale of Parcels after default shall be as provided in the Indenture.

(b) Prior to recording the Assessment lien upon a Parcel, the Authority shall obtain from the Property Owner: either (i) a FIGTREE PACE Property Owner Disclosure and Acknowledgement stating that said owner has been informed that executing an Assessment Contract, receiving financing for authorized improvements and consenting to the assessment levied against the Parcel without lender consent may constitute an event of default under said owner's mortgage, and said owner takes the sole responsibility for consequences of such default which may include acceleration of repayment obligations due under said owner's mortgage, or (ii) a Lender Consent representing the acknowledgement and approval of the respective lender holding a lien on the subject Parcel.

( c) Delinquent Assessment Installments shall be paid from the moneys available in the Reserve Fund. The Authority has made the express election in the Resolution that under Section 8769(b) of the Assessment Law, the Authority shall not be obligated to advance funds, other than funds held in the Reserve Fund, to pay any delinquencies on the Bonds.

Commence Foreclosure. The Assessments shall be collected in semi-annual installments, together with interest on the declining balances on the tax roll on which general taxes on real property are collected, and are payable, and shall become delinquent at the same time and in the same proportionate amounts and bear the same proportionate penalties and interest after delinquency as do general taxes. The Authority covenants with and for the benefit of the Bond owners that it will order and cause to be commenced and thereafter diligently prosecute an action in the superior court to foreclose any Assessment lien or installment thereof which has not been paid pursuant to and as provided in sections 8830 and 8835 of the Assessment Law, as follows:

On each August 30 commencing the first August after the Closing Date, the Authority shall review the County assessment roll to determine whether all Assessment Installments are current and in the event there are delinquencies, within 7 days, the Authority shall direct the Program Administrator to commence a foreclosure action; and (ii) a foreclosure action against parcels with delinquent assessments shall be commenced prior to the December 1 following the June 30th delinquency.

Punctual Payment; Extension of Payment of Bonds. The Authority shall punctually pay or cause to be paid the principal, interest and premium (if any) to become due in respect of all of the Bonds, in strict conformity with the terms of the Bonds and of the Indenture, according to the true intent and meaning thereof, but only out of Assessment Installments and other assets pledged for such payment as provided in the Indenture.

Against Encumbrances. The Authority shall not create, or permit the creation of, any pledge, lien, charge or other encumbrance upon the Assessment Installments and other assets

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pledged or assigned under the Indenture while any of the Bonds are Outstanding, except the pledge and assignment created by the Indenture. Subject to this limitation, the Authority expressly reserves the right to enter into one or more other indentures for any of its corporate purposes, including other programs under the Act, and reserves the right to issue other obligations for such purposes.

Power to Issue Bonds and Make Pledge and Assignment. The Authority is duly authorized pursuant to law to issue the Bonds and to enter into the Indenture and to pledge and assign the Assessment Installments and other assets purported to be pledged and assigned, respectively, under the Indenture in the manner and to the extent provided in the Indenture. The Bonds and the provision of the Indenture are and will be the legal, valid and binding special obligations of the Authority in accordance with their terms, and the Authority and the Trustee shall at all times, subject to the provisions of the Indenture, and to the extent permitted by law, defend, preserve and protect said pledge and assignment of Assessment Installments and other assets and all rights of the Bond owners under the Indenture against all claims and demands of all persons whomsoever.

Accounting Records and Financial Statements. The Trustee shall at all times keep, or cause to be kept, proper books of record and account, prepared in accordance with industry standards, in which complete and accurate entries shall be made of all transactions made by the Trustee relating to the proceeds of Bonds, the Assessment Installments and all funds and accounts held by it pursuant to the Indenture. Such books of record and account shall be available for inspection by the Authority during regular business hours with reasonable prior notice.

No Continuing Disclosure. The Bonds are being offered in a principal amount less than $1,000,000 and therefore the provisions of Rule 15c2-12 of the Securities and Exchange Act, as amended, do not require the Authority or any other party to provide continuing disclosure to owners of the Bonds. Neither the Authority, Program Administrator any Member Jurisdiction, nor property owner has agreed to or is obligated to provide any information concerning the Bonds after the purchase by a qualified investor.

Further Assurances. Subject to the other provisions of the Indenture, the Authority and the Trustee ( at the cost of the Authority) will make, execute and deliver any and all such further resolutions, instruments and assurances as may be reasonably necessary or proper to carry out the intention or to facilitate the performance of the Indenture, and for the better assuring and confirming unto the Owners of the Bonds the rights and benefits provided thereto.

Filing. The Authority shall be responsible for the filing of any supplemental instruments or documents of further assurance as may be required by law in order to perfect the security interests created by the Indenture. The Trustee shall not be responsible for such filing. The Trustee shall cooperate with the Authority in making any such filing.

Amendment of Indenture

The Indenture and the rights of the Owners of the Bonds, may be modified or amended at any time by a supplemental agreement which shall become effective when the written consent of a majority in aggregate principal amount of the Bonds then Outstanding, exclusive of Bonds

4844-5572.{;]00.l B-6

disqualified as provided in the Indenture. No such modification or amendment shall (1) extend or have the effect of extending the fixed maturity of any Bond or reducing the interest rate with respect thereto or extending the time of payment of interest, or reducing the amount of principal thereof, without the express consent of the Owner of such Bond, or (2) modify any of the rights or Bonds of the Trustee without its written assent thereto. Any such supplemental agreement shall become effective as provided in the Indenture.

The Indenture and the Participation Agreements may be modified or amended at any time by supplemental agreement without the consent of any such Owners, but only to the extent permitted by law and only (1) to cure, correct or supplement any ambiguous or defective provision contained herein or therein, or (2) in regard to questions arising hereunder or thereunder, as the parties hereto or thereto may deem necessary or desirable, and which shall not, in the Opinion of Counsel, materially adversely affect the interest of the Owners of the Bonds, or (3) in connection with a Supplemental Indenture. Any such supplemental agreement shall become effective upon its issuance.

Procedure for Amendment with Written Consent of Bond Owners. The Indenture and the Participation Agreements may be amended by supplemental agreement as provided in the Indenture in the event the consent of the Owners of the Bonds is required pursuant to the Indenture. A copy of such supplemental agreement, together with a request to the Bond owners for their consent thereto, shall be mailed by the Trustee to the Owner of each Bond at his address as set forth in the Bond Register, but failure to mail copies of such supplemental agreement and request shall not affect the validity of the supplemental agreement when assented to as provided in the Indenture.

The Indenture may not be modified without the consent of the Participating Member Jurisdictions if such modification materially adversely affects the finances or the operation of any Participating Member Jurisdictions. In such event, the Authority shall obtain the prior written consent of such Participating Member Jurisdictions, which consent shall not be unreasonably withheld.

Events of Default

The following events shall be Events of Default under the Indenture:

(a) Default in the due and punctual payment of the principal of any Bond when and as the same shall become due and payable, whether at maturity as therein expressed, by proceedings for redemption, by acceleration or otherwise.

(b) Default in the due and punctual payment of interest on any Bond when and as such interest shall become due and payable.

(c) Failure by the Authority to observe and perform any of the covenants, agreements or conditions on its part in the Indenture or in the Bonds contained, other than as referred to in the preceding clauses (a) and (b), for a period of sixty (60) days after written notice, specifying such failure and requesting that it be remedied has been given to the Authority by the Trustee, or to the Authority and the Trustee by the Owners of the Bonds of not less than twenty-five percent

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(25%) in the aggregate principal amount of the Bonds at that time outstanding; provided, however, that if in the reasonable opinion of the Authority the failure stated in such notice can be corrected, but not within such sixty ( 60) day period, such failure shall not constitute an Event of Default if corrective action is instituted by the Authority within such sixty ( 60) day period and diligent! y pursued until such failure is corrected.

( d) The filing by the Authority of a petition or answer seeking reorganization or arrangement under the federal bankruptcy laws or any other applicable law of the United States of America, or if a court of competent jurisdiction shall approve a petition, filed with or without the consent of the Authority, seeking reorganization under the federal bankruptcy laws or any other applicable law of the United States of America, or if, under the provisions of any other law for the relief or aid of debtors, any court of competent jurisdiction shall assume custody or control of the Authority or of the whole or any substantial part of its property.

Remedies of Owners. Following the occurrence of an event of default, any Owners shall have the right for the equal benefit and protection of all Owners similarly situated:

(a) By mandamus or other suit or proceeding at law or in equity to enforce his rights against the Authority and any of the members, officers and employees of the Authority, and to compel the Authority or any such members, officers or employees to perform and carry out their duties under the Assessment Law and their agreements with the owners as provided in the Indenture;

(b) By suit in equity to enjoin any acts or things which are unlawful or violate the rights of the Owners; or

( c) Upon the happening of an Event of Default ( as defined in the Indenture), by a suit in equity to require the Authority and its members, officers and employees to account as the trustee of an express trust.

Discharge oflndenture

If the Authority shall pay and discharge any or all of the Outstanding Bonds of a Series in any one or more of the following ways:

(a) by well and truly paying or causing to be paid the principal of, and the interest and premium (if any) on, such Bonds as and when the same become due and payable;

(b) by irrevocably depositing with the Trustee, in trust, at or before maturity, money which, together with the available amounts then on deposit in the funds arid accounts established with the Trustee pursuant to the Indenture is fully sufficient to pay such Bonds, including all principal, interest and premiums (if any); or

( c) by irrevocably depositing with the Trustee or any other fiduciary, in trust, Defeasance Securities in such amount as an Independent Accountant shall determine will, together with the interest to accrue thereon and available moneys then on deposit in the funds and accounts established with the Trustee pursuant to the Indenture be fully sufficient to pay and

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discharge the indebtedness on such Bonds (including all principal, interest and redemption premiums) at or before their respective maturity dates; and if such Bonds are to be redeemed prior to the maturity thereof notice of such redemption shall have been mailed pursuant to the Indenture or provision satisfactory to the Trustee shall have been made for the mailing of such notice, then, at the Request of the Authority, and notwithstanding that any of such Bonds shall not have been surrendered for payment, the pledge of the Assessment Installments and other funds provided for in the Indenture with respect to such Series of Bonds, and all other pecuniary obligations of the Authority under the Indenture with respect to all such Bonds of that Series, shall cease and terminate, except only the obligation of the Authority to pay or cause to be paid to the Owners of such Bonds not so surrendered and paid all sums due thereon from amounts set aside for such purpose as aforesaid, and all expenses and costs of the Trustee. Any funds held by the Trustee following any payments or discharge of the Outstanding Bonds pursuant to the Indenture, which are not required for said purposes, shall be applied as provided by the Assessment Law.

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APPENDIXC

FORM OF OPINION OF BOND COUNSEL




OPINION OF BOND COUNSEL

Ladies and Gentlemen:

We have acted as bond counsel to the California Enterprise Development Authority (the "Authority"), solely to provide this opinion in connection with issuance of the $809,900 California Enterprise Development Authority Water Efficiency and Property Assessed Clean Energy (PACE) and Job Creation Program Limited Obligation hnprovement Bonds, Series 2013A (the "Bonds"). We are providing this Opinion Letter pursuant to Section 3.lO(c)(i) of the Bond Purchase Agreement dated July 9, 2013 between the Inland Bond Acquisition LLC (the Purchaser) and the Authority (the "Purchase Agreement"). All terms not otherwise defined herein shall have the meaning ascribed in the Master Indenture of Trust (the "Master Indenture") dated as of July 1, 2013, by and between the Authority and The Bank ofNew York Mellon Trust Company, N.A., as Trustee (the "Trustee"), as supplemented by the First Supplemental Indenture between the Authority and Trustee dated July 1, 2013 ( collectively, the "Indenture").

The Bonds are being issued pursuant to Chapter 29 of Part 3 of Division 7 of the California Streets and Highways Code (commencing with Section 5898.12 et seq.) and the hnprovement Act of 1915 codified at Chapter 29 Part 1 of Division 10 of the California Streets and Highways Code (commencing with Section 8500 et seq.) (collectively, the "Assessment Law"). The Bonds are subject to optional and mandatory redemption as shall be described in a Supplemental Indenture.

The Authority will apply the proceeds of the Bonds to create and implement the Authority's Water Efficiency and Property Assessed Clean Energy (PACE) and Job Creation Program (the "Program") by financing the installation of distributed renewable energy, energy efficiency and water conservation equipment (the "Improvements") on improved commercial, industrial and certain residential property within its Participating Member Jurisdictions. Proceeds of the Bonds will be applied to pay for the costs of installation of the Improvements, fund a reserve fund for the Bonds and pay costs of issuance associated with the issuance of the Bonds.

The Bonds are dated the date hereof, mature, bear interest, are payable and are subject to redemption prior to maturity in whole or in part, all as provided in the Indenture.

In our capacity as such counsel, we have examined originals, or copies identified to our satisfaction as being true copies, of such records, documents or other instruments as in our judgment are necessary or appropriate to enable us to render the opinions expressed below, including such records and documents of Authority and such certificates of public officials and officers of Authority as we have deemed necessary or appropriate for

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purposes of this opinion. These records, documents and instruments also included execution copies or counterparts of the following documents ( collectively, the "Authority Documents"):

1. The Master Indenture;

2. The First Supplemental Indenture;

3. The Purchase Contract; and

4. Issuer's General Certificate.

In rendering the opinions set forth below, we have examined the Authority Documents and have made such inquiries and investigations oflaw and fact as we have deemed necessary to render the opinions hereinafter set forth. As to certain matters of fact material to the opinions expressed herein, we have relied on the assumptions herein with your consent. Based upon our examination of the Authority Documents, and based upon and subject to the assumptions, qualifications, limitations, exceptions and disclaimers herein set forth, we are of the opinion that:

1. The Bonds constitute a valid and binding, special, limited obligation of the Authority.

2. The Indenture has been duly authorized, executed and delivered by the Authority and is valid and binding upon the Authority and, assuming due authorization, execution and delivery by the Trustee, is enforceable in accordance with its terms.

3. The Bonds are valid and binding limited assessment obligations of the Authority, payable solely from and secured by the unpaid Assessment Installments (as defined in the Indenture) and certain funds held under the Indenture and are not a pledge upon the funds or property of the Authority or any of its members except to the extent of the Assessment Installments as described above. The Indenture creates a valid lien on the Assessment Installments and causes the effective transfer of all of the Authority's right, title and interest therein to the Trustee for the benefit of the Owners of the Bonds.

4. Under existing statutes, interest on the Bonds is exempt from present State of California personal income taxes.

In reaching the opinions set forth below, we have assumed the following:

(a) Each of the parties to the Authority Documents, other than Authority, has duly and validly executed and delivered each of the Authority Documents to which such party is a signatory, and such party's obligations set forth in the Authority Documents are its legal, valid and binding obligations, enforceable in accordance with their respective terms, and each such party, other than Authority, has obtained all consents required by it in connection with the execution and delivery of the Authority Documents to which it is a party, and the performance of all its obligations under, and the consunnnation of the transactions contemplated by the Authority Documents to which it is a party. We have assumed herein that each party to the Authority Documents, other than the Authority, is in compliance with respective applicable law relating to the transactions contemplated under the Authority Documents.

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(b) That all material factual matters, including without limitation, representations and warranties, contained in the Authority Documents and certifications and opinions executed in connection with the issuance of the Bonds, are true and correct as set forth therein, and that all conditions to, and requirements for, the effectiveness of the Authority Documents, have been satisfied or waived.

(c) The Trustee is a National Banking Association insured by the Federal Deposit Insurance Corporation.

( d) The Authority Documents will be governed by and construed in accordance with the laws of the State of California without regard to its conflicts of law principles.

The op1mons expressed in this letter are made subject to and are qualified by the following qualifications, limitations, exceptions and disclainiers:

1. We have been engaged as bond counsel to the Authority in connection with the issuance of the Bonds. Accordingly, the foregoing opinions apply only insofar as the law of the State of California or of the United States of America may be concerned, and we express no opinion with respect to the laws of any other jurisdiction. We assume no obligation to supplement this opinion if any applicable laws change after the date of this opinion, or if we become aware of any facts that might change the opinions expressed above after the date of this opinion, including without limitation any subsequent transaction or securitization of the Bonds. We will not assume any obligation of any nature whatsoever to provide future updates of the opinions assumptions, limitations, or qualifications set forth herein.

2. Unless explicitly stated in this letter, the foregoing opinions do not address any of the following legal issues, and we specifically express no opinion with respect thereto:

(a) Compliance with fiduciary duty requirements;

(b) Title to the Property in the Assessment Lien, or the accuracy of its description;

( c) The sufficiency of the description of the Property to provide notice to third parties of the lien or security interest provided for in the Authority Documents;

(d) Compliance with the transactions contemplated under the Authority Documents with any state or federal securities laws.

( e) The impact of contingencies, including, without limitation, the possibility of wars, strikes, catastrophes, accidents, econoinic calamity, tax law changes, changes in governniental policies, presently unknown claims or litigation, budget shortfalls other similar matters arising in the future.

( f) Any laws and rules adopted by any city, county, other municipality or any local governniental agency or entity other than the Authority;

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(g) Any laws and regulations not customarily recognized as being applicable to transactions similar to the transactions contemplated by the Authority Documents.

3. Our opinions expressed above as to the enforceability of any instrument are subject to the following:

( a) The effect and application of bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium, and other laws now or hereafter in effect which relate to or limit creditors' rights generally;

(b) The effect and application of general principles of equity, whether considered in a proceeding in equity or at law;

( c) Limitations imposed by or resulting from the exercise by any court of its discretion;

( d) Limitations imposed by reason of generally applicable public policy principles or considerations;

( e) Limit or affect the enforceability of a waiver of a right of redemption; and

(f) Any provision which purports to disclaim a person's or entity's liability for, or create an obligation to indemnify a person or entity against, such person's or entity's negligence, actions or omissions.

4. The opinions herein expressed are strictly limited to the matters stated herein and the facts assumed hereby, and no opinion is implied or may be inferred beyond specific matters and assumptions expressly stated.

5. We confirm that we do not have any financial interest in the Authority or the Bonds, and that other than as bond counsel for the Authority, we have no interest in the Authority or the Purchaser and do not serve as director, officer or an employee of the Authority or the Purchaser. We have no undisclosed interest in the subject matters of this opinion.

6. The opinions expressed in the letter are an expression of professional judgment and are not a guarantee of a result. This opinion letter is provided as of the date hereof based upon the facts as of the date hereof and the assumptions, qualifications limitations, exceptions and exclusions set forth in this opinion letter. We expressly decline any undertaking to advise you of any legal development arising subsequent to the date of this letter that would cause us to amend any portion of this opinion letter, including our opinions or the qualifications contained in this opinion letter, in part or in whole.

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7. The opinions expressed in this letter are given solely for the benefit of the Trustee, the Authority and the Purchaser under Section3 .10( c )(i) of the Purchase Agreement and may not be relied upon by the Trustee, the Authority and the Purchaser, or any other person, for any other purpose without our prior written consent.

· Very truly yours,

LEWIS BRISBOIS BISGAARD & SMITH LLP

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APPENDIXD

QUALIFIED INVESTOR LETTER

July 9, 2013

California Enterprise Development Authority Sacramento, California

Figtree Company, Inc. San Diego, California

Lewis Brisbois Bisgaard & Smith LLP La Quinta, California

The Bank of New York Mellon Trust Company, N.A. Los Angeles, California

Ladies and Gentlemen:

This letter acknowledges the intent of the undersigned (the "Purchaser'') to purchase a portion of the above-captioned Bonds (the "Bonds") issued by the California Enterprise Development Authority ("Issuer") for $809,900 ("Purchase Amount"), representing a price of 100% of the par amount of such Bonds having the terms set forth in that certain Indenture of Trust, as supplemented by the First Supplemental Indenture of Trust each to be entered into between Issuer and The Bank of New York Mellon Trust Company, N.A., dated July 1, 2013 ( collectively, the "Indenture").

In connection with such intent to purchase, Purchaser represents as follows:

(1) Purchaser has received from Issuer a copy of the Private Placement Memorandum including appendices thereto (the "Memorandum"), and Purchaser has read, understood, and relied upon the information contained in the Memorandum, including but not limited to the discussion of Risk Factors contained therein, and other information from the Issuer and Figtree Company, Inc ("Figtree") as described below in arriving at a decision to invest in the Bonds.

(2) Purchaser is aware that an investment in the Bonds involves special risks, including those disclosed in the Memorandum.

(3) Purchaser has adequate means of providing for Purchaser's current needs and contingencies and has no need for liquidity of Purchaser's investment in the Bonds, and Purchaser can bear the economic risk of losing Purchaser's entire investment in the Bonds.

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(4) Purchaser intends to sell or transfer all or a portion of the Bonds only as provided for in the Securities Act of 1933, as amended ("Securities Act") and any applicable securities laws of the State of California ("State Securities Law"), or the securities law of any other jurisdiction relevant to the offer of the Bonds. Purchaser will not sell or distribute the Bonds in violation of the Securities Act, the State Securities Law, or other applicable securities law.

( 5) Purchaser's overall commitment to investments which are not readily marketable is not disproportionate to Purchaser's net worth. Investment in the Bonds will not cause such overall commitment to become excessive.

(6) Purchaser has received sufficient information concerning the Bonds to make an informed and independent judgment with regard to the purchase of the Bonds. Purchaser has such knowledge and experience in financial and business matters as to be capable of evaluating the merits and risks of purchasing the Bonds or has received advice from Purchaser's attorney, accountant, or investment adviser, as Purchaser has deemed necessary and appropriate. Purchaser has been given the opportunity to ask questions and receive answers, verify information, and obtain additional information, and obtain additional documents and materials from Figtree or the Issuer through the Discussions. Purchaser has made an informed and independent decision as to the merits and risks of purchasing the Bonds.

(7) The offering of the Bonds has not been registered under the Securities Act, the Trust Indenture Act of 1939 (the "Trust Indenture Act"), or the securities law of any state and will not be sold, transferred, or otherwise disposed of without registration or compliance with such acts. The offering of the Bonds has not been registered under any state jurisdiction. The Issuer is not under any obligation to register, and has no intention to file a registration to permit, the transfer of the Bonds. A restrictive legend will be placed on each certificate evidencing the Bonds, and an appropriate notation will be made in the records of the Registrar for the Bonds, that the Bonds have been offered and sold not pursuant to registration under the Securities Act, the Trust Indenture Act, or under applicable state securities law.

(8) (A)

(B)

(C)

(D)

If an individual, Purchaser is at least 21 years of age;

Purchaser is_ is not_ (check one response) an accredited investor1

as the term is defined in Regulation D, Rule 501 adopted by the SEC pursuant to the Securities Act;

Purchaser is is not check one response) a qualified institutional buyer as the term is defined in Regulation 144A adopted by the SEC pursuant to the Securities Act;2

Either alone or with Purchaser's representative, Purchaser has such knowledge in business matters that the Purchaser is capable of evaluating

1 The term "accredited investor'' is defined on Page 5 of this letter. 2 The term "qualified institutional buyer'' is defined on Page 6 of this letter.

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the merits and risks of an investment in the Bonds, and, if Purchaser is relying upon a purchaser representative, Purchaser has attached a copy of a Purchaser Representative Questionnaire form completed by Purchaser's representative.

(9) Purchaser recognizes that there is no public market for the Bonds and that the nature of investment in the Bonds is highly speculative.

(I 0) Purchaser acknowledges that the Issuer has not undertaken to provide any continuing disclosure with respect to the Bonds under Rule I5c2-12 of the Securities Act.

(II) Purchaser acknowledges that the Bonds are transferable only in the context that:

(A) the transferring holder thereof shall first have complied with all applicable state and federal securities laws and regulations; and

(B) transfer or sale of the Bonds by the Purchaser may only be to an accredited investor1 or qualified institutional buyer. Prior to the transfer or sale of Bonds, the Purchaser shall provide to the Authority and Trustee an Investor Letter as defined in the Indenture from the transferee.

The closing of the purchase of the Bonds is expected to occur on or about July I 0, 2013, but may occur on a later mutually-satisfactory to Purchaser, Guarantor, and Company. As a condition to payment for the Bonds, Purchaser shall receive the opinion of Lewis Brisbois Bisgaard & Smith LLP substantially in the form attached as Appendix "C" to the Memorandum.

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DEFINITIONS

1. The term "accredited investor" means any person who comes within any of the following categories, or who the issuer reasonably believes comes within any of the following categories, at the time of the sale of the securities to that person:

(1) Any bank as defined in section 3(a)(2) of the Securities Act, or any savings and loan association or other institution as defined in section 3(a)(5)(A) of the Securities Act whether acting in its individual or fiduciary capacity; any broker or dealer registered pursuant to section 15 of the Securities Exchange Act of 1934; any insurance company as defined in section 2(13) of the Securities Act; any investment company registered under the Investment Company Act of 1940 or a business development company as defined in section 2(a)(48) of that Act; any Small Business Investment Company licensed by the U.S. Small Business Administration under section 301(c) or (d) of the Small Business Investment Act of 1958; any plan established and maintained by a slate, its political subdivisions, or any agency or instrumentality of a state or its political subdivisions, for the benefit of its employees, if such plan has total assets in excess of $5,000,000; any employee benefit plan within the meaning of the Employee Retirement Income Security Act of 1974 if the investment decision is made by a plan fiduciary, as defined in section 3(21) of such Act, which is either a bank, savings and loan association, insurance company, or registered investment adviser, or if the employee benefit plan has total assets in excess of $5,000,000 or, if a self-directed plan, with investment decisions made solely by persons that are accredited investors;

(2) Any private business development company as defined m section 202(a)(22) of the Investment Advisers Act of 1940;

(3) Any organization described in section 501(c)(3) of the Internal Revenue Code, corporation, Massachusetts or similar business trust, or partnership, not formed for the specific purpose of acquiring the securities offered, with total assets in excess of$5,000,000;

( 4) Any director, executive officer, or general partner of the issuer of the securities being offered or sold, or any director, executive officer, or general partner of a general partner of that issuer;

(5) Any natural person whose individual net worth, or joint net worth with that person's spouse, at the time of his purchase exceeds $1,000,000;

(6) Any natural person who had an individual income in excess of $200,000 in each of the two most recent years or joint income with that person's spouse in excess of $300,000 in each of those years and has a reasonable expectation of reaching the same income level in the current year;

(7) Any trust, with total assets in excess of $5,000,000, not formed for the specific purpose of acquiring the securities offered, whose purchase is directed by a sophisticated person as described in § 230.506(b )(2)(ii) of the Securities Act [Regulation D, Rule 51: 16(b )(2)(ii) 1; and

(8) Any entity in which all of the equity owners are accredited investors.

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2. The. term "qualified institutional buyer" means: (i) Any of the following entities, acting for its own account or the accounts of other qualified institutional buyers, that in the aggregate owns and invests on a discretionary basis at least $100 million in securities of issuers that are not affiliated with the entity:

(A) Any insurance company as defined in section 2(a)(13) of the Securities Act;

Note: A purchase by an insurance company for one or more of its separate accounts, as defined by section 2(a)(37) of the Investment Company Act of 1940 (the "Investment Company Act"), which are neither registered under section 8 of the Investment Company Act nor required to be so registered, shall be deemed to be a purchase for the account of such insurance company.

(B) Any investment company registered under the Investment Company Act or any business development company as defined in section 2( a)( 48) of that Act;

(C) Any Small Business Investment Company licensed by the U.S. Small Business Administration under section 301(c) or (d) of the Small Business Investment Act of 1958;

(D) Any plan established and maintained by a state, its political subdivisions, or any agency or instrumentality of a state or its political subdivisions, for the benefit of its employees;

(E) Any employee benefit plan within the meaning of title I of the Employee Retirement Income Security Act of 1974;

(F) Any trust fund whose trustee is a bank or trust company and whose participants are exclusively plans of the types identified in clause (ID) or (E) above, except trust funds that include as participants individual retirement accounts or H.R. 10 plans;

(G) Any business development company as defined in section 202(a)(22) of the Investment Advisers Act of 1940;

(H) Any organization described in section 501(c) (3) of the Internal Revenue Code, corporation (other than a bank as defined in section 3(a)(2) of the Securities Act or a savings and loan association or other institution referenced in section 3(a)(5)(A) of the' Securities Act or a foreign bank or savings and loan association or equivalent institution), partnership, or Massachusetts or similar business trust; and

(I) Any investment adviser registered under the Investment Advisers Act.

(i) Any dealer registered pursuant to section 15 of the Securities Exchange Act of 1934 (the "Exchange Act"), acting for its own account or the accounts of other qualified institutional buyers, that in the aggregate owns and invests on a discretionary basis at least $10 million of securities of issuers that are not affiliated with the dealer, provided, that securities constituting the whole or a part of an unsold allotment to or subscription by a dealer as a participant in a public offering shall not be deemed to be owned by such dealer;

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(ii) Any dealer registered pursuant to section 15 of the Exchange Act acting in a riskless principal transaction on behalf of a qualified institutional buyer;

Note: A registered dealer may act as agent, on a non-discretionary basis, in a transaction with a qualified institutional buyer without itself having to be a qualified institutional buyer.

(iii) Any investment company registered under the Investment Company Act, acting for its own account or for the accounts of other qualified institutional buyers, that is part of a family of investment companies which own in the aggregate at least $100 million in securities of issuers, other than issuers.

(iv) Any dealer registered pursuant to section 15 of the Exchange Act acting in a riskless principal transaction on behalf of a qualified institutional buyer; that are affiliated with the investment company or are part of such family of investment companies. "Family of investment companies" means any two or more investment companies registered under the Investment Company Act, except for a unit investment trust whose assets consist solely of shares of one or more registered investment companies, that have the same investment adviser ( or, in the case of unit investment trusts, the same depositor), provided that, for purposes of this section:

(J) Each series of a series company (as defined in Rule 18f-2 under the Investment Company Act) shall be deemed to be a separate investment company; and

(K) Investment companies shall be deemed to have the same adviser ( or depositor) if their advisers (or depositors) are majority-owned subsidiaries of the same parent, or if one investment company's adviser ( or depositor) is a majority-owned subsidiary of the other investment company's adviser (or depositor);

(i) Any entity, all of the equity owners of which are qualified institutional buyers, acting for its own account or the accounts of other qualified institutional buyers; and

(ii) Any bank as defined in section 3(a)(2) of the Securities Act, any savings and ban association or other institution as referenced in section 3(a)(5)(A) of the Securities Act, or any foreign bank or savings and loan association or equivalent institution, acting for its own account or the accounts of other qualified institutional buyers, that in the aggregate owns and invests on a discretionary basis at least $100 million in securities of issuers that are not affiliated with it and that has an audited net worth of at least $25 million as demonstrated. in its latest annual financial statements, as of a date not more than 16 months preceding the date of sale under the Rule in the case of a U.S. bank or savings and loan association, and not more than 18 months preceding such date of sale for a foreign bank or savings and loan association or equivalent institution.

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APPENDIXE

ECONOMIC AND DEMOGRAPIDC INFORMATION FOR THE

CITY OF FRESNO AND FRESNO COUNTY

The following iriforrnation concerning the County of Fresno and the City of Fresno is included only for the purpose of supplying general information regarding the area of the Parcels. The Bonds are not a debt of the City of Fresno, the County, the State or any of its political subdivisions, other than the Authority, and neither the City of Fresno, the County, the State nor any of its political subdivisions, other than the Authority, is liable therefor.

General

City of Fresno. The City of Fresno encompasses approximately 112 square miles and is located in the heart of California's San Joaquin Valley, which is predominantly an agriculturally based economy, but is promoting business growth through the expansion of industrial development and through partnerships with Fresno County, the I-5 Business Development Corridor, the Economic Development Corporation serving Fresno County and the Regional Jobs Initiative.

County of Fresno. Fresno County is California's fifth largest county, covering approximately 6,000 square miles. It is located in the geographic center of the State and is the nation's leading crop-producing county.

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Population

The table below shows comparable population data for the City of Fresno and Fresno County for 2002 through 2012.

POPULATION OF CITY OF FRESNO AND FRESNO COUNTY

2002 through 2012

City of Fresno Fresno County Annual Annual

Year Population % Change Population %Change 2002 440,193 821,809 2003 447,548 1.7% 837,256 1.9% 2004 452,909 1.2 853,057 1.9 2005 457,786 1.1 866,058 1.5 2006 463,405 1.2 879,128 1.5 2007 478,808 3.3 893,088 1.6 2008 485,335 1.4 906,521 1.5 2009 495,231 2.0 918,500 1.3 2010 494,182 (0.2) 929,758 1.2 2011 497,561 0.7 936,089 0.7 2012 505,009 1.5 945,711 1.0

Source: State Department of Finance estimates (as of January 1).

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Employment and Industry

The unemployment rate in Fresno County was 15.1 % in June 2012, down from a revised 16.3% in December 2011, and below the year-ago estimate of 15.8%. This compares with an unadjusted unemployment rate of 10.7% for California and 8.4% for the nation during the same period.

The following tables show civilian labor force and wage and salary employment data for Fresno County, for the years 2007 through 2011. These figures are county-wide statistics and may not necessarily accurately reflect employment trends in the City.

COUNTY OF FRESNO Civilian Labor Force!'l, Employment and Unemployment, Unemployment by Industry

(Annual Averages) 2007 through 2011

2007 2008 2009 2010 2011 Civilian Labor Force (I) 419,200 430,200 434,500 440,100 442,100

Employment 383,400 385,100 369,400 366,000 368,900

Unemployment 35,900 45,100 65,100 74,100 73,100

Unemployment Rate 8.6% 10.5% 15.0% 16.8% 16.5%

Wage and Sa1~ Em2Ioyment:C2)

Agriculture 48,100 48,900 45,100 46,000 46,500 Mining and Logging 100 100 200 200 200

Construction 21,100 17,900 13,700 12,000 11,600

Manufacturing 28,100 27,100 25,100 24,100 23,900

Wholesale Trade 13,500 12,900 11,900 11,500 12,300

Retail Trade 36,300 35,400 33,100 32,800 33,100

Trans., Warehousing, Utilities 10,700 11,000 10,600 10,800 11,100

Information 4,200 4,700 4,100 3,400 3,200

Financial and Insurance 10,800 10,300 9,500 9,300 9,100

Real Estate, Rental & Leasing 30,000 30,700 28,200 26,700 27,000

Professional and Business Services 38,900 40,100 40,200 40,700 41,500

Educational and Health Services 28,200 28,000 26,600 26,800 27,400

Leisure and Hospitality 11,000 10,600 10,200 10,000 9,900

Other Services 9,600 9,800 9,800 10,700 10,200

Federal Government 10,600 10,800 10,900 10,500 10,700

State Government 49,000 49,400 48,000 45,900 44,800

Local Government 48,100 48,900 45,100 46,000 46,500

Total All Industries (3) 354,500 351,900 331,500 325,500 326,300

(1) Labor force data is by place of residence; includes self-employed individuals, unpaid family workers, household domestic workers, and workers on strike.

(2) Industry employment is by place of work; excludes self-employed individuals, unpaid family workers, household domestic workers, and workers on strike.

(3) Totals may not add due to rounding. Source: State of California Employment Development Department.

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Major Employers

The largest employers in the City of Fresno for the year ending June 30, 2011 were as follows:

Emi!lo1:er Name 1 . Community Medical Centers 2. City of Fresno 3. Saint Agnes Medical Center

CITY OF FRESNO LARGEST EMPLOYERS

Year Ending June 30, 2011 (Ranked by Number of Employees)

Product/Service Medical

Government Medical

4. Kaiser Permanente Medical Center Medical 5. Foster Farms Food Products 6. Zacky Farms LLC Food Products 7. ArneriGuard Security Systems Retail 8. Guarantee Real Estate Real Estate 9. Rex Moore Electrical Contractors

and Engineers Service 10. Lyons Magnus Food Service/Products

Approximate Number of Emi!lo1:ees

6,000 3,790 2,800 2,160 1,100

900 700 502

500 400

Source: City of Fresno, Comprehensive Annual Financial Report for fiscal year ending June 30, 2011.

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Median Household Income

"Median Household Income" is defined as:

Income of Households - This includes the income of the householder and all other individuals 15 years old and over in the household, whether they are related to the householder or not. Because many households consist of only one person, average household income is usually less than average family income. Although the household income statistics cover the past 12 months, the characteristics of individuals and the composition of households refer to the time of interview. Thus, the income of the household does not include amounts received by individuals who were members of the household during all or part of the past 12 months if these individuals no longer resided in the household at the time of interview. Similarly, income amounts reported by individuals who did not reside in the household during the past 12 months but who were members of the household at the time of interview are included. However, the composition of most households was the same during the past 12 months as at the time of interview.

The median divides the income distribution into two equal parts: one-half of the cases falling below the median income and one-half above the median. For households and families, the median income is based on the distribution of the total number of households and families including those with no income. The median income for individuals is based on individuals 15 years old and over with income. Median income for households, families, and individuals is computed on the basis of a standard distribution.

The following table summarizes the median household effective buying income for the City of Fresno, the Fresno County, the State and the United States for the years 2007 through 2011.

CITY OF FRESNO, FRESNO COUNTY, THE STATE OF CALIFORNIA AND THE UNITED STATES

Median Household Income 2007 through 2011

City of Fresno Fresno County California United States $ 43,440 $ 46,903 $ 61,632 $ 52,762

Source: U. S. Census Bureau, American Community Survey, 5-Year Estimates.

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Commercial Activity

In 2009 the State Board of Equalization converted the business codes of sales and use tax permit holders to North American Industry Classification System codes. As a result of the coding change, data for 2009 and after is not comparable to that of prior years.

CITY OF FRESNO Taxable Transactions

Nnmber of Permits and Valuation of Taxable Transactions (Dollars in Thousands)

2007 through 2011

Retail Stores Total All Outlets

Number Taxable Number Tasable of Permits Transactions of Permits Transactions

2007 5,589 $5,495,981 11,163 $7,122,176 2008 5,720 $4,950,427 11,232 $6,591,134

2()()9llJ 6,646 $4,343,089 10,546 $5,667,810 2010"' 6,917 $4,478,073 10,816 $5,738,383 2011"' 6,988 $4,845,456 10,777 $6,225,734

(1) Not comparable to prior years. "Retail" category now includes "Food Services". Source: California State Board of Equalization, Taxable Sales in California {Sales & Use Tax).

Total taxable sales reported during calendar year 2011 in the County were $11.18 billion, a 10% increase from the total taxable sales of $10.15 billion in calendar year 2010. A summary of taxable sales from 2006 to 2010 within the County is shown in the following table.

COUNTY OF FRESNO Taxable Retail Sales

Number of Permits and Valuation of Taxable Transactions (shown in thousands of dollars)

2007 through 2011


Number Taxable Number Taxable of Permits Transactions of Permits Transactions

2006 9,425 $9,058,802 20,266 $12,560,649 2007 9,583 8,776,111 20,415 12,308,257 2008 9,848 7,872,783 20,273 11,729,171

2009v, 12,341 6,735,619 19,004 9,966,448 2010"' 12,160 6,973,969 18,652 10,154,265 2011"' 12,659 $7,602,313 19,238 $11,179,478

(]) Not comparable to prior years. "Retail" category now includes "Food Services". Source: California State Board of Equalization, Taxable Sales in California (Sales & Use Tax).

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APPENDIXF

ECONOMIC AND DEMOGRAPHIC INFORMATION FOR THE

CITY OF PALM SPRINGS AND RIVERSIDE COUNTY

The following information concerning the County of Riverside and the City of Palm Springs is included only for the purpose of supplying general information regarding the area of certain Parcels. The Bonds are not a debt of the City of Palm Springs, the County of Riverside, the State or any of its political subdivisions, other than the Authority, and neither the City of Palm Springs, the County of Riverside, the State nor any of its political subdivisions, other than the Authority, is liable therefor.

General

City of Palm Springs. The City of Palm Springs was incorporated as a general law city on April 20, 1938. It became a charter city on July 12, 1994. The city encompasses 96.2 square miles in eastern Riverside County, 108 miles east of downtown Los Angeles and 120 miles west of the Arizona border. Neighboring communities include Desert Hot Springs, Cathedral City, Rancho Mirage and Palm Desert.

County of Riverside. Riverside County is California's fourth-most populous county, with a population of 2,268,783. It is located in southern California and covers 7,208 square miles with climate zones ranging from Mediterranean to desert. Notable communities include the resort cities of Palm Springs, Rancho Mirage, Palm Desert, Indian Wells and La Quinta all located in the Coachella Valley region.

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Population

The table below shows comparable population data for the City of Pahn Springs and Riverside County for 2002 through 2012.

POPULATION OF CITY OF PALM SPRINGS AND RIVERSIDE COUNTY

2002 through 2012

City of Palm Springs Annnal

Riverside County

Year 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012

Population 43,179 43,358 43,441 43,963 44,308 44,154 44,026 44,346 44,480 44,829 45,279

%Cham?e 0.36% 0.41% 0.19% 1.20% 0.78% -0.35% -0.29% 0.73% 0.30% 0.78% 1.00%

Source: State Department of Finance estimates (as of January 1).

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Population 1,655,291 1,730,219 1,814,485 1,895,695 1,975,913 2,049,902 2,102,741 2,140,626 2,179,692 2,205,731 2,227,577

Annnal % Chani!e

4.13% 4.53% 4.87% 4.48% 4.23% 3.74% 2.58% 1.80% 1.82% 1.19% 4.13%

Employment and Industry

The unemployment rate in Riverside County was 12.7% in June 2012, up from a revised 12.6% in December 2011, and above the year-ago estimate of 11.6%. This compares with an unadjusted unemployment rate of 10.7% for California and 8.4% for the nation during the same period.

The following tables show civilian labor force and wage and salary employment data for Riverside County, for the years 2007 through 2011. These figures are county-wide statistics and may not necessarily accurately reflect employment trends in the City of Palm Springs.

COUNTY OF RIVERSIDE Civilian Labor Force, Employment and Unemployment, Unemployment by Industry

(Annual Averages) 2007 through 2011

2007 2008 2009 2010 2011 Civilian Labor Force 903,400 Not Reported Not Reported Not Reported 939,600

Civilian Employment 848,900 Not Reported Not Reported Not Reported 810,400

Civilian Unemployment 54,500 Not Reported Not Reported Not Reported 129,200 Civilian Unemployment Rate 6.0% Not Reported Not Reported Not Reported 13.7% Total, All Industries 620,200 592,000 546,300 536,000 548,800

Total Farm 13,000 13,100 12,400 12,400 12,800 Total Nonfarm 607,200 578,900 533,900 523,600 536,000

Goods Producing 124,000 103,700 79,900 73,700 73,700 Mining and Logging 700 500 500 400 400

Construction 68,900 54,700 40,400 35,400 34,300 Manufacturing 54,400 48,400 39,000 37,900 39,000

Durable Goods 39,300 34,000 26,800 26,400 27,700 Nondurable Goods 15,100 14,400 12,200 11,500 11,300

Service Providing 483,300 475,200 454,000 449,900 462,300 Trade, Transportation & Utilities 130,000 126,400 117,200 117,000 119,700

Wholesale Trade 21,100 20,400 18,700 19,100 19,900 Retail Trade 88,000 84,900 78,800 78,500 79,400 Transportation, Warehousing & 20,900 21,200 19,700 19,400 20,300

Information 7,800 7,700 8,500 10,200 9,600 Financial Activities 23,000 22,300 20,700 19,300 18,300

Finance & Insurance 13,500 12,400 11,800 11,100 10,900 Real Estate & Rental & Leasing 9,500 9,900 8,900 8,200 7,400

Professional & Business Services 63,000 58,000 53,600 50,300 52,700

Professional, Scientific & Technical 21,800 20,500 18,900 16,100 16,500 Management of Companies & 3,500 3,500 3,000 2,900 2,800 Administrative & Support & Waste 37,600 34,000 31,800 31,300 33,400

Educational & Health Services 56,900 58,100 57,900 58,000 61,600

Educational Services 6,200 6,200 6,200 5,500 5,300

Health Care & Social Assistance 50,700 51,900 51,700 52,600 56,200 Leisure & Hospitality 73,700 72,800 68,700 67,700 69,300

Arts, Entertainment & Recreation 10,600 10,500 10,000 9,900 9,600

Accommodation & Food Services 63,100 62,300 58,700 57,800 59,700

Other Services 20,100 19,400 18,100 18,300 19,000

Government 108,800 110,600 109,300 109,200 112,200

Federal Govermnent 6,400 6,600 6,900 7,600 7,000

State Govermnent 15,400 15,700 15,800 15,900 16,300

Local Government 87,100 88,300 86,600 85,600 88,900

Source: State of California Employment Development Department.

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Major Employers

The largest employers in the City of Palm Springs for the year ending June 30, 2012 were as follows:

Employer Name Spa Casino Desert Regional Medical Center Rehab Care Fusion Palm Springs Personoel Desert Sun Palm Springs Riviera Resort Savoury's Inc Agua Caliente Baod of Indiaos Eat at the Desert Hilton Palm Springs Resorts

CITY OF PALM SPRINGS PRINCIPAL EMPLOYERS Year Ending June 30, 2012

(Ranked by Number of Employees)

Product/Service Hospitality Medical Medical Local Government Newspaper Hospitality Catering Hospitality Hospitality Hospitality

Approximate Number of Employees

1000-4999 1000-4999

250-499 250-499 250-499 250-499 250-499 100-249 100-249 100-249

Source: City of Palm Springs, Comprehensive Annual Financial Report for f,scal year ending June 30, 2012.

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Median Household Income

"Median Household Income" is defined as:

Income of Households - This includes the income of the householder and all other individuals 15 years old and over in the household, whether they are related to the householder or not. Because many households consist of only one person, average household income is usually less than average family income. Although the household income statistics cover the past 12 months, the characteristics of individuals and the composition of households refer to the time of interview. Thus, the income of the household does not include amounts received by individuals who were members of the household during all or part of the past 12 months if these individuals no longer resided in the household at the time of interview. Similarly, income amounts reported by individuals who did not reside in the household during the past 12 months but who were members of the household at the time of interview are included. However, the composition of most households was the same during the past 12 months as at the time of interview.

The median divides the income distribution into two equal parts: one-half of the cases falling below the median income and one-half above the median. For households and families, the median income is based on the distribution of the total number of households and families including those with no income. The median income for individuals is based on individuals 15 years old and over with income. Median income for households, families, and individuals is computed on the basis of a standard distribution.

The following table summarizes the median household effective buying income for the City of Palm Springs, the County of Riverside, the State and the United States for the years 2007 through 2011.

CITY OF PALM SPRINGS, RIVERSIDE COUNTY, THE STATE OF CALIFORNIA AND THE UNITED STATES

Median Household Income 2007 through 2011

City of Pahn Springs Riverside County California United States $ 45,989 $ 58,365 $ 61,632 $ 52,762

Source: U. S. Census Bureau, American Community Sun,ey, 5-Y ear Estimates.

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Commercial Activity

In 2009 the State Board of Equalization converted the business codes of sales and use tax permit holders to North American Industry Classification System codes. As a result of the coding change, data for 2009 and after is not comparable to that of prior years.

CITY OF PALM SPRINGS Taxable Transactions

Number of Permits and Valuation of Taxable Transactions (Dollars in Thousands)

2007 through 2011



2007 Not Reported $176,806 Not Reported $219,366 2008 1,059 $648,728 2,043 $826,056 2009(!) 1,298 $579,183 1,865 $763,354 2010"1 1,320 $610,488 1,869 $806,540 2011\'J 1,409 $662,012 1,973 $880,426

(1) Not comparable to prior years. "Retail" category now includes "Food Services". Source: California State Board of Equalization, Taxable Sales in California (Sales & Use Tax).

Total taxable sales reported during calendar year 2011 in the County were $25.64 billion, a 10.7% increase from the total taxable sales of $23.15 billion in calendar year 2010. A summary of taxable sales from 2007 to 2011 within the County is shown in the following table.

COUNTY OF RIVERSIDE Taxable Retail Sales

Number of Permits and Valuation of Taxable Transactions (shown in thousands of dollars)

2007 through 2011



2007 22,918 $21,242,516 45,279 $29,023,609 2008 23,604 $18,689,249 46,272 $26,003,595 2009(1) 29,829 $16,057,488 42,765 $22,227,877 2010\'J 32,534 $16,919,500 45,688 $23,152,780 2011 Vi 33,398 $18,576,285 46,886 $25,641,497

(1) Not comparable to prior years. "Retail" category now includes "Food Services". Source: California State Board of Equalization, Taxable Sales in California {Sales & Use Tax).

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