NEW ISSUE- BOOK-ENTRY-ONLY NO RATING In the opinion of Quint & Thimmig LLP, San Francisco, California, Bond Counsel, subject to certain qualifications described herein, under existing law, interest on the 2007 Bonds is excludablefromgross income ofthe owners thereoffor federal income tax purposes and is not included as an item of tax preference in computing the federal alternative minimum tax for individuals and corporations under the Internal Revenue Code of 1986, as amended, but is taken into account in computing an adjustment used in determining the federal alternative minimum tax for certain corporations. In the further opinion of Bond Counsel, such interest is exempt from State of California personal income taxes. See "TAX MATTERS" herein. $6,100,000 TEJON RANCH PUBLIC FACILITIES FINANCING AUTHORITY COMMUNITY FACILITIES DISTRICT NO. 2000-1 (TEJON INDUSTRIAL COMPLEX PUBLIC IMPROVEMENTS) SPECIAL TAX BONDS, SERIES 2007-A Dated: Date of Delivery Due: September 1, 2037 The Tejon Ranch Public Facilities Financing Authority Community Facilities District No. 2000-1 (Tejon Industrial Complex Public Improvements) Special Tax Bonds Series 2007-A in the aggregate principal amount of$6,100,000 (the "2007 Bonds") are being issued by the Tejon Ranch Public Facilities Financing Authority (the "Authority") on behalf of the Tejon Ranch Public Facilities Financing Authority Community Facilities District No. 2000-1 (Tejon Industrial Complex Public Improvements) (the "District"). The Authority is a joint powers authority formed by the County of Kern (the "County") and the Tejon-Castac Water District (the "Water District"). The District is located in an unincorporated area of the County, approximately 83 miles north of downtown Los Angeles and is adjacent to Interstate 5. The 2007 Bonds are being issued to provide additional financing for various public improvements needed to develop property located within the District, to fund an increase in the balance in the Reserve Fund established under the Fiscal Agent Agreement, to fund capitalized interest on the 2007 Bonds to September 1, 2008 and to pay costs of issuance for the 2007 Bonds. The 2007 Bonds are authorized to be issued pursuant to the Mello-Roos Community Facilities Act of 1982, as amended (Sections 53311 et seq. of the Government Code of the State of California), and are being issued pursuant to a certain Fiscal Agent Agreement, dated as of June 1, 2000, by and between the Authority for and on behalf of the District and The Bank of New York Trust Company, N.A., a successor to BNY Western Trust Company, as fiscal agent (the "Fiscal Agent"), as amended and supplemented by Supplemental Agreement No. 1 to Fiscal Agent Agreement, dated as of December 1, 2003, and as amended and supplemented by Supplemental Agreement No. 2 to Fiscal Agent Agreement, dated as of November 1, 2007 (collectively, the "Fiscal Agent Agreement"). The 2007 Bonds are limited obligations of the Authority and are payable solely from a pledge and lien upon certain Special Taxes Revenues (as defined herein) and from certain other funds pledged under the Fiscal Agent Agreement, all as further described herein. The 2007 Bonds are secured on a parity under the Fiscal Agent Agreement with $23,540,000 of outstanding bonds issued by the Authority for the District in 2000 and in 2003, respectively. See "SOURCES OF PAYMENT FOR THE 2007 BONDS" herein. The 2007 Bonds are issuable in fully registered form and when issued will be registered in the name of Cede & Co., as nominee of The Depository Trust Company, New York, New York ("DTC"). Individual purchases may be made in principal amounts of $5,000 and integral multiples thereof and will be in book-entry form only. Purchasers of 2007 Bonds will not receive certificates representing their beneficial ownership of the 2007 Bonds but will receive credit balances on the books of their respective nominees. Interest on the 2007 Bonds will be payable on March 1, 2008 and semiannually thereafter on each September 1 and March 1. Principal of, premium, if any, and interest on the 2007 Bonds will be paid by the Fiscal Agent to DTC for subsequent disbursement to DTC Participants who are obligated to remit such payments to the beneficial owners of the 2007 Bonds. See "THE 2007 BONDS-Description of the 2007 Bonds" and APPENDIX H-"BOOK-ENTRY SYSTEM." Neither the faith and credit nor the taxing power of the Authority, the County, the Water District, the State of California or any political subdivision thereof is pledged to the payment of the 2007 Bonds. Except for the Special Taxes, no other taxes are pledged to the payment ofthe 2007 Bonds. The 2007 Bonds are not obligations of the County or the Water District or general obligations of the Authority, but are limited obligations of the Authority issued by the Authority for the District payable solely from Special Taxes and certain amounts held under the Fiscal Agent Agreement as more fully described herein. The 2007 Bonds are subject to optional redemption, mandatory sinking fund redemption and special mandatory redemption from Special Tax prepayments prior to maturity as set forth herein. See "TI-IE 2007 BONDS-Redemption" herein. THE PURCHASE OF THE 2007 BONDS INVOLVES CERTAIN RISKS AND THE 2007 BONDS ARE NOT SUITABLE INVESTMENTS FOR ALL TYPES OF INVESTORS. SEE TIIE SECTION OF THIS OFFICIAL STATEMENT ENTITLED "SPECIAL RISK FACTORS" FOR A DISCUSSION OF CERTAIN RISK FACTORS THAT SHOULD BE CONSIDERED, IN ADDITIONTOTIIEOTHERMATIERSSETFORTHHEREIN,INEVALUATINGTHEINVESTMENTQUALITYOFTHE2007 BONDS. TIIE 2007 BONDS ARE NOT RATED BY ANY RATING AGENCY. This cover page contains certain information for general reference only. It is not a summary of this issue. Investors are advised to read the entire Official Statement to obtain information essential to the making of an informed investment decision with respect to the 2007 Bonds. MATURITY SCHEDULE $6,100,000 5.625% Tenn Bonds due September 1, 2037 Yield: 5.650% CUSIP No.t 879083 BR3 The 2007 Bonds are offered when, as and if issued and accepted by the Underwriter, subject to approval as to their legality by Quint & Thimmig LLP, San Francisco, California, Bond Counsel, and subject to certain other conditions. Certain legal matters will be passed on for the Authority by its counsel. Certain legal matters will be passed on by Stradling Yocca Carlson & Rauth, a Professional Corporation, Newport Beach, California, as Disclosure Counsel to the Authority, and by Goodwin Procter LLP, Los Angeles, California, as counsel to Tejon Ranchcorp and its related entities owning land in the District. It is anticipated that the 2007 Bonds in book-entry form will be available for delivery to DTC in New York, New York, on or about November 14, 2007.

STONE & YOUNGBERG Dated: November 2, 2007 f Copyright 2007, American Bankers Association. CUSIP data herein is provided by Standard and Poor's, CUSIP Service Bureau, a division of The McGraw-Hill Companies, Inc. This data is not intended to create a database and does not serve in any way as a substitute for the CUSIP Se!Vice. Neither the Authority, the District nor the Unde,writer make any representations as to the accuracy ofCUSIP data herein.

TEJON RANCH PUBLIC FACILITIES FINANCING AUTHORITY COUNTY OF KERN STATE OF CALIFORNIA

BOARD OF DIRECTORS OF THE AUTHORITY Jeff Frapwell, Chairman Brent Dezember Charles Lackey Don Maben Joe Drew

AUTHORITY OFFICERS Brent Dezember, Executive Director Allen E. Lyda, Treasurer Ernest Conant, Secretary

BOND COUNSEL

Quint & Thimmig LLP San Francisco, California

SPECIAL TAX ADMINISTRATOR DISCLOSURE COUNSEL

David Taussig & Associates, Inc. Stradling Yocca Carlson & Rauth Newport Beach, California a Professional Corporation Newport Beach, California

AUTHORITY COUNSEL REAL ESTA TE APPRAISER

Law Offices of Young Wooldridge Bruce W. Hull & Associates, Inc. Bakersfield, California Ventura, California

FISCAL AGENT

The Bank of New York Trust Company, N.A. Los Angeles, California No dealer, broker, salesperson or other person has been authorized by the Authority, the District, the Fiscal Agent or the Underwriter to give any information or to make any representations in connection with the offer or sale of the 2007 Bonds 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 Authority, the District, the Fiscal Agent or the Underwriter. This Official Statement does not constitute an offer to sell or the solicitation of an offer to buy nor shall there be any sale of the 2007 Bonds by a person in any jurisdiction in which it is unlawful for such person to make such an offer, solicitation or sale.

This Official Statement is not to be construed as a contract with the purchasers or Owners of the 2007 Bonds. Statements contained in this Official Statement which involve estimates, forecasts or matters of opinion, whether or not expressly so described herein, are intended solely as such and are not to be construed as representations of fact. This Official Statement, including any supplement or amendment hereto, is intended to be deposited with a nationally recognized municipal securities depository.

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

The information set forth herein which has been obtained by the Authority from third party sources is believed to be reliable but is not guaranteed as to accuracy or completeness by the Authority, the District or the Fiscal Agent. fu accordance with its responsibilities under the federal securities laws, the Underwriter has reviewed the information in this Official Statement but does not guarantee its accuracy or completeness. The information and expressions of opinion herein are subject to change without notice and neither the delivery of this Official Statement nor any sale made hereunder shall, under any circumstances, create any implication that there has been no change in the affairs of the Authority or the District, the landowners within the District or any other parties described herein since the date hereof. All summaries of the Fiscal Agent Agreement or 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 on file with the Authority for further information in connection therewith.

Certain of the taxpayers within the District maintain internet websites that contain certain information regarding such taxpayers. fuformation contained therein is not a part of this Official Statement and should not be relied upon in making an investment decision with respect to the 2007 Bonds.

Certain statements included or incorporated by reference in this Official Statement constitute "forward-looking statements" within the meaning of the United States Private Securities Litigation Reform Act of 1995, Section 21E of the United States Securities Exchange Act of 1934, as amended, and Section 27A of the United States Securities Act of 1933, as amended. Such statements are generally identifiable by the terminology used such as "plan," "expect," "estimate," "project," "budget" or other similar words. Such forward-looking statements include, but are not limited to, certain statements contained in the information under the caption "THE COMMUNITY FACILITIES DIS1RICT," "THE DEVELOPMENT AND PROPERTY OWNERSHIP" and APPENDIX B.

THE ACHIEVEMENT OF CERTAIN RESULTS OR OTHER EXPECTATIONS CONTAINED IN SUCH FORWARD-LOOKING STATEMENTS INVOLVE KNOWN AND UNKNOWN RISKS, UNCERTAINTIES AND OTHER FACTORS WHICH MAY CAUSE ACTUAL RESULTS, PERFORMANCE OR ACHIEVEMENTS DESCRIBED TO BE MATERIALLY DIFFERENT FROM ANY FUTURE RESULTS, PERFORMANCE OR ACHIEVEMENTS EXPRESSED OR IMPLIED BY SUCH FORWARD-LOOKING STATEMENTS. THE DIS1RICT DOES NOT PLAN TO ISSUE ANY UPDATES OR REVISIONS TO THE FORWARD-LOOKING STATEMENT SET FORTH IN THIS OFFICIAL STATEMENT.

IN CONNECTION WITH THE OFFERING OF THE 2007 BONDS, THE UNDERWRITER MAY OVERALLOT OR EFFECT TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF SUCH 2007 BONDS AT A LEVEL ABOVE THAT WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN MARKET. SUCH STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME.

THE 2007 BONDS HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, IN RELIANCE UPON AN EXEMPTION CONTAINED IN SUCH ACT. THE 2007 BONDS HAVE NOT BEEN REGISTERED OR QUALIFIED UNDER THE SECURITIES LAWS OF ANY STATE. Table of Contents

Page INTRODUCTION ...... 1 Forward Looking Statements ...... 2 The District ...... 2 Sources of Payment for the Bonds ...... 3 Description of the 2007 Bonds ...... 4 Tax Matters ...... 5 Professionals Involved in the Offering ...... 5 Relationship of Certain District Board Members to Landowners ...... 5 Continuing Disclosure ...... 6 Bond Owners' Risks ...... 6 Other Information ...... 6 THE FINANCING PLAN ...... 6 ESTIMATED SOURCES AND USES OF FUNDS ...... 7 THE 2007 BONDS ...... 8 Authority for Issuance ...... 8 Purpose of the 2007 Bonds ...... 8 Description of the 2007 Bonds ...... 8 Redemption ...... 9 Selection of 2007 Bonds for Redemption ...... 10 Notice of Redemption ...... 10 Effect of Redemption ...... 10 Transfer and Exchange of 2007 Bonds ...... 11 Debt Service Schedule for the 2007 Bonds and Prior Bonds ...... 12 Estimated Debt Service Coverage ...... 13 SOURCES OF PAYMENT FOR THE 2007 BONDS ...... 14 Limited Obligations ...... 14 Special Taxes ...... 14 Reserve Fund and Letter of Credit ...... 18 Issuance of Parity Bonds ...... 20 THE COMMUNITY FACILITIES DISTRICT ...... 20 General Description of the District ...... 20 Description of Authorized Facilities ...... 21 Principal Taxpayers ...... 23 Direct and Overlapping Debt ...... 25 Assessed Value-to-Lien Ratios ...... 25 Estimated Value-to-Lien Ratios Based on Appraised Values ...... 26 THE DEVELOPMENT AND PROPERTY OWNERSHIP ...... 29 The Landowners ...... 29 General Description of the Development...... 31 Status of Land Use Approvals for Future Development ...... 32 Estimated Sources and Uses of Funds and Projected Cash Flow ...... 35 Appraisal ...... 3 7 SPECIAL RISK FACTORS ...... 38 Concentration of Ownership ...... 38 Competition ...... 39 Limited Obligations ...... 39 Insufficiency of Special Taxes; Release of Zone 2 Property ...... 40 Failure to Develop Properties ...... 40 Possible Release or Reduction of Letter of Credit ...... 42 Table of Contents (continued)

Endangered Species ...... 42 Natural and Manmade Disasters ...... 43 Hazardous Substances ...... 43 Parity Taxes, Special Assessments and Land Development Costs ...... 44 Disclosures to Future Purchasers ...... 45 Special Tax Delinquencies ...... 45 Non-Cash Payments of Special Taxes ...... 45 Payment of the Special Tax is not a Personal Obligation of the Owners ...... 46 Property Values ...... 46 FDIC/Federal Government Interests in Properties ...... 47 Bankruptcy and Foreclosure ...... 4 7 No Acceleration Provision ...... 48 Loss of Tax Exemption ...... 48 Limitations on Remedies ...... 49 Limited Secondary Market...... 49 Proceedings to Reduce or Terminate the Special Tax ...... 49 Ballot Initiatives ...... 50 CONTINUING DISCLOSURE ...... 50 TAXMATTERS ...... 51 LEGALMATTERS ...... 52 ABSENCE OF LITIGATION ...... 52 NORATING ...... 52 UNDERWRITING ...... 52 FINANCIAL INTERESTS ...... 52 PENDING LEGISLATION ...... 53 ADDITIONAL INFORMATION ...... 53

APPENDIX A RATE AND METHOD OF APPORTIONMENT OF SPECIAL TAXES ...... A-1 APPENDIXB APPRAISALREPORT ...... B-1 APPENDIX C GENERAL INFORMATION CONCERNING THE COUNTY OF KERN ...... C-1 APPENDIXD SUMMARY OF FISCAL AGENT AGREEMENT ...... D-1 APPENDIX E CONTINUING DISCLOSURE AGREEMENT OF THE AUTHORITY ...... E-1 APPENDIX F CONTINUING DISCLOSURE AGREEMENT OF TEJON RANCHCORP ...... F-1 APPENDIX G FORM OF OPINION OF BOND COUNSEL...... G-1 APPENDIX H BOOK-ENTRY SYSTEM ...... H-1

11 PACI PlC OCHA N

~ TEJON RANCH PIJUJ.'1'11\'CJ C,HtJOJ.UA.'' UIJ.lCY PIOVlDlXO :roa C.A.LlJ'OiltlJ.'S J'UYu•• [THIS PAGE INTENTIONALLY LEFT BLANK] $6,100,000 TEJON RANCH PUBLIC FACILITIES FINANCING AUTHORITY COMMUNITY FACILITIES DISTRICT NO. 2000-1 (TEJON INDUSTRIAL COMPLEX PUBLIC IMPROVEMENTS) SPECIAL TAX BONDS, SERIES 2007-A

INTRODUCTION

The purpose of this Official Statement, which includes the cover page, the table of contents and the attached appendices (collectively, the "Official Statement"), is to provide certain information concerning the issuance by the Tejon Ranch Public Facilities Financing Authority (the "Authority") of the $6,100,000 Tejon Ranch Public Facilities Financing Authority Community Facilities District No. 2000-1 (Tejon Industrial Complex Public Improvements) Special Tax Bonds, Series 2007-A (the "2007 Bonds"). All capitalized terms used in this Official Statement and not defined herein shall have the meanings set forth in APPENDIX D­ "SUMMARY OF FISCAL AGENT AGREEMENT."

The Authority is a joint powers authority formed by the County of Kern (the "County") and the Tejon­ Castac Water District (the "Water District"). The proceeds of the 2007 Bonds will be used to provide additional financing for various public improvements which have been or are to be installed with respect to the proposed development within Tejon Ranch Public Facilities Financing Authority Community Facilities District No. 2000-1 (Tejon Industrial Complex Public Improvements) (the "District"), to fund an increase in the balance in the Reserve Fund securing the Bonds (as defined below), to fund capitalized interest on the 2007 Bonds to September 1, 2008 and to pay costs of issuance for the 2007 Bonds.

The Reserve Fund, which serves as security for the Prior Bonds (as defined below) and which will serve as security for the 2007 Bonds, is currently underfunded and will be increased to its required balance on the closing date for the 2007 Bonds with a combination of proceeds of Special Taxes (defined below) paid by the owners of the undeveloped property in the District and the proceeds of the 2007 Bonds. See "SOURCES OF PAYMENT FOR THE BONDS-Reserve Fund and Letter of Credit" herein.

The 2007 Bonds are secured under the Fiscal Agent Agreement (as defined below) on a parity with the Authority's Special Tax Bonds, Series 2000-A originally issued in the aggregate principal amount of $17,000,000 and now outstanding in the amount of $16,670,000 (the "2000 Bonds") and the Authority's Special Tax Bonds, Series 2003-A originally issued in the aggregate principal amount of $6,900,000 and now outstanding in the amount of $6,870,000 (the "2003 Bonds," and together with the 2000 Bonds, the "Prior Bonds"). The 2007 Bonds and the Prior Bonds are collectively referred to herein as the "Bonds." See "THE FINANCING PLAN" herein.

The 2007 Bonds are authorized to be issued pursuant to the Mello-Roos Community Facilities Act of 1982, as amended (Sections 53311 et seq. of the Government Code of the State of California) (the "Act"), and are being issued pursuant to a Fiscal Agent Agreement, dated as of June 1, 2000, by and between the Authority for and on behalf of the District and The Bank of New York Trust Company, N.A., a successor to BNY Western Trust Company, as fiscal agent (the "Fiscal Agent"), as supplemented and amended by Supplemental Agreement No. 1 to Fiscal Agent Agreement, dated as of December 1, 2003 and by Supplemental Agreement No. 2 to Fiscal Agent Agreement, dated as of November 1, 2007 (collectively, the "Fiscal Agent Agreement"). The 2007 Bonds and the outstanding Prior Bonds will be secured on a parity under the Fiscal Agent Agreement by a pledge of and lien upon Special Tax Revenues (as defined therein) and all moneys on deposit in the Bond Fund and the Reserve Fund. See "SOURCES OF PAYMENT FOR THE 2007 BONDS."

This introduction is not a summary of this Official Statement. It is only a brief description of and guide to, and is qualified by, more complete and detailed information contained in this entire Official Statement and the documents summarized or described herein. A full review should be made of the entire

1 Official Statement. The sale and delivery of 2007 Bonds to potential investors is made only by means of the entire Official Statement.

Forward Looking Statements

Certain statements included or incorporated by reference in this Official Statement constitute "forward-looking statements" within the meaning of the United States Private Securities Litigation Reform Act of 1995, Section 21E of the United States Securities Exchange Act of 1934, as amended, and Section 27A of the United States Securities Act of 1933, as amended. Such statements are generally identifiable by the terminology used such as a "plan," "expect," "estimate," "project," "budget" or similar words. Such forward­ looking statements include, but are not limited to certain statements contained in the information under the caption "THE COMMUNITY FACILITIES DISTRICT," "THE DEVELOPMENT AND PROPERTY OWNERSHIP" and APPENDIX B-"APPRAISAL REPORT."

THE ACHIEVEMENT OF CERTAIN RESULTS OR OTHER EXPECTATIONS CONTAINED IN SUCH FORWARD-LOOKING STATEMENTS INVOLVE KNOWN AND UNKNOWN RISKS, UNCERTAINTIES AND OTHER FACTORS WHICH MAY CAUSE ACTUAL RESULTS, PERFORMANCE OR ACHIEVEMENTS DESCRIBED TO BE MATERIALLY DIFFERENT FROM ANY FUTURE RESULTS, PERFORMANCE OR ACHIEVEMENTS EXPRESSED OR IMPLIED BY SUCH FORWARD-LOOKING STATEMENTS. NEITHER THE DISTRICT NOR THE AUTHORITY PLANS TO ISSUE ANY UPDATES OR REVISIONS TO THE FORWARD-LOOKING STATEMENTS SET FORTH IN THIS OFFICIAL STATEMENT.

The District

Development Status. The District is located in the southern end of the San Joaquin Valley in an unincorporated area of the County. The District is located near the intersection of Interstate 5 and State Highway 99 approximately 25 miles south of the City of Bakersfield and 83 miles north of downtown Los Angeles. Interstate 5 bisects the District. The District consists of approximately 1,878 total acres of which approximately 206 acres are developed and approximately 170 acres are planned for future development into commercial and industrial uses. Approximately 1,436 of the acres are zoned agricultural and approximately 21 acres are zoned commercial and as described herein are expected to be released from any obligation to pay Special Taxes pledged to repay the Bonds. See "-Special Taxes" below.

The property within the District on the east side of Interstate 5 is referred to in this Official Statement as the "Eastside Property" and the property within the District on the west side of Interstate 5 is referred to as the "Tejon Industrial Complex." In the Tejon Industrial Complex, approximately 177 acres of the approximately 311 acres planned for development have been developed, consisting of an approximately 50- acre improved parcel operating as a travel plaza for truckers and other motorists (the "Petro Travel Plaza"), two industrial buildings located on approximately 78 acres and 33 acres, respectively, and retail development and a motel located on approximately 16 acres. The balance of the land within the Tejon Industrial Complex has been partially improved with infrastructure consisting of roads, water, sewer and wastewater facilities and is being marketed to end users for industrial, light industrial and commercial uses. Approximately 30 of the 66 acres of the Eastside Property have been developed consisting of a truck stop, gas station and other travel related facilities; however, these existing improvements are to be demolished in 2008 and subsequently replaced by commercial development related to travel uses. The remaining approximately 36 acres of Eastside Property are undeveloped. It is expected that all of these acres will be developed, but that approximately 21 acres, which are located in Zone 2 (as described below), will be released from the obligation to pay Special Taxes, as described herein. See "-Special Taxes" below.

Bruce W. Hull and Associates, Inc. (the "Appraiser") has appraised certain parcels of land within the District in its "as is" condition based upon a number of limiting conditions and assumptions and has reported

2 the assessed values of certain developed parcels within the District. See "THE DEVELOPMENT AND PROPERTY OWNERSHIP-Appraisal" and APPENDIX B-"APPRAISAL REPORT."

Formation Process. The District was formed in March 2000 pursuant to the Act and the 2007 Bonds are being issued pursuant to the Act. The Act was enacted by the California legislature to provide an alternative method of financing certain public capital facilities and services, especially in developing areas of the State. Any local agency (as defined in the Act) may establish a community facilities district to provide for and finance the cost of eligible public facilities and services. Generally, the legislative body of the local agency which forms a community facilities district acts on behalf of such district as its legislative body. Subject to approval by two-thirds of the votes cast at an election and compliance with the other provisions of the Act, a legislative body of a local agency may issue bonds for a community facilities district and may levy and collect a special tax within such district to repay such indebtedness.

Pursuant to the Act, on January 25, 2000, the Board of Directors adopted the necessary resolutions stating its intent to establish the District, to authorize the levy of Special Taxes on taxable property within the boundaries of the District, and to have the District incur bonded indebtedness. On March 14, 2000, following a public hearing conducted pursuant to the provisions of the Act, the Board of Directors adopted resolutions establishing the District and calling a special election to submit the levy of the Special Taxes and the incurring of bonded indebtedness to the qualified voters of the District. Also, on March 14, 2000, at an election held pursuant to the Act, the three landowners who comprised the qualified voters of the District, authorized the District to incur bonded indebtedness in the aggregate principal amount of $30,000,000 and approved a rate and method of apportionment of the Special Taxes for the District. On April 25, 2000, the Board of Directors of the Authority adopted a resolution of consideration to alter the rate and method of apportionment of the Special Taxes to lower the Special Tax rate on certain undeveloped property. This alteration was approved by a vote of the landowners on May 30, 2000. The rate and method of apportionment of the Special Taxes in its amended form is set forth in Appendix A hereto (the "Rate and Method").

Special Taxes. The Rate and Method classifies property into Zone 1 and Zone 2. Zone 1 includes approximately 421 acres, consisting of the approximately 206 acres of property within the District that is currently developed, approximately 149 acres planned for development and approximately 66 acres planned for public uses and/or open space which will be exempt from the Special Tax. Zone 2 includes approximately 1,457 acres of undeveloped land, which is used primarily for grazing purposes, of which approximately 1,436 acres are Open Space Property (as defined in the Rate and Method) and approximately 21 acres of which are planned to be developed for retail purposes. Approximately 335 acres of Zone 2 property will be exempt from the Special Taxes, of which approximately 160 acres will be Open Space Property and of which approximately 175 acres will be for habitat conservation purposes and will be exempt from the Special Tax. So long as Zone 2 property remains undeveloped, it will be taxed only if additional monies are needed after the Special Tax has been levied at the maximum rates on the Zone 1 property. Although Zone 2 property is subject to the Special Tax, the District does not expect to levy any Special Tax on Zone 2 property for the repayment of the Bonds. The District expects that Zone 2 property will be released from its obligation to pay Special Taxes in the future upon satisfaction of the release conditions set forth in the Rate and Method, most of which have been satisfied as of the date of this Official Statement. The District does not give any assurance as to whether or when Zone 2 property will be released from its obligation to pay Special Taxes. See "SOURCES OF PAYMENT FOR THE 2007 BONDS-Special Taxes-Rate and Method of Apportionment of Special Taxes" and Section I of APPENDIX A-"RATE AND METHOD OF APPORTIONMENT OF SPECIAL TAXES."

Sources of Payment for the Bonds

As used in this Official Statement, the term "Special Tax" is that tax which has been authorized pursuant to the Act to be levied against certain land within the District pursuant to the Act and in accordance with the Rate and Method. See APPENDIXA-"RATE AND METHOD OF APPORTIONMENT OF SPECIAL TAXES." Under the Fiscal Agent Agreement, the Authority has pledged to repay the Bonds from the Special Tax Revenues and amounts on deposit in the Bond Fund and the Reserve Fund established under

3 the Fiscal Agent Agreement. Special Tax Revenues are defined in the Fiscal Agent Agreement to include the proceeds of the Special Taxes received by the Authority, including any scheduled payments and prepayments thereof, interest and penalties thereon and the proceeds of the redemption or sale of property sold as a result of foreclosure of the lien of the Special Taxes to the amount of said lien. Special Tax Revenues do not include interest and penalties on foreclosure of a lien of the Special Taxes in excess of the rate of interest payable on the Bonds.

The Special Taxes are the primary security for the repayment of the Bonds. In the event that the Special Taxes are not paid when due, the only sources of funds available to pay the debt service on the Bonds are amounts held by the Fiscal Agent in certain funds under the Fiscal Agent Agreement, including amounts held in the Reserve Fund. The Authority has covenanted for the benefit of the owners of the Bonds that it will commence, or cause to be commenced, within 60 days after the Treasurer of the Authority becomes aware of a delinquency, and diligently prosecute to judgment (unless the delinquency is brought current), judicial foreclosure proceedings against Assessor's parcels with delinquent Special Taxes. See "SOURCES OF PAYMENT FOR THE BONDS-Proceeds of Foreclosure Sales" herein.

An appraisal (the "Appraisal") of certain land and improvements within the District (the "Appraised Property") was prepared by the Appraiser, with a date of value of August 7, 2007. The Appraisal provides an estimate of the market value of the fee simple interest of the Appraised Property subject to the lien of the Special Tax and based on certain assumptions and limiting conditions contained in the Appraisal. The Appraisal also reports the fiscal year 2007-08 assessed value of the parcels within the District, other than the Appraised Property, which are subject to a Special Tax levy. These parcels have a combined assessed value of $23,640,841. Based upon the assumptions and limiting conditions set forth in the Appraisal and the current development plan being undertaken by District landowners, the Appraiser is of the opinion that the market value of the Appraised Property in the District as of August 7, 2007 was $147,619,000. The $171,259,841 total value reported in the Appraisal results in an estimated value-to-lien ratio of 5.65 to 1 for the District as a whole. Of the total value reported in the Appraisal, $167,366,841 is for the Zone 1 property and $3,893,000 for the Zone 2 property (which Zone 2 property is subject to release from the Special Tax lien, as noted under the subheading "Special Taxes" above). Some of the parcels in the District have value-to-lien ratios of less than 3 to 1. See "THE COMMUNITY FACILITIES DISTRICT-Estimated Value-to-Lien Ratios Based on Values Reported in the Appraisal" herein. There is no assurance that the property within the District can be sold for the appraised value or assessed value or for a price sufficient to pay delinquent Special Taxes in the event of a default in payment of Special Taxes by the current or future landowners within the District. See "SPECIAL RISK FACTORS-Property Values" herein and APPENDIX B-"APPRAISAL REPORT."

NEITHER THE FAITH AND CREDIT NOR THE TAXING POWER OF THE AUTHORITY, THE WATER DISTRICT, THE COUNTY, THE STATE OF CALIFORNIA OR ANY POLITICAL SUBDIVISION THEREOF IS PLEDGED TO THE PAYMENT OF THE 2007 BONDS. EXCEPT FOR THE SPECIAL TAXES, NO OTHER TAXES ARE PLEDGED TO THE PAYMENT OF THE 2007 BONDS. THE BONDS ARE NOT OBLIGATIONS OF THE COUNTY OR THE WATER DISTRICT OR GENERAL OBLIGATIONS OF THE AUTHORITY, BUT ARE SPECIAL OBLIGATIONS OF THE AUTHORITY FOR THE DISTRICT PAYABLE SOLELY FROM SPECIAL TAXES AND AMOUNTS HELD UNDER THE FISCAL AGENT AGREEMENT AS MORE FULLY DESCRIBED HEREIN.

Description of the 2007 Bonds

The 2007 Bonds will be issued and delivered as fully registered bonds, registered in the name of Cede & Co. as nominee of The Depository Trust Company, New York, New York ("DTC"), and will be available to actual purchasers of the 2007 Bonds (the "Beneficial Owners") in the denominations of $5,000 or any integral multiple thereof, under the book-entry system maintained by DTC, only through brokers and dealers who are or act through DTC Participants as described herein. Beneficial Owners will not be entitled to receive physical delivery of the 2007 Bonds. See "BOOK-ENTRY-ONLY SYSTEM" herein.

4 Principal of, premium, if any, and interest on the 2007 Bonds is payable by the Fiscal Agent to DTC. Disbursement of such payments to DTC Participants is the responsibility of DTC and disbursement of such payments to the Beneficial Owners is the responsibility of DTC Participants. In the event that the book-entry­ only system is no longer used with respect to the 2007 Bonds, the Beneficial Owners will become the registered owners of the 2007 Bonds and will be paid principal and interest by the Fiscal Agent, all as described herein. See "BOOK-ENTRY-ONLY SYSTEM" herein.

The 2007 Bonds are subject to optional redemption, mandatory sinking fund redemption and special mandatory redemption from Special Tax prepayments as described herein. For more complete descriptions of the 2007 Bonds and the basic documentation pursuant to which they are being sold and delivered, see "THE 2007 BONDS" herein and APPENDIX D-"SUMMARY OF FISCAL AGENT AGREEMENT."

Tax Matters

In the opinion of Quint & Thimmig LLP, San Francisco, California ("Bond Counsel"), under existing law, the interest on the 2007 Bonds is exempt from personal income taxes of the State of California and, assuming compliance with certain covenants set forth in the Fiscal Agent Agreement described herein, is excludable from gross income of the owners thereof for federal income tax purposes and is not included as an item of tax preference in computing the federal alternative minimum tax for individuals and corporations under the Internal Revenue Code of 1986, as amended, but is taken into account in computing an adjustment used in determining the federal alternative minimum tax for certain corporations. Set forth in Appendix G is the opinion of Bond Counsel expected to be delivered in connection with the issuance of the 2007 Bonds. For a more complete discussion of such opinion and the tax consequences incident to the ownership of the 2007 Bonds, including certain exceptions to the tax treatment of interest, see "TAX MATTERS" herein.

Professionals Involved in the Offering

The Bank of New York Trust Company, N.A., Los Angeles, California, is acting as Fiscal Agent under the Fiscal Agent Agreement and will act as the initial Dissemination Agent under the Continuing Disclosure Agreement of the Authority and the Continuing Disclosure Agreement of Tejon Ranchcorp (herein defined). Stone & Youngberg LLC is the underwriter of the 2007 Bonds (the "Underwriter"). The legal proceedings in connection with the issuance and delivery of the 2007 Bonds are subject to the approval of Quint & Thimmig LLP, San Francisco, California, Bond Counsel. Certain legal matters will be passed on for the Authority by its counsel. Certain legal matters will be passed on by Stradling Yocca Carlson & Rauth, a Professional Corporation, Newport Beach, California, as Disclosure Counsel to the Authority ("Disclosure Counsel") and by Goodwin Procter LLP, Los Angeles, California, as counsel to Tejon Ranchcorp and its related entities, as landowners within the District ("Developer's Counsel"). Other professional services have been performed by David Taussig & Associates, Inc., Newport Beach, California as the Special Tax Administrator for the District, and Bruce W. Hull & Associates, Inc., Ventura, California, as Appraiser.

For information concerning respects in which certain of the above-mentioned professionals, advisors, counsel and agents may have a financial or other interest in the offering of the 2007 Bonds, see "FINANCIAL INTERESTS" herein.

Relationship of Certain District Board Members to Landowners

Two members of the Board of Directors of the Authority (the "Board of Directors") are appointed by the Water District. The election of the members of the Board of the Water District is controlled by the Tejon Ranch Co. and its affiliates as the present landowners within the Water District. The Tejon Ranch Co. owns a controlling interest in a majority of the landowners within the District. One member of the Board of Directors is an officer of the Tejon Ranch Co. as is the Treasurer of the Authority. See "FINANCIAL INTERESTS" herein.

5 Continning Disclosnre

Each of the Authority and the Tejon Ranchcorp, one of the landowners within the District, has agreed to provide, or cause to be provided, to each nationally recognized municipal securities information repository and any public or private repository or entity designated by the State as a state repository for purposes of Rule 15c2-12 adopted by the Securities and Exchange Commission (the "Rule") certain financial information and operating data on an annual basis and in the case of the landowner on a semiannual basis during the development period. The Authority has further agreed to provide, in a timely manner, notice of certain material events. These covenants have been made in order to assist the Underwriter in complying with the Rule. The Authority and Tejon Ranchcorp may elect to make any filings required under the Rule through the Central Post Office (as defined in Appendix E and Appendix F hereto). See "CONTINUING DISCLOSURE" herein and Appendix E and Appendix F hereto for a description of the specific nature of the annual reports to be filed by the Authority and Tejon Ranchcorp and notices of material events and a copy of the continuing disclosure agreements pursuant to which such annual reports are to be made. The Authority failed to file timely its reports due December 1, 2000, 2001 and 2002 for the 2000 Bonds. The Authority subsequently filed the past due reports for the 2000 Bonds and since its report due in 2003 has been current on its reports for the 2000 Bonds and the 2003 Bonds. Tejon Ranchcorp has never failed to comply with its filing requirements under the Rule.

Bond Owners' Risks

Certain events could affect the timely repayment of the principal of and interest on the 2007 Bonds when due. See the section of this Official Statement entitled "SPECIAL RISK FACTORS" for a discussion of certain factors which should be considered, in addition to other matters set forth herein, in evaluating an investment in the 2007 Bonds. The 2007 Bonds are not rated by any nationally recognized rating agency. The purchase of the 2007 Bonds involves risks, and the 2007 Bonds are not suitable investments for some types of investors. See "SPECIAL RISK FACTORS" herein.

Other Information

This Official Statement speaks only as of its date, and the information contained herein is subject to change.

Brief descriptions of the 2007 Bonds and the Fiscal Agent Agreement are included in this Official Statement. Such descriptions and information do not purport to be comprehensive or definitive. All references herein to the Fiscal Agent Agreement, the 2007 Bonds and the constitution and laws of the State as well as the proceedings of the Authority, acting as the legislative body of the District, are qualified in their entirety by references to such documents, laws and proceedings, and with respect to the 2007 Bonds, by reference to the Fiscal Agent Agreement. Capitalized terms not otherwise defined herein shall have the meanings set forth in the Fiscal Agent Agreement.

Copies of the Fiscal Agent Agreement, the Continuing Disclosure Agreement of the Authority and the Continuing Disclosure Agreement of Tejon Ranchcorp and other documents and information referred to herein are available for inspection and (upon request and payment to the Authority of a charge for copying, mailing and handling) for delivery from the Authority c/o Tejon Ranch Company, 4436 Lebec Road, Lebec, California 93243, Attention: Secretary.

THE FINANCING PLAN

The proceeds of the 2007 Bonds will be used to provide additional financing for various public improvements which have been or are to be installed with respect to the proposed development within the District, to fund a deposit to the Reserve Fund to increase the balance therein to the Reserve Requirement, to fund capitalized interest on the 2007 Bonds to September 1, 2008 and to pay costs of issuance for the 2007

6 Bonds. The Reserve Fund, which serves as security for the Prior Bonds and which will serve as security for the 2007 Bonds, is currently underfunded and will be increased to its required balance on the closing date for the 2007 Bonds with a combination of proceeds of Special Taxes paid by the owners of the undeveloped property in the District and the proceeds of the 2007 Bonds.

The Fiscal Agent Agreement requires the deposit of a letter of credit with the Fiscal Agent in the amount required under the Fiscal Agent Agreement and for the letter of credit to remain on deposit with the Fiscal Agent so long as any of the Prior Bonds are Outstanding. Tejon Ranchcorp has deposited a letter of credit in the amount of $4,584,420 with the Fiscal Agent which satisfies the current requirement under the Fiscal Agent Agreement. If the Prior Bonds are refunded, defeased or paid at maturity, the letter of credit will be released and there will be no letter of credit available to pay the Special Taxes levied against the property in the District for which the letter of credit has been provided. The letter of credit may also be reduced in amount if the parcels owned by Ikea or the parcels owned by Tejon Ranchcorp and its related entities are no longer responsible for more than 33% or more of the annual Special Taxes levied. See "SPECIAL RISK FACTORS-Possible Release or Reduction of Letter of Credit."

ESTIMATED SOURCES AND USES OF FUNDS

The following table sets forth the expected uses of 2007 Bond proceeds:

Sources of Funds Principal Amount of 2007 Bonds $ 6,100,000.00 Original Issue Discount (22,448.00) TOTAL SOURCES $ 6,077,552.00

Uses of Funds Improvement Fund $ 4,953,530.12 Reserve Fund 610,000.00 Capitalized Interest 273,546.88 Cost of Issuance Fund(!) 181,000.00 Underwriter's Discount 59 475.00 TOTAL USES $ 6,077,552.00

(1) To be used to pay legal fees, printing costs, Fiscal Agent fees and other Costs of Issuance for the 2007 Bonds.

7 THE 2007 BONDS

Authority for Issuance

The 2007 Bonds are being issued by the Authority for the District in the aggregate principal amount of $6,100,000 under and subject to the terms of the Fiscal Agent Agreement, the Act and other applicable laws of the State of California. See "SOURCES OF PAYMENT FOR THE 2007 BONDS."

Purpose of the 2007 Bonds

The 2007 Bonds are being issued to provide funds to: (i) provide additional financing for the costs of certain public facilities previously constructed or to be constructed with respect to the development of certain land within the District; (ii) pay costs of issuance for the 2007 Bonds; (iii) fund an increase in the balance of the Reserve Fund to increase the balance therein to the Reserve Requirement in effect following the issuance of the 2007 Bonds; and (iv) fund capitalized interest on the 2007 Bonds to September 1, 2008. See "ESTIMATED SOURCES AND USES OF FUNDS."

Description of the 2007 Bonds

The 2007 Bonds are being issued as fully registered bonds without coupons in denominations of $5,000 and any integral multiple thereof (not exceeding the principal amount maturing at any one time), and shall be dated the date of delivery thereof. The 2007 Bonds will be issued in book-entry only form and DTC will act as securities depository for the 2007 Bonds. So long as the 2007 Bonds are held in book-entry only form, (i) principal of, premium, if any, and interest on the 2007 Bonds will be paid directly to DTC for distribution to the beneficial owners of the 2007 Bonds in accordance with the procedures adopted by DTC and (ii) all references in this Official Statement to the Bondowners, the Bondholders or the Owners or Holders of the 2007 Bonds shall mean DTC and not the beneficial owners of the 2007 Bonds. See "BOOK-ENTRY SYSTEM" herein. The 2007 Bonds will mature on September 1, in the principal amounts and years, and bear interest, as shown on the inside cover of this Official Statement.

Interest on the 2007 Bonds will be payable semiannually on March 1 and September 1 of each year, commencing March 1, 2008 (each, an "Interest Payment Date") and will be computed on the basis of a 360- day year comprised of twelve 30-day months. Each 2007 Bond will bear interest from the Interest Payment Date next preceding the date of authentication thereof, unless (i) it is authenticated on an Interest Payment Date, in which event it shall bear interest from such Interest Payment Date, or (ii) it is authenticated prior to an Interest Payment Date and after the close of business on the Record Date preceding such Interest Payment Date, in which event it shall bear interest from such Interest Payment Date, or (iii) it is authenticated prior to the Record Date preceding the first Interest Payment Date in which event it shall bear interest from its dated date; provided, that if at the time of authentication of a 2007 Bond, interest is then in default thereon, such 2007 Bond shall bear interest from the Interest Payment Date to which interest has previously been paid or made available for payment thereon, or from its dated date, if no interest has previously been paid or made available for payment thereon.

In the event that the book-entry system described in Appendix H is no longer used with respect to the 2007 Bonds, the principal of the 2007 Bonds will be payable upon surrender thereof at the Principal Corporate Trust Office of the Fiscal Agent. Interest on the 2007 Bonds will be payable on each Interest Payment Date to the registered owner thereof as of the close of business on the Record Date immediately preceding each Interest Payment Date, such interest to be paid by check of the Fiscal Agent, mailed by first-class mail to the registered owner at his address as it appears on the Register (or at such other address as is furnished to the Fiscal Agent in writing by the registered owner). A registered owner of $1,000,000 or more in principal amount of 2007 Bonds may be paid interest by wire transfer in immediately available funds to an account in the United States if the registered owner makes a written request of the Fiscal Agent no later than the applicable Record Date.

8 Redemption

Optional Redemption. The 2007 Bonds are subject to optional redemption prior to their stated maturity on any Interest Payment Date as a whole, or in part, by lot, at redemption price (expressed as a percentage of the principal amount of the 2007 Bonds to be redeemed), as set forth below, together with accrued interest to the date of redemption as follows:

Redemption Dates Redemption Price Any Interest Payment Date from March 1, 2008 to and including March 1, 2015 103.0% September 1, 2015 and March 1, 2016 102.0 September 1, 2016 and March 1, 2017 101.0 September 1, 2017 and any Interest Payment Date thereafter 100.0

Mandatory Sinking Payment Redemption. The 2007 Bonds are subject to mandatory sinking payment redemption, in part, on September 1, 2031, and on each September 1 thereafter to maturity, by lot, at a redemption price equal to the principal amount thereof to be redeemed, together with accrued interest to the date of redemption, without premium, from sinking payments as follows:

Redemption Date (September 1) Sinking Payment 2031 $ 360,000 2032 375,000 2033 385,000 2034 1,135,000 2035 1,205,000 2036 1,280,000 2037(maturity) 1,360,000

The amount of 2007 Bonds to be redeemed pursuant to the foregoing schedule shall be reduced to the extent practicable so as to maintain the same debt service profile as in effect on the Closing Date on the 2007 Bonds as a result of any prior partial redemption of the 2007 Bonds, as specified in writing by the Treasurer of the Authority to the Fiscal Agent.

Special Mandatory Redemption from Special Tax Prepayments. The 2007 Bonds are subject to special mandatory redemption from prepaid Special Taxes and corresponding amounts transferred from the Reserve Fund in connection with any such prepayments, on any Interest Payment Date, in whole or in part, by lot, at the following redemption prices, expressed as a percentage of the principal amount of the 2007 Bonds to be redeemed, together with accrued interest to the date of redemption:

Redemption Dates Redemption Price Any Interest Payment Date from March 1, 2008 to and including March 1, 2015 103.0% September 1, 2015 and March 1, 2016 102.0 September 1, 2016 and March 1, 2017 101.0 September 1, 2017 and any Interest Payment Date thereafter 100.0

Purchase of 2007 Bonds. In lieu of payment at maturity or redemption, moneys in the Bond Fund may be used and withdrawn by the Fiscal Agent for purchase of Outstanding 2007 Bonds, upon the filing with the Fiscal Agent of an Officer's Certificate requesting such purchase, at a public or private sale as and when, and at such prices (including brokerage and other charges) as such Officer's Certificate may provide, but in no

9 event will 2007 Bonds be purchased at a price in excess of the principal amount thereof, plus interest accrued to the date of purchase and any premium which would otherwise be due if the 2007 Bonds were to be redeemed in accordance with the Fiscal Agent Agreement.

Selection of 2007 Bonds for Redemption

Whenever provision is made in the Fiscal Agent Agreement for the redemption of less than all of the 2007 Bonds or any given portion thereof, the Fiscal Agent shall select the 2007 Bonds to be redeemed, from all 2007 Bonds or such given portion thereof not previously called for redemption, by lot, in any manner which the Fiscal Agent in its sole discretion shall deem appropriate.

Notice of Redemption

So long as the 2007 Bonds are held in book-entry form, redemption notices will be sent only to Cede & Co. as the registered owner of the 2007 Bonds and not to the owner of any beneficial interest in the 2007 Bonds. See APPENDIX H-"THE BOOK-ENTRY SYSTEM."

The Fiscal Agent Agreement requires the Fiscal Agent to cause notice of any redemption to be mailed by first class mail, postage prepaid, at least thirty (30) days but not more than sixty (60) days prior to the date fixed for redemption, to the Underwriter, the Securities Depositories, one or more Information Services, and to the respective registered Owners of any 2007 Bonds designated for redemption, at their addresses appearing on the 2007 Bond registration books maintained by the Fiscal Agent at its Principal Office. Such mailing will not be a condition precedent to such redemption and failure to mail or to receive any such notice, or any defect therein, will not affect the validity of the proceedings for the redemption of such 2007 Bonds.

Such notice will state the redemption date, the redemption price and, if less than all of the then Outstanding 2007 Bonds are to be called for redemption, will designate the CUSIP numbers and the bond numbers of the 2007 Bonds to be redeemed, or will state that all 2007 Bonds between two stated 2007 Bond numbers, both inclusive, are to be redeemed or that all of the 2007 Bonds of one or more maturities have been called for redemption, will state as to any 2007 Bond called for redemption in part the portion of the principal of the 2007 Bond to be redeemed, will require that such 2007 Bonds be then surrendered at the Principal Office of the Fiscal Agent for redemption at the said redemption price, and will state that further interest on such 2007 Bonds will not accrue from and after the redemption date.

Upon the payment of the redemption price of 2007 Bonds being redeemed, each check or other transfer of funds issued for such purpose shall, to the extent practicable, bear the CUSIP number identifying, by issue and maturity, of the 2007 Bonds being redeemed with the proceeds of such check or other transfer.

Upon surrender of 2007 Bonds redeemed in part only, the Authority will execute and the Fiscal Agent will authenticate and deliver to the Owner, at the expense of the District, a new 2007 Bond or 2007 Bonds, of the same maturity, of authorized denominations in an aggregate principal amount equal to the unredeemed portion of the 2007 Bond or 2007 Bonds.

Effect of Redemption

From and after the date fixed for redemption, if funds available for the payment of the redemption price of the 2007 Bonds called for redemption have been deposited in the 2007 Bond Fund, such 2007 Bonds will cease to be entitled to any benefit under the Fiscal Agent Agreement other than the right to receive payment of the redemption price, and interest will cease to accrue on the 2007 Bonds to be redeemed on the redemption date specified in the notice of redemption. All 2007 Bonds redeemed and purchased by the Fiscal Agent pursuant to the foregoing will be canceled by the Fiscal Agent. The Fiscal Agent will destroy the canceled 2007 Bonds and issue a certificate of destruction thereof to the Authority.

10 Transfer and Exchange of 2007 Bonds

Any 2007 Bond may, in accordance with its terms, be transferred upon the books required to be kept pursuant to the provisions of the Fiscal Agent Agreement, by the person in whose name it is registered, in person or by his duly authorized attorney, upon surrender of such 2007 Bond for cancellation at the Principal Office of the Fiscal Agent, accompanied by delivery of a duly executed written instrument of transfer in a form acceptable to the Fiscal Agent. The cost for any services rendered or any expenses incurred by the Fiscal Agent in connection with any such transfer shall be paid by the District. The Fiscal Agent will collect from the Owner requesting transfer of a 2007 Bond any tax or other governmental charge required to be paid with respect to such transfer.

Whenever any 2007 Bond or 2007 Bonds are surrendered for transfer, the Authority will execute and the Fiscal Agent will authenticate and deliver a new 2007 Bond or 2007 Bonds of like aggregate principal amount.

2007 Bonds may be exchanged at the Principal Office of the Fiscal Agent only for a like aggregate principal amount of 2007 Bonds of authorized denominations and of the same maturity and interest rate. The cost for any services rendered or any expense incurred by the Fiscal Agent in connection with any such exchange will be paid by the District. The Fiscal Agent will collect from the Owner requesting exchange of a 2007 Bond any tax or other governmental charge required to be paid with respect to such exchange.

No transfers or exchanges of 2007 Bonds will be required to be made (i) during the fifteen (15) days preceding the date established by the Fiscal Agent for selection of 2007 Bonds for redemption, (ii) with respect to 2007 Bonds which have been selected for redemption, or (iii) between a Record Date and the succeeding Interest Payment Date.

11 Debt Service Schedule for the 2007 Bonds and Prior Bonds

Period Ending Prior Bonds 2007 Bonds 2007 Bonds Total (September 1) Debt Service Principal Interest Debt Service 2008 $ 1,771,790.00 $ 0.00 $ 273,546.88 $ 2,045,336.88 2009 1,806,345.00 0.00 343,125.00 2,149,470.00 2010 1,833,035.00 0.00 343,125.00 2,176,160.00 2011 1,867,085.00 0.00 343,125.00 2,210,210.00 2012 1,902,735.00 0.00 343,125.00 2,245,860.00 2013 1,939,570.00 0.00 343,125.00 2,282,695.00 2014 1,977,252.50 0.00 343,125.00 2,320,377.50 2015 2,010,422.50 0.00 343,125.00 2,353,547.50 2016 2,048,902.50 0.00 343,125.00 2,392,027.50 2017 2,086,932.50 0.00 343,125.00 2,430,057.50 2018 2,124,098.76 0.00 343,125.00 2,467,223.76 2019 2,165,196.26 0.00 343,125.00 2,508,321.26 2020 2,169,471.26 0.00 343,125.00 2,512,596.26 2021 2,183,786.26 0.00 343,125.00 2,526,911.26 2022 2,192,416.26 0.00 343,125.00 2,535,541.26 2023 2,210,448.76 0.00 343,125.00 2,553,573.76 2024 2,216,338.76 0.00 343,125.00 2,559,463.76 2025 2,231,017.50 0.00 343,125.00 2,574,142.50 2026 2,238,458.76 0.00 343,125.00 2,581,583.76 2027 2,253,716.26 0.00 343,125.00 2,596,841.26 2028 2,265,710.00 0.00 343,125.00 2,608,835.00 2029 2,283,800.00 0.00 343,125.00 2,626,925.00 2030 2,292,210.00 0.00 343,125.00 2,635,335.00 2031 690,940.00 360,000.00 343,125.00 1,394,065.00 2032 700,290.00 375,000.00 322,875.00 1,398,165.00 2033 716,850.00 385,000.00 301,781.26 1,403,631.26 2034 0.00 1,135,000.00 280,125.00 1,415,125.00 2035 0.00 1,205,000.00 216,281.26 1,421,281.26 2036 0.00 1,280,000.00 148,500.00 1,428,500.00 2037 0.00 1360000.00 76 500.00 1436 500.00 Total $50,178,818.84 $ 6,100,000.00 $ 9,511,484.40 $ 65,790,303.24

Source: Stone & Youngberg.

12 Estimated Debt Service Coverage

The table below sets forth the current debt service coverage on the 2007 Bonds and the Prior Bonds based on the actual Special Taxes levied for Fiscal Year 2007-08 and the Assigned Special Taxes that may be levied on Developed Property and the Maximum Special Taxes that may be levied on Undeveloped Property for Fiscal Year 2008-09 and thereafter, based on the development status of the land within the District as of August 7, 2007. As further development occurs in the District, it is expected that the debt service coverage will somewhat decline from the levels set forth in this table and no assurance can be given as to the exact level of coverage in the future. It is expected, however, that the coverage from Maximum Special Taxes will not be less than 110% of debt service in each future bond year.

Developed Undeveloped Coverage Special Tax Special Tax Gross Special Annual from Coverage Period Ending Revenues in Revenues in Tax Revenues Administrative Bonds Debt Developed from all (September 1) Zone J(li Zone 1r2> in Zone 1 Expenses(]! Servici41 Propert/51 Propert/61 2008 $1.324.517 $ 890.001 $ 2.214.518 $ 26.010 $ 1.771.790 73.29% 123.52%(7) 2009 1,607.837 974.821 2,582.658 26.530 2.149.470 73.57 118.92 2010 1,639.993 994.318 2,634.311 27.061 2.176.160 74.12 119.81 2011 1.672.793 1.014.204 2,686.997 27.602 2.210.210 74.44 120.32 2012 1.706.249 1,034.488 2.740.737 28.154 2.245.860 74.72 120.78 2013 1.740.374 1,055.178 2.795.552 28.717 2.282.695 74.98 121.21 2014 1.775.182 1.076.281 2,851.463 29.291 2.320.378 75.24 121.63 2015 1,810.685 1,097.807 2,908.492 29.877 2,353.548 75.66 122.31 2016 1.846.899 1.119.763 2,966.662 30.475 2,392.028 75.94 122.75 2017 1,883.837 1.142.158 3,025.995 31.084 2.430.058 76.24 123.24 2018 1.921.514 1.165.001 3,086.515 31.706 2.467.224 76.60 123.82 2019 1,959.944 1.188.302 3,148.245 32.340 2,508.321 76.85 124.22 2020 1,999.143 1.212.068 3,211.210 32.987 2.512.596 78.25 126.49 2021 2,039.126 1.236.309 3,275.435 33.647 2.526.911 79.36 128.29 2022 2.079.908 1.261.035 3,340.943 34.320 2,535.541 80.68 130.41 2023 2.121.506 1.286.256 3,407.762 35.006 2,553.574 81.71 132.08 2024 2. 163. 936 1.311.981 3,475.917 35.706 2,559.464 83.15 134.41 2025 2.207.215 1,338.220 3,545.436 36.420 2.574.143 84.33 136.32 2026 2.251.359 1,364.985 3,616.344 37.149 2,581.584 85.77 138.64 2027 2.296.387 1,392.285 3,688.671 37.892 2,596.841 86.97 140.59 2028 2.342.314 1.420.130 3,762.445 38.649 2,608.835 88.30 142.74 2029 2,389.161 1.448.533 3,837.694 39.422 2.626.925 89.45 144.59 2030 2.436.944 1.477.504 3,914.447 40.211 2,635.335 90.95 147.01 2031 2.485.683 1,507.054 3,992.736 41.015 1,394.065 175.36 283.47 2032 2,535.396 1,537.195 4.072.591 41.835 1,398.165 178.35 288.29 2033 2,586.104 1,567.939 4.154.043 42.672 1.403.631 181.20 292.91 2034 2,637.826 1,599.297 4.237.124 43.526 1.415.125 183.33 296.34 2035 2,690.583 1,631.283 4.321.866 44.396 1.421.281 186.18 300.96 2036 2.744.395 1,663.909 4.408.304 45.284 1.428.500 188.95 305.43 2037 2.799.283 1,697.187 4.496.470 46.190 1.436.500 191.65 309.80

0) Figures are based on Special Tax revenues from Developed Property for bond year ending September 1, 2008 based on the actual Fiscal Year 2007--08 Special Tax levy. Special Tax revenues from Developed Property for lxmd year ending September 1, 2009 and thereafter are based on the Assigned Special Tax revenues from property classified as Developed Property as of August 7, 2007. Special Taxes for all subsequent years are escalated annually at 2%, without the assumption of any further development. Figures are based on Special Tax revenues from Undeveloped Property for bond year ending September 1, 2008 based on the actual Fiscal Year 2007-08 Special Tax levy, which includes direct bills necessary to replenish the Reserve Fund. Special Tax revenues from Undeveloped Property for bond year ending September 1, 2009 and thereafter are based on the Maximum Special Tax revenues from 104 acres of property classified as Undeveloped Property as of August 7, 2007. Special Taxes for all subsequent years are escalated annually at 2%, without the assumption of any further development. (S) Figures are based on the actual administrative expenses for Fiscal Year 2008 and escalated annually by 2% for each subsequent Fiscal Year thereafter. (') Figures are based on debt service for the 2007 Bonds and the Prior Bonds, taking into account capitalized interest on the 2007 Bonds through September 1, 2008. (') Figures are based on Special Taxes on Developed Property less annual administrative expenses divided by the Bonds Debt Service colurnu. (0 Figures are based on Special Taxes on Developed Property and on Undeveloped Property less annual administrative expenses divided by the Bonds debt service. (1) Debt service on the Prior Bonds for bond year ending September 1, 2008 will be paid from Special Taxes levied in Fiscal Year 2007--08 and amounts on deposit in the Bond Fund. Capitalized interest will be available to pay interest due on the 2007 Bonds for the lxmd year ending September 1, 2008. Source David Taussig & Associates, Inc.

13 SOURCES OF PAYMENT FOR THE 2007 BONDS

Limited Obligations

The 2007 Bonds and any Prior Bonds that remain outstanding upon the issuance of the 2007 Bonds are special, limited obligations of the District payable on a parity only from amounts pledged under the Fiscal Agent Agreement.

The Special Tax Revenues are the primary security for the repayment of the Bonds. Under the Fiscal Agent Agreement, the Authority has pledged to repay the Bonds and any Parity Bonds issued in the future from the Special Tax Revenues and amounts held in the Bond Fund and the Reserve Fund. Special Tax Revenues are defined in the Fiscal Agent Agreement to include the proceeds of the Special Taxes received by the Authority, including any scheduled payments and prepayments thereof, interest and penalties thereon and the proceeds of the redemption or sale of property sold as a result of foreclosure of the lien of the Special Taxes to the amount of said lien. Special Tax Revenues do not include interest and penalties on foreclosure of a lien of the Special Taxes in excess of the rate of interest payable on the Bonds.

In the event that the Special Tax Revenues are not paid when due, the only sources of funds available to pay the debt service on the Bonds and any other Parity Bonds issued in the future are amounts held by the Fiscal Agent, including amounts held in the Reserve Fund, for the exclusive benefit of the Owners of the Bonds and any other Parity Bonds.

NEITHER THE FAITH AND CREDIT NOR THE TAXING POWER OF THE AUTHORITY, THE WATER DISTRICT, THE COUNTY, THE STATE OF CALIFORNIA OR ANY POLITICAL SUBDIVISION THEREOF IS PLEDGED TO THE PAYMENT OF THE 2007 BONDS. EXCEPT FOR THE SPECIAL TAXES, NO OTHER TAXES ARE PLEDGED TO THE PAYMENT OF THE 2007 BONDS. THE 2007 BONDS ARE NOT OBLIGATIONS OF THE COUNTY OR THE WATER DISTRICT OR GENERAL OBLIGATIONS OF THE AUTHORITY BUT ARE LIMITED OBLIGATIONS OF THE AUTHORITY FOR THE DISTRICT PAYABLE SOLELY FROM THE SPECIAL TAXES AND OTHER AMOUNTS PLEDGED UNDER THE FISCAL AGENT AGREEMENT AS MORE FULLY DESCRIBED HEREIN.

Special Taxes

General. In accordance with the provisions of the Act, the Board of Directors established the District on March 14, 2000 for the purpose of financing the acquisition, construction and installation of various public improvements to serve the District. At a special election held on March 14, 2000, the then owners of the property within the District authorized the District to incur indebtedness in an amount not to exceed $30,000,000, and approved the rate and method of apportionment of the Special Taxes to pay the principal of and interest on the bonds of the District, pay the annual Administrative Expenses of the District and pay directly for public facilities eligible to be financed by the District. On April 25, 2000, the Board of Directors adopted a resolution of consideration to alter the rate and method approved on March 14, 2000 to reduce the Maximum Special Tax for Undeveloped Property in Zone 2 from $8,000 per acre in Fiscal Year 2000-01 to $822 per acre and to exempt from Special Tax levies approximately 335 acres in Zone 2 which are expected to be used for open space and habitat conservation purposes. These changes were approved by the landowners within the District at an election held on May 30, 2000. The rate and method as amended is referred to herein as the "Rate and Method," a copy of which is attached hereto as Appendix A. All capitalized terms used in this section shall have the meanings set forth in the Rate and Method.

There is no assurance that the Special Tax proceeds will, in all circumstances, be adequate to pay the principal of and interest on the Bonds and any other Parity Bonds when due. See "SPECIAL RISK FACTORS" herein for a discussion of various factors that could affect the timely receipt of Special Taxes.

14 The Board of Directors of the Authority, as the legislative body of the District, has covenanted in the Fiscal Agent Agreement that by July 15 of each year (or such later date as the County Auditor will accept the transmission of the Special Tax amounts for inclusion on the next real property tax roll) it will levy Special Taxes up to the maximum rates permitted under the Rate and Method in the amount required for the payment of principal of and interest on any Outstanding Bonds (including any Parity Bonds) becoming due and payable during the ensuing calendar year, including any necessary replenishment or expenditure of the Reserve Fund and the amount estimated to be sufficient to pay the Administrative Expenses during such calendar year, taking into account the balances in the Reserve Fund, the Administrative Expense Fund and the Special Tax Fund. The Special Taxes levied in any Fiscal Year may not exceed the maximum rates authorized pursuant to the Rate and Method. See APPENDIX A-"RATE AND METHOD OF APPORTIONMENT OF SPECIAL TAXES."

Rate and Method of Apportionment of Special Taxes. The Rate and Method classifies the land within the District into Zone 1 and Zone 2. Zone 1, consisting of approximately 421 acres, includes the existing development within the District and the property planned for development. Zone 2 includes approximately 1,457 acres of undeveloped land.

The Rate and Method provides that for each Fiscal Year all parcels in the District not otherwise exempt are to be classified as either Developed Property, Taxable Property Owner Association Property, Taxable Public Property, Taxable Open Space Property or Undeveloped Property. The Rate and Method exempts from the levy of the Special Tax up to 77 acres of property within Zone 1 and 335 acres in Zone 2 which is owned by or irrevocably dedicated to a governmental agency or a property owner association or are dedicated for open space purposes. All other property within Zone 1 of the District is Taxable Property. Developed Property is all Taxable Property (i) located on certain specified Assessor Parcels or (ii) for which a foundation building permit for new construction was issued prior to May 1 of a fiscal year, but not before January 1, 2000. Undeveloped Property is all Taxable Property not classified as Developed Property, Taxable Property Owner Association Property, Taxable Public Property or Taxable Open Space Property.

It is expected that the Zone 2 property will be relieved of the Special Tax levy once the Developed Property within Zone 1 is capable of generating revenues equal to or greater than 60% of the current Fiscal Year Special Tax Requirement, provided that certain other tests set forth in Section I of the Rate and Method are satisfied. Once released, the Zone 2 property will no longer be subject to a Special Tax levy. The release of the Zone 2 property will reduce the total amount of Special Taxes that may be collected within the District. Although Zone 2 property is subject to the Special Tax, the District does not expect to levy any Special Tax on Zone 2 property for the repayment of the Bonds. The District expects that Zone 2 property will be released from its obligation to pay Special Taxes in the future upon satisfaction of the release conditions set forth in Section I of the Rate and Method, most of which have been satisfied as of the date of this Official Statement. The District does not give any assurance as to whether or when Zone 2 property will be released from its obligation to pay Special Taxes.

Under the Rate and Method, Developed Property within Zone 1 and Zone 2 will be taxed up to the greater of the Assigned Special Tax or the Backup Special Tax. The Backup Special Tax for Developed Property, excluding Industrial Property which is not subject to a Backup Special Tax, is $8,515.21 per Acre for Fiscal Year 2007-08. The Assigned Special Tax varies by Land Use Class and for Fiscal Year 2007-08 is $4.96 per Building Square Foot for Travel Plaza Property, $1.70 per Building Square Foot for Commercial Property, $0.19 per Parcel Square Foot for Industrial Property and $9,809.78 per Acre for Residential Property. On each July 1, these Assigned Special Tax and the Backup Special Tax rates will increase by an amount equal to two percent (2%) of the amount in effect for the previous Fiscal Year.

The Rate and Method provides that the Fiscal Year 2007-08 Maximum Special Tax for Undeveloped Property, Taxable Property Owner Association Property, Taxable Public Property and Taxable Open Space Property will be $9,189.49 per acre in Zone 1 and $944 in Zone 2. On each July 1, the Maximum Special Tax on Undeveloped Property, Taxable Property Owner Association Property, Taxable Public Property and

15 Taxable Open Space Property will increase by an amount equal to two percent (2%) of the amount in effect for the previous Fiscal Year.

The Rate and Method provides that commencing with Fiscal Year 2000-01 and for each following Fiscal Year, the Board or its designee shall levy the Special Tax until the amount of Special Taxes equals the Special Tax Requirement.

The Special Tax is to be levied in each Fiscal Year as follows:

First: The Special Tax shall be levied Proportionately on each Assessor's Parcel of Developed Property in Zone 1 or Zone 2 at up to 100% of the applicable Assigned Special Tax as needed to satisfy the Special Tax Requirement.

Second: If additional monies are needed to satisfy the Special Tax Requirement after the first step has been completed, the Special Tax shall be levied Proportionately on each Assessor's Parcel of Undeveloped Property in Zone 1 at up to 100% of the Maximum Special Tax for Undeveloped Property.

Third: If additional monies are needed to satisfy the Special Tax Requirement after the second step has been completed, the Special Tax shall be levied Proportionately on each Assessor's Parcel of Undeveloped Property in Zone 2 at up to 100% of the Maximum Special Tax for Undeveloped Property.

Fourth: If additional monies are needed to satisfy the Special Tax Requirement after the first three steps have been completed, then the levy of the Special Tax on each Assessor's Parcel of Developed Property in either Zone 1 or Zone 2 whose Maximum Special Tax is determined through the application of the Backup Special Tax shall be increased Proportionately from the Assigned Special Tax up to the Maximum Special Tax for each such Assessor's Parcel.

Fifth: If additional monies are needed to satisfy the Special Tax Requirement after the first four steps have been completed, then the Special Tax shall be levied Proportionately on each Assessor's Parcel of Taxable Property Owner Association Property or Taxable Open Space Property in Zone 1 or Zone 2 at up to the Maximum Special Tax for Taxable Property Owner Association Property and Taxable Open Space Property.

Sixth: If additional monies are needed to satisfy the Special Tax Requirement after the first five steps have been completed, then the Special Tax shall be levied Proportionately on each Assessor's Parcel of Taxable Public Property in Zone 1 or Zone 2 at up to the Maximum Special Tax for Taxable Public Property.

Prepayment of Special Taxes. The Rate and Method provides that a property owner may prepay and satisfy the Special Tax obligation of an Assessor's Parcel in whole or in part upon satisfaction of the conditions in Section H of the Rate and Method. A prepayment may be made only if there are no delinquent Special Taxes on the parcel at the time of prepayment. In addition, no prepayment shall be allowed unless the amount of Assigned Special Taxes that may be levied on Taxable Property both prior to and after the proposed prepayment is at least 1.1 times the maximum annual debt service on all Bonds.

In the event that a prepayment of Special Taxes occurs, a portion of the net proceeds of such prepayment will be applied to effect an optional redemption of the 2007 Bonds. See "THE 2007 BONDS­ Redemption" herein.

Collection and Application of Special Taxes. The Special Taxes shall be payable and be collected in the same manner and at the same time and in the same installment as the general taxes on real property are payable, and have the same priority, become delinquent at the same time and in the same proportionate amounts and bear the same proportionate penalties and interest after delinquency as to the ad valorem taxes on real property.

16 The Authority has made certain covenants in the Fiscal Agent Agreement for the pwpose of ensuring that the current maximum Special Tax rates and method of collection of the Special Taxes are not altered in a manner that would impair the Authority's ability to collect sufficient Special Taxes to pay debt service on the Bonds and any future Parity Bonds and Administrative Expenses when due. First, the Authority has covenanted not to consent or conduct proceedings with respect to a reduction in the Maximum Special Taxes that may be levied in the District below an amount for any Fiscal Year, equal to 110% of the aggregate of the debt service on the Bonds and any other Parity Bonds in such Fiscal Year, plus a reasonable estimate of Administrative Expenses for such Fiscal Year. See "SPECIAL RISK FACTORS-Proposition 218." Second, the District has covenanted not to exercise its rights under the Act to waive delinquency and redemption penalties related to the Special Taxes or to declare a special tax penalties amnesty program if to do so would materially and adversely affect the interests of the owners of the Bonds or any other Parity Bonds or to permit the tender of Bonds or any other Parity Bonds in payment of any Special Taxes except upon receipt of a certificate of an Independent Financial Consultant that to accept such tender will not result in the District having insufficient Special Tax revenues to pay the principal of and interest on the Bonds and any other Parity Bonds remaining Outstanding following such tender. See "SPECIAL RISK FACTORS-Non-Cash Payment of Special Taxes."

Although the Special Taxes constitute liens on taxed parcels within the District, they do not constitute a personal indebtedness of the owners of property within the District. Moreover, other liens for taxes and assessments already exist on the property located within the District and others could come into existence in the future in certain situations without the consent or knowledge of the Authority or the landowners in the District. See "SPECIAL RISK FACTORS-Parity Taxes, Special Assessments and Land Development Costs" herein. There is no assurance that property owners will be financially able to pay the annual Special Taxes or that they will pay such taxes even if financially able to do so, all as more fully described in the section of this Official Statement entitled "SPECIAL RISK FACTORS."

Under the terms of the Fiscal Agent Agreement, all Special Tax Revenues received by the Authority, other than the portion levied for Administrative Expenses and Special Tax Prepayments, are to be remitted to the Fiscal Agent for deposit in the Special Tax Fund. Special Tax Revenues levied for Administrative Expenses are to be deposited in the Administrative Expense Fund, Special Tax Prepayments constituting a prepayment of construction costs will be deposited by the Fiscal Agent to the Improvement Fund, and any remaining portion of any Special Tax Prepayment will be deposited by the Fiscal Agent directly in the Special Tax Prepayments Account established pursuant to the Fiscal Agent Agreement.

Moneys in the Special Tax Fund will be held in trust by the Authority for the benefit of the Authority and the Owners of the Bonds and any Parity Bonds, will be disbursed as provided below and, pending disbursement, will be subject to a lien in favor of the Owners of the Bonds and any other Parity Bonds and the Authority.

On each Interest Payment Date, the Fiscal Agent shall withdraw from the Special Tax Fund and transfer the following amounts in the following order of priority (i) to the Bond Fund an amount, taking into account any amounts then on deposit in the Bond Fund and any expected transfers from the Improvement Fund, the Reserve Fund, and the Capitalized Interest Account and the Special Tax Prepayments Account to the Bond Fund, such that the amount in the Bond Fund equals the principal (including any sinking payment), premium, if any, and interest due on the Bonds on such Interest Payment Date, and (ii) to the Reserve Fund an amount, taking into account amounts then on deposit in the Reserve Fund, such that the amount in the Reserve Fund is equal to the Reserve Requirement.

Proceeds of Foreclosure Sales. The net proceeds received following a judicial foreclosure sale of land within the District resulting from a landowner's failure to pay the Special Tax when due, exclusive of any penalties paid with respect to a delinquency, are pledged to the payment of principal of and interest on the Bonds and any Parity Bonds issued in the future.

17 Pursuant to Section 53356.1 of the Act, in the event of any delinquency in the payment of any Special Tax or receipt by the Authority of Special Taxes in an amount which is less than the Special Tax levied, the Board of Directors, as the legislative body of the District, may order that Special Taxes be collected by a superior court action to foreclose the lien within specified time limits. In such an action, the real property subject to the unpaid amount may be sold at a judicial foreclosure sale. Under the Act, the commencement of judicial foreclosure following the nonpayment of a Special Tax is not mandatory. However, the Authority has covenanted for the benefit of the owners of the Bonds that it will commence within 60 days of the date the Treasurer of the Authority becomes aware of any delinquency and diligently prosecute to judgment (unless the delinquency is brought current), judicial foreclosure proceedings against Assessor's parcels with delinquent Special Taxes. The Fiscal Agent Agreement provides that the Treasurer shall, on or about each March 1 and July 1, compare the amount of Special Taxes levied to the amount received to determine whether or not any delinquencies in the payment of Special Taxes exist. See APPENDIX D-"SUMMARY OF FISCAL AGENT AGREEMENT."

If foreclosure is necessary and other funds (including amounts in the Reserve Fund) have been exhausted, debt service payments on the Bonds could be delayed until the foreclosure proceedings have ended with the receipt of any foreclosure sale proceeds. Judicial foreclosure actions are subject to the normal delays associated with court cases and may be further slowed by bankruptcy actions, involvement by agencies of the federal government and other factors beyond the control of the Authority. See "SPECIAL RISK FACTORS­ Bankruptcy and Foreclosure" herein. Moreover, no assurances can be given that the real property subject to foreclosure and sale at a judicial foreclosure sale will be sold or, if sold, that the proceeds of such sale will be sufficient to pay any delinquent Special Tax installment. See "SPECIAL RISK FACTORS-Property Values" herein. Although the Act authorizes the Authority to cause such an action to be commenced and diligently pursued to completion, the Act does not impose on the District or the Authority any obligation to purchase or acquire any lot or parcel of property sold at a foreclosure sale if there is no other purchaser at such sale. The Act provides that, in the case of a delinquency, the Special Tax will have the same lien priority as is provided for ad valorem taxes.

Reserve Fund and Letter of Credit

In order to secure further the payment of principal of and interest on the Bonds, the Authority is required, upon delivery of the Bonds, to deposit in the Reserve Fund an amount sufficient to cause the balance therein to equal the Reserve Requirement and thereafter to maintain the Reserve Fund an amount equal to the Reserve Requirement. The Reserve Fund, which serves as security for the Prior Bonds and which will serve as security for the 2007 Bonds, is currently underfunded and will be increased to its required balance on the closing date for the 2007 Bonds with a combination of proceeds of Special Taxes paid by the owners of the undeveloped property in the District and the proceeds of the 2007 Bonds. Under the terms of the Fiscal Agent Agreement, the Authority may elect to deliver a Qualified Reserve Fund Credit Investment in lieu of cash. See APPENDIX D-"SUMMARY OF FISCAL AGENT AGREEMENT-Reserve Fund."

The current balance in the Reserve Fund is $1,561,200, which is less than the $2,292,210 that should currently be on deposit therein. This shortfall arose as a result of the Fiscal Agent erroneously calculating the amount of the Reserve Requirement and transferring $731,000 from the Reserve Fund to the Bond Fund to pay debt service on the Prior Bonds in Fiscal Years 2004 and 2005. The Authority became aware in early October 2007 of the shortfall in the Reserve Fund. The Authority plans to send out supplemental tax bills for Fiscal Year 2007-08 to the three owners of the Undeveloped Property in the District for the purpose of collecting Special Taxes to provide a portion of the funds needed to increase the amount in the Reserve Fund to its required balance. As a condition to the issuance of the 2007 Bonds, the Authority will deposit in the Reserve Fund a portion of the proceeds of the 2007 Bonds and Special Taxes received from the owners of the Undeveloped Property in an amount sufficient to cause the balance in the Reserve Fund to equal the amount of the Reserve Requirement in effect upon the issuance of the 2007 Bonds, which as of such date will be $2,635,335.00.

18 Subject to the limits on the maximum annual Special Tax which may be levied within the District, as described in Appendix A, the Authority has covenanted to levy Special Taxes in an amount that is anticipated to be sufficient to replenish the balance in the Reserve Fund each year to the Reserve Requirement. Amounts in the Reserve Fund are to be applied to (i) pay debt service on the Bonds, to the extent other monies are not available therefor, (ii) redeem the Bonds in whole or in part, (iii) pay the principal and interest due in the final year of maturity of the Bonds, and (iv) to pay any rebate due to the federal government. See APPENDIX D­ "SUMMARY OF FISCAL AGENT AGREEMENT-Parity Bonds."

The Letter of Credit is not intended to be a Qualified Reserve Fund Credit Instrument and is provided in addition to the required amount of funds necessary to satisfy the Reserve Fund Requirement.

Provisions Relating to Letter of Credit. Under the Fiscal Agent Agreement, so long as the Prior Bonds are Outstanding, a Letter of Credit is to be provided for any property owner and its affiliates responsible for the payment of 33% or more of the annual Special Taxes levied to pay debt service on the Bonds and any Parity Bonds. The Letter of Credit is to be in a stated amount equal to two years' estimated maximum annual debt service for the portion of the Bonds and any Parity Bonds attributable to Special Taxes to be levied on the County Assessor's parcels to which it pertains. The current Letter of Credit from Wells Fargo Bank, N.A. may be replaced, in whole or in part, with an irrevocable letter of credit from an entity rated "A" or better by Standard and Poor's Rating Services ("S&P") or Moody's Investor's Service ("Moody's").

The Fiscal Agent may reduce or acknowledge reduction of the amount of any Letter of Credit held by it upon receipt by the Fiscal Agent of:

(a) a Letter of Credit which satisfies the requirements set forth in the Fiscal Agent Agreement in substitution or replacement for all or a portion of the amount available to be drawn under any Letter of Credit then held by the Fiscal Agent, accompanied by a written statement of the provider of or account party under such new Letter of Credit as to the parcels and the outstanding Letter of Credit to which the new Letter of Credit pertains, and then the amount under the then applicable outstanding Letter of Credit may be reduced by the amount available to be drawn under the new Letter of Credit; or

(b) an Officer's Certificate to the effect that the landowner for whom the Letter of Credit was provided has sold or otherwise transferred property in the District, and specifying the amount of reduction in the Letter of Credit, which reduction shall be a percentage of the then amount of the Letter of Credit equivalent to the percentage of the Special Tax obligation attributable to the land so sold or transferred in relation to the Special Tax obligation of the landowner making the sale or transfer prior to such sale or transfer; provided that no such reduction shall occur under this clause (b) if the amount of land so sold or transferred is responsible for Special Taxes in an amount greater than 33% of the debt service on the Bonds and any Parity Bonds, unless a substitute or replacement Letter of Credit is delivered pursuant to the preceding clause (a).

The Fiscal Agent will release a Letter of Credit only upon receipt of written direction from the Treasurer to the effect that Special Taxes that may be levied on parcels in the District owned by the property owner for whom such Letter of Credit was provided, and affiliates of such property owner, will be less than 33% of the annual debt service on the Bonds and any Parity Bonds.

The Fiscal Agent Agreement provides that the Fiscal Agent shall draw upon a Letter of Credit promptly following receipt by the Fiscal Agent of a written direction of the Treasurer instructing the Fiscal Agent to draw on a Letter of Credit because Special Taxes levied in the District on parcels to which such Letter of Credit pertains are then delinquent in the amount so to be drawn on the Letter of Credit. Upon collection of any delinquent Special Taxes with respect to which a draw on a Letter of Credit has been made, the Authority shall send to the provider of the Letter of Credit a portion of the amount so collected up to the amount of the proceeds of the draw on the Letter of Credit received by the Fiscal Agent. The proceeds of any draw on a Letter of Credit pursuant to the foregoing shall be deposited by the Fiscal Agent to the Special Tax Fund. Such draws are expected to occur prior to any applicable draw on funds held in the Reserve Fund.

19 In addition to the foregoing, the Fiscal Agent Agreement provides that the Fiscal Agent shall draw upon the full amount available under a Letter of Credit (i) five (5) days prior to the expiration of the Letter of Credit, unless the Fiscal Agent receives a renewal or replacement thereof, in such amount, prior to such date, which satisfies the requirements set forth in the Fiscal Agent Agreement; (ii) forty-five (45) days after the Fiscal Agent receives actual knowledge that the then rating of the Letter of Credit provider's unsecured debt obligations has been reduced to BBB+ (or its equivalent) by Moody's or S&P, unless the Fiscal Agent receives a replacement thereof, in such amount, prior to such date, which satisfies the requirements set forth in the Fiscal Agent Agreement; or (iii) as soon as practicable following receipt by the Fiscal Agent of actual knowledge that the then rating of the Letter of Credit provider's unsecured debt obligations has been reduced to BBB (or its equivalent), or lower, by Moody's or S&P.

The proceeds of any draw on a Letter of Credit pursuant to the preceding paragraph shall be held by the Fiscal Agent in a separate subaccount within the Reserve Fund created by the Fiscal Agent for such purpose, to be (a) drawn upon at the written direction of the Treasurer prior to any Interest Payment Date to the effect that the amount specified in such written direction to be drawn is in the amount of any delinquent Special Taxes levied on the parcels to which it pertains, or (b) released or reduced at the written direction of the Treasurer when the Letter of Credit to which such proceeds pertain would otherwise be released or reduced under the Fiscal Agent Agreement ( with any amount so reduced or released to be sent by the Fiscal Agent to the provider of the Letter of Credit).

The amount received pursuant to any draw on a Letter of Credit shall in no way reduce or act as a credit in respect of the amount of any Special Taxes that have been levied in the District.

Issuance of Parity Bonds

Subject to the limitations set forth in the Fiscal Agent Agreement, the Authority may, at any time after the issuance and delivery of the Bonds, and without the consent of any Bondowners, issue additional bonds ("Parity Bonds") equally secured with the Bonds by a pledge of and lien upon the Special Tax Revenues and amounts in the funds and accounts established under the Fiscal Agent Agreement with respect to the Bonds, but only for the purpose of refunding the Bonds or other Parity Bonds outstanding, and only if the refunding results in no increase in the total principal and interest payments on the Outstanding Bonds and Parity Bonds of the District. See APPENDIX D-"SUMMARY OF FISCAL AGENT AGREEMENT."

THE COMMUNITY FACILITIES DISTRICT

General Description of the District

The District is located along Interstate 5, due south of the split of Interstate 5 with Highway 99, approximately 83 miles north of downtown Los Angeles and 25 miles south of the City of Bakersfield. The development project currently underway in the District on the west side of Interstate 5 is known as the Tejon Industrial Complex which is an approximately 376-acre master-planned area including an industrial complex and highway-oriented commercial uses that are intended to serve existing and future commerce along the Interstate 5 transportation corridor. The Tejon Industrial Complex offers a variety of commercial and industrial lot sizes available for such uses as gas stations, convenience stores, restaurants, fast food facilities, motels, warehouse distribution, light industrial, and travel industry uses. On the opposite side of Interstate 5 from the Tejon Industrial Complex are approximately 66 acres within the District constituting the Eastside Property, of which approximately 30 acres are developed with travel-related uses and approximately 36 acres that are currently undeveloped and planned for future development. Of these 36 undeveloped acres, approximately 21 acres are located in Zone 2 and are subject to being released from the obligation to pay Special Taxes. The existing improvements on the approximately 30 acres are scheduled to be demolished in 2008 and subsequently replaced by commercial development related to travel uses. Being immediately adjacent to Interstate 5, the proposed development is well situated to service the approximately 65,000 or more

20 vehicles that travel the Interstate 5 daily. See "THE DEVELOPMENT AND PROPERTY OWNERSHIP" for a description of the existing and planned development in the District.

Description of Anthorized Facilities

The facilities authorized to be funded by the District with the proceeds of the Bonds consist of various public improvements, or portions thereof, including: (1) roadway facilities, (2) interchange improvements to the Interstate 5/Laval Road interchange, (3) water and sewage treatment facilities with an ultimate design capacity of approximately 200,000 gallons per day, (4) a water reservoir facility consisting of multiple storage tanks with an ultimate design capacity of approximately 1.5 million gallons, (5) a water transmission main extending from an existing well to the water reservoir facility, (6) four traffic signals, (7) a fire station, (8) a secondary water source for fire protection, including a 270,000 gallon water storage tank, approximately 3 miles of waterline and a turnout facility and pump station, and (9) incidental expenses related to the planning and designing such facilities, environmental evaluations, formation of the District, sale of bonds and any other costs associated with the construction, completion and inspection of the public facilities.

The expected cost of the facilities to be financed with the proceeds of the Prior Bonds and the 2007 Bonds are described in Table 1. As identified in Table 1, approximately $25.8 million of improvements eligible for financing with the 2007 Bonds and the Prior Bonds are complete as of the date of issuance of the 2007 Bonds. Proceeds of the 2007 Bonds will be applied first to reimburse Tejon Industrial Corp. for expenditures made prior to the date of issuance of the 2007 Bonds to construct the completed facilities and then to fund the remaining costs of the facilities as they are completed by Tejon Industrial Corp.

21 TABLEl

TEJON RANCH PUBLIC FACILITIES FINANCING AUTHORITY COMMUNITY FACILITIES DISTRICT NO. 2000-1 (TEJON INDUSTRIAL COMPLEX PUBLIC IMPROVEMENTS) CONSTRUCTION COST ESTIMATE AS OF AUGUST 31, 2007

Approximate Estimated Estimated Improvements Estimated Completed Future Total Purchased By Remaining Construction Construction Construction Authori?i7i To Construction Description of Facilities Costs Cost Cost Date 1! Cosif2! 1. Roadway Facilities $ 13,491,604 $ 4,423,413 $ 17,915,017 $ (10,106,625) $ 7,808,393 2. 1-5/Laval Road Interchange 3,487,574 0 3,487,574 (2,907,357) 580,216 3. Waste Water Treatment Facility 1,990,924 234,300 2,225,224 (1,916,840) 308,384 4. Water Reservoir Facility 894,641 0 894,641 (894,641) 0 5. Water Transmission Main 1,558,228 182,684 1,740,912 (969,420) 771,492 6. Traffic Signals 277,216 0 277,216 (277,216) 0 7. Fire Station 3,073,425 0 3,073,425 (2,506,741) 566,684 8. Secondary Water Source for Fire Protection 1 027 523 0 1 027 523 (1,027,523) 0 Totals(3l $ 25,801,136 $ 4,840,397 $ 30,641,533 $ (20,606,364) $ 10,035,169

These facilities were purchased by the Authority with proceeds of the Prior Bonds. All proceeds of the Prior Bonds available to finance the facilities have been disbursed. Cl) Costs not paid from proceeds of the Prior Bonds and the 2007 Bonds will be paid for by Tejon Ranch Co. or its subsidiaries. 3 C) Totals may not add due to rounding. Source: The District.

22 Principal Taxpayers

There are currently seven owners of the property within the District subject to a Special Tax levy, two of which, directly or indirectly, are under the control of the Tejon Ranch Co., one of which is sixty percent (60%) owned by Tejon Ranch Co. and one of which is fifty percent (50%) owned indirectly by Tejon Ranch Co.

There currently are no parcels in the District with delinquent Special Taxes.

Table 2A below sets forth the Special Taxes levied on each of the seven property owners subject to the Special Tax in Fiscal Year 2007-08. As a result of the issuance of the 2007 Bonds and other factors, the Special Tax Levy will increase in Fiscal Year 2008-09 by approximately $470,000. Table 2B below sets forth the projected Special Taxes that would be levied on each of the property owners in Fiscal Year 2008-09 based on current development status and assuming no change of ownership. For Fiscal Year 2007-08, 45.38% of the Special Taxes levied have been levied on entities in which Tejon Ranch Co. has a direct or indirect ownership interest. Based on the current ownership within the District, and assuming no ownership changes, it is projected that approximately 56.32% of the Fiscal Year 2008-09 Special Tax levy would be levied on property in which Tejon Ranch Co. has a direct or indirect ownership interest.

TABLE2A

PRINCIPAL TAXPAYERS FOR FISCAL YEAR 2007-08 SPECIAL TAX LEVY

Percentage of Special Tax Owne/1! Special Tax Levy Levy Ikea Property, Inc. $ 650,692.38 38.14% Tejon Industrial Corp.(2! 383,727.14 22.49 Prologis NA3 CA LLC 272,577.18 15.98 Petro Travel Plaza LLC(3J 241,943.50 14.18 Tejon Ranchcorp(4J 93,916.14 5.51 Five West Parcel LLC(SJ 54,645.86 3.20 In N Out Burger 8 337.08 0.49 Total('! $ 1,705,839.28 100.00%

(1) Based on the Appraisal. (2) Tejon Industrial Corp. is a wholly owned subsidiary of Tejon Ranchcorp, which is a wholly owned subsidiary of Tejon Ranch Co. (3) The majority interest (60%) in Petro Travel Plaza LLC is owned by the Tejon Development Corporation. The Tejon Development Corporation is a wholly owned subsidiary ofTejon Ranchcorp, which is a wholly owned subsidiary of the Tejon Ranch Co. (4) Tejon Ranch Co. owns a controlling interest in Tejon Ranchcorp and Tejon Industrial Corp. and a 60% interest in Petro Travel PlazaLLC. (5) Fifty percent (50%) owned by Tejon Industrial Corp. (6) Does not include additional levy of $508,678.39 to replenish the Reserve Fund. See "SOURCES OF PAYMENT FOR TI-IE 2007 BONDS-Reserve Fund and Letter of Credit." Source: David Taussig & Associates, Inc.

23 TABLE2B

PRINCIPAL TAXPAYERS FOR FISCAL YEAR 2008-09 SPECIAL TAX LEVY

Percentage of Projected Special Special Tax Owne/1! Tax Levy Levy Ikea Property, Inc. $ 663,706.24 30.50% Tejon Industrial Corp.(2! 635,465.70 29.20 Prologis NA3 CA LLC 278,028.74 12.78 Five West Parcel LLC(3J 247,685.92 11.38 Petro Travel Plaza LLC(4J 246,815.28 11.34 Tejon Ranchcorp(SJ 95,794.46 4.40 In N Out Burger $ 8 503.82 0.39 Total $2,176,000.16 100.00%

(1) Based on the Appraisal. (2) Tejon Industrial Corp. is a wholly owned subsidiary of Tejon Ranchcorp, which is a wholly owned subsidiary of Tejon Ranch Co. (3) Fifty percent (50%) owned by Tejon Industrial Corp. (4) The majority interest (60%) in Petro Travel Plaza LLC is owned by the Tejon Development Corporation. The Tejon Development Corporation is a wholly owned subsidiary ofTejon Ranchcorp, which is a wholly owned subsidiary of the Tejon Ranch Co. (5) Tejon Ranch Co. owns a controlling interest in Tejon Ranchcorp and Tejon Industrial Corp. and a 60% interest in Petro Travel PlazaLLC. Source: David Taussig & Associates, Inc.

24 Direct and Overlapping Debt

Table 3 below summarizes the existing direct and overlapping debt payable from taxes and assessments levied on property within the District. Other than the Bonds, approximately $638,998 of debt is currently payable from taxes and assessments on the property. The land within the District is subject to certain outstanding indebtedness of the Wheeler Ridge-Maricopa Water Storage District ("Wheeler Ridge"). The Wheeler-Ridge debt is currently paid for by Tejon Ranchcorp pursuant to certain water contracts. Other indebtedness could be issued in the future which is payable from taxes and assessments on the land within the District which are on a parity with the Special Taxes. See "SPECIAL RISK FACTORS-Parity Taxes, Special Assessments and Land Development Costs."

TABLE3

DIRECT AND OVERLAPPING DEBT SUMMARY FOR THE DISTRICT

Amount of Percent of Levy on Levy on District Share FY 2007-08 Parcels in Parcels in Total Debt of Total Debt 1 2 3 Overlapping Debt Total Levl J Districi J District Outstanding( J Outstanding

4 Wheeler Ridge Maricopa Water Storage District $ 162,581 ( ) $ 0 0.00% $ 7,555.000 $ 0 Kem High School Refunding 1 996A 5,971.128 12.767 0.21 56.580.000 120.976 Kem High School 1990E 1.147.999 2.454 0.21 21.810.000 46.630 Kem High School 2004A 2.514.492 5,376 0.21 49.250.000 105.302 Kem High School 2004B 3,295.925 7.047 0.21 70.000.000 149.668 Kem High School 2004C 4.326.099 9,250 0.21 50.ooo.ooo 106.907 Kem Community College District SRID 02A Refunding 3,800.819 5,784 0.15 17.756.548 27.019 Kem Community College District SRID 02B 1.214.714 1.848 0.15 53.885.132 81.991 Kem Community College District Assessment District 1.113.763 92 0.01 6,090.000 505 Estimated Share of Overlapping Debt Allocable to the District $ 638.998 Plus CFD No. 2000-1 2007 Bonds 6.100.000 Plus CFD No. 2000-1 Series 2000 Bonds 16 670 000(5) Plus CFD No. 2000-1 Series 2003 Bonds 6's70'000(6) Estimated Share of Direct Debt Allocable to the District $ 29 640 000 Estimated Share of Direct and Overlapping Debt Allocable to the District $ 30 278 998

Cl) Based on 2007-08 tax rates and assessed values, provided by the County of Kern. CZ) Based on actual Fiscal Year 2007-08 tax bills for the County of Kern. 3 C) Based on figures as of August 23, 2007. 4 C) Represents total levy within the County of Kern. Portion of funds used for yearly debt service payments are received from sources other than property taxes. 5 C) Remaining outstanding principal as of September 2, 2007 for the 2000 Bonds. 6 ( ) Remaining outstanding principal as of September 2, 2007 for the 2003 Bonds. Source: David Taussig & Associates, Inc.

Assessed Vaine-to-Lien Ratios

Table 4 below sets forth the assessed value-to-lien ratios for property ownerships within Zone 1 of the District based upon the fiscal year 2007-08 County Assessor's roll and the projected Special Tax levy for Fiscal Year 2008-09 based on current development status and assuming no further change in ownership. Pursuant to the Authority's Continuing Disclosure Agreement, Table 4 will be updated annually based on assessed values. Table 5 below, which is based on values in the Appraisal, will not be updated. The assessed values are lower than the appraised values and do not reflect a current market value, but rather the value on the County Assessor's records. The assessed value of the land within Zone 1 of the District for Fiscal Year 2007-08 is $98,675,507. The estimated assessed value-to-lien ratio of the property within Zone 1 of the District calculated as described in Table 4 below is 3.33 to 1. The overlapping debt described in Table 3 has not been included in the calculation of the assessed value-to-lien ratios, which would be somewhat lower than those set forth in Table 4 below if such amounts had been included. Since no Special Tax is projected to be levied on Zone 2 property in fiscal year 2008-09, the value of the Zone 2 property has been excluded from the

25 table even though such Zone 2 property is subject to a Special Tax levy to secure the Bonds. In the event that delinquencies occur on the payment of the Special Taxes levied on parcels within Zone 1, the Special Taxes may be levied on the taxable acres within Zone 2, until such time as the Zone 2 property is released from the obligation to pay Special Taxes.

TABLE4

ESTIMATED ASSESSED VALUE-TO-LIEN RATIOS OF ZONE 1 PROPERTY IN THE DISTRICT

Projected Percentage Share of Projected Allocated Assessed Projected FY FY 2008-09 Share of FY 2007-08 Value-to- 2008-09 Special Bonded Assessed Lien 1 2 3 4 5 6 Property Owne/ J Acreage Special Tax( J Tax( J lndebtedness( J Valuei J Ratios( J

Developect0> Ikea Property, Inc. 77.87 $ 663,706 30.50% $ 9,040,557 $52,075,898 5.76:1 Petro Travel Plaza LLC 56.67 246,815 11.34 3,361,951 20,927,309 6.23:1 Prologis NA3 CA LLC 32.62 278,029 12.78 3,787,119 14,076,202 3.72:1 Five West Parcel LLCcs) 29.06 247,686 11.38 3,373,810 2,667,300 0.79:1 Tejon Ranchcorp 44.96 95,794 4.40 1,304,847 4,430,698'') 3.40:1 Tejon Industrial Corporation 7.73 67,302 3.09 916,745 1,113,170 1.21:1 In N Out Burger ___Llill 8 504 ____iU2 115 833 950 000 8.20:1 Subtotal 250.71 $ 1,607,837 73.89% $ 21,900,862 $96,240,577 4.39:1 Undeveloped Tejon Industrial CorporationC10> 104.00 $ 568 164 26.11% $ 7 739 138 $ 2 434 930 0.32:1 Subtotal 104.00 $ 568 164 26.11% $ 7 739 138 $ 2 434 930 0.32:1 Total 354.71 $2,176,000 100.00% $ 29,640,000 $98,675,507 3.33:1

Cl) Based on the Appraisal. CZ) Based on development status provided in the Appraisal and debt service on the Bonds provided by the Underwriter. 3 C) Figures represent percentage of Special Tax levy for Fiscal Year 2008-09 based on current ownership status. 4 C) Calculated by multiplying principal amount of Bonds by Percentage Share of Projected Fiscal Year 2008-09 Special Tax colunm. 5 C) Figures are based on Assessed Value provided by the County of Kern Assessor's Office as of January 1, 2007. 6 ( ) Calculated by dividing Fiscal Year 2007-08 Assessed Values colunm by Allocated Share of Bonded Indebtedness colunm. (7) Based on property categorized as Developed Property using the development status in the Appraisal. CS) Construction began on a 606,000 square foot building during May 2007. Completion is expected during the first quarter of 2008. Costs to construct the building including land costs is expected to be approximately $22,400,000. 9 C) Includes $4,117,800 in improvement value on the unsecured tax roll. (lO) Acreage excludes two parcels that are anticipated to be classified as Exempt Property. Source: David Taussig & Associates, Inc.

Estimated Value-to-Lieu Ratios Based ou Appraised Values

Table 5 below sets forth the estimated value-to-lien ratios for the parcels owned by each landowner within Zone 1 of the District based upon the values and ownerships set forth in the Appraisal and the projected Fiscal Year 2008-09 Special Tax levy. As a result of the issuance of the 2007 Bonds and other factors, the Special Tax levy in Fiscal Year 2008-09 will increase by approximately $470,000 from the Fiscal Year 2007- 08 levy. This increased levy, coupled with the reclassification of certain parcels to Developed Property, shifts the Special Tax burden on certain parcels. Table 5 below shows the estimated value-to-lien ratios of Zone 1 property based on the values in the Appraisal and assuming no further change of ownership. These estimated value-to-lien ratios range from a low of 0.74 to 1 on the Five West LLC parcel to a high of 25.90 to 1 for the In-N-Out Burger parcel. It is expected that the actual value-to-lien ratio on the Five West LLC parcel will be considerably higher given the construction currently underway on the parcel. The increase in the Special Tax

26 levy for 2008-09 falls primarily on the Undeveloped Property owned by Tejon Industrial Corporation, resulting in an estimated value-to-lien ratio of 1.63 to 1 for that land. The overlapping debt described in Table 3 has not been included in the calculation of the value-to-lien ratios, which would be somewhat lower than those set forth in Table 5 below if such amounts had been included.

TABLES

ESTIMATED VALUE-TO-LIEN RATIOS OF WNE 1 PROPERTY IN THE DISTRICT BASED ON APPRAISAL VALUES

Percentage Share of Projected FY Projected FY Allocated Share Estimated 2008-09 2008-09 of Bonded Values in Value-to-Lien 1 2 4 5 6 Property Owne/ J Acreage Special Taxr J Special Tax(JJ lndebtednesi J Appraisaf J Ratioi J

Developect0> Ikea Property, Inc. 77.87 $663,706 30.50% $ 9,040,557 $ 80,000,000 8.85:1 Petro Travel Plaza LLC 56.67 246,815 11.34 3,361,951 21,710,209 6.46:1 Prologis NA3 CA LLC 32.62 278,029 12.78 3,787,119 30,000,000 7.92:1 Five West Parcel LLCcs) 29.06 247,686 11.38 3,373,810 2,500,000 0.74:1 Tejon Ranchcorp 44.96 95,794 4.40 1,304,847 6,871,632'') 5.27:1 Tejon Industrial Corporation 7.73 67,302 3.09 916,745 10,700,000 11.67:1 In N Out Burger ___Llill 8 504 0.39 115 833 3 000 000 25.90:1 Subtotal 250.71 $ 1,607,837 73.89% $ 21,900,862 $154,781,841 7.07:1 Undeveloped Tejon Industrial Corporation°0> 104.00 $ 568 164 26.11 % $ 7 739 138 $ 12,585,000 1.63: 1 Subtotal 104.00 $ 568 164 26.11 % $ 7 739 138 $ 12,585,000 1.63: 1 Total 354.71 $ 2,176,000 100.00% $ 29,640,000 $167,366,841 5.65:1

(1) Based on the Appraisal. (2) Based on development status provided in the Appraisal and debt service on the Bonds provided by the Underwriter. (3) Figures represent percentage of projected Fiscal Year 2008-09 Special Tax based on current ownership status. (4) Calculated by multiplying principal amount of Bonds by Percentage Share of Projected Fiscal Year 2008-09 Special Tax colunm. 5 C) Values from Appraisal include certain assessed values. 6 ( ) Calculated by dividing Values in Appraisal colunm by Allocated Share of Bonded Indebtedness colunm. (7) Based on property categorized as Developed Property using the development status in the Appraisal. CS) Construction began on a 606,000 square foot building during May 2007. Completion is expected during the first quarter of 2008. Costs to construct the building including land costs is expected to be approximately $22,400,000. 9 C) Value is based on appraised value for one lot and assessed value in the remainder of land owned by Tejon Ranchcorp. See Appendix B herein for a more detailed explanation of the way in which the Appraiser arrived at this value. (lO) Acreage excludes two parcels that are anticipated to be classified as Exempt Property. Source: David Taussig & Associates, Inc.

27 Ill !lilti,w facll!lills lndlllltrilll Sites • 20,000 • 1.8 Million Sf • Fne.., Commerdol

Conceplua! phim for pr•limin• ,y planning: purpol:l~•only, Tlms plan i:,; :J:U!JJ"'ctto oh• nv• • nd th~ owner rt;<51;wvt;1s h111 right to mak¼' des1gn or layout Cha11g0s at ctny UfnCr. THE DEVELOPMENT AND PROPERTY OWNERSHIP

The Tejon Ranch Co. has provided the following information. No assurance can be given that the proposed development will occur as described herein or that it will be completed in a timely manner. Neither the Bonds nor the Special Taxes securing the Bonds are personal obligations of the landowners within the District and, in the event that a landowner defaults in the payment of the Special Taxes, the Authority may proceed with judicial foreclosure but has no direct recourse to the assets of any landowner. See "SPECIAL RISK FACTORS" herein.

The Landowners

There are currently seven owners of land that, collectively, own all of the property within the District. As described below, the Tejon Ranch Co. owns either a controlling or 50% interest in four of the seven landowners. Tejon Ranch Co. does not own any property in the District in its own name. The remaining three property owners are Ikea Property, Inc., a Delaware corporation ("Ikea"), the owner of approximately 78 acres in the Tejon Industrial Complex, which has been improved with a 1.74 million square foot distribution center, Prologis CA (defined herein), the owner of approximately 33 acres in the Tejon Industrial Complex, which has been improved with a 652,000 square foot distribution center and In-N-Out Burger, which operates a fast food restaurant on a 1.8-acre parcel. Tejon Ranch Co. has no ownership interest in Ikea, Prologis CA or In-N-Out Burger.

The ownership structure for the Tejon Ranch Co. and its affiliates owning land within the District is depicted below:

Tejon Ranch Co., a Delaware Corporation, NYSE Traded Holding Company

I

Tejon Ranchcorp, a California Corporation (100% Owned by Tejon Ranch Co.)

I

I

Tejon Industrial Corp., Tejon Development Corporation, a California Corporation a California Corporation (100% Owned by Tejon Ranchcorp) (100% Owned by Tejon Ranchcorp)

I I

Five West Parcel LLC, Petro Travel Plaza LLC a Delaware Limited Liability Company a California Limited Liability Company (50% Interest Owned by (60% Interest Owned by Tejon Industrial Corp.) Tejon Development Corporation)

29 A description of Tejon Ranch Co. and the six largest landowners in the District is set forth below. The seventh landowner is In-N-Out Burger.

Tei on Ranch Co.

Tejon Ranch Co., a Delaware corporation ("TRC"), is a publicly traded holding company listed on the New York Stock Exchange under the symbol "TRC." TRC is a diversified land development and agribusiness company whose major asset is its 270,000-acre land holding. TRC currently operates in three business segments: commercial/industrial real estate development, resort/residential real estate development, and farming. Real estate activities include land entitlement and development, commercial leases and sales, marketing of real estate projects, utility easements, oil and mineral leases and grazing leases. Farming operations focus on almond, pistachio, walnut and wine grape production and include an almond processing plant.

Copies of TRC's most recent filings with the Securities and Exchange Commission (the "SEC") are available at the SEC's website at www.sec.gov and from TRC's website at www.tejonranch.com or upon request mailed to TRC, Attn: Corporate Secretary, at P.O. Box 1000, Lebec, California 93243. The most recent reports available are the Form 10-K annual report for TRC for the fiscal year ended December 31, 2006 and the Form 10-Q for the quarter ending June 30, 2007.

Both Tejon Industrial Corp. and Tejon Development Corporation are wholly owned subsidiaries of Tejon Ranchcorp. Tejon Ranchcorp is a wholly owned subsidiary of Tejon Ranch Co.

Tejon Ranchcorp

Tejon Ranchcorp, a California corporation, was formed on February 14, 1936 and is a wholly owned subsidiary of the Tejon Ranch Co. Tejon Ranchcorp owns approximately 1,502 acres in the District, including the Eastside Property and all of the property in Zone 2 of the District. The Eastside Property consists of an existing approximately 30 acres of commercial development located east of Interstate 5 adjacent to Wheeler Ridge Road and Laval Road, and approximately 36 acres of undeveloped land, which are planned for future commercial development. Approximately 21 of these acres, which are located in Zone 2, are subject to being released from the obligation to pay Special Taxes. The existing development on the Eastside Property includes approximately 55,000 square feet of buildings, including a Truckstops of America complex, Chevron gas station/convenience store, and a Blue Beacon truck wash. These existing improvements are scheduled to be demolished in 2008 and subsequently replaced by travel-related commercial uses starting in late 2008 or early 2009. The remaining approximately 1,436 acres of land within the District owned by Tejon Ranchcorp are located in Zone 2 of the District and are zoned agricultural. The majority of this land is used for grazing cattle. These acres are currently not expected to be developed and a portion of these acres will be subject to the Special Tax only until the conditions to releasing these acres from the Special Tax lien contained in the Rate and Method have been satisfied. Although Zone 2 property is subject to the Special Tax, the District does not expect to levy any Special Tax on Zone 2 property for the repayment of the Bonds. The District expects that Zone 2 property will be released from its obligation to pay Special Taxes in the future. The District does not give any assurance as to whether or when Zone 2 property will be released from its obligation to pay Special Taxes. See "SOURCES OF PAYMENT FOR THE 2007 BONDS-Special Taxes."

Tei on Industrial Corp.

Tejon Industrial Corp., a California corporation (the "Developer"), was formed on November 13, 1998 for the purpose of owning and developing land within the Tejon Industrial Complex. The Developer is a wholly owned subsidiary of Tejon Ranchcorp. The Developer currently owns approximately 178 acres of land within the Tejon Industrial Complex.

30 Ikea Property, Inc.

Ikea owns approximately 78 acres within the Tejon Industrial Complex upon which it has constructed an approximately 1.74 million square foot distribution center. The facility is used to distribute merchandise to IKEA furniture stores primarily in the western United States. The merchandise is shipped on trucks loaded at the facility. The Appraiser has valued the land and improvements on the site at $80,000,000. Ikea currently is the largest taxpayer in the District, responsible for approximately 38% of the fiscal year 2007-08 Special Tax Levy, and so long as it owns the facility is expected to be responsible to pay not less than 25% of the annual Special Tax levy. See "SPECIAL RISK FACTORS-Concentration of Ownership." Ikea has not participated in the preparation of this Official Statement and has not reviewed or furnished the foregoing information.

Prologis CA

In July 2007, Prologis NA3 CA, LLC, a California limited liability company ("Prologis CA") purchased a 32.62-acre parcel with a completed distribution industrial building containing 651,909 square feet. As of August 7, 2007, 386,000 square feet was leased to Ikea, an additional 244,141 square feet was leased to Oneida, a flatware maker, and the remaining 25,000 square feet were vacant. Prologis CA is a subsidiary of Prologis, a real estate investment trust, organized and operating under the laws of the state of Maryland ("Prologis"). Prologis is a national owner, manager and developer of distribution facilities, with 446.9 million square feet (41.5 million square meters) of industrial space in 105 markets across North America, Asia and Europe. Prologis leases industrial space to manufacturers, retailers, transportation companies, third-party logistics providers and other enterprises with large-scale distribution needs. Prologis is headquartered in Denver, Colorado and is a Fortune 1000 company and a member of the S&P 500. Prologis' customers include manufacturers, retailers, transportation companies, third-party logistics providers and other enterprises with large-scale distribution needs. Prologis employs more than 1,300 people worldwide. Prologis has not participated in the preparation of this Official Statement and has not reviewed or furnished the foregoing information.

Petro Travel Plaza LLC

Petro Travel Plaza LLC, a California limited liability company ("Petro"), currently owns and operates the Petro Travel Plaza, which encompasses approximately 50 acres of existing developed land within the Tejon Industrial Complex and a Mobil gas station located on approximately 2 acres within the Tejon Industrial Complex. Petro is currently constructing a Chevron gas station and convenience store on approximately 4.75 acres in the Tejon Industrial Complex. Completion is scheduled for the first quarter of 2008.

Five West Parcel LLC

Five West Parcel LLC, a Delaware limited liability company ("Five West"), is developing a 606,000 square foot concrete tilt-up industrial building for lease on approximately 29 acres in the Tejon Industrial Complex. Five West has received all permits necessary to complete the construction of the building, which is expected to be completed during the first quarter of 2008 at a total cost, including land, of approximately $22,400,000. Tejon Industrial Corp. is one of the two members of Five West, owning a 50% interest in the Company. The remaining 50% is owned by the Rockefeller Development Corporation. The Appraiser has valued the land at $2,500,000 and has not ascribed any value to the building construction that is underway on the land. As of October 1, 2007, Five West had not obtained any tenants for the building under construction.

General Description of the Development

The current plan of the landowners in the District is to develop approximately 376 of the 1,878 acres that they own in the District. At present, approximately 206 acres within the District have been developed with a mix of commercial and industrial uses. See "-Existing Development" below. Of the remaining 170 acres planned for development, approximately 134 acres are part of the Tejon Industrial Complex and are

31 owned by Tejon Industrial Corp. and approximately 36 acres are part of the Eastside property and owned by Tejon Ranchcorp.

Of the total approximately 376 developable acres within the District, it is anticipated that at buildout there will be approximately 133 acres of commercial use and 243 acres of light industrial use. The existing and planned uses include gas station/convenience stores, restaurants, fast food facilities, a 61 unit motel, warehouse distribution, light industrial, agricultural and travel industry uses. Approximately 4. 7 million square feet of commercial and light industrial buildings are planned within the District. TRC projects complete buildout of the property to occur within approximately a 5-year period. See "-Appraisal" below and "SPECIAL RISK FACTORS" herein.

Status of Land Use Approvals for Future Development

On March 28, 2000, the Kern County Board of Supervisors (the "Board of Supervisors") took several actions approving discretionary land use entitlements for the development of the Tejon Industrial Complex. Such actions taken by the Board of Supervisors followed a noticed public hearing also held on March 28, 2000, and were taken pursuant to the recommendations of the County Planning Commission which held a noticed public hearing on the proposed development on March 9, 2000. Thereafter, the Board of Supervisors also approved a statutory Development Agreement for the property within the District as further described below, on June 13, 2000. The actions taken by the Board of Supervisors on March 28, 2000 and June 13, 2000 and certain additional approvals granted by the Director of Planning on April 6, 2000 are described below, and are hereafter collectively returned to as the "TIC Development Approvals."

Final Environmental Impact Report. Pursuant to the provisions of the California Environmental Quality Act ("CEQA"), the Board of Supervisors amended and certified the Final Environmental Impact Report ("EIR") for the Tejon Industrial Complex (SCH# 99061016) and, pursuant to CEQA Guidelines Section 15091, adopted Findings and Facts in Support of Findings Relating to Significant Environmental Impacts of the Tejon Industrial Complex and, pursuant to Section 15093 of the CEQA Guidelines, adopted a Statement of Overriding Considerations. The Board of Supervisors also adopted an Amended Mitigation Measure Monitoring Program which relates to conditions of approval on the various land use entitlements approved by the Board of Supervisors on March 28, 2000. The Mitigation Measure Monitoring Program, which must be complied with as a condition of future development of the land within the District, includes the following mitigation measures and requirements:

(a) Provision of a cultural resources monitor during excavation activities on the site to help insure the protection of any buried cultural resources;

(b) Provisions relating to a conservation plan to mitigate for loss of endangered species or habitat;

(c) Pre-construction biological surveys;

(d) Shielded lighting on the perimeter of the project site to prevent spillage into the remaining natural and open space areas;

(e) County road and state highway improvements for access and circulation of the site, which improvements will be developed in phases;

(f) Dust control plans approved by the San Joaquin Valley Air Pollution Control District;

(g) Energy efficient plans;

(h) Schedule agreements with the Kern Regional Transit Authority;

32 (i) Traffic and pedestrian flow measures; and

G) A fire protection mitigation program with the Kern County Fire Department, including the dedication of a fire station site and the contribution of funds towards the construction of a fire station.

March 28, 2000 Board Approvals. On March 28, 2000, the Board of Supervisors also took the following actions approving the basic land use entitlements for the Tejon Industrial Complex by adopting the following resolutions and ordinances:

(a) Resolution No. 2000-087 to amend the Land Use, Open Space and Conservation Element of the Kern County General Plan from Map Codes 8.3 (Extensive Agriculture), 7.1 (Light Industrial) and 8.4 (Mineral and Petroleum) to Map Code 7.2 (Service Industrial);

(b) Resolution No. 2000-088 and Ordinance No. G-6667 approving a change rn zone classification fromM-1 PD (Light Industrial-Precise Development Combining), A (Exclusive Agriculture), and C-2 PD (General Commercial-Precise Development Combining) to M-2 PD (Medium Industrial-Precise Development Combining);

(c) Resolution No. 2000-089 and Ordinance No. G-6668 approving a change in zone classification from M-1 PD (Light Industrial-Precise Development Combining), C-2 PD (General Commercial-Precise Development Combining), and A (Exclusive Agriculture) to M-2 PD (Medium Industrial-Precise Development Combining); and

(d) Resolution No. 2000-090 excluding 156 acres of the Property from Agricultural Preserve No.19.

Pursuant to CEQA, a Notice of Determination regarding the adopted resolutions and ordinances referred to above was filed on March 31, 2000. The actions taken by the Board of Supervisors on March 28, 2000 establish the various types of permitted uses which can be developed within the Tejon Industrial Complex.

Development Agreement. On June 13, 2000, the Board of Supervisors adopted Ordinance G-6688 approving a statutory Development Agreement for the District pursuant to Government Code Section 65864 et seq. which had been negotiated by the Developer and the County (the "Development Agreement"). The Development Agreement was approved by the Board of Supervisors at a noticed public hearing on June 13, 2000, was recorded June 23, 2000 and became effective on July 13, 2000. The Development Agreement provides a contractual vested right to the Developer to proceed with development of the Tejon Industrial Complex in accordance with the TIC Development Approvals and all rules, regulations and official policies of the County in effect on the effective date of the Development Agreement for a period of ten years thereafter, subject to certain exceptions stated therein. See "SPECIAL RISK FACTORS-Failure to Develop Properties."

Director of Planning Approvals. Tejon Industrial Complex (West) is principally governed by the Conditions of Approval associated with the following three vesting tentative parcel maps and a Conditional Use Permit (as approved by the Kern County Board of Supervisors) that cover all developable property within the Tejon Industrial Complex (West) legal bounds:

(a) Precise Development Plan No. 7, Map No. 202, Precise Development Plan No. 16, and Map No. 219, which constitute a Master Precise Development Plan for industrial and commercial development;

(b) Parcel Map 10663, which has been recorded for Phases A through D;

33 (c) Parcel Map 10502, on which there are no developable acres and which was recorded in 1998 and largely replaced by Parcel Map 10663; and

(d) Parcel Map 11569, which was conditionally approved in June 2007, which is currently in review with Kern County Engineering, and which is estimated to be recorded in February 2008.

Project-wide, development within Tejon Industrial Complex (West) is also governed by any and all applicable requirements of any other governmental agency having jurisdiction in the District. Receiving entitlements (and related permits) for improvement of individual parcels at Tejon Industrial Complex (West) requires a complete submittal of a Precise Development Plan, compliance with the Comprehensive Plan and all applicable zoning and subdivision codes, compliance with all applicable Conditions of the Parcel Map and compliance with applicable requirements of any other governmental agency having jurisdiction in the District.

Habitat Conservation Mitigation Measures. The EIR, as well as certain provisions of the Mitigation Monitoring Program, contemplate conditions and mitigation measures with regard to potential impacts to endangered or threatened species. The Developer has an Incidental Take Statement approved by the United States Fish and Wildlife Service ("USFWS") regarding implementation of mitigation measures to comply with the federal Endangered Species Act. Grading and development of the Tejon Industrial Complex may proceed even though a "take" of an endangered species may occur. Mitigation measures have been imposed which include monitoring during grading and construction activities to protect against the taking of endangered species. Biological surveys of the Tejon Industrial Complex have not identified the presence of threatened or endangered species on the land within the District.

Future Approvals and Challenges. The Authority and the Developer each believes that all necessary environmental action has been taken with respect to the formation of the District and the commencement and completion of development within the Tejon Industrial Complex. With regard to the Board of Supervisors approvals, the Director of Planning Approvals, the General Plan Amendment, changes of zone, Agricultural Preserve No. 19 exclusion, the Vesting Tentative Parcel Map, Master Precise Development Plan and Development Agreement approvals referenced above, the applicable statute of limitations to bring a legal action challenging such approvals has expired. It should be noted, however, that to the extent there may be additional discretionary approvals or challenges with regard to the project conditions, a new statute of limitations can commence with respect to those discretionary approvals and/or challenges.

Eastside Property Approvals. On January 21, 2003, the Board of Supervisors approved General Plan amendments, zone changes, the adoption of the Tejon Industrial Complex-East Specific Plan, a related development agreement and an amendment to the development agreement for the Tejon Industrial Complex­ West, the alteration of the boundaries of Agricultural Preserve No. 19 to exclude approximately 959 acres and the cancellation of land use restriction on 130 acres under the Land Conservation Act for certain properties owned by Tejon Ranchcorp located east of Interstate 5.

On February 20, 2003, a lawsuit was filed in the Kern County Superior Court by the Center for Biological Diversity, the Center on Race, Poverty and the Environment, the Sierra Club and the Kern Audubon Society challenging the Board of Supervisors' January 21, 2003 approvals under CEQA. On October 24, 2003, the Court issued a tentative decision in which it determined the EIR approved by the Board of Supervisors failed to comply with CEQA and ordered certain portions of the EIR to be revised and reconsidered by the Board of Supervisors in accordance with CEQA. The Court voided the EIR on two grounds. First, the Court found that there was not sufficient evidence that the EIR adequately described the impacts the Tejon Industrial Complex-East Specific Plan would have on the air quality of the San Joaquin Valley air basin. Second, two "species of concern" (i.e. species not listed under the state and federal endangered species acts but which are required to be discussed in E!Rs if they could be affected by a development) found on or near the project site were not specifically discussed in the EIR, due to a mistake by the consulting biologists. Based on these new findings, a new environmental impact report was prepared for

34 the development that was re-approved by the Kern County Board of Supervisors in November 2005 and submitted to the Kern County Superior Court. On March 24, 2006, Tejon Ranchcorp received a favorable ruling in Kern County Superior Court that cleared the way for expansion of the Tejon Industrial Complex pursuant to the Tejon Industrial Complex - East Specific Plan by dismissing the legal challenges to the project. On June 28, 2006, plaintiffs filed an appeal of the ruling. On April 16, 2007, the Fifth District Court of Appeal, in Fresno, ruled that the Kern County Superior Court decision was correct and affirmed the ruling that expansion of Tejon Industrial Complex could proceed. The applicable statute of limitations to challenge the Fifth District Court of Appeal decision has expired.

Only 66 acres of the District are included in the Tejon Industrial Complex - East Specific Plan. The development and marketing of the property outside of the District in accordance with the Tejon Industrial Complex - East Specific Plan will overlap with the buildout of the remaining property within the District and could create competition in the market and delay the ultimate buildout of the District. See "SPECIAL RISK FACTORS-Competition."

Estimated Sources and Uses of Funds and Projected Cash Flow

Table 6 below summarizes the actual expenditures through October 1, 2007 for development of the public infrastructure related to the Tejon Industrial Complex and the projected sources and uses of funds to complete the infrastructure and site development work for the remaining development as currently proposed. Table 6 is a projection only and no assurance can be given that these results will be achieved. The actual cash flow will depend on future events such as the rate of land sales and actual costs of infrastructure development.

35 Table 6 does not include the cost of any building improvements that are expected to be financed by the owners or lessees of individual parcels. Table 6 includes those development costs that, at a minimum, are necessary in order to sell commercial and industrial lots within the Tejon Industrial Complex.

TABLE6

TEJON INDUSTRIAL CORP. PROJECT CASH FLOW ANALYSISC'l

2006 and De'Scription Prier Years 2007 2008 2009 2010 2011 2012 Total Revenues Land Sales $ 5,628,940 $ 0 $ 3,628,391 $ 4,057,173 $4,057,173 $ 612,372 $ 612,372 $ 18,596,420 Leases & Joint Ventures 8,270,102 7,223,208 881,516 1,974,691 2,165,691 2,194,691 6,618,640 29,328,538 Tenninal Value of Leases & Joint Ventures 0 0 0 0 0 0 29927 374 29927 374 Total Revenues $ 13,899,042 $ 7,223,208 $ 4,509,907 $ 6,031,864 $ 6,222,864 $ 2,807,063 $ 37,158,385 $ 77,852,332

Costs Development Costs $ (28.377.160) $ (2.237 .695) $ (583.970) $ (1.866.364) $(1.270.512) $ (22.580) $ (22.580) $ (34.400.861) Marketing, G&A, Property Taxes (7,325,170) (910.838) (1,033,953) (1,170,034) (1,029,551) (799.885) (2,798,281) (15,067,712) Interest Cost (2,083,712) 0 0 0 0 0 0 (2,083,712) Total Costs {37,786,042} {3,148,533} {1,617,923} {3,056,398} {2,300,063} {822,465} {2,820,861} {51,552,285} Cash Flow Before Financing and Income Taxes $ (23,887,000) $ 4,074,675 $ 2,891,983 $ 2,975,466 $ 3,922,801 1,984,598 $ 34,337,524 $ 26,300,047

Loan Advances $ 8,593,338 $ 0 $ 0 $ 0 $ 0 $ 0 $ 0 $ 8,593,338 Mello Roos Funding 20,606,364 2,500,000 1,917,629 1,021,496 0 0 0 26,045,489 Loan Repayments {8,593,338} 0 0 0 0 0 0 {8,593,338} Total Financing Cash Flow $ 20,606,364 $ 2,500,000 $ 1,917,629 $ 1,021,496 $ 0 $ 0 $ 0 $ 26,045,489 Total Projected Cash Flow Before Income Taxes $ (3 280 636) $ 6 574 675 $ 4802612 $ 3 226 262 $ 3 222 801 $ 1284528 $ 34 337 524 $ 52 345 536

All unsold industrial sites are assumed to be sold to end users who construct on the buildable parcels delivered by Tejon Industrial Cotp. All unsold commercial sites are assumed to be leased with a terminal value calculated using an 8.0% capitalization rate. Source: The Developer.

36 Appraisal

The following information regarding ownership of property in the District included in the Appraisal has been included because it is considered relevant to an informed evaluation of the 2007 Bonds. The inclusion in this Official Statement of information related to existing owners of property should not be construed to suggest that the 2007 Bonds, or the Special Taxes that will be used to pay the 2007 Bonds, are recourse obligations of the property owners. A property owner may sell or otherwise dispose of land within the District or a development or any interest therein at any time. Development may also be abandoned at any time.

The Appraisal was prepared to provide the Appraiser's best estimate of market value of the fee simple interest of the Appraised Property subject to the Special Tax lien as of August 7, 2007. A copy of the Appraisal is set forth in APPENDIX B-"APPRAISAL REPORT" and should be read in its entirety.

The Appraisal is divided into six sections. Section I is an appraisal of the two existing industrial buildings comprising a total of approximately 110 acres. Section II reports the assessed values of seven assessor's parcels of approximately 81 acres improved with a Chevron gas station, a Blue Beacon Truck Wash, a Truckstops of America and a Petro Travel Plaza facility that includes miscellaneous shops. Section III is an appraisal of approximately 36 acres of undeveloped land located on the east side of Interstate 5. Section IV is an appraisal of the approximately 104 acres of land within the Tejon Industrial Complex remaining to be developed. Section V is an appraisal of seven parcels consisting of approximately 43 acres of land on which improvements have recently been constructed. These include a McDonald's, Starbucks, Panda Express and a Best Western Hotel, which are operational, an In-N-Out Burger nearing completion and a Petro Convenience Store and a 606,000 square foot warehouse/distribution center under construction. Section VI is an appraisal of approximately 1,101 acres in Zone 2. Approximately 335 acres of undeveloped property within Zone 2 of the District owned by Tejon Ranchcorp were not appraised because they are exempt from the Special Tax levy.

A summary of the appraised values and assessed values reported in the Appraisal are as follows:

Section Owner Appraised Value Assessed Value I Ikea Property, Inc. $ 80,000,000 I Prologis NA3 CA, LLC 30,000,000 II Petro Travel Plaza LLC and Tejon Ranchcorp $ 23,640,841 III Tejon Ranchcorp 5,567,000 IV Tejon Industrial Corp. 12,585,000 V Tejon Industrial Corp. and In-N-Out Burger 18,700,000 VI Tejon Ranchcorp 767 000 TOTAL $ 147,619,000 $ 23,640,841

Source: Bruce Hull and Associates, Inc.

The Appraiser has used various approaches to arrive at the property values in the Appraisal. The Appraisal is divided into six sections. In valuing the existing buildings and land in Section I which is owned by Ikea and Prologis CA, the Appraiser has used the cost, income and sales comparison approaches to value. For the Section I property, the Appraiser has concluded that the Ikea and Prologis CA parcels have a value of $46.00 per square foot of building. Section II reports the assessed value for the seven parcels located therein. For the approximately 36 acres of undeveloped property in Section III, the Appraiser believes that the highest and best use is commercial as designated by the Tejon Industrial Complex East Specific Plan approved by the County. The Appraiser used a sales comparison approach in valuing this property and has assigned a value of $4 per square foot or $174,240 per acre. Section III includes parts of Zone 2 property. In valuing the Section IV property, which is the approximately 104 acres remaining to be developed in the Tejon Industrial Complex, the Appraiser has used a sales comparison approach and a discounted cash flow analysis to arrive at a bulk sale value. The Appraiser valued ten industrial parcels ranging in size from 1.2 to 8.49 acres, totaling

37 approximately 23.8 acres, at $3.00 to $4.00 per square foot, two retail pads of under an acre each at $15.00 per square foot and two larger retail pads ranging from 6 to 8 acres at $4.00 per square foot and 65.5 acres of industrial land south of Laval Road at $2.00 per square foot. The 43 acres of property in Section V, which has seven parcels constructed or under construction for travel-related uses, have been valued by the Appraiser using both the sales comparison and income approaches to value. For the Section VI property, which is 1,101 acres of Zone 2 property, the Appraiser used a sales comparison approach and concluded a land value of $1,300 per acre.

The discounted cash flow analysis used by the Appraiser in valuing the Section IV property uses the land value stated above to create the projected revenue for the land sales and a number of additional assumptions to arrive at the estimate of value. In the discounted cash flow, the Appraiser has assumed a three­ year absorption period for the unsold parcels, a 1.0% per annum increase in direct costs and a 2% per annum increase in indirect costs, remaining development costs of approximately $4,800,000, taxes based on current and projected rates, and a discount rate of 18%.

In arriving at the estimated value of the Appraised Property in Sections I, III, IV, V and VI of the Appraisal, the Appraiser also has relied on several assumptions and limiting conditions all of which are set forth in Appendix B. Certain key assumptions are that there are no hidden or unapparent conditions of the property, subsoil or structures that render it more or less valuable, that all required licenses, certificates of occupancy or other legislative or administrative authority can be obtained, that the costs of development of the Tejon Industrial Complex provided by TRC are accurate and that no hazardous and/or toxic waste exists on the property. Certain hazardous waste does exist on portions of the Section II property, for which the Appraiser has not estimated a market value. See "SPECIAL RISK FACTORS-Hazardous Substances" herein. To the extent that the assumptions and limiting conditions are not realized with respect to the Appraised Property, the value of the these parcels could be significantly less than that estimated by the Appraiser.

SPECIAL RISK FACTORS

The purchase of the 2007 Bonds involves a high degree of investment risk and, therefore, the 2007 Bonds are not suitable investments for many types of investors. The following is a discussion of certain risk factors which should be considered, in addition to other matters set forth herein, in evaluating the investment quality of the 2007 Bonds. This discussion does not purport to be comprehensive or definitive. The occurrence of one or more of the events discussed herein could adversely affect the ability or willingness of property owners in the District to pay their Special Taxes when due. Such failures to pay Special Taxes could result in the inability of the Authority to make full and punctual payments of debt service on the 2007 Bonds. In addition, the occurrence of one or more of the events discussed herein could adversely affect the value of the property in the District. See "-Property Values" and "-Limited Secondary Market" below.

Concentration of Ownership

The concentration of property ownership in the District presents a risk to the owners of the 2007 Bonds in that the delinquency of one or more major taxpayers could result in a rapid depletion of the Reserve Fund and a default in the payment of the 2007 Bonds.

Four entities under the common control of TRC are responsible for approximately 45.38% of the fiscal year 2007-08 Special Tax levy, exclusive of the amount levied in the supplemental tax bills to replenish the Reserve Fund. A fifth owner, Ikea occupies approximately 1.74 million square feet of industrial warehouse space, and is responsible for approximately 38.14% of the fiscal year 2007-08 Special Tax levy, exclusive of the amount levied in the supplemental tax bills to replenish the Reserve Fund. See "THE COMMUNITY FACILITIES DISTRICT-Principal Taxpayers" and "THE DEVELOPMENT AND PROPERTY OWNERSHIP-The Landowners." If no further development occurs and no additional parcels of land are sold, it is projected that entities under the common control of TRC will be responsible for approximately 56.32% of the Fiscal Year 2008-09 Special Tax levy. Until the sale of additional parcels, the receipt of the

38 Special Taxes is dependent on the willingness and the ability of the current landowners to pay the Special Taxes when due. Failure of the current landowners, or any successor, to pay the annual Special Taxes when due could result in a default in payments of the principal of, and interest on, the 2007 Bonds, when due. See "-Failure to Develop Properties" below.

No assurance can be made that the Developer and Tejon Ranchcorp, or their successors, will complete the intended construction and development in the District. See "-Failure to Develop Properties" below. As a result, no assurance can be given that the Developer and the other landowners within the District will continue to pay Special Taxes in the future or that they will be able to pay such Special Taxes on a timely basis. See "-Bankruptcy and Foreclosure" below, for a discussion of certain limitations on the District's ability to pursue judicial proceedings with respect to delinquent parcels.

A concentration of ownership is expected to exist even upon completion of the proposed development, given the large amount of space owned and occupied by Ikea. If the property builds out as projected, and Ikea continues to occupy the space it now owns, it will remain responsible for approximately 25% of the annual Special Tax levy. It is possible that the present landowners will choose to lease rather than sell the developable parcels in the Tejon Industrial Complex, in which case the existing concentration of ownership could continue indefinitely.

Competition

The Tejon Industrial Complex is in direct competition for customers with other industrial sites in Northern, Central, and Southern California and is also in competition with other highway interchange locations using Interstate 5 and State Route 99 for commercial leasing opportunities.

The Tejon Industrial Complex could face direct competition from the planned Tejon Industrial Complex-East. In a press release dated September 9, 2003, the Tejon Ranch Co. announced that Catellus Development Corporation, a publicly traded real estate development company ("Catellus"), executed a purchase option for an approximately 80-acre industrial development site at the Tejon Industrial Complex­ East, outside of the District. As of September 15, 2007, Prologis CA has an option to purchase this land by assignment of such option from Catellus at a per square foot rate below the rate at which the Appraiser appraised other vacant industrial land in the District. The option expires on December 31, 2007. It is possible that other potential owners will purchase space in the Tejon Industrial Complex-East outside of the District rather than space in the Tejon Industrial Complex-West which is within the District. The Developer expects to advertise the Eastside Property concurrently with the Tejon Industrial Complex. Such advertising may increase competition between the Eastside Property and Tejon Industrial Complex.

The competition with other locations could result in a slower buildout in the District than is currently projected, resulting in a continuing concentration of ownership and reliance on Special Taxes being paid from undeveloped property. See "-Concentration of Ownership" and "-Failure to Develop Properties."

Limited Obligations

The 2007 Bonds and interest thereon are not payable from the general funds of the Authority. Except with respect to the Special Taxes, neither the credit nor the taxing power of the County, the Water District, the District or the Authority is pledged for the payment of the 2007 Bonds or the interest thereon, and, except as provided in the Fiscal Agent Agreement, no Owner of the 2007 Bonds may compel the exercise of any taxing power by the District or the Authority or force the forfeiture of any Authority or District property. The principal of, premium, if any, and interest on the 2007 Bonds are not a legal or equitable pledge, charge, lien or encumbrance upon any of the Authority's property or upon any of the Authority's income, receipts or revenues, except the Special Tax Revenues and other amounts pledged under the Fiscal Agent Agreement. Special Tax Revenues could be insufficient to pay debt service on the 2007 Bonds as a result of delinquencies in the payment of Special Taxes or the insufficiency of proceeds derived from the sale of land within the

39 District following a delinquency in the payment of the applicable Special Tax. The Authority has no obligation to pay debt service on the 2007 Bonds in the event of insufficient Special Tax Revenues except to the extent that money is available for such purpose in the Reserve Fund. The Authority's only obligation with respect to delinquent Special Taxes is to pursue judicial foreclosure proceedings under the circumstances described in the Fiscal Agent Agreement. See "SOURCES OF PAYMENT FOR THE 2007 BONDS­ Special Taxes-Proceeds of Foreclosure Sales."

Insnfficiency of Special Taxes; Release of Zone 2 Property

Under the Rate and Method, the annual amount of Special Tax to be levied on each taxable parcel in the District will generally be based on whether such parcel is categorized as Undeveloped Property or as Developed Property and on the land use class to which a parcel of Developed Property is assigned. See APPENDIXA-"RATE AND METHOD OF APPORTIONMENT OF SPECIAL TAXES" and "SOURCES OF PAYMENT FOR THE 2007 BONDS-Special Taxes-Method of Apportionment of Special Tax."

The Rate and Method governing the levy of the Special Tax expressly exempts up to 77 acres of property within Zone 1 of the District and up to 335 acres of property within Zone 2 of the District, which is publicly owned, owned by a property owner association or reserved as open space. If for any reason property within the District becomes exempt from taxation by reason of ownership by a non-taxable entity such as the federal government or another public agency, subject to the limitations of the maximum authorized rates, the Special Tax will be reallocated to the remaining taxable properties within the District. This would result in the owners of such property paying a greater amount of the Special Tax and could have an adverse impact upon the ability and willingness of the owners of such property to pay the Special Tax when due.

Moreover, if a substantial portion of land within the District became exempt from the Special Tax because of public ownership, or otherwise, the maximum Special Tax which could be levied upon the remaining property within the District might not be sufficient to pay principal of and interest on the 2007 Bonds when due and a default could occur with respect to the payment of such principal and interest.

Although Zone 2 property is subject to the Special Tax, the District does not expect to levy any Special Tax on Zone 2 property for the repayment of the Bonds. The District expects that Zone 2 property will be released from its obligation to pay Special Taxes in the future in accordance with the provisions of Section I of the Rate and Method. The District does not give any assurance as to whether or when Zone 2 property will be released from its obligation to pay Special Taxes.

Failnre to Develop Properties

Undeveloped or partially developed land is inherently less valuable than developed land and provides less security to the Bondowners should it be necessary for the Authority to foreclose on the property due to the nonpayment of Special Taxes. The failure to complete development of the required infrastructure in the District as planned, or substantial delays in the development of the remaining undeveloped property in the District due to litigation or other causes may reduce the value of the property within the District and increase the length of time during which Special Taxes will be payable from undeveloped property, and may affect the willingness and ability of the owners of property within the District to pay the Special Taxes when due.

Land development is subject to comprehensive federal, State and local regulations. Approval is required from various agencies in connection with the layout and design of developments, the nature and extent of improvements, construction activity, land use, zoning, school and health requirements, as well as numerous other matters. There is always the possibility that such approvals will not be obtained or, if obtained, will not be obtained on a timely basis. Failure to obtain any such agency approval or satisfy such governmental requirements would adversely affect planned land development. See "THE DEVELOPMENT AND PROPERTY OWNERSHIP-Status of Land Use Approvals for Future Development."

40 The installation of the necessary infrastructure improvements and the construction of the proposed development are subject to the receipt of ministerial and discretionary approvals from a number of public agencies concerning the layout and design of the proposed development, the nature and extent of the improvements, land use, health and safety requirements and other matters. The failure to obtain any such approval could adversely affect the planned land development within the District. The Developer believes that it has obtained all discretionary approvals required to complete the development of the Tejon Industrial Complex and the undeveloped portions of the Eastside Property. See "THE DEVELOPMENT AND PROPERTY OWNERSHIP-Status of Land Use Approvals for Future Development." Moreover, there can be no assurance that land development operations within the District will not be adversely affected by future governmental policies, including, but not limited to, governmental policies to restrict or control development.

Under current California law, it is generally accepted that proposed development is not exempt from future land use regulations until a vested right to proceed has been perfected by obtaining a permit, generally a building permit, and performing substantial work and incurring substantial liabilities in good faith reliance on such permit. To date, building permits have been issued and improvements constructed on approximately 232 acres of developed property within the District. No building permits have been issued with respect to the remaining 144 acres currently proposed for development in the District. However, the Developer does have a contractual vested right to proceed with the development of the Tejon Industrial Complex in accordance with the TIC Development Approvals by virtue of having entered into a statutory Development Agreement with the County pursuant to Government Code Section 65864 et seq., which Development Agreement was adopted by Ordinance G-6688 on June 13, 2000, was recorded on June 23, 2000 and became effective on July 13, 2000 (the "Effective Date"). Any subsequent discretionary land use approvals needed for the development of the Tejon Industrial Complex are only subject to those rules, regulations and official policies of the County in effect on the Effective Date of the Development Agreement, and only subsequently enacted rules, regulations and official policies not in conflict with the TIC Development Approvals or reasonably necessary to protect the public health, safety and welfare can be applied. The Development Agreement is for a term of 10 years commencing on the its Effective Date, and may only be modified or cancelled by mutual consent of the Developer and the County, or the Development Agreement may only be modified or cancelled by the County unilaterally if, after a noticed public hearing, and following an annual Periodic Review, the Board of Supervisors finds, on the basis of substantial evidence, that the Developer has not proceeded in substantial good faith compliance with the terms of the Development Agreement. There can be no assurance that the Developer will comply with the terms of the Development Agreement or that the County will not terminate such agreement if the Developer fails to comply with its terms. In 2003, the County and Tejon Ranchcorp entered into a statutory development agreement for the Tejon Industrial Complex - East Specific Plan, which includes 66 acres of the District (the "Eastside Development Agreement"). See "THE DEVELOPMENT AND PROPERTY OWNERSHIP-Status of Land Use Approvals for Future Development-Development Agreement."

In the past, a number of communities in California have placed on the ballot initiative measures intended to control the rate of future development. It is possible that future initiatives could be enacted, could become applicable to the proposed development and could negatively impact the ability of the current landowners, and their successors, to complete the proposed development. The application of future land use regulations to the proposed development could cause significant delays and cost increases in the completion of the development and could cause the property values within the District to decrease substantially from those estimated by the Appraiser.

Notwithstanding the Development Agreement and the Eastside Development Agreement, there can be no assurance that land development operations within the District will not be adversely affected by a future deterioration of the real estate market and economic conditions or future local, State and federal governmental policies and laws relating to real estate development, the income tax treatment of real property ownership, or the national economy. A slowdown of the development process and the absorption rate could adversely affect property values and reduce the ability or desire of the property owners to pay the annual Special Taxes. In that event, there could be a default in the payment of principal of, and interest on, the 2007 Bonds when due.

41 Bondowners should assume that any event that significantly impacts the ability to develop the remaining acres in the District planned for development would cause the property values within the District to decrease substantially from those estimated by the Appraiser and could affect the willingness and ability of the owners of such land to pay the Special Taxes when due.

Undeveloped property is less valuable per unit of area than developed land, especially if there are no plans to develop such land or if there are severe restrictions on the development of such land. Undeveloped property also provides less security to the Bondowners should it be necessary for the District to foreclose on undeveloped property due to the nonpayment of the Special Taxes. Furthermore, an inability to develop the land within the District as currently proposed will make the Bondowners dependent upon timely payment of the Special Taxes levied on undeveloped property for a longer period of time than projected. Because all of the land within the District is currently owned by seven owners, four of which are under common control, the timely payment of the 2007 Bonds depends upon the willingness and ability of this limited group of owners to pay the Special Taxes levied on the taxable property when due. See "-Concentration of Ownership" above. A slowdown or stoppage in the continued development of the District could reduce the willingness and ability of the owners of the remaining undeveloped land to make Special Tax payments and could greatly reduce the value of such property in the event it has to be foreclosed upon. See "-Property Values" below.

Possible Release or Reduction of Letter of Credit

The Fiscal Agent Agreement requires that, so long as the Prior Bonds are Outstanding, a letter of credit must be provided for any property owner and its affiliates responsible for the payment of 33% or more of the annual Special Taxes levied to pay debt service on the Bonds and any Parity Bonds. The letter of credit is to be in a stated amount equal to two years' estimated maximum annual debt service for the portion of the Bonds and any Parity Bonds attributable to Special Taxes to be levied on the County Assessor's parcels to which it pertains. Tejon Ranchcorp has provided to the Fiscal Agent a letter of credit in the amount of $4,584,420 in satisfaction of this requirement. The letter of credit may be drawn upon in the event of a failure to pay Special Taxes for any of the parcels to which it pertains, and will be released when the Prior Bonds are no longer Outstanding. The letter of credit currently pertains to all of the parcels owned by Tejon Ranchcorp and its related entities and by Ikea. See "SOURCES OF PAYMENT FOR THE 2007 BONDS-Reserve Fund and Letter of Credit" and APPENDIX D-"SUMMARY OF FISCAL AGENT AGREEMENT."

Based on the projected Special Tax levy for Fiscal Year 2008-09, the parcel owned by Ikea will fall below the 33% threshold for a letter of credit. See Table 2B above. As a result, it is expected that the letter of credit will be reduced in Fiscal Year 2008-09 and will be provided only for the parcels owned by Tejon Ranchcorp and its related entities. Assuming that Ikea's share of the Special Tax falls below 33% as projected, the letter of credit is expected to be reduced to approximately $2,582,447.

Purchasers of the 2007 Bonds should not expect a letter of credit to be in effect throughout the term of the 2007 Bonds.

Endangered Species

During the last several years, there has been an increase in activity at the State and federal level related to the possible listing of certain plant and animal species found in the Central Valley area as endangered species. An increase in the number of endangered species is expected to curtail development in a number of areas. New species are proposed to be added to the State and federal protected lists on a regular basis by the California Fish and Game Commission or the United States Fish and Wildlife Service. As described below, the Developer has received approval of mitigation measures that address existing issues regarding endangered species and the development of the Tejon Industrial Complex. Any action by the State or federal governments to protect species located on or adjacent to the property within the District which are not included within the existing mitigation measures could negatively impact the ability of an owner of the undeveloped land within the District to complete the remaining development planned within the District or

42 could increase the cost of development. This, in turn, could reduce the likelihood of timely payment of the Special Taxes and would likely reduce the value of the land estimated by the Appraiser and the potential revenues available at a foreclosure sale for delinquent Special Taxes. See "Failure to Develop Properties" and "Property Values."

Certain endangered and protected species, including the San Joaquin kit fox, migratory birds and the blunt nosed leopard lizard, inhabit land in the southern San Joaquin Valley, although they have not been found to be present in the District. Mitigation measures related to the protection of endangered species have, nonetheless, been imposed on the development of land within the District. These measures include monitoring during grading and construction activities to ensure that endangered species will not be taken. In addition, the Developer has provided land not proposed for development for habitat preservation purposes. According to the Developer, however, such mitigation measures are not expected to adversely affect the scope, location, size, or type of development planned within the District. See "THE DEVELOPMENT AND PROPERTY OWNERSHIP-Status of Land Use Approvals-Habitat Conservation Mitigation Measures."

Natural and Manmade Disasters

The District, like all California communities, may be subject to unpredictable seismic activity, fires, floods or other natural disasters. Southern Kern County is a seismically active area. The Pleito Thrust Fault has been mapped just southwest of the District and the White Wolf Fault to the north. At least 7 active faults have been recognized within or very near the southern San Joaquin Valley. The property within the District has the potential to experience moderate to high ground shaking during a seismic event. Seismic activity from these or other faults represents potential risk for damage to buildings, roads, bridges and property within the District in the event of an earthquake. There is significant potential for destructive ground-shaking during the occurrence of a major seismic event. In addition, land susceptible to seismic activity may be subject to liquefaction during the occurrence of such an event.

In the event of a severe earthquake, fire, flood or other natural or manmade disaster, there may be significant damage to both property and infrastructure in the District. As a result, a substantial portion of the property owners may be unable or unwilling to pay the Special Taxes when due. In addition, the value of land in the District could be diminished in the aftermath of such a natural or manmade disaster, reducing the resulting proceeds of foreclosure sales in the event of delinquencies in the payment of the Special Taxes.

Hazardous Substances

The presence of hazardous substances on a parcel may result in a reduction in the value of the parcel. In general, the owners and operators of a parcel may be required by law to remedy conditions of the parcel relating to releases or threatened releases of hazardous substances. The Federal Comprehensive Environmental Response, Compensation and Liability Act of 1980, sometimes referred to as "CERCLA" or the "Superfund Act," is the most well-known and widely applicable of these laws, but California laws with regard to hazardous substances are also stringent and similar. Under many of these laws, the owner or operator is obligated to remedy a hazardous substance condition of property, whether or not the owner or operator had anything to do with creating or handling the hazardous substance. The effect, therefore, should any of the taxed parcels be affected by a hazardous substance, is to reduce the marketability and value of the parcel by the estimated costs of remedying the condition to the level required by government agencies, because the 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 any of the parcels resulting from the existence, currently, on the parcel of a substance presently classified as hazardous but which has not been released or the release of which is not presently threatened, or may arise in the future resulting from the existence, currently, on the parcel of a substance not presently classified as hazardous but which may in the future be so classified. Further, such liabilities may arise not simply from the existence of a hazardous

43 substance but from the method of handling it. All of these possibilities could significantly affect the value of a parcel that is realizable upon a delinquency.

Except as hereafter described, neither the Authority nor the Developer has knowledge of any hazardous substances being located on the property within the District. Diesel, gasoline, lubricants, and solvents are being used at the Petro Travel Plaza, Petro gas station and the Truckstops of America/Chevron facilities. Petro Travel Plaza LLC, which owns the Petro Travel Plaza and Petro gas station, has purchased environmental contamination insurance to provide funds to pay for any cleanup of fuels and other contaminants that may be released from underground storage tanks. The underground storage tanks at the Petro Travel Plaza are new tanks meeting all current requirements. Tejon Ranchcorp, which owns the property on which the Truckstops of America and Chevron facilities are located, benefits from the cleanup and indemnity obligations described below.

According to TRC, remediation procedures were conducted in 1990 and 1998 to remove diesel and gasoline fuel contamination on a portion of the leased commercial property that is presently used as a Truckstops of America truck stop and Chevron gas station/convenience store. Diesel and gasoline fuel contamination still exists, however, with respect to a portion of the Truckstops of America/Chevron site. However, under the lease, various guaranties of the lease, and other agreements, the lessee and other parties which previously had an interest in the leasehold estate, which include BP Exploration & Oil Inc. and The Standard Oil Company of Ohio, are obligated to indemnify and hold harmless Tejon Ranchcorp from substantially all claims, government cleanup orders, and economic losses that could result from such contamination, and, upon lease expiration in 2008, are required to demolish all improvements and remove all contaminated soils (at least to a depth of ten feet) from the site.

Notwithstanding these cleanup and indemnity obligations, the contamination of the soil on this site could adversely affect the ability of the Authority to foreclose on the property and sell the property for delinquent Special Taxes.

Parity Taxes, Special Assessments and Land Development Costs

The Special Taxes and any penalties thereon will constitute a lien against the lots and parcels of land on which they will be annually imposed until they are paid. Such lien is on a parity with all special taxes and special assessments levied by other agencies and is co-equal to and independent of the lien for general property taxes regardless of when they are imposed upon the same property. The Special Taxes have priority over all existing and future private liens imposed on the property except, possibly, for liens or security interests held by the Federal Deposit Insurance Corporation ("FDIC"). See "-FDIC/Federal Government Interests in Properties" below.

Development of land within the District is contingent upon construction or acquisition of major public improvements such as arterial streets, water distribution facilities, sewage collection and transmission facilities, drainage and flood protection facilities, gas, telephone and electrical facilities, as well as local in­ tract improvements and on-site grading and related improvements. Certain of these improvements have been acquired and/or completed; however, there can be no assurance that the remaining improvements will be constructed or will be constructed in time for development to proceed as currently expected. The cost of these additional improvements plus the public and private in-tract, on-site and off-site improvements could increase the public and private debt for which the land within the District is security. This increased debt could reduce the ability or desire of the property owners to pay the annual Special Taxes levied against the property. In that event there could be a default in the payment of principal of, and interest on, the 2007 Bonds when due.

Neither the Authority nor the District has control over the ability of other entities and districts to issue indebtedness secured by ad valorem taxes, special taxes or assessments payable from all or a portion of the property within the District. In addition, the landowners within the District may, without the consent or knowledge of the Authority, petition other public agencies to issue public indebtedness secured by special

44 taxes or assessments. Any such ad valorem taxes, special taxes or assessments may have a lien on such property on a parity with the Special Taxes and could reduce the estimated value-to-lien ratios for property within the District described herein.

Disclosures to Future Purchasers

The willingness or ability of an owner of a parcel to pay the Special Tax even if the value of the parcel 1s sufficient may be affected by whether or not the owner was given due notice of the Special Tax authorization at the time the owner purchased the parcel, was informed of the amount of the Special Tax on the parcel should the Special Tax be levied at the maximum tax rate and the risk of such a levy and, at the time of such a levy, has the ability to pay it as well as pay other expenses and obligations. The Authority has caused a notice of the Special Tax lien to be recorded in the Office of the Recorder for the County against each parcel. \Vhile title companies normally refer to such notices in title reports, there can be no guarantee that such reference will be made or, if made, that a prospective purchaser or lender will consider such Special Tax obligation in the purchase of a property within the District or lending of money thereon.

The Act requires the subdivider (or its agent or representative) of a subdivision to notify a prospective purchaser or long-term lessor of any lot, parcel, or unit subject to a Mello-Roos special tax of the existence and maximum amount of such special tax using a statutorily prescribed form California Civil Code Section 1102.6(b) requires that in the case of transfers of residential property, other than those covered by the above requirement, the seller must at least make a good faith effort to notify the prospective purchaser of the special tax lien in a format prescribed by statute. Failure by an owner of the property to comply with the above requirements, or failure by a purchaser or lessor to consider or understand the nature and existence of the Special Tax, could adversely affect the willingness and ability of the purchaser or lessor to pay the Special Tax when due.

Special Tax Delinquencies

Under provisions of the Act, the Special Taxes, from which funds necessary for the payment of principal of, and interest on, the 2007 Bonds are derived, are customarily billed to the properties within the District on the ad valorem property tax bills sent to owners of such properties. The Act currently provides that such Special Tax installments are due and payable, and bear the same penalties and interest for non-payment, as do ad valorem property tax installments.

See "SOURCES OF PAYMENT FOR THE 2007 BONDS-Special Tax-Proceeds of Foreclosure Sales," for a discussion of the provisions which apply, and procedures which the Authority is obligated to follow under the Fiscal Agent Agreement, in the event of delinquencies in the payment of Special Taxes. See "-Bankruptcy and Foreclosure" below, for a discussion of the policy of FDIC regarding the payment of special taxes and assessment and limitations on the Authority's ability to foreclosure on the lien of the Special Taxes in certain circumstances.

Non-Cash Payments of Special Taxes

Under the Act, the Board of Directors may reserve to itself the right and authority to allow the owner of any taxable parcel to tender a 2007 Bond in full or partial payment of any installment of the Special Taxes or the interest or penalties thereon. A Bond so tendered is to be accepted at par and credit is to be given for any interest accrued thereon to the date of the tender. Thus, if Bonds can be purchased in the secondary market at a discount, it may be to the advantage of an owner of a taxable parcel to pay the Special Taxes applicable thereto by tendering a Bond. Such a practice would decrease the cash flow available to the Authority to make payments with respect to other Bonds then outstanding; and, unless the practice was limited by the Authority, the Special Taxes paid in cash could be insufficient to pay the debt service due with respect to such other Bonds. In order to provide some protection against the potential adverse impact on cash flows which might be caused by the tender of Bonds in payment of Special Taxes, the Fiscal Agent Agreement

45 includes a covenant pursuant to which the Authority will not authorize owners of taxable parcels to satisfy Special Tax obligations by the tender of Bonds unless the Authority shall have first obtained a report of an Independent Financial Consultant certifying that doing so would not result in the Authority having insufficient Special Tax Revenues to pay the principal of and interest on all Outstanding Bonds and any Parity Bonds when due.

Payment of the Special Tax is not a Personal Obligation of the Owners

An owner of a taxable parcel is not personally obligated to pay the Special Tax. Rather, the Special Tax is an obligation which is secured only by a lien against the taxable parcel. If the value of a taxable parcel is not sufficient, taking into account other liens imposed by public agencies, to secure fully the Special Tax, the Authority has no recourse against the owner.

Property Valnes

The value of the property within the District is a critical factor in determining the investment quality of the 2007 Bonds. If a property owner is delinquent in the payment of Special Taxes, the Authority's only remedy is to commence foreclosure proceedings in an attempt to obtain funds to pay the Special Taxes. Reductions in property values due to a downturn in the economy, physical events such as earthquakes, fires or floods, stricter land use regulations, delays in development or other events will adversely impact the security underlying the Special Taxes. See "THE COMMUNITY FACILITIES DISTRICT-Estimated Assessed Value-to-Lien Ratios" and "-Estimated Value-to-Lien Ratios Based on Appraisal" herein.

The assessed values set forth in this Official Statement do not represent market values arrived at through an 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 Kern County Assessor, generally not to exceed an increase of more than 2% per fiscal year. No assurance can be given that a parcel could actually be sold for its assessed value.

The Appraisal report indicates a total land and improvement value as of August 7, 2007 of $147,619,000 for the Appraised Property and $23,640,841 of assessed value for certain developed parcels. The Appraiser has valued the Appraised Property on the basis of certain definitions, assumptions and limiting conditions contained in the Appraisal. The estimated value-to-lien ratios for various categories of parcels within Zone 1 of the District based upon property values and property ownership in the District as set forth in the Appraisal and, assuming no change in ownership and no changes in property values, ranges from a low of 0.74 to 1 to a high of 25.90 to 1 based on the projected Fiscal Year 2008-09 Special Tax levy. Using these same assumptions, the estimated value-to-lien ratios for the Zone 1 property as a whole is 5.65 to 1.

The Appraisal is based on the assumptions as stated in APPENDIX B-"APPRAISAL REPORT." The Appraisal does not reflect any possible negative impact which could occur by reason of future slow or no growth voter initiatives, any potential limitations on development occurring due to time delays, an inability of the Developer or any other landowner to obtain any needed development approval or permit, the presence of hazardous substances within the District, the presence of endangered species or the determination that habitat for endangered or threatened species exists within the District. The presence of any of these factors could reduce the value of the land within the District from that estimated by the Appraiser. See "-Failure to Develop Properties" and "-Endangered Species" above.

Prospective purchasers of the 2007 Bonds should not assume that the Appraised Property within the District could be sold for the appraised amount described above or that the remaining taxable property in the District could be sold for its assessed value as reported in the Appraisal at a foreclosure sale for delinquent Special Taxes. In arriving at the estimates of value, the Appraiser assumes that any sale will be unaffected by undue stimulus and will occur following a reasonable marketing period, which is not always present in a

46 foreclosure sale. See Appendix B for a description of other assumptions made by the Appraiser and for the definitions and limiting conditions used by the Appraiser.

No assurance can be given that, should a parcel with delinquent Special Taxes be foreclosed upon and sold for the amount of the delinquency, any bid will be received for such property or, if a bid is received, that such bid will be sufficient to pay all delinquent Special Taxes. See "SOURCES OF PAYMENT FOR THE 2007 BONDS-Proceeds of Foreclosure Sales."

FDIC/Federal Government Interests in Properties

The ability of the Authority to foreclose the lien of delinquent unpaid Special Tax installments may be limited with regard to properties in which FDIC, the Drug Enforcement Agency, the Internal Revenue Service, or other federal agency has or obtains an interest. In the event that any financial institution making any loan which is secured by real property within the District is taken over by the FDIC, and prior thereto or thereafter the loan or loans go into default, then the ability of the Authority to collect interest and penalties specified by State law and to foreclose the lien of delinquent unpaid Special Taxes may be limited.

The FDIC's policy statement regarding the payment of state and local real property taxes (the "Policy Statement") provides that property owned by the FDIC is subject to state and local real property taxes only if those taxes are assessed according to the property's value, and that the FDIC is immune from real property taxes assessed on any basis other than property value. According to the Policy Statement, the FDIC will pay its property tax obligations when they become due and payable and will pay claims for delinquent property taxes as promptly as is consistent with sound business practice and the orderly administration of the institution's affairs, unless abandonment of the FDIC's interest in the property is appropriate. The FDIC will pay claims for interest on delinquent property taxes owed at the rate provided under state law, to the extent the interest payment obligation is secured by a valid lien. The FDIC will not pay any amounts in the nature of fines or penalties and will not pay nor recognize liens for such amounts. If any property taxes (including interest) on FDIC-owned property are secured by a valid lien (in effect before the property became owned by the FDIC), the FDIC will pay those claims. The Policy Statement further provides that no property of the FDIC is subject to levy, attachment, garnishment, foreclosure or sale without the FDIC's consent. In addition, the FDIC will not permit a lien or security interest held by the FDIC to be eliminated by foreclosure without the FDIC's consent.

The Policy Statement states that the FDIC generally will not pay non-ad valorem taxes, including special assessments, on property in which it has a fee interest unless the amount of tax is fixed at the time that the FDIC acquires its fee interest in the property, nor will it recognize the validity of any lien to the extent it purports to secure the payment of any such amounts. Special taxes imposed under the Mello-Roos Act and a special tax formula which determines the special tax due each year are specifically identified in the Policy Statement as being imposed each year and therefore covered by the FDIC's federal immunity. According to information available from the Kern County assessment roll, the FDIC does not currently own any of the property in the District.

The Authority is unable to predict what effect the application of the Policy Statement would have in the event of a delinquency in the payment of Special Taxes on a parcel within the District in which the FDIC has or obtains an interest, although prohibiting the lien of the FDIC to be foreclosed out at a judicial foreclosure sale could reduce or eliminate the number of persons willing to purchase a parcel at a foreclosure sale. Such an outcome could cause a draw on the Reserve Fund and perhaps, ultimately, if enough property were to become owned by the FDIC, a default in payment on the 2007 Bonds.

Bankruptcy and Foreclosnre

Bankruptcy, insolvency and other laws generally affecting creditors rights could adversely impact the interests of owners of the 2007 Bonds in at least two ways. First, the payment of property owners' taxes and

47 the ability of the Authority to foreclose the lien of a delinquent unpaid Special Tax pursuant to its covenant to pursue judicial foreclosure proceedings may be limited by bankruptcy, insolvency or other laws generally affecting creditors' rights or by the laws of the State relating to judicial foreclosure. See "SOURCES OF PAYMENT FOR THE 2007 BONDS-Special Taxes-Proceeds of Foreclosure Sales." In addition, the prosecution of a foreclosure could be delayed due to many reasons, including crowded local court calendars or lengthy procedural delays.

Secondly, the Bankruptcy Code might prevent moneys on deposit in the Improvement Fund from being applied to pay interest on the 2007 Bonds and/or to redeem 2007 Bonds if bankruptcy proceedings were brought by or against the Developer and if the court found that the Developer had an interest in such moneys within the meaning of Section 54l(a)(l) of the Bankruptcy Code.

Although a bankruptcy proceeding would not cause the Special Taxes to become extinguished, the amount of any Special Tax lien could be modified if the value of the property falls below the value of the lien. If the value of the property is less than the lien, such excess amount could be treated as an unsecured claim by the bankruptcy court. In addition, bankruptcy of a property owner could result in a delay in prosecuting Superior Court foreclosure proceedings. Such delay would increase the likelihood of a delay or default in payment of delinquent Special Tax installments and the possibility of delinquent Special Tax installments not being paid in full.

The various legal opinions to be delivered concurrently with the delivery of the 2007 Bonds (including Bond Counsel's approving legal opinion) will be qualified, as to the enforceability of the various legal instruments, by moratorium, bankruptcy, reorganization, insolvency or other similar laws affecting the rights of creditors generally.

No Acceleration Provision

The 2007 Bonds do not contain a provision allowing for the acceleration of the 2007 Bonds in the event of a payment default or other default under the 2007 Bonds or the Fiscal Agent Agreement.

Loss of Tax Exemption

As discussed under the caption "TAX MATTERS," the interest on the 2007 Bonds could become includable in gross income for federal income tax purposes retroactive to the date of issuance of the 2007 Bonds as a result of a failure of the Authority to comply with certain provisions of the Internal Revenue Code of 1986, as amended. Should such an event of taxability occur, the 2007 Bonds are not subject to early redemption and will remain outstanding to maturity or until redeemed under the optional redemption provisions of the Fiscal Agent Agreement.

The Internal Revenue Service (the "IRS") has initiated an expanded program for the auditing of tax­ exempt bond issues, including both random and targeted audits. It is possible that the 2007 Bonds will be selected for audit by the IRS. It is also possible that the market value of the 2007 Bonds might be affected as a result of such an audit of the 2007 Bonds (or by an audit of similar bonds). No assurance can be given that in the course of an audit, as a result of an audit, or otherwise, Congress or the IRS might not change the Code ( or interpretation thereof) subsequent to the issuance of the 2007 Bonds to the extent that it adversely affects the exclusion from gross income of interest (and original issue discount) on the 2007 Bonds or their market value.

It is possible that subsequent to the issuance of the 2007 Bonds there might be federal, state, or local statutory changes ( or judicial or regulatory interpretations of federal, state, or local law) that affect the federal, state, or local tax treatment of the 2007 Bonds or the market value of the 2007 Bonds. No assurance can be given that subsequent to the issuance of the 2007 Bonds such changes or interpretations will not occur.

48 Limitations on Remedies

Remedies available to the owners of the 2007 Bonds may be limited by a variety of factors and may be inadequate to assure the timely payment of principal of and interest on the 2007 Bonds or to preserve the tax-exempt status of the 2007 Bonds.

Bond Counsel has limited its opinion as to the enforceability of the 2007 Bonds and of the Fiscal Agent Agreement to the extent that enforceability may be limited by bankruptcy, insolvency, reorganization, fraudulent conveyance or transfer, moratorium, or other similar laws affecting generally the enforcement of creditors' rights, by equitable principles and by the exercise of judicial discretion. The lack of availability of certain remedies or the limitation of remedies may entail risks of delay, limitation or modification of the rights of the owners of the 2007 Bonds.

Limited Secondary Market

There can be no guarantee that there will be a secondary market for the 2007 Bonds or, if a secondary market exists, that such 2007 Bonds can be sold for any particular price. Although the Authority and Tejon Ranchcorp each has committed to provide certain statutorily-required financial and operating information, there can be no assurance that such information will be available to Bondowners on a timely basis. See "CONTINUING DISCLOSURE." The failure to provide the required annual financial information does not give rise to monetary damages but merely an action for specific performance. Occasionally, because of general market conditions, lack of current information, 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.

Proceedings to Rednce or Terminate the Special Tax

An initiative measure commonly referred to as the "Right to Vote on Taxes Act" (the "Initiative") was approved by the voters of the State of California at the November 5, 1996 general election. The Initiative added Article XIIIC and Article XIIID to the California Constitution. According to the "Title and Summary" of the Initiative prepared by the California Attorney General, the Initiative limits "the authority of local governments to impose taxes and property-related assessments, fees and charges." The provisions of the Initiative have not yet been interpreted by the courts, although several lawsuits have been filed requesting the courts to interpret various aspects of the Initiative. The Initiative could potentially impact the Special Taxes available to the Authority to pay the principal of and interest on the 2007 Bonds as described below.

Among other things, Section 3 of Article XIIIC states that " ... the initiative power shall not be prohibited or otherwise limited in matters of reducing or repealing any local tax, assessment, fee or charge." The Act provides for a procedure which includes notice, hearing, protest and voting requirements to alter the rate and method of apportionment of an existing special tax. However, the Act prohibits a legislative body from adopting any resolution to reduce the rate of any special tax or terminate the levy of any special tax pledged to repay any debt incurred pursuant to the Act unless such legislative body determines that the reduction or termination of the special tax would not interfere with the timely retirement of that debt. On July 1, 1997, a bill was signed into law by the Governor of the State enacting Government Code Section 5854, which states that:

"Section 3 of Article XIIIC of the California Constitution, as adopted at the November 5, 1996, general election, shall not be construed to mean that any owner or beneficial owner of a municipal security, purchased before or after that date, assumes the risk of, or in any way consents to, any action by initiative measure that constitutes an impairment of contractual rights protected by Section 10 of Article I of the United States Constitution."

49 Accordingly, although the matter is not free from doubt, it is likely that the Initiative has not conferred on the voters the power to repeal or reduce the Special Taxes if such reduction would interfere with the timely retirement of the 2007 Bonds.

It may be possible, however, for voters or the Board of Directors acting as the legislative body of the District to reduce the Special Taxes in a manner which does not interfere with the timely repayment of the 2007 Bonds, but which does reduce the maximum amount of Special Taxes that may be levied in any year below the existing levels. Furthermore, no assurance can be given with respect to the future levy of the Special Taxes in amounts greater than the amount necessary for the timely retirement of the 2007 Bonds. Therefore, no assurance can be given with respect to the levy of Special Taxes for Administrative Expenses. Nevertheless, to the maximum extent that the law permits it to do so, the Authority has covenanted that it will not initiate proceedings under the Act to reduce the maximum Special Tax rates on parcels on which a completed structure is located to less than an amount equal to 110% of annual debt service on the Outstanding Bonds and Parity Bonds plus the amount reasonably necessary to pay the annual Administrative Expenses. In connection with the foregoing covenant, the Authority has made a legislative finding that this covenant is necessary to assure the timely payment of the Bonds. No assurance can be given as to the enforceability of the foregoing covenant.

The interpretation and application of the Initiative will ultimately be determined by the courts with respect to a number of the matters discussed above, and it is not possible at this time to predict with certainty the outcome of such determination or the timeliness of any remedy afforded by the courts. See "SPECIAL RISK FACTORS-Limitations on Remedies."

Ballot Initiatives

Article XIIIA, Article XIIIB and Proposition 218 were adopted pursuant to measures qualified for the ballot pursuant to California's constitutional initiative process. From time to time, other initiative measures could be adopted by California voters. The adoption of any such initiative might place limitations on the ability of the State, the Authority or local districts to increase revenues or to increase appropriations or on the ability of the landowners within the District to complete the remaining proposed development. See "SPECIAL RISK FACTORS-Failure to Develop Properties" herein.

CONTINUING DISCLOSURE

Pursuant to the Continuing Disclosure Agreement of the Authority (the "Continuing Disclosure Agreement of the Authority"), by and between the Authority and The Bank of New York Trust Company, N.A., as dissemination agent (the "Dissemination Agent"), the Authority, for and on behalf of the District, has agreed to provide, or cause to be provided, to each nationally recognized municipal securities information repository and any public or private repository or entity designated by the State as a state repository for purposes of the Rule (each, a "Repository") certain financial information and operating data concerning the District on an annual basis. The Annual Report to be filed by the Authority for and on behalf of the District is to be filed not later than December 1 of each year, beginning December 1, 2007, and is to include audited financial statements of the Authority. The requirement that the Authority file its audited financial statements as a part of the Annual Report has been included in the Continuing Disclosure Agreement of the Authority solely to satisfy the provisions of the Rule. The inclusion of this information does not mean that the 2007 Bonds are secured by any resources or property of the Authority other than as described herein. See "SOURCES OF PAYMENT FOR THE 2007 BONDS" and "SPECIAL RISK FACTORS-Limited Obligations." The Authority failed to file timely its reports due December 1, 2000, 2001 and 2002 for the 2000 Bonds pursuant to its previous undertaking with regard to the Rule to provide annual reports or notices of material events. The Authority has now filed the past due reports in its 2000 Bonds and is current on its report for the 2000 Bonds and the 2003 Bonds. The full text of the Continuing Disclosure Agreement of the Authority is set forth in Appendix E.

50 To assist the Underwriter in complying with the Rule, Tejon Ranchcorp will enter into a certain Continuing Disclosure Agreement of Tejon Ranchcorp, by and between Tejon Ranchcorp and the Dissemination Agent (the "Continuing Disclosure Agreement of Tejon Ranchcorp") covenanting to provide an Annual Report not later than June 15 of each year beginning June 15, 2008, and a Semiannual Report on each December 15, beginning December 15, 2008, until such time as the infrastructure to be constructed within the District with the proceeds of the 2007 Bonds and any Parity Bonds is complete. The Annual Report provided by Tejon Ranchcorp is to contain the audited financial statements of TRC, and the Annual Report and the Semiannual Report will contain additional financial and operating data outlined in Section 4 of the Continuing Disclosure Agreement of Tejon Ranchcorp attached in Appendix F. Tejon Ranchcorp has never failed to comply with its previous undertaking with regard to the Rule to provide annual reports or notices of material events.

The Authority and Tejon Ranchcorp may elect to make any filings required under the Rule through the Central Post Office (as defined in Appendix E and Appendix F hereto).

Tejon Ranchcorp's obligations under the Continuing Disclosure Agreement of Tejon Ranchcorp will terminate upon the earliest to occur of: (a) the legal defeasance, prior redemption or payment in full of all the 2007 Bonds; (b) the date on which the property owned by Tejon Ranchcorp and all affiliates of Tejon Ranchcorp is no longer responsible for the payment of more than 20 percent of the annual Special Tax levy; provided, however, if the Developer has not yet completed the installation of the infrastructure necessary for development of the lots to a finished condition, the termination will not occur until such infrastructure is complete; (c) the date upon which all development planned within the District has been completed and occupied; or (d) the date on which Tejon Ranchcorp delivers to the Authority an opinion of nationally­ recognized bond counsel to the effect that the continuing disclosure required under the Continuing Disclosure Agreement of Tejon Ranchcorp is no longer required. Tejon Ranchcorp has also agreed that if it, or any of its affiliates, sells or transfers an ownership interest in any property in the District which will result in the transferee becoming responsible for the payment of 20 percent of the annual Special Tax levy in the fiscal year following such transfer, Tejon Ranchcorp, or one of its affiliates, as applicable, will cause any such transferee to enter into a disclosure agreement described in Section 12 of the Continuing Disclosure Agreement of Tejon Ranchcorp attached hereto in Appendix F.

The Continuing Disclosure Agreement of Tejon Ranchcorp will inure solely to the benefit of Tejon Ranchcorp, the Authority, any Dissemination Agent, the Underwriter and owners or beneficial owners from time to time of the 2007 Bonds. The failure of the Authority or Tejon Ranchcorp to comply with any continuing disclosure obligation is not a default under the Fiscal Agent Agreement, and the only remedies available in the event of any such failure are as provided in the Continuing Disclosure Agreement of the Authority and the Continuing Disclosure Agreement of Tejon Ranchcorp See Appendix E and Appendix F.

TAX MATTERS

In the opinion of Quint & Thimmig LLP, San Francisco, California, Bond Counsel, under existing law, subject to the Authority's compliance with certain covenants, interest on the 2007 Bonds is excludable from gross income of the owners thereof for federal income tax purposes under Section 103 of the Internal Revenue Code of 1986, as amended (the "Code"), and, under Section 55 of the Code, is not included as an item of tax preference in computing the federal alternative minimum tax for individuals and corporations under the Code but is taken into account in computing an adjustment used in determining the federal alternative minimum tax for certain corporations. Failure by the Authority to comply with one or more of such covenants could cause interest on the 2007 Bonds to not be excludable from gross income under Section 103 of the Code for federal income tax purposes retroactively to the date of issuance of the 2007 Bonds.

In the further opinion of Bond Counsel, interest on the 2007 Bonds is exempt from California personal income taxes.

51 2007 Bondowners should also be aware that the ownership or disposition of, or the accrual or receipt of interest on, the 2007 Bonds might have tax consequences other than as described above. Bond Counsel expresses no opinion regarding any collateral tax consequences arising with respect to the Bonds other than as expressly described above.

The complete text of the final opinion that Bond Counsel expects to deliver upon issuance of the 2007 Bonds is set forth in Appendix G.

LEGAL MATTERS

The legal opinion of Bond Counsel approving the validity of the 2007 Bonds in the form set forth as Appendix G hereto, will be made available to purchasers of the 2007 Bonds at the time of initial delivery of the 2007 Bonds. Certain legal matters will be passed upon for the Authority by its counsel. Certain legal matters will be passed on for the Authority by Disclosure Counsel and for Tejon Ranchcorp and its related entities by Developer's Counsel. Such counsel express no opinion to the owners of the 2007 Bonds as to the accuracy, completeness or fairness of this Official Statement or other offering materials relating to the 2007 Bonds, and, in certain cases, expressly disclaim any duty to advise the owners of the 2007 Bonds as to matters related to the Official Statement.

ABSENCE OF LITIGATION

No litigation is known to the Authority to be pending or threatened concerning the validity of the 2007 Bonds or the pledge of Special Taxes to repay the 2007 Bonds and a certificate of the Authority to that effect will be furnished to the Underwriter at the time of the original delivery of the 2007 Bonds. The Authority is not aware of any litigation pending or threatened which questions the existence of the District or the Authority or contests the authority of the Authority to levy and collect the Special Taxes or to issue and retire the 2007 Bonds.

NO RATING

The Authority has not made and does not contemplate making application to any rating agency for the assignment of a rating for the 2007 Bonds.

UNDERWRITING

The 2007 Bonds are being purchased by the Underwriter. The Underwriter has agreed to purchase the 2007 Bonds at a price of $6,018,077.00 (being the aggregate principal amount thereof in the amount of $6,100,000.00, less original issue discount in the amount of $22,448.00, less Underwriter's discount in the amount of $59,475.00). The purchase agreement relating to the 2007 Bonds provides that the Underwriter will purchase all of the 2007 Bonds if any are purchased. The obligation to make such purchase is subject to certain terms and conditions set forth in such purchase agreement, the approval of certain legal matters by counsel and certain other conditions.

The Underwriter may offer and sell the 2007 Bonds to certain dealers and others at prices lower than the offering price stated on the cover page hereof. The offering price may be changed from time to time by the Underwriter.

FINANCIAL INTERESTS

The fees being paid to the Underwriter, Disclosure Counsel and Bond Counsel are contingent upon the issuance and delivery of the 2007 Bonds. From time to time, Bond Counsel and Disclosure Counsel represent the Underwriter on matters unrelated to the 2007 Bonds.

52 When the District was initially formed, two members of the Board of Directors and the Executive Director, Treasurer and Secretary of the Authority were officers and employees of Tejon Ranchcorp. Other than the Treasurer, those individuals no longer serve in that capacity. One member of the Board of Directors of the Authority is an officer of Tejon Ranch Co. and its affiliates. Two members of the Board of Directors of the Authority are appointed by the Water District, the Board of which is controlled by Tejon Ranch Co. and its affiliates, as the majority landowners within the Water District.

PENDING LEGISLATION

The Authority is not aware of any significant pending legislation which would have material adverse consequences on the 2007 Bonds or the ability of the Authority to pay the principal of and interest on the 2007 Bonds when due.

ADDITIONAL INFORMATION

The purpose of this Official Statement is to supply information to prospective buyers of the 2007 Bonds. Quotations and summaries and explanations of the 2007 Bonds and documents contained in this Official Statement do not purport to be complete, and reference is made to such documents for full and complete statements and their provisions.

The execution and delivery of this Official Statement by the Executive Director of the Authority has been duly authorized by the Board of Directors acting in its capacity as the legislative body of the District.

TEJON RANCH PUBLIC FACILITIES FINANCING AUTHORITY for and on behalf of COMMUNITY FACILITIES DISTRICT NO. 2000-1 (TEJON INDUSTRIAL COMPLEX PUBLIC IMPROVEMENTS)

By: is/ Brent Dezember Executive Director

53 [THIS PAGE INTENTIONALLY LEFT BLANK] APPENDIX A

RATE AND METHOD OF APPORTIONMENT OF SPECIAL TAXES FOR TEJON RANCH PUBLIC FACILITIES FINANCING AUTHORITY COMMUNITY FACILITIES DISTRICT NO. 2000-1 (TEJON INDUSTRIAL COMPLEX PUBLIC IMPROVEMENTS)

A Special Tax as hereinafter defined shall be levied on all Assessor's Parcels in Community Facilities District No. 2000-1 (Tejon Industrial Complex Public Improvements) of the Tejon Ranch Public Facilities Financing Authority ("CFD No. 2000-1") and collected each Fiscal Year commencing in Fiscal Year 2000- 2001, in an amount determined by the Treasurer or his designee through the application of the appropriate Special Tax for "Developed Property," "Taxable Property Owner Association Property," "Taxable Public Property," "Taxable Open Space Property" and "Undeveloped Property" as described below. All of the real property in CFD No. 2000-1, unless exempted by law or by the provisions hereof, shall be taxed for the purposes, to the extent and in the manner herein provided.

A. DEFINITIONS

The terms hereinafter set forth have the following meanings:

"Acre or Acreage" means the land area of an Assessor's Parcel as shown on an Assessor's Parcel Map, or if the land area is not shown on an Assessor's Parcel Map, the land area shown on the applicable final map, parcel map, condominium plan, or other recorded County parcel map. The Parcel Square Footage of an Assessor's Parcel is equal to the Acreage multiplied by 43,560.

"Act" means the Mello-Roos Community Facilities Act of 1982, as amended, being Chapter 2.5, Division 2 of Title 5 of the Government Code of the State of California.

"Administrative Expenses" means the following actual or reasonably estimated costs directly related to the administration of CFD No. 2000-1, as determined by the Treasurer: the costs of computing the Special Taxes and preparing the annual Special Tax collection schedules (whether by the Financing Authority or designee thereof or both); the costs of collecting the Special Taxes (whether by the County or otherwise); the costs of remitting the Special Taxes to the Fiscal Agent; the costs of the Fiscal Agent (including its legal counsel) in the discharge of the duties required of it under the Fiscal Agent Agreement; the costs to the Financing Authority, CFD No. 2000-1 or any designee thereof of complying with arbitrage rebate requirements; the costs to the Financing Authority, CFD No. 2000-1 or any designee thereof of complying with Financing Authority, CFD No. 2000-1 or obligated persons disclosure requirements associated with applicable federal and state securities laws and of the Act; the costs associated with preparing Special Tax disclosure statements and responding to public inquiries regarding the Special Taxes; the costs of the Financing Authority, CFD No. 2000-1 or any designee thereof related to an appeal of the Special Tax; the costs associated with the release of funds from an escrow account; and the Financing Authority's annual administration fees and third party expenses. Administrative Expenses shall also include amounts estimated or advanced by the Financing Authority or CFD No. 2000-1 for any other administrative purposes of CFD No. 2000-1, including attorney's fees and other costs related to commencing and pursuing to completion any foreclosure of delinquent Special Taxes.

"Affiliate" means with respect to any person or entity, (i) each person or entity that, directly or indirectly, owns or controls, whether beneficially or as a trustee, guardian, or other fiduciary, fifty percent (50%) or more of any class of equity securities of such person or entity, (ii) each person or entity that controls, is controlled by or is under common control with such person or entity or any Affiliate of such person or entity, or (iii) each of such person's or entity's joint venturers and general partners; provided, however, that in no case shall the Financing Authority be deemed to be an Affiliate.

A-1 "Assessor's Parcel" means a lot or parcel shown in an Assessor's Parcel Map with an assigned Assessor's Parcel number.

"Assessor's Parcel Map" means an official map of the Assessor of the County designating parcels by Assessor's Parcel number.

"Assigned Special Tax" means the Special Tax for each Land Use Class of Developed Property, as determined in accordance with Section C below.

"Backnp Special Tax" means the Special Tax applicable to each Assessor's Parcel of Developed Property, except for Industrial Property, as determined in accordance with Section C below.

"Board" means the Board of Directors of the Tejon Ranch Public Facilities Financing Authority, acting as the legislative body of CFD No. 2000-1.

"Bonds" means any bonds or other debt (as defined in Section 53317 ( d) of the Act), whether in one or more series, issued by CFD No. 2000-1 under the Act.

"Bnilding Sqnare Footage" or "Bnilding Sqnare Foot" means the total building square footage of the building(s) located on an Assessor's Parcel, measured from outside wall to outside wall, exclusive of overhangs, porches, patios, carports, or similar spaces attached to the building but generally open on at least two sides, as determined by reference to the building permit(s) issued for that Assessor's Parcel, or if these are not available, as otherwise determined by the Treasurer.

"CFD No. 2000-1" means Community Facilities District No. 2000-1 (Tejon Industrial Complex Public Improvements) of the Tejon Ranch Public Facilities Financing Authority.

"Commercial Property" means all Assessor's Parcels of Non-Residential Property, excluding Travel Plaza Property and Industrial Property.

"County" means the County of Kern.

"Developed Property" means, for each Fiscal Year, all Taxable Property, exclusive of Taxable Property Owner Association Property, Taxable Public Property or Taxable Open Space Property, which is (i) located in Assessor Parcels 238-450-03, 238-450-06, 238-450-07, 238-091-30, 238-091-20, and 238-091-19 (as designated on the County Assessor's Roll for Fiscal Year 1999-2000), or (ii) for which a foundation building permit for new construction was issued prior to May 1 of the prior Fiscal Year, but not before January 1, 2000.

"Escrow Fund" means the escrow fund or other fund or account by whatever name into which proceeds of CFD No. 2000-1 Bonds have been deposited, which proceeds (or a portion thereof) are to be made available to pay for authorized facilities upon the satisfaction of certain conditions (e.g., value-to-lien test or debt service coverage test) set forth in the Fiscal Agent Agreement.

"Financing Anthority" means the Tejon Ranch Public Facilities Financing Authority.

"Fiscal Year" means the period starting July 1 and ending on the following June 30.

"Fiscal Agent" means the fiscal agent or trustee under the Fiscal Agent Agreement.

"Fiscal Agent Agreement" means the indenture, fiscal agent agreement, resolution or other instrument pursuant to which Bonds are issued, as modified, amended and/or supplemented from time to time, and any instrument replacing or supplementing the same.

A-2 "Independent Financial Consultant" means any financial consultant or firm of such consultants appointed and paid by CFD No. 2000-1 and who, or each of whom, (i) is in fact independent and not under domination of CFD No. 2000-1, the Financing Authority, or property owners in CFD No. 2000-1, and (ii) is not an officer or employee of CFD No. 2000-1, the Financing Authority, or property owners in CFD No. 2000-1, but who may be regularly retained to prepare financial or other reports to CFD No. 2000-1, the Financing Authority or property owners in CFD No. 2000-1.

"Industrial Property" means all Assessor's Parcels of Developed Property for which a building permit(s) was issued for construction of a non-residential structure(s) which is primarily used for: manufacturing, procession, fabricating, assembly, refining, repairing, packaging, or treatment of goods, material or produce; research and development; and/or warehousing and wholesale distribution of goods, material, or produce, excluding Travel Plaza Property.

"Land Use Class" means any of the classes listed in Table 1.

"Maximum Special Tax" means the maximum Special Tax, determined in accordance with Section C below, that can be levied in any Fiscal Year on any Assessor's Parcel.

"Non-Residential Property" means all Assessor's Parcels of Developed Property for which a building permit was issued for a non-residential use.

"Open Space Property" means any property within the boundaries of CFD No. 2000-1 that is owned in fee by, granted by easement to, or dedicated to a non-profit entity for purposes of preserving open space or for preserving land for wildlife or habitat purposes.

"Outstanding Bonds" means all Bonds which are outstanding under the Fiscal Agent Agreement.

"Parcel Square Foot" or "Parcel Square Footage" means a square foot of land located within an Assessor's Parcel.

"Property Owner Association Property" means any property within the boundaries of CFD No. 2000-1 that is owned by or irrevocably dedicated to a property owner association, including any master or sub-association.

"Proportionately" means for Developed Property that the ratio of the actual Special Tax levy to the Assigned Special Tax is equal for all Assessor's Parcels of Developed Property within CFD No. 2000-1. For Undeveloped Property, "Proportionately" means that the ratio of the actual Special Tax levy per Acre to the Maximum Special Tax per Acre is equal for all Assessor's Parcels of Undeveloped Property in CFD No. 2000-1. For Taxable Property Owner Association Property, Taxable Public Property and Taxable Open Space Property, "Proportionately" means that the ratio of the actual Special Tax levy per Acre to the Maximum Special Tax per Acre is equal for all Assessor's Parcels of Taxable Property Owner Association Property, Taxable Public Property and Taxable Open Space Property in CFD No. 2000-1.

"Public Property" means any property within the boundaries of CFD No. 2000-1 that is used for rights-of-way or any other purpose and is owned by or irrevocably offered for dedication to the federal government, the State, the County or any other governmental agency, provided however that any property leased by a public agency to a private entity and subject to taxation under Section 53340.l of the Act shall be taxed and classified in accordance with its use.

"Reserve Requirement" means the reserve requirement for the CFD No. 2000-1 Bonds as defined in the Fiscal Agent Agreement.

A-3 "Residential Property" means all Assessor's Parcels of Developed Property for which a building permit has been issued for purposes of constructing one or more residential dwelling units.

"Special Tax" means the special tax to be levied in each Fiscal Year on each Assessor's Parcel of Developed Property, Undeveloped Property, Taxable Property Owner Association Property, Taxable Public Property and Taxable Open Space Property to fund the Special Tax Requirement.

"Special Tax Reqnirement" means that amount required in any Fiscal Year for CFD No. 2000-1 to: (i) pay debt service due in the calendar year which commences in such Fiscal Year on all Outstanding Bonds; (ii) pay periodic costs on the Bonds, including but not limited to, credit enhancement and rebate payments on the Bonds; (iii) pay Administrative Expenses; (iv) pay any amounts required to establish or replenish any reserve funds for all Outstanding Bonds; (v) pay directly for acquisition or construction of CFD No. 2000-1 facilities eligible under the Act; and (iv) pay for reasonably anticipated delinquent Special Taxes based on the delinquency rate for Special Taxes levied in the previous Fiscal Year.

"State" means the State of California.

"Taxable Open Space Property" means all Assessor's Parcels of Open Space Property that are not exempt pursuant to Section E below.

"Taxable Property" means all of the Assessor's Parcels within the boundaries of CFD No. 2000-1 which are not exempt from the Special Tax pursuant to law or Section E below.

"Taxable Property Owner Association Property" means all Assessor's Parcels of Property Owner Association Property that are not exempt pursuant to Section E below.

"Taxable Pnblic Property" means all Assessor's Parcels of Public Property that are not exempt pursuant to Section E below.

"Travel Plaza Property" means Assessor's Parcels 238-450-03, 238-450-06 and 238-450-07 (as designated on the County Assessor's Roll for Fiscal Year 1999-2000).

"Treasurer" means an official of the Financing Authority, or designee thereof, responsible for determining the Special Tax Requirement and providing for the levy and collection of the Special Taxes.

"Undeveloped Property" means, for each Fiscal Year, all Taxable Property not classified as Developed Property, Taxable Property Owner Association Property, Taxable Public Property, or Taxable Open Space Property.

"Update Property" means an Assessor's Parcel of Undeveloped Property for which a building permit has been issued, but which has not yet been classified as Developed Property.

"Zone 1" means all property currently within CFD No. 2000-1 which is not located in Zone 2.

"Zone 2" means all property located within Assessor's Parcels 238-091-28, 238-450-01, 241-230-28, 241-230-39, 241-230-34, and 241-250-01 (as designated on the County Assessor's Roll for Fiscal Year 1999- 2000).

B. ASSIGNMENT TO LAND USE CATEGORIES

Each Fiscal Year, all Taxable Property within CFD No. 2000-1 shall be classified as Developed Property, Taxable Property Owner Association Property, Taxable Public Property, Taxable Open Space Property, or Undeveloped Property, and shall be subject to Special Taxes in accordance with the rate and

A-4 method of apportionment determined pursuant to Sections C and D below. Travel Plaza Property shall be assigned to Land Use Class 1, Commercial Property shall be assigned to Land Use Class 2, Industrial Property shall be assigned to Land Use Class 3, and Residential Property shall be assigned to Land Use Class 4.

The Assigned Special Tax for Non-Residential Property shall be based on the Building Square Footage of the buildings located on an Assessor's Parcel, or on the Parcel Square Footage of an Assessor's Parcel. The Assigned Special Tax for Residential Property shall be based on the Acreage of an Assessor's Parcel.

C. MAXIMUM SPECIAL TAX RATE

1. Developed Property

a. Maximum Special Tax in Zones 1 and 2

The Maximum Special Tax for each Assessor's Parcel classified as Developed Property in either Zone 1 or Zone 2 shall be the greater of (i) the amount derived by application of the Assigned Special Tax or (ii) the amount derived by application of the Backup Special Tax.

b. Assigned Special Tax in Zones 1 and 2

The Assigned Special Tax for Fiscal Year 2000-2001 for each Land Use Class in either Zone 1 or Zone 2 is shown below in Table 1.

TABLEl

Assigned Special Taxes for Developed Property In Zone 1 or Zone 2 For Fiscal Year 2000-2001 Commnnity Facilities District No. 2000-1

Land Use Class Description Assigned Special Tax

1 Travel Plaza Property $ 4.32 per Building Square Foot

2 Commercial Property $ 1.48 per Building Square Foot

3 Industrial Property $ 0.167 per Parcel Square Foot

4 Residential Property $8,540 per Acre

c. Backup Special Tax in Zones 1 and 2

The Fiscal Year 2000-2001 Backup Special Tax for an Assessor's Parcel of Developed Property, excluding Industrial Property, in either Zone 1 or Zone 2 shall equal $7,413 per Acre. There shall be no Backup Special Tax on Industrial Property.

d. Increase in the Assigned Special Tax and Backup Special Tax for Zones 1 and 2

On each July 1, commencing on July 1, 2001, the Assigned Special Tax and the Backup Special Tax for an Assessor's Parcel in either Zone 1 or Zone 2 shall be

A-5 increased by an amount equal to two percent (2 % ) of the amount in effect for the previous Fiscal Year.

e. Reduction in the Backup Special Tax for Zone 1 and Zone 2

The Backup Special Tax applicable to all Assessor's Parcels, excluding Industrial Property, in either Zone 1 or Zone 2 shall be permanently reduced when the Treasurer determines that all of the following have occurred: (i) no funds are being held in an Escrow Fund for the CFD No. 2000-1 Bonds; (ii) all authorized CFD No. 2000-1 Bonds have already been issued or the Financing Authority has covenanted that it will not issue any additional CFD No. 2000-1 Bonds (except refunding bonds); (iii) the balance in the reserve fund established by the Fiscal Agent Agreement is at or above the Reserve Requirement; (iv) CFD No. 2000-1 is current in the payment of interest and principal on all Outstanding Bonds; and (v) the Assigned Special Tax on all Assessor's Parcels of Developed Property in CFD No. 2000-1, excluding the Assigned Special Taxes for Assessor's Parcels which are currently delinquent in paying their Special Taxes, generates 110% of the annual debt service on all Outstanding Bonds in each Fiscal Year plus the estimated Administrative Expenses for each Fiscal Year. In addition, the Backup Special Tax applicable to any Assessor's Parcel shall be permanently reduced upon a full or partial prepayment of the Special Tax obligation in accordance with Section H, below.

2. Undeveloped Property, Taxable Property Owner Association Property, Taxable Pnblic Property and Taxable Open Space Property

a. Maximum Special Tax for Zone 1

The Fiscal Year 2000-2001 Maximum Special Tax for Undeveloped Property, Taxable Property Owner Association Property, Taxable Public Property and Taxable Open Space Property in Zone 1 ofCFD No. 2000-1 shall be $8,000 per Acre.

b. Maximum Special Tax for Zone 2

The Fiscal Year 2000-2001 Maximum Special Tax for Undeveloped Property, Taxable Property Owner Association Property, Taxable Public Property and Taxable Open Space Property in Zone 2 ofCFD No. 2000-1 shall be $822 per Acre.

c. Increase in the Maximum Special Tax

On each July 1, commencing on July 1, 2001, the Maximum Special Tax for Undeveloped Property, Taxable Property Owner Association Property, Taxable Public Property and Taxable Open Space Property in either Zone 1 or Zone 2 shall be increased by an amount equal to two percent (2 % ) of the amount in effect for the previous Fiscal Year.

D. METHOD OF APPORTIONMENT OF THE SPECIAL TAX

Commencing with Fiscal Year 2000-2001 and for each following Fiscal Year, the Board or its designee shall levy the Special Tax until the amount of Special Taxes equals the Special Tax Requirement. The Special Tax shall be levied each Fiscal Year as follows:

A-6 First: The Special Tax shall be levied Proportionately on each Assessor's Parcel of Developed Property in Zone 1 or Zone 2 at up to 100% of the applicable Assigned Special Tax as needed to satisfy the Special Tax Requirement;

Second: If additional monies are needed to satisfy the Special Tax Requirement after the first step has been completed, the Special Tax shall be levied Proportionately on each Assessor's Parcel of Undeveloped Property in Zone 1 at up to 100% of the Maximum Special Tax for Undeveloped Property;

Third: If additional monies are needed to satisfy the Special Tax Requirement after the second step has been completed, the Special Tax shall be levied Proportionately on each Assessor's Parcel of Undeveloped Property in Zone 2 at up to 100% of the Maximum Special Tax for Undeveloped Property;

Fourth: If additional monies are needed to satisfy the Special Tax Requirement after the first three steps have been completed, then the levy of the Special Tax on each Assessor's Parcel of Developed Property in either Zone 1 or Zone 2 whose Maximum Special Tax is determined through the application of the Backup Special Tax shall be increased Proportionately from the Assigned Special Tax up to the Maximum Special Tax for each such Assessor's Parcel;

Fifth: If additional monies are needed to satisfy the Special Tax Requirement after the first four steps have been completed, then the Special Tax shall be levied Proportionately on each Assessor's Parcel of Taxable Property Owner Association Property or Taxable Open Space Property in either Zones 1 or Zone 2 at up to the Maximum Special Tax for Taxable Property Owner Association Property and Taxable Open Space Property.

Sixth: If additional monies are needed to satisfy the Special Tax Requirement after the first five steps have been completed, then the Special Tax shall be levied Proportionately on each Assessor's Parcel of Taxable Public Property in either Zone 1 or Zone 2 at up to the Maximum Special Tax for Taxable Public Property.

Notwithstanding the above, under no circumstances will the Special Tax levied against any Assessor's Parcel of Residential Property for which an occupancy permit for private residential use has been issued be increased by more than ten percent as a consequence of delinquency or default by the owner of any other Assessor's Parcel within the CFD.

E. EXEMPTIONS

No Special Tax shall be levied on up to 77.0 Acres of Property Owner Association Property, Public Property and/or Open Space Property in Zone 1, and on up to 160.00 Acres of Property Owner Association Property, Public Property and/or Open Space Property in Zone 2. Tax-exempt status will be assigned by the Treasurer in the chronological order in which property becomes Property Owner Association Property, Public Property and/or Open Space Property. However, should an Assessor's Parcel no longer be classified as Property Owner Association Property, Public Property or Open Space Property, its tax-exempt status will be revoked.

In addition to the 237.0 acres exempted above, no Special Tax shall be levied on property located within Assessor's Parcel No. 238-450-01 (as designated on the County Assessor's Roll for Fiscal Year 1999- 2000).

Property Owner Association Property, Public Property and/or Open Space Property that is not exempt from Special Taxes under this section shall be subject to the levy of the Special Tax and shall be taxed Proportionately as part of the fifth and sixth steps in Section D, above, at up to 100% of the applicable Maximum Special Tax for Taxable Property Owner Association Property, Taxable Public Property or Taxable Open Space Property.

A-7 F. MANNER OF COLLECTION

The Special Tax shall be collected in the same manner and at the same time as ordinary ad valorem property taxes; provided, however, that CFD No. 2000-1 may directly bill the Special Tax, may collect Special Taxes at a different time or in a different manner if necessary to meet its financial obligations, and may covenant to foreclose and may actually foreclose on delinquent Assessor's Parcels as permitted by the Act.

G. PROPERTY OWNER APPEALS OF SPECIAL TAX LEVIES

Any property owner claiming that the amount or application of the Special Tax is not correct and requesting a refund may file a written notice of appeal and refund to that effect with the Treasurer not later than one calendar year after having paid the Special Tax that is disputed. The Treasurer shall promptly review the appeal, and if necessary, meet with the property owner, consider written and oral evidence regarding the amount of the Special Tax, and decide the appeal. If the Treasurer's decision requires that the Special Tax be modified or changed in favor of the property owner, a cash refund shall not be made ( except for the last year of levy), but an adjustment shall be made to the next Special Tax levy. Any dispute over the decision of the Treasurer shall be referred to the Board and the decision of the Authority shall be final. This procedure shall be exclusive and its exhaustion by any property owner shall be a condition precedent to any legal action by such owner.

H. PREPAYMENT OF SPECIAL TAX

The following definitions apply to this Section H:

"CFD Public Facilities" means either $23,300,000 in 2000 dollars, which shall increase by the Construction Inflation Index on July 1, 2001, and on each July 1 thereafter, or such lower number as (i) shall be determined by the Treasurer as sufficient to provide the public facilities to be provided by CFD No. 2000-1 under the authorized bonding program for CFD No. 2000-1, or (ii) shall be determined by the Board concurrently with a covenant that it will not issue any more Bonds to be supported by Special Taxes levied under this Rate and Method of Apportionment as described in Section D.

"Improvement Fund" means an account specifically identified in the Fiscal Agent Agreement to hold funds which are currently available for expenditure to acquire or construct public facilities eligible under the Act.

"Construction Inflation Index" means the annual percentage change in the Engineering News-Record Building Cost Index for the Financing Authority of Los Angeles, measured as of the calendar year which ends in the previous Fiscal Year. In the event this index ceases to be published, the Construction Inflation Index shall be another index as determined by the Treasurer that is reasonably comparable to the Engineering News-Record Building Cost Index for the Financing Authority of Los Angeles.

"Future Facilities Costs" means the CFD Public Facilities minus public facility costs available to be funded through existing construction or escrow accounts or funded by Previously Issued Bonds, minus public facility costs funded by interest earnings on the Improvement Fund actually earned prior to the date of prepayment, and minus public facilities costs paid directly with Special Taxes.

"Outstanding Bonds" means all Previously Issued Bonds which are deemed to be outstanding under the Fiscal Agent Agreement after the first interest and/or principal payment date following the current Fiscal Year.

"Previously Issued Bonds" means all Bonds that have been issued by CFD No. 2000-1 prior to the date of prepayment.

A-8 1. Prepayment in Fnll

Any Assessor's Parcel of Taxable Property, except for Assessor's Parcels of Undeveloped Property for which a building permit has not been issued, may be prepaid. The Special Tax obligation applicable to such Assessor's Parcel in CFD No. 2000-1 may be fully prepaid and the obligation of the Assessor's Parcel to pay the Special Tax permanently satisfied as described herein; provided that a prepayment may be made only if there are no delinquent Special Taxes with respect to such Assessor's Parcel at the time of prepayment. An owner of an Assessor's Parcel intending to prepay the Special Tax obligation shall provide the Treasurer with written notice of intent to prepay. Within 30 days of receipt of such written notice, the Treasurer shall notify such owner of the prepayment amount of such Assessor's Parcel. The Treasurer may charge a reasonable fee for providing this figure. Prepayment must be made not less than 45 days prior to the next occurring date that notice of redemption of Bonds from the proceeds of such prepayment may be given to the Fiscal Agent pursuant to the Fiscal Agent Agreement.

The Prepayment Amount ( defined below) shall be calculated as summarized below (capitalized terms as defined below):

Bond Redemption Amount plus Redemption Premium plus Future Facilities Amount plus Defeasance Amount plus Administrative Fees and Expenses less Reserve Fund Credit less Capitalized Interest Credit Total: equals Prepayment Amount

As of the proposed date of prepayment, the Prepayment Amount ( defined below) shall be calculated as follows:

Paragraph No.:

1. For Assessor's Parcels of Developed Property, compute the Assigned Special Tax and, if applicable, the Backup Special Tax for the Assessor's Parcel to be prepaid. For Assessor's Parcels of Undeveloped Property for which a building permit has been issued, compute the Assigned Special Tax and Backup Special Tax for that Assessor's Parcel as though it was already designated as Developed Property, based upon the building permit which has already been issued for that Assessor's Parcel. For all other Taxable Property, compute the Maximum Special Tax for that Assessor's Parcel.

2. (a) Divide the Assigned Special Tax (for Assessor's Parcels of Developed Property or Undeveloped Property) or the Maximum Special Tax (for all other Taxable Property), as applicable, computed pursuant to paragraph 1 by the total estimated Assigned Special Taxes for the entire CFD No. 2000-1 based on the Developed Property Special Taxes which could be charged in the current Fiscal Year on all expected development through buildout of CFD No. 2000-1, excluding any Assessor's Parcels which have been prepaid, and

(b) Divide the Backup Special Tax (for Assessor's Parcels of Developed Property or Undeveloped Property) or the Maximum Special Tax (for all other Taxable Property), as applicable, computed pursuant to paragraph 1 by the total estimated Backup Special Taxes at buildout for the entire CFD No. 2000-1, excluding any Assessor's Parcels which have been prepaid.

A-9 3. Multiply the larger quotient computed pursuant to paragraph 2(a) or 2(b) by the Outstanding Bonds to compute the amount of Outstanding Bonds to be retired and prepaid (the "Bond Redemption Amount").

4. Multiply the Bond Redemption Amount computed pursuant to paragraph 3 by the applicable redemption premium, if any, on the Outstanding Bonds to be redeemed (the "Redemption Premium").

5. Compute the current Future Facilities Costs.

6. Multiply the larger quotient computed pursuant to paragraph 2(a) or 2(b) by the amount determined pursuant to paragraph 5 to compute the amount of Future Facilities Costs to be prepaid (the "Future Facilities Amount").

7. Compute the amount needed to pay interest on the Bond Redemption Amount from the first bond interest and/or principal payment date following the current Fiscal Year until the earliest redemption date for the Outstanding Bonds.

8. Confirm that no Special Tax delinquencies apply to such Assessor's Parcel.

9. Determine the Special Taxes levied on the Assessor's Parcel in the current Fiscal Year which have not yet been paid.

10. Compute the minimum amount the Treasurer reasonably expects to derive from the reinvestment of the Prepayment Amount less the Future Facilities Amount and the Administrative Fees and Expenses from the date of prepayment until the redemption date for the Outstanding Bonds to be redeemed with the prepayment.

11. Add the amounts computed pursuant to paragraphs 7 and 9 and subtract the amount computed pursuant to paragraph 10 (the "Defeasance Amount").

12. Verify the administrative fees and expenses of CFD No. 2000-1, including the costs of computation of the prepayment, the costs to invest the prepayment proceeds, the costs of redeeming Bonds, and the costs of recording any notices to evidence the prepayment and the redemption (the "Administrative Fees and Expenses").

13. The reserve fund credit (the "Reserve Fund Credit") shall equal the lesser of: (a) the expected reduction in the reserve requirement (as defined in the Fiscal Agent Agreement), if any, associated with the redemption of Outstanding Bonds as a result of the prepayment, or (b) the amount derived by subtracting the new reserve requirement (as defined in the Fiscal Agent Agreement) in effect after the redemption of Outstanding Bonds as a result of the prepayment from the balance in the reserve fund on the prepayment date, but in no event shall such amount be less than zero.

14. If any capitalized interest for the Outstanding Bonds will not have been expended at the time of the first interest and/or principal payment following the current Fiscal Year, a capitalized interest credit shall be calculated by multiplying the larger quotient computed pursuant to paragraph 2(a) or 2(b) by the expected balance in the capitalized interest fund after such first interest and/or principal payment (the "Capitalized Interest Credit").

15. The Special Tax prepayment is equal to the sum of the amounts computed pursuant to paragraphs 3, 4, 6, 11 and 12, less the amounts computed pursuant to paragraphs 13 and 14 (the "Prepayment Amount").

A-10 16. From the Prepayment Amount, the amounts computed pursuant to paragraphs 3, 4, 11, 13 and 14 shall be deposited into the appropriate fund as established under the Fiscal Agent Agreement and be used to retire Outstanding Bonds or make debt service payments. The amount computed pursuant to paragraph 6 shall be deposited into the Improvement Fund. The amount computed pursuant to paragraph 12 shall be retained by CFD No. 2000-1.

The Prepayment Amount may be sufficient to redeem other than a $5,000 increment of Bonds. In such cases, the increment above $5,000 or integral multiple thereof will be retained in the appropriate fund established under the Fiscal Agent Agreement to be used with the next prepayment of bonds or to make debt service payments.

As a result of the payment of the current Fiscal Year's Special Tax levy as determined under paragraph 9 (above), the Treasurer shall remove the current Fiscal Year's Special Tax levy for such Assessor's Parcel from the County tax rolls. With respect to any Assessor's Parcel that is prepaid, the Board shall cause a suitable notice to be recorded in compliance with the Act, to indicate the prepayment of Special Taxes and the release of the Special Tax lien on such Assessor's Parcel, and the obligation of such Assessor's Parcel to pay the Special Tax shall cease.

Notwithstanding the foregoing, no Special Tax prepayment shall be allowed unless the amount of Assigned Special Taxes that may be levied on Taxable Property within CFD No. 2000-1 both prior to and after the proposed prepayment is at least 1.1 times the maximum annual debt service on all Outstanding Bonds.

2. Prepayment in Part

The Maximum Special Tax on an Assessor's Parcel of Developed Property or an Assessor's Parcel of Undeveloped Property for which a building permit has been issued may be partially prepaid. The amount of the prepayment shall be calculated as in Section H. l; except that a partial prepayment shall be calculated according to the following formula:

PP =PE XF.

These terms have the following meaning:

PP = the partial prepayment PE = the Prepayment Amount calculated according to Section H. l F = the percent by which the owner of the Assessor's Parcel(s) is partially prepaying the Maximum Annual Special Tax.

The owner of an Assessor's Parcel who desires to partially prepay the Maximum Special Tax shall notify the Treasurer of (i) such owner's intent to partially prepay the Maximum Special Tax, (ii) the percentage by which the Maximum Special Tax shall be prepaid, and (iii) the company or agency that will be acting as the escrow agent, if applicable. The Treasurer shall provide the owner with a statement of the amount required for the partial prepayment of the Maximum Special Tax for an Assessor's Parcel within 30 days of the request and may charge a reasonable fee for providing this service.

With respect to any Assessor's Parcel that is partially prepaid, the Financing Authority shall (i) distribute the funds remitted to it according to Paragraph 16 of Section H.l., and (ii) indicate in the records of CFD No. 2000-1 that there has been a partial prepayment of the Maximum Special Tax and that a portion of the Maximum Special Tax equal to the outstanding percentage (l.00-F) of the remaining Maximum Special Tax shall continue to be authorized to be levied on such Assessor's Parcel pursuant to Section D.

A-11 Notwithstanding the foregoing, no partial prepayment of a Special Tax shall be allowed unless the amount of Assigned Special Taxes that may be levied on Taxable Property within CFD No. 2000-1 both prior to and after the proposed prepayment is at least 1.1 times the maximum annual debt service on all Outstanding Bonds.

I. RELEASE OF OBLIGATION BY WNE2 PROPERTIES TO PAY SPECIAL TAXES TO SUPPORT CFD NO. 2000-1 BONDS

All CFD No. 2000-1 Bonds shall initially be secured through Special Taxes collected from Assessor's Parcels within Zone 1, as well as Special Taxes collected from Zone 2, as outlined in Section D of this RMA. At the request of a property owner within Zone 2, the Treasurer shall undertake the eight tests listed below for purposes of evaluating the feasibility of relieving all of the Zone 2 properties simultaneously from their obligation to pay Special Taxes to support CFD No. 2000-1 Bonds.

The Financing Authority may retain one or more Independent Financial Consultant(s) and an independent MAI appraiser to assist with the eight tests set forth below, and the costs of such Independent Financial Consultant(s) and appraiser shall be borne by the property owner requesting that the tests be conducted. For purposes of conducting these tests, all property classifications shall be updated to the date of calculation (i.e., Update Property shall be considered) and values provided by an MAI appraisal that is consistent with the Financing Authority's appraisal guidelines and satisfactory to the Financing Authority may be used.

The Treasurer shall permanently relieve all Assessor's Parcels within Zone 2 from their obligations to pay Special Taxes to support CFD No. 2000-1 Bonds, provided that all eight of the tests below are satisfied.

(1) Escrow Test

Confirm that no funds are being held in any Escrow Fund (as defined in the CFD No. 2000-1 Fiscal Agent Agreement) for the CFD No. 2000-1 Bonds.

(2) No Additional Bond Issnances Test

Confirm that all authorized CFD No. 2000-1 Bonds have already been issued, or that the Financing Authority has covenanted that it will not issue any additional CFD No. 2000-1 Bonds (except refunding bonds);

(3) Fnll Reserve Fnnd Test

Confirm that the current balance in the reserve fund established by the Fiscal Agent Agreement is at or above the Reserve Requirement;

(4) Development Stains Test

Confirm that the Assigned Special Taxes for Developed Property and Update Property within Zone 1, after subtracting the Assigned Special Taxes for Assessor's Parcels within Zone 1 which are currently delinquent in paying their Special Taxes, generate revenues which are equal to or greater than 60% of the current Fiscal Year's Special Tax Requirement for CFD No. 2000-1.

(5) Delingnency Test

Confirm that the Special Tax delinquencies in Zone 1 for the current Fiscal Year are less than 5% of the total CFD No. 2000-1 Special Tax levy for such Fiscal Year, and confirm that there

A-12 are no current or prior year tax delinquencies for all Assessor's Parcels owned by the owner(s) or any Affiliate(s) of the owner(s) of any Zone 2 Assessor's Parcels.

(6) Assigned Special Tax Coverage Test

Confirm that based on the current development status of Zone 1, the Assigned Special Taxes for Developed Property in Zone 1, plus the Assigned Special Taxes that would have been levied on Update Property in Zone 1 had it been considered Developed Property in the current Fiscal Year, plus the Maximum Special Taxes for all other Undeveloped Property in Zone 1, escalated by 2 % per year for future Fiscal Year comparisons, generate revenues sufficient to provide 110% debt coverage as compared to the full amount required under item (i) of the CFD No. 2000-1 Special Tax Requirement for the current and all future Fiscal Years, plus $40,000 per year (escalated by 2% each Fiscal Year beginning in Fiscal Year 2000-01) in annual administrative expenses for such Bonds.

(7) CFD No. 2000-1 Backnp Special Tax Test

Confirm that the Backup Tax as computed under Section C.l. for Zone 1 properties will provide 110% debt service coverage at build out of CFD No. 2000-1 to support all outstanding CFD No. 2000-1 Bonds.

(8) Vaine-to-Lien Test

(i) Confirm that the sum of the values of all of the Assessor's Parcels of Taxable Property in Zone 1 is currently equal to or greater than 4.0 times the sum of all CFD No. 2000-1 Outstanding Bonds, plus the aggregate principal amount of other assessment district, Mello-Roos or other land-secured municipal bonds which may be apportioned to these Assessor's Parcels, based on such Assessor's Parcels' proportionate share of the current special assessment, Special Tax levy or other land­ secured levy impacting such Assessor's Parcels as determined by the Independent Financial Consultant(s).

(ii) For purposes of allocating the CFD No. 2000-1 Outstanding Bonds to particular Assessor's Parcels of Undeveloped Properties in Section 1.7.(iii) below, CFD No. 2000-1 Outstanding Bonds shall first be allocated to all Developed Property and Update Property using the following formula:

[(DPUP + 1.1) + DS] x OB

DPUP = The sum of the Assigned Special Taxes that can be levied on Developed Property in Zone 1 in the current Fiscal Year plus the Assigned Special Taxes that could have been be levied on Update Property in Zone 1 in the current Fiscal Year, had such property been classified as Developed Property

DS The full amount required under item (i) of the CFD No. 2000-1 Special Tax Requirement for the current Fiscal Year (without any credit for available funds)

OB Principal amount of CFD No. 2000-1 Outstanding Bonds

The CFD No. 2000-1 Outstanding Bonds not allocated to Developed Property and Update Property pursuant to the preceding formula shall be assigned proportionately

A-13 on an Acreage basis to each of the remaining Assessor's Parcels of Undeveloped Property in Zone 1.

(iii) Confirm that the sum of the current appraised values of the remaining Assessor's Parcels of Undeveloped Property in Zone 1 for which building permits have not yet been issued, pursuant to the debt allocation methodology described in paragraph (ii) above, is equal to or greater than 3.0 times the sum of the CFD No. 2000-1 Outstanding Bonds allocated to such Assessor's Parcels plus the aggregate principal amount of other assessment district, Mello-Roos or other land-secured municipal bonds based on such Assessor's Parcels' proportionate share of the current special assessment, special tax levy or other land-secured levy impacting such Assessor's Parcels as determined by the Independent Financial Consultant(s).

All eight tests shall be completed no later than 60 days after the submittal of a request for release from a property owner within Zone 2. To the extent that the calculations for these eight tests are completed by July 1 of a Fiscal Year, and if the proposed release meets all eight of these tests, the Assessor's Parcels in Zone 2 shall be relieved from any obligation to support CFD No. 2000-1 Bonds in the current Fiscal Year and any future Fiscal Years. With respect to any Assessor's Parcel so released, the Financing Authority shall cause a suitable notice to be recorded to indicate the release of such Assessor's Parcel from the obligation to pay Special Taxes to support CFD No. 2000-1 Bonds.

J. TERM OF SPECIAL TAX

The Special Tax shall be levied for a period not to exceed fifty years commencing with Fiscal Year 2000-01.

A-14 APPENDIXB

APPRAISAL REPORT

B-1 [THIS PAGE INTENTIONALLY LEFT BLANK] SUMMARY APPRAISAL REPORT

COMMUNITY FACILITIES DISTRICT NO. 2CXX}-1 TEJ ON RANCH PUBLIC FACILITIES Fl NANCI NG AUTHORITY 2007-A SPECIAL TAX BONDS Tejm Industrial Corrplex Public I mp-avernents County of Kern, State of California (App-aiser's File No. 2007-127)

Prepared For

Tejm Ranch Public Facilities Financing Authority 4436 Lebec Road Lebec, California 93243

Prepared By Bruce W. H ul I & Associates, I nc. 1056 E. Meta Street, Suite 202 Ventura, California 93001 BRUCE W. HULL & ASSOCIATES I NC. REAL ESTATE APPRAISERS & CONSULTANTS

August 23, 2007

Mr.Jeff Frap.,vell, Chairman Tejm Ranch Public Facilities F inancingAuthcrity 4436 Lebec Road Lebec, California 93243

Reference: Ccrnrnunity Facilities District No. 2CXX}-1 Tejon Ranch Public Facilities FinancingAuthcrity 2007-A Special Tax Bonds Tejon Industrial Cornpex Pullie lrnprCNements County of Kern, State of California

Dear Mr. F rap.,vel I:

At the authorizatim and request of the Tejm Ranch Pullie Facilities Financing Authority (the "Authority"), I have prepared a surnrnary Appraisal Report for the properties within the alxNe­ referenced Ccrnrnunity Faci Ii ties District ("CFO No. 2CXX}-1 ").

This appraisal assignment is presented in six sections. Five of the six sections involve an appraisal of the lands or the i rnpravements described within those sections. Section 11 represents a repcrti ng of assessed values as reported by the Kern County Assessor's Office for the 2007 /2008 tax year. An independent opi ni m of value was not formed for these parcels.

Section I is an appraisal of existing industrial buildings within the Tejon Industrial Park. These buildings are new cr have been cmstructed relatively recently and are of good quality construction.

As a result of this investigation, analysis, and based upon my knavvledge and experience, the total market value frr Section I is repcrted as:

ONE HUNDRED AND TEN MILLION DOLLARS ($110,(XX),(XX))

Section II involves the reporting of the assessed values for several parcels located within CFO No. 2CXX}-l. These parcels are irnpraved with a Petro Travel Plaza, a Molli gas station, a Chevron gas station, a Blue Beacon Truck Wash, and a Truck Stops of America, which

1056 E. Meta Street, Suite 202, Ventura, California 93001 -(805) 641-3275 -Facsimile (805) 641-3278 115 E. Second Street, Suite 100, Tustin, California 92780 -(714) 544--9978 -Facsimile (714) 544--9985 Mr.Jeff Frap.,vell Tejon Ranch Public Facilities Financing Authority August 23, 2007 Page Two includes miscellaneous shops. The tctal assessed value for these parcels is reported as:

TWENTY-THREE Ml LLION, SIX HUNDRED AND FORTY THOUSAND, EIGHT HUNDRED AND FORTY-ONE DOLLARS ($23,640,841)

Section Ill invdves the valuation of undeveloped lands consisting of app-oximately 37 acres located east of Interstate 5. These lands are located west of the existing Truck Stops of America and north of the Chevron gas station (Section 11) with frontage along Interstate 5. I have considered the Sal es Comparison Approach in the valuation of these I ands.

As a result of this investigation, analysis, and based upon my knavvledge and experience, the total market value for Section 111 is reported as:

FIVE MILLI ON, FIVE HUNDRED AND SIXTY-SEVEN THOUSAND DOLLARS ($5,567,CXXl)

Section IV involves the valuation of the Tejon Industrial Complex avvned 0\/ Tejon Industrial Corporation. The rerrai ni ng 104t acres of land surround the Petro Travel Plaza (Section 11) and consist of industrial, quasi-commercial, and commercial lands. A Discounted Cash Flew Analysis was considered in the valuation of these I ands.

As a result of this investigation, analysis, and based upon my knavvledge and experience, the total market value for Section IV is reported as:

TWELVE MILLION, FIVE HUNDRED AND EIGHTY FIVE THOUSAND DOLLARS ($12,585,CXXl)

Section V invdves the valuation of p-operties upon which irnpravements have recently been built (or are under construction). These p-operties also have frontage along Interstate 5 and include a McDonald's, Starbucks, Best Western Motel, Panda Exp-ess, ln--N-Out Burger (nearing completion), and land currently being developed for a Chevron station 0\/ Petro. In addition, I will be valuing land currently being developed with a high-cube distributionA,varehouse building that is ajdnt venture between Rockefeller Group Develor:;rnent Corporation and the Tejon Industrial Corporation. The aggregate value for these p-operties is reported as:

El GHTEE NM IL LI ON, SEVEN HUNDRED THOUSAND DOLLARS ( $18, 700, CXXl) Mr.Jeff Frap.,vell Tejon Ranch Public Facilities Financing Authority August 23, 2007 Page Three

Section VI involves the valuation of agriculture lands located south and north of Tejon Industrial Complex-West. These lands tctal 1,436 acres of land and are undeveloped. Up to 160 of these acres are planned for open space!l)Ublic use for which no value is attributed. In addition, there are 174. 93 acres that are part of a flood fl ai n, which are not being valued.

A total of 1,101 acres are being valued in this section. I have considered the Sales Corrparison Approach in the valuation of these lands. As a result of this investigation, analysis, and based upon ITTy' kncwl edge and experience, the rrwket value forthese agriculture I ands is reported as:

SEVEN HUNDRED AND SIXTY-SEVEN THOUSAND DOLLARS $767,000

A sumnary of the appraised values and total assessed value is as fd I cws:

Section Appraised Value Assessed Value I $110,000,000 II $23,640,841 Ill 5,567,000 IV 12,585,000 V 18,700,000 VI $767,000 $147,619,000 $23,640,841

The abcwe values are reported subject to the attached assumptions and limiting conditions and appraiser's certification as of August 7, 2007.

This report is a Summary Appraisal Report as defined 0\/ the Appraisal Foundation Uniform Standards of Professional Practice (USPAP) effectiveJ uly 1, 2006. The value concluded herein represents "cash or cash equivalent terms."

The appraised values contained within this report are being estimated subject to the special tax lien of Community Facilities District No. 2000-1, Tejon Ranch Public Facilities Financing Authority, 2007-A Special Tax Bonds, Tejon Industrial Compex Pullie lmprCNements, County of Kern, State of California

The report is also intended to comply with the appraisal standard proposed 0\/ California DelX Advisory Commission (May 1994) and revised July 2005. As such, it might not include full discussions of the data, reasoning, and analyses that were used in the appraisal process to Mr.Jeff Frap.,vell Tejon Ranch Public Facilities Financing Authority August 23, 2007 Page Four develop the app-aiser's opinion of value. Supporting documentation concerning the data, reasoning, and analyses is retained in the app-aiser' s work file. The information contained in this report is specific to the needs of the client and for the intended use stated in this report. The appraiser is not responsible for unauthorized use of this report.

In addition, there is one hypothetical condition that is part of this report. It is that all the irnpravernents and benefits to the subject p-operty that are being financed b,' Cornrnunity Facilities No. 2CXX}-1 are competed and in place.

This I etter of transrri ttal is part of the attached report, which sets forth the data and analyses upon which the opinion of value is, in part, predicated.

Respectfully subrritted,

BRUCE W. HULL & ASSOCIATES, I NC.

BruceW. Hull, MAI State Certified General Real Estate Appraiser (AG004964)

Attachment TABLE OF CONTENTS

Assumptions and Limiting Conditions ...... Purrxise of Report ...... The Suqject Property ...... Mark et Value Defined...... 3 I ntended U se of the Report...... 4 Owners of Record ...... 4 Effective Date of Value ...... 4 Date of Report ...... 4 Property RightsApp-aised ...... 4 Appraisal Develop-nent and Rerx:irti ng Process ...... 5 Regional Area Description ...... 8 Immediate Surroundings ...... 21 Community Faci Ii ties District No. 2CXX}-1 (Tejon Industrial Complex Public I rnpravements) ... 24 Three-Year Sales Hi stay ...... 26 Section I -Industrial Buildings ...... 28

Section 11 -Assessed Values-I rnpraved Parcels ...... 42

Section 111 -Undeveloped Lands East of Truck Stops of America ...... 45 Section IV - Tejon Industrial Comp ex Lands ...... 49 Section V - Buildings Competed and Under Construction in the Retail Center ...... 57 Section VI - Agriculture Lands South of Tejon Industrial Compex-West ...... 74 Appraisal Report Summary ...... 77 Appraiser's Certification ...... 79

ADDENDA Site Development Costs Discounted Cash Flavv Appraisers' Qualifications ASSUMPTIONS AND LIMITING CONDITIONS

This app-ai sal rerx:irt has been based urxin the follcwi ng assump:ions and limiting conditions.

1. This is a Summary Arriraisal Report, which is intended to campy with the reporting requirements set forth under Standard Rule 2-2(b) of the Uniform Standards of Profes­ sional Arriraisal Practice for a Summary App-aisal Report. As such, it might not include full discussions of the data, reasoning, and analyses that were used in the app-aisal process to develop the appraiser's opinion of value. Supporting documentation concerning the data, reasoning, and analyses is retained in the appraiser's file. The information contained in this rerx:irt is specific to the needs of the client and for the intended use stated in this report. The app-ai ser is nct responsible for unauthorized use of thi s report.

2. No responsiblity is assumed for legal or title considerations. Title to the property is assumed to be good and marketable uni ess otherwise stated in this report.

3. The property is app-ai sed free and cl ear of any or al I Ii ens and encumbrances uni ess ctherwise stated in this report, but subject to CFO special tax lien.

4. Resrxinsible cwnership and competent property management are assumed unless ctherwi se stated in this report.

5. The information furnished b,' cthers is believed to be reliable. H avvever, no warranty is given for its accuracy.

6. All engineering is assumed to be correct. Any pct plans and illustrative material in this report are included only to assist the reader in visualizing the p-operty.

7. It is assumed that there are no hidden or unapparent conditions of the property, subsoi I, or structures that render it more or less valuable. No resrxinsibility is assumed for such conditions or for arranging for engineering studies that may be required to di scaver them

8. It is assumed that there is full compliance with all applicable federal, state, and local environmental regulations and Iaws uni ess otherwise stated in this report.

9. It is assumed that al I arril i cable zoning and use regulations and restrictions have been compied with, unless nonconformity has been stated, defined, and considered in this apprai sal report.

10. It is assumed that al I required Ii censes, certificates of occupancy or cther I egi sl ative or

Summry Appraisal Report Comrunity Facilities District No. 2000-l Tejon Ranch Public Facilities Financing Authority 2007-ASpecial Tax Bonds Tejon Industrial Corrplex Public lrrprc:werrents County of Kern, State of California Bruce W. Hull & Associates, Inc. Page i administrative authority from any local, state, or national gavernmental or p-ivate entity or organization have been or can be ol::tai ned or remwed for any use on which the value estimates contained in this report are based.

11. Any sketch in this report may shew app-oxi mate dimensions and is included to assist the reader in visualizing the property. Maps and exhi • ts found in this report are p-avided for reader reference purposes only. No guarantee as to accuracy is expressed or impied uni ess otherwise stated in this report. No survey has been made for the purpose of this report.

12. It is assumed that the utilization of the land and irnpravements (if any) are within the boundaries or p-operty Ii nes of the property described and that there is no encroachment or trespass uni ess otherwise stated in this report.

13. The app-ai ser is nct qualified to detect hazardous waste and/or taxi c materials. Any comment 0\/ the appraiser that rri ght suggest the possi b I ity of the presence of such sub­ stances should nct be talk en as confirmation of the p-esence of hazardous waste and/or taxi c materials. Such deterrri nation would require i nvesti gati on 0\/ a qualified expert relating to asbestos, urea-formaldehyde foam i nsul ati on, or cther potentially hazardous materials which may affect the value of the p-operty. The app-ai ser' s value estimate is predicated on the assumption that there i s not such material on or i n the p-operty that would cause a loss in value unless otherwise stated in this report. No responsiblity is assumed for any environmental conditions, or for any expertise or engineering kncwl edge required to discaver them The appraiser's descriptions and resulting comments are the result of the routine observations made during the appraisal process.

14. Any proposed irnpravements are assumed to be completed in a good workmanlike manner in accordance with the proper pl ans and specifications.

15. The distribution, if any, of the tctal valuation in this report between land and irnpravements appies only under the stated p-ogram of utilization. The separate allocations for land and buildings must not be used in conjunction with any other apprai sal and are i nval id if so used.

16. A survey of the subject property was not made available forthe app-ai ser's review.

17. It is assumed that a lot line adjustment will occur for Assessor's Parcel Number ("APN") 238-091-33. The lot line adjustment is anticipated to have the undeveloped lands west of Wheel er Ridge Road be a separate assessor's parcel from the i mp-cwed I ands I ocated east of Wheel er Ridge Road. As indicated 0\/ the photograph I ocated within this report, these I ands are I ocated at an on pff-ramp and opposite an exi sti ng truck stop J9a5 station with a substantial amount of frontage along I nterstate 5.

Summry Appraisal Report Comrunity Facilities District No. 2000-l Tejon Ranch Public Facilities Financing Authority 2007-ASpecial Tax Bonds Tejon Industrial Corrplex Public lrrprc:werrents County of Kern, State of California Bruce W. Hull & Associates, Inc. Page ii 18. It is assurred that if the real property cdlateralized in the CFO lx:Jnd issue were to revert to the lx:Jndholders to rerredy a default, all franchises would continue to operate (i.e., McDonalds, Panda Express, Starb.Jcks, Etc.)

19. There are two open-space parcels in Zone I. They are 238-4 50-1 0 ( 19.02 acres) and 238- 460-04 (47.32 acres). These have not been valued in the appraisal. Zone 1 exemp:s up to 77 acres for public useppen space and these parcels would fall under that classification.

20. Assessed values in Section 11, as prcwided in the secured tax roll by the Kern County Assessor, were not comprehensive. For reasons unclear to the appraiser, certain property i mpraverrents have been assessed in the unsecured tax rol Is whi Ie the same property' s land has been assessed in the secured rdls. Where necessary, composite assessed values have been created by the appraiser. It should al so be ncted that i mpraverrents under the classification "Other lmpraverrents'' have been included in these composite assessed values. Hcwever, no "Personal Property Value" has been kncwingly included in these composite assessed values.

Hypcthetical Condition In addition to the limiting conditions and assumptions stated ai::xNe, there is one hypcthetical condition that is imp icit in this report. It is that all the imprcwerrents and benefits to the subject property that are being financed by Community Facilities District No. 2000-1 are competed and in pace.

Extraordinary Assumption In addition, the appraisal is suqject to the extraordinary assumption that all cost estimates pravided by the Tejon Ranch Company are accurate.

Summry Appraisal Report Comrunity Facilities District No. 2000-l Tejon Ranch Public Facilities Financing Authority 2007-ASpecial Tax Bonds Tejon Industrial Corrplex Public lrrprc:werrents County of Kern, State of California Bruce W. Hull & Associates, Inc. Page iii [THIS PAGE INTENTIONALLY LEFT BLANK] PURPOSE OF APPRAISAL

The purrxise of this Summary Appraisal Report ("appraisal report") is to prCNide the appraiser's best estimate of market value of the fee simple interest for the properties within CFO No. 2CXX}-1 subject to the special tax lien. According to appraisal standards set forth b,' the California OelX Investment Advisory Committee, appraisals undertalken to establish value-to-lien ratios in CF Os and assessment districts should value the fee simple estate, subject only to special tax and special assessment liens. The value-to-lien ratio essentially measures the collateral of bondhdders, much Ii ke the loan-to-value ratio measures a lending institution's collateral in a commercial loan.

Property is not cdlateral in the sense that bondhdders assume title to delinquent properties to remedy a default. But the val ue--to--l i en ratio i rnpl i es the contingency that property may have to be sdd to satisfy claims of bondholders, whether through foreclosure action or, more likely, private sale. B ecause special taxes and, i n most cases assessments, enjoy fi rst I i en position, delinquencies jeopardize all legal and financial interests in the subject property. The appraisal therefore values the entire "bundle of rights'' in the suqject property, all of which would be transferred upon sale. The exception to this is Section 11, which is a rerx:irti ng of the assessed values as deterrrined b,' the Kern County Assessor's Office for the 2007/2008 tax year. There has been no independent valuation of this section in the appraisal assignment.

THE SUBJECT PROPERTY

CFO No. 2CXX}-1 consists of 1,878.13 acres of land. For valuation purposes, this appraisal report wi 11 be presented in six sections. The valued acres consist of :

Section I: Two existing industrial buildings located on lands avvned b,' Ikea Property, Inc., a total of 77.9 acres, and Prologis, a tctal of 32.62 acres. The total for Section I is approximately 110.

Section II: Tejon Ranch Company (Truck Stops of America), a total of 15.78 acres (refer to Lirriting Condition No. 17); Tejon Ranch Company (Chevron), a total of 5.84 acres; Tejon Ranch Company (Blue Beacon), a total of 7.29 acres. This includes Petro Travel Plaza, 50.08 acres. In addition,

Summry Appraisal Report Comrunity Facilities District No. 2000-l Tejon Ranch Public Facilities Financing Authority 2007-ASpecial Tax Bonds Tejon Industrial Corrplex Public lrrprc:werrents County of Kern, State of California Bruce W. Hull & Associates, Inc. Page 1 there is a 1.84--acre Petro 11 parcel. The total for Secti m 11 is 80.83 acres.

Section Ill: Tejon Ranch Corporation, a tctal of :±37 acres (refer to Limiting Cmditim No. 17).

Section IV: Tejon Industrial Corrxiratim, a tctal of 104± acres of land.

Section IV Properties APN Classification Lot Size (acres) Status Industrial Land 238-450-47 Land south of Laval Rd. 65.47 Vacant

Industrial Cam[:>us 238-460-01 Carrpus Parcel 8.49 Vacant 238-460-02 Carrpus Parcel 2.49 Vacant 238-460-03 Carrpus Parcel 3.23 Vacant 238-460-05 Carrpus Parcel 1.87 Vacant 238-460-06 Carrpus Parcel 1.37 Vacant 238-460-07 Carrpus Parcel 1.34 Vacant 238-460-08 Carrpus Parcel 1.30 Vacant 238-460-09 Carrpus Parcel 1.27 Vacant 238-460-10 Carrpus Parcel 1.23 Vacant 238-460-11 Carrpus Parcel 1.20 Vacant

Retail 238-450-40 Retai I pad at crescent 0.85 Vacant 238-450-41 Retai I pad at crescent 0.58 Vacant 238-4 50-34 T ~ on Carrpus 5.78 Vacant 238-450-35 T ~ on Carrpus 7.53 Vacant

Total Acreage: 104.00

SectionV: See table belavv:

Section V Properties APN Classification Lot Size (acres) Buldi ng Size Status (SF) Hos[:>italitv 238-450-33 Best Western 4.69 30,745 Operati anal

Restaurants 238-450-27 McDonald's 1.08 3,530 Operational 238-450-28 Starbucks 1.21 2,137 Operati anal 238-450-43 Panda Express 0.75 2,400 Operati anal 238-450-45 I n--N-Out Burger 1.80 3,980 Nearly Operati anal

Summry Appraisal Report Comrunity Facilities District No. 2000-l Tejon Ranch Public Facilities Financing Authority 2007-ASpecial Tax Bonds Tejon Industrial Corrplex Public lrrprc:werrents County of Kern, State of California Bruce W. Hull & Associates, Inc. Page2 Retail Pad 238-450-46 Che.tron Petro 111 4.75 5,200 Under Construction

Industrial 238-450-44 Five West Parcel 29.CXi 6CXi,CXX) Under LLC Construction

Totals: 43.34 653,992

Section VI: Tejon Ranch Corporation, a total of 1,436 acres of which 174.93 acres are attributed to a flood plain and 160 acres are subject to a conservation easement. The total acreage being valued is 1,101 acres.

MARKET VALUE DEFINED

The term "market value" as used in this report is defined as being: " The most probable price which a speci fled interest in real property is Ii kely to bring under al I the fol I cwi ng conditions:

1. Consummation of a sale occurs as of a speci fled date. 2. An open and competitive market exists for the property interest appraised. 3. The buyer and seller are each acting prudently and kncwledgeally. 4. The price is not affected 0\/ undue stimulus. 5. The buyer and sel Ier are typically motivated. 6. Both parties are acting in whatthey consider their best interest. 7. Marketing efforts were adequate and a reasonable time was allavved for exposure in the open market. 8. Payment was made in cash in U.S. dol Iars or in terms of financial arrangements cornparall e thereto. 9. The price represents the normal consideration for the property sold, unaffected 0\/ special or creative fl nanci ng or sales concessions granted 0\/ anyone associated with the sale." 1

1TheAppraisal of Real Estate, twelfth Edition.

Summry Appraisal Report Comrunity Facilities District No. 2000-l Tejon Ranch Public Facilities Financing Authority 2007-ASpecial Tax Bonds Tejon Industrial Corrplex Public lrrprc:werrents County of Kern, State of California Bruce W. Hull & Associates, Inc. Page 3 Hypcthetical Condition The term" Hypothetical Condi ti on" as used in this report is defined as: "That which is contrary to what exists but is supposed forthe purpose of analysi s." 2

This appraisal is based on the hypothetical condition that imprOJernents that are to be funded 0\/ CFO No. 2CXX}-1 are complete and in place.

INTENDED USE OF THE REPORT

It is the appraiser's understanding that the appraisal report is to assist the Tejon Ranch Pullie Facilities Financing Authority in deternining the feasibility of refunding the bonds of CFD- 2CXX}-1 that are currently outstanding and issuance of $6,100,000 for the remaining balance that has been authorized for CFO 2CXX}-1 ($30,000,000). The mw bonds being issued are referred to as CFO 2CXX}-1, 2007-A Special Tax Bonds, which include an estimated $5,439,125 for prqject faci I i ti es.

OWNER OF RECORD

Please referto the Property pite Descri p:ion section for each property.

EFFECTIVE DATE OF VALUE

Op nions and matters are expressed herein as of August 7, 2007.

DATE OF REPORT

The date of this appraisal report is August 23, 2007.

PROPERTY RIGHTS APPRAISED

The property rights appraised are the fee simple interests suqject to easements of record and CFO

2 Uniform Standard of Professional Appraisal Practice, 20CX5.

Summry Appraisal Report Comrunity Facilities District No. 2000-l Tejon Ranch Public Facilities Financing Authority 2007-ASpecial Tax Bonds Tejon Industrial Corrplex Public lrrprc:werrents County of Kern, State of California Bruce W. Hull & Associates, Inc. Page4 No. 2CXX}-1 s~ci al tax Ii en. As previously mentioned, according to appraisal standards set forth b,' the California DelX Investment Advisory Cornrrittee, appraisals undertaken to estallish value-to-lien ratios in CFDs and assessment districts should value the fee sirnpe estate, suqject only to s~cial tax and special assessment liens.

APPRAISAL DEVELOPMENT AND REPORTING PROCESS

The purpose of this appraisal report is to report the appraiser's best esti rnate of rrwket value for certain portions of CFO No. 2CXX}-l. S~cifically, this relates to Sections I, 111, IV, V and VI of this appraisal report. A reporting of the assessed values is included as Section 11.

In Section I of the appraisal report, the Cost, Income, and Sales Comparison Approaches to value were considered. I n some instances al I three were uti Ii zed. I n cther instances one or two of the approaches were considered.

The Cost Approach is defined as follavvs: " A set of procedures in which an appraiser derives a value i ndi cation b,' esti rrati ng the current cost to reproduce or replace the existing structure, deducting for al I accrued depreciation in the pro~rty, and adding the estirrated land value." 3

The I ncome Approach is defined as fol I avvs:

"A set of procedures in which an appraiser derives a value i ndi cation for i ncorne­ produci ng pr~rty b,' converting anticipated benefits into pr~rty value. This conversion is accornpished either b,' 1) capitalizing a single year's income expectancy or an annual average of several years' i ncorne expectancies at a rrarket - derived capitalization rate or a capitalization rate that reflects a s~cified income pattern, return on i nvestrnent, and change in the value of the i nvestrnent; or 2) discounting the annual cash fl avvs for the holding ~ri od and the reversion at a

3The Dictionary of Real Estate Appraisal; Al REA; 1984; Page 75

Summry Appraisal Report Comrunity Facilities District No. 2000-l Tejon Ranch Public Facilities Financing Authority 2007-ASpecial Tax Bonds Tejon Industrial Corrplex Public lrrprc:werrents County of Kern, State of California Bruce W. Hull & Associates, Inc. Page 5 specified yield rate." 4

The Sal es Compari sm Approach is defined as fol I cws:

" The process in which a rrarket value esti rrate is derived by analyzing the rrarket for si rrilar properties and comparing these properties to the subject property." 5

Section 11 is the reporting of assessed values as determined by the Kern County Assessor's Office. I have no op ni on as to whether these estimates represent market value.

Section 111 is the appraisal of :±3 7 acres of undeveloped Iand Iocated east of I nterstate 5 and mostly north of the Section 11 properties (which include Blue Beacon, Chevron, Truck Stops of America). The Sales Comparism Approach was utilized for the valuation of these lands.

Section IV is the appraisal of the vacant industrial and retail lands within the Tejon Industrial Complex. The Sales Comparism Approach was utilized for the valuation of these lands.

Section V is the valuation of the retai I bui Idings ( and including those under construction) I ocated on the southeast side of Dennis McCarthy Drive, fronting Interstate 5 and Laval Road. These include McDonald's, Starbucks, Best Western Hotel, Panda Express and an ln--N-Out Burger (under construction). In Section I of the appraisal report, the Cost, Income, and Sales Comparison Approaches to value were considered. I n some instances al I three were uti Ii zed. I n cther instances one or two of the approaches were considered.

Section VI involves the valuation of agriculture lands located south and north of Tejon Industrial Complex-West. These lands total 1,436 acres of land and are undeveloped. Approximately 160 of these acres are suqj ect to a conservation easement, for which no value is attributed. I n addition, there are 174.93 acres that are part of a flood pain, which are nct being valued. A tctal of 1,101 acres are being valued in this section.

'The Dictionary of Real Estate Appraisal; Al REA; 1984 "The Appraisal of Real Estate; Al; Elarenth Edition

Summry Appraisal Report Comrunity Facilities District No. 2000-l Tejon Ranch Public Facilities Financing Authority 2007-ASpecial Tax Bonds Tejon Industrial Corrplex Public lrrprc:werrents County of Kern, State of California Bruce W. Hull & Associates, Inc. Page6 The appraisal report wi 11 ~ presented in the fd I avvi ng fcrmat. Descriptim of Kern County, Tejm Ranch and the Interstate 5. Descriptim of Cornrnunity Faci Ii ties District No. 2CXX}-l. Descri p:im of Subject Properties (and irnprCNements, if any) within each sectim of the apprai sal report. Valuatim Analysis and Cmclusion frr the Suqject Properties within each sectim (with the excep:im of sectim 11). A Surnrnary of the Appraised Values and the Reprning of Assessed Values.

The due di Ii gence and scope of wcrk of this assignment included the fol I cwi ng:

Cornpilatim of certain demographic and histcrical information, which included a review of an Environmental Impact Reprn ("EIR") frr Tejon Industrial Complex prepared February 2CXX) b,' Impact Sciences of Agoura Hills; and a review of a rrwketing and absorption report prepared b,' Economic Research Associates dated Oct~r 1, 2003 ("ERA report"), use of various Web-based sources such as the Web sites of the California Department of Finance, the U.S. Census Bureau and the online encyclopedia W i ki pedi a A review of the Korpacz Real Estate Investor Survey forthe 2m Quarter of 2007. Interviews with Hugh McMahm andJ ake Sill of the Tejm Ranch Company relating to costs and rrwketi ng of properties within CFO No. 2CXX}-l. A review of the historical costs of the construction of the existing industrial bui I dings. A review of the Rate and Method of Apprnionment of Special Tax prepared b,' David Taussig & Associates, I nc. A physical inspection of the subject properties within CFO No. 2CXX}-l. Cd I ecti on of cornparabl es frr the appropriate I and uses and bui I dings ~i ng appraised.

Summry Appraisal Report Comrunity Facilities District No. 2000-l Tejon Ranch Public Facilities Financing Authority 2007-ASpecial Tax Bonds Tejon Industrial Corrplex Public lrrprc:werrents County of Kern, State of California Bruce W. Hull & Associates, Inc. Page 7 REGIONAL AREA DESCRIPTION -KERN COUNTY, CENTERAL VALLEY

General Area CFO No. 2CXX}-1 is situated in the southern end of Kern County near the bcrder with Los Angeles County south of the City of Bakersfield (the county seat). Kern County (the "County") is California's third-largest county in land area caveri ng 8,073 square rniles. About one-third of the County is situated on the flat valley floor at the extreme southern end of the great San Joaquin Val I ey. A horseshoe-shaped ri rn of rnountai ns surrounds this val I ey portion. To the west is the lcw Teni:Jlor Range that fd lcws the western boundary that runs frorn the northwest to the southwest. On the south are the Tehachap Mountains. To the east is a wide belt of foothills and ranges of the Sierra Nevada Mountains, which occupies almost a third of the County area East of this belt of rnountai ns is an expanse of high desert which cavers nearly ancther one--thi rd of the County area

Kern County was established in 1866. It extends east beyond the southern slope of the Eastern Sierra Nevada range into the Mojave Desert, and includes parts of the Western Indian Wells Valley, and Northern Antelope Valley, north of Los Angeles County, an area largerthan the state of Massachusetts. As of the 2000 census, its population is 661,645, but recent California Department of Finance estimates pace the county population at 779,869. The county seat is Bakersfield (since 1874) with the original county seat being the former mining tcwn of Havilah in the rnountai ns between B akersfi el d and Tehachapi.

Social Influences The Kern County area was first claimed 0\/ the Spanish in 1769. In 1772, Cornrnander Don Pedro Fages became the first European to enter the area; the expedition entered via the Grapevine Canyon (laterthe site of the Ridge Route along State Highway 99 and new I nterstate-5). Walker Pass was di sccwered in 1834 and is an i rnportant pass across the Sierra Nevada as it is one of the fevv nct closed 0\/ winter sncws. It is new a Nati anal Historic L andrnark. I n 1848, the Kern area was ceded to the United States as part of the transfer of California, Nevada, and Utah and other

Summry Appraisal Report Comrunity Facilities District No. 2000-l Tejon Ranch Public Facilities Financing Authority 2007-ASpecial Tax Bonds Tejon Industrial Corrplex Public lrrprc:werrents County of Kern, State of California Bruce W. Hull & Associates, Inc. Page8 Iands under the Treaty of Guadalupe Hidalgo.

Kern County was created in 1866 with the county seat located in the new abandoned mining tcwn of Havilah. In its beginning, Kern County was dominated 0\/ mining in the mountains and desert. The area of the San Joaquin Valley was considered inhospitable and impassable at the ti rne due to swamps, I akes, sharp tul e reeds, and diseases such as rnal aria This changed when settlers started draining lands for farming and constructing canals, most dug 0\/ hand 0\/ hired Chinese laborers, to lx:Jth irrigate and drain these lands. Within 10 years, the area of the San Joaquin Valley surpassed the nining areas as the econonic influence of the county, and the county seat was rnoJed frorn Havi lah to Bakersfield in 1874.

Kern County was formed in 1866 frorn parts of Los Angel es and Tulare Counties. The county derives its name frorn the Kern River, which was named for Edward Kern, cartographer for General John C. Fremont's 1845 expedition, which crossed Walker Pass. Local legend has it Kern had the river named after hi rn 0\/ Carson after he nearly drewned in the river which turned into a raging torrent due to surnrner snewrnel t before the I sabel Ia Darn was bui It in the 1950s. The Kern River was originally named Rio Bravo de San Felipe 0\/ Father Francisco Garces when he explored the area in 1776. Kern County was nearly named Buena Vista County forthe large, and new mostly drained, Buena Vista Lake between Bakersfi el d and Taft.

Kern County was the site of the Battle of San Ernigdio, between Indians of the Santa Barbara M i ssi on who rebel I ed against the Mexican gavernrnent taking aver rni ssi on property. This ba.ttl e between Mexican forces frorn Monterrey occurred at the canyon where San Ernigdio Creek flews dcwn San Ernigdio Mountain and the Blue Ridge south of Bakersfield near Highway 166.

Forrner U .S. A rnba.ssador and U .S. A rITTy' General Edward Beal e establ i shed and ewned the Iarge Tejon Ranch in the mountains south of Bakersfield. It was the consolidation of four separate Mexican Rancheros he purchased in 1846 after his part in winning California independence in the Bear Flag Revolt against Mexico. Today, the Tejon Ranch is the largest tract of privately ewned land in California The Beale Memorial Library, Beale Avenue, General Beale Road, The

Summry Appraisal Report Comrunity Facilities District No. 2000-l Tejon Ranch Public Facilities Financing Authority 2007-ASpecial Tax Bonds Tejon Industrial Corrplex Public lrrprc:werrents County of Kern, State of California Bruce W. Hull & Associates, Inc. Page9 Beale Memorial Clock Tcwer, Beale Park, and Truxtun Avenue are nanned after the influential Beale fani ly, both for Eclvvard and his wife, and their son T ruxtun.

I n 1854 the Fi rst Regi rnent, U .5. Dragoons, estal:l i shed Fort T ej on near the head of the Grapevine Canyon. The post's mission was prctecting peaceful Indians living on the nearby Tejon Indian Rancherias, as well as safeguarding niners from raids by hostile Mohave and Paiute Indians. The Indians of the Tejon Ranch, most of whom were Hai du, assimilated into the local population and the Rancherias no longer exist. Located next to the Ridge Route (new lnterstate-5) just north of the tcwn of Lebec, the fort is a California State Historical Park featuring living history programs and Civil War re-enactments (although no Civil War battles were fought there).

Elk Hills, one of the largest di fields in Kern County, was invdved in the affair remembered as the Teapct Dorne Scandal, the most infamous exampe of corruption of President Warren G. Harding's administration. In 1923 it was revealed that Harding's Secretary of the Interior, Albert Fall, transferred portions of the naval petroleum reserves into private hands without competitive adding, and in the case of Elk Hills, in exchange for personal "loans." The illicit deals invdved the reserves at EI k Hi 11 s and at Teapot Dorne in Wyoming.

As of the census of 2CXX), there were 661,645 peope, 208,652 households, and 156,489 families residing in the county. Recent California Department of Finance estimates place the county

2 population at 779,869. The population density was 81 frni • There were 231,564 housing units at

2 an average density of 28/ni •

Further, there were 208,652 households out of which 42.20 percent had children under the age of 18 living with them, 54.60 percent were married couples living together, 14.50 percent had a female householder with no husband present, and 25.00 percent were non-families. 20.30 percent of al I households were made up of individuals and 7. 80 percent had someone I ivi ng al one who was 65 years of age or dder. The average househdd size was 3.03 and the average family size was 3.50.

Summry Appraisal Report Comrunity Facilities District No. 2000-l Tejon Ranch Public Facilities Financing Authority 2007-ASpecial Tax Bonds Tejon Industrial Corrplex Public lrrprc:werrents County of Kern, State of California Bruce W. Hull & Associates, Inc. Page 10 In the county, the population was spread out with 31.90 percent under the age of 18, 10.20 percent from 18 to 24, 29.80 percent from 25 to 44, 18.70 percent from 45 to 64, and 9.40 percent who were 65 years of age or older. The median age was 31 years. For every 100 ferrales there were 105.30 rrales.

Kern County Population Trend 2CXX, 2000 1990 Population 780,117 661,645 543,477

Source: U.S. Census B ureau

Economic Influences The county has a large agricultural base and is a significant producer of oil, natural gas, hydro-­ electric pcwer, wind-turbine pcwer, and geotherrral pcwer. As of 2004, Kern remains California's top oil-producing county, with CNer 85 percent of the state's 43,000 oil wells. The county accounts for one-tenth of averal I U.S. d I production, and three of the five I argest U.S. oi I fields are in Kern County. Kern is also noted for its mineral wealth, including gdd, borite, and kernite. Kern County is home to California's largest open pit mine at Boron, which mines borax.

Historian Kevin Starr has referred to the San Joaqui n Val I ey as "the most productive unnatural environment on Earth." By some estimates, fully 25 percent of the United States' agricultural production (as measured in dollar value) comes from California, and the vast majority of that is in the San Joaqui n Val I ey. Grapes - table, raisin, and to a I esser extent wine - are perhaps the valley's highest-profile product, but equally (if nct more) important are cotton, nuts (especially almonds and pistachios), citrus, and vegetables.

Cattle and sheep ranching are also vitally importantto the valley's economy. During recent years, dairy farning has greatly expanded in importance. As areas such as Chino and Corona have

Summry Appraisal Report Comrunity Facilities District No. 2000-l Tejon Ranch Public Facilities Financing Authority 2007-ASpecial Tax Bonds Tejon Industrial Corrplex Public lrrprc:werrents County of Kern, State of California Bruce W. Hull & Associates, Inc. Page 11 ~cane absor~d into the suburban sprawl of Los Angeles, many dairy farmers have sold and rruved their operations to Kings, Tulare, and Kern counties. Si nee dairy farrns errit considerable quantities of methane and other noxious gases, this has exacerbated the region's air quality problems. In addition, several high-profile incidents in which farmhands have dravvned or suffocated in manure pits have led to calls to slavv the proliferation of dairies in the region, with Kern County gdng so far as to declare a rnoratoriurn on mw dairies in 2004.

As mentioned earlier, California has long ~en one of the nation's rnost important oil-producing states, and the San J oaqui n Val I ey has I ong si nee eel i psed the Los Angel es Basin as the state's pri rnary oi I production region. Srnal I oi I wel Is are found throughout the region, and several enormous extraction facilities-most notably near Lost Hills and Taft-are veritable forests of purnps and derricks. Shell has operated a major refinery in B alkersfield. Hcwever, the d I and gas fields in Kern County are considered to~ in decline, and no major discaveries have ~en rnade in the region for quite some ti me.

The California real estate boorn that began in the late 1990s has significantly changed the San Joaquin Valley. Once distinctly and fiercely independent of Los Angeles and San Francisco, the area has seen increasing urban development as the cost of I ivi ng forces young farni Ii es and srnal I businesses further and further away frorn the coastal urban cores. Balkersfield, traditionally a boom-bust oil tavvn once descri~d b,' urban scholar Joel Kctkin as an "American Abu Dhabi," has seen a massive influx of former Los Angeles business avvners and cornrnuters, to the extent that gated cornrnunities containing rnillion--ddlar homes are ~ing developed on the city's outskirts. Wal-Mart, IKEA, Target and various large shippng firrns have built huge distribution centers at the far southern end of the val I ey, I ured b,' the convenience of statewide highway accessibility and lavv land costs and the region's lavv wages. Further integration with the rest of the state is likely to continue for the foreseeable future.

The median incane for a househdd in Kern County was $35,446, and the median income for a farri ly was $39,403. Males had a median income of $38,097 versus $25,876 for females. The per capita income for the county was $15,760. About 16.80 percent of families and 20.80 percent of

Summry Appraisal Report Comrunity Facilities District No. 2000-l Tejon Ranch Public Facilities Financing Authority 2007-ASpecial Tax Bonds Tejon Industrial Corrplex Public lrrprc:werrents County of Kern, State of California Bruce W. Hull & Associates, Inc. Page 12 the rxipulatim were belavv the pc,Jerty line, including 27.00 percent of those under age 18 and 10. 50 percent of those age 65 or ewer.

Environmental I nfl uences Flanked 0\/ mountains and lacking any prevailing winds to disperse smog, the San Joaquin Valley has 1mg suffered from some of the United States' worst air rxillution. This rxillution, exacerbated 0\/ stagnant weather, comes mainly from diesel-and gasoline-fueled vehicles and agricultural operations such as dairies and field-tilling. Populatim gravvth has caused the San

Joaquin Val I ey to rank with Los Angel es and Houston in most measures of air rxil I uti on. Only the I nl and Empire regi m east of Los Angel es has worse cweral I air quality, and the San J oaqui n Valley led the nation in 2004 in the number of days with quantities of ozme cmsidered unhealthy 0\/ the Environmental Protectim Agency. Grounclvvater purity is an ongoing issue in this San Joaquin Valley, including the Turlock Basin. Kern County is also knavvn for dust and poor air quality. The American Lung Association ranked Kern County as the most ozone­ rxil I uted county in the nati m in 2006.

Water pollution is another significant prollem in the valley. Soil salination in heavily irrigated areas has significantly reduced the viability of some of the valley's most fertile tracts, especially those in the Tulare lake bed. Contani natim of grounclvvater O)l leakage from manure pts at dairy farms and cattle feedl cts has I ed to significant outcry.

Kern County's geography offers a wide variety of outdoor geography. Among the outdoor recreational activities are horseback riding, water skiing (Lake Buena Vista, Lake Ming, and private ski ranches), off-road • king and dune b.Jggies Uawoone Canyon, California City, and Randsburg), auto racing (Willavv Springs, Buttonwillavv, Bakersfield Speedway, Famoso and an unnamed hal f--ni I e speeclvvay under construction), hunting, paint bal I courses, white water rafting, Olympe quality kayaking, sncw skiing (Shirley Meadavvs), shocting ranges (Five Dogs Creek Range), hiking, biking (trails, paths, and roads), camping, fishing, and other activities.

Parts of the county are cmsi dered seismically active. On J uly 21, 1952, an earthquake with

Summry Appraisal Report Comrunity Facilities District No. 2000-l Tejon Ranch Public Facilities Financing Authority 2007-ASpecial Tax Bonds Tejon Industrial Corrplex Public lrrprc:werrents County of Kern, State of California Bruce W. Hull & Associates, Inc. Pagel3 epicenter in Kern County measuring 7.3 on the Richter scale killed 12 people. The Kern County earthquake was the largest earthquake to strike Southern California since the Fort Tejon earthquake of 1857 and the Lone Pine earthquake of 1872, causing immense and widespread darnage. In addition tothe12 fatalities, it was responsible for at least 18 injuries and aver $50 nil lion in property damage. It was fdlavved 0\/ several aftershocks, at least 20 of which were ITTl.gnitude 5.0 or greater. The quake occurred on the White Wolf Fault and was the second­ strongest quake in California history, second only to the 19J6 San Francisco earthquake.

Gavernrnental Influences As home to Edwards Air Force Base - the Air Force's rnai n flight test facility - Kern County has been the site of rnany aeronautic milestones, including the first supersonic flight and the first landing of the Space Shuttle. Kern County is also the home of the first inland spaceport in the United States, the Mqjave Spaceport. Kern County is also home to the China Lake Naval Air Weapons Station at Ridgecrest where rnany weapons used 0\/ the Navy were and continue to be developed and tested, including the Sidewinder rni ssi I e. It should be noted, hcwever, that these bases are on the Mojave Desert side of the county and have little impact on the San Joaquin Valley side of the county where the subject CFO is located. The only significant nilitary base in the San Joaquin Valley is Naval Air Station Lemoore, a vast air base located 15.5 rniles west of Hanford. Unlike ITTl.nY of California's other military installations, NAS Lernoore's operational i rnportance has i ncreased i n the 19<:Xls and 20005.

The isolation and vastness of the San Joaquin Valley, as well as its paverty and need for jobs, have I ed the state to bui Id numerous prisons in the area The rnost notable of these is Corcoran, whose inITTl.tes include Charles Manson, Sirhan Sirhan, and Juan Corona Other correctional facilities in the valley are at Avenal, Chavvchilla, Tracy, Delano, Coalinga, and Wasco.

Currently, Kern County is represented 0\/ 5 District Supervisors, with John McQuiston representing the 1st District, Don Maben representing the 2nd District, Mike Maggard

Summry Appraisal Report Comrunity Facilities District No. 2000-l Tejon Ranch Public Facilities Financing Authority 2007-ASpecial Tax Bonds Tejon Industrial Corrplex Public lrrprc:werrents County of Kern, State of California Bruce W. Hull & Associates, Inc. Page 14 representing the 3rd District, Ray Watson representing the 4th District, and Michael J. Rubio representi ng the 5th Di stri ct.

Discussion of Interstate 5 Interstate 5 is a crucial economic driver to the CFO. Interstate 5 spans the West Coast, originating at the nation's busiest international border crossing at San Ysidro (San Diego), California, and culminating at Blaine, Washington. This freeway connects all of the major population centers of the Western Seaboard, including San Diego, Santa Ana, Anaheim, Los Angeles, Sacramento, Portland, and Seattle. Via Interstates 580 and 505, Interstate 5 prcwides freeway connections to the populous San Francisco Bay Area Most of the route was constructed in the 1%Os and 1970s, with Oregon's section opening in October 1%6.

Interstate 5 is part of High Priority Corridor 30: Camino Real for its entire length. In the Everett­

Seattle-Tacorna area, Interstate 5 is also part of High Priority Corridor 35: FAST Corridor.

Starting at the border in San Ysidro, which is part of the city of San Diego, as theJohnJ. Montgomery Freeway, 1-5 goes through the suburbs of National City and Chula Vista before reaching davvntcwn San Diego. It then parallels the Pacific coastline, going through the northern suburbs of San Diego, bsecting the University of California, San Diego campus, before passing through the 28 rniles of Marine Corps Base Camp Pendleton in northern San Diego County.

At Dana Pdnt, 1-5 turns inland and heads due north through Mission Viejo to the El Toro "Y" interchange in southeastern Irvine. 1-5 becomes the Santa Ana Freeway as it runs southeast to northwest, passing through major cities and suburbs in Orange and Southern Los Angeles counties.

When the freeway reaches the East Los Angel es I nterchange one ni I e east of dcwntavvn Los Angeles, 1-5 becomes the Golden State Freeway. For about a four-mile stretch between Pyranid Lake and the Santa Clarita Valley, the northbound and southbound lanes separate and actually invert, with the southbound I anes being to the east of the northbound ones. F rorn there, the

Summry Appraisal Report Comrunity Facilities District No. 2000-l Tejon Ranch Public Facilities Financing Authority 2007-ASpecial Tax Bonds Tejon Industrial Corrplex Public lrrprc:werrents County of Kern, State of California Bruce W. Hull & Associates, Inc. Page 15 Gdden State Freevvay sharply rises to the north through the Grapevine to eventually cross the Tejon Pass through the Tehachapi Mountains with po.,ver I ines generally paralleling the freevvay. The freeway then sharply descends for 12 mi I es from ewer 4,100 feet at Tejon Pass to around 1,600 feet at Grapevine near the southernmost point of the SanJ oaquin Valley, approximately 30 nil es south of Bakersfield and 4 miles south from where State Route 99 spits away from it at Wheel er Ridge, proximate to the subject CF D.

From Highway 99 to south of Tracy, 1-5 skirts along the far more remote western edge of the great Central Val I ey, and thus here is renuved from population centers such as B akersfi el d and Fresno with cther state highways pravi ding connections. I nterstate 580 splits off from 1-5 at a point south of Tracy, praviding a loop-mute connection to the San Francisco Bay Area After passing Tracy, 1-5 heads due north through Stockton and Sacramento before turning due west to Woodland. At Woodland, the interstate heads northwest again tavvards Dunnigan, where it converges with Interstate 505.

From Dunnigan, 1-5 skirts north along the western edge of the Sacramento Valley to Red Bluff. 1-5 then enters the Shasta Cascade region, passing through Redding and Shasta Lake before climbing up to near the foot of Mount Shasta The interstate then travels to Weed and Yreka before reaching the Oregon border.

In the Salem area, paced in the median between mile marks 259 and 260 (closer to 260), is a sign designating where 1-5 crosses the 45th parallel. It bears the words "45 Parallel half way between the Equator and the North Pde." After crossing the W i 11 amette River on the M arquam B ridge, 1-5 has junctions at the western terni nus of I nterstate 84 and the northern terminus of I - 405. It then continues through the northern parts of the city of Portland, and crosses into Washington vi a the I nterstate B ridge.

The highway begins in Washington ewer the Columbia River and drops davvn into the city of Vancouver, Washington and the eastern edge of the Portland-Vancouver metropolitan area The freevvay eventually reaches Olympia, where it bends sharply east, after that it goes through Fort

Summry Appraisal Report Comrunity Facilities District No. 2000---l Tejon Ranch Public Facilities Financing Authority 2007-ASpecial Tax Bonds Tejon Industrial Corrplex Public lrrprc:werrents County of Kern, State of California Bruce W. Hull & Associates, Inc. Page 16 Lewis and 0\/ McChord AFB, then finally Tacorra where it bends sharply north again to reach Seattle, finally arriving at the Peace Arch Canadian border crossing between Blaine, Washington, and Surrey, British Colurri:Jia British Cdumbia prCNincial highway 99 continues northwesterly from the border into Vancouver, BC. See the table belcw for rri leage and cities the 1-5 connects.

Interstate 5 Mileage Table

State Mileage Cities Junctions California 796.53 San Diego, San Diego, Santa Ana, Los Interstate 805, Future Interstate 905, Angel es, Stockton, Sacrarnento, Red Future Interstate 15, Interstate 8, B I uff, Anderson, Redding, Y reka Interstate 805, Interstate 405, Interstate 605, Interstate 710, Interstate l 0, Interstate 405, I nterstate 21 0, I nterstate 580, I nterstate 205, B usi ness Loop 80, I nterstate 80 Oregon 308.14 Ashland, Medford, Grants Pass, Interstate l 05, Interstate 205, Roseburg, Eugene, Salem, Portland Interstate 405, Interstate 84, I nterstate 405 Washington 276.62 Vancower, Kelso, Chehalis, Centralia, Interstate 205, Interstate 705, Olyrrpia, Tacom1, Seattle, Everett, Mt Interstate 405, Interstate 90, Vernon, B el Ii ngharn I nterstate 405 Total 1,381.29

Other Transportation Infrastructure Rail The San Joaquin Valley Railroad (SJVR) is one of several short line railroad companies and is part of the Sunset Division of RailAmerica It operates about 207 miles of track primarily on several Ii nes in the San J oaqui n Val I ey outside of Fresno and B alkersfi el d. The SJ V R has trackage rights CNer Union Pacific (formerly Southern Pacific) from Fresno- GoshenJ unction - Famoso - Balkersfield - Algoso. The SJVR also operates forthe Tulare Valley Railroad (TVRR) from Calwa to Corcoran and Famoso. SJVR interchanges with the BNSF Railway at Fresno and Balkersfield and with the Union Pacific at Fresno and GoshenJ unction.

Trucking Dozens of motor freight carriers have locations in and around Kern County and the SanJ oaquin

Summry Appraisal Report Comrunity Facilities District No. 2000-l Tejon Ranch Public Facilities Financing Authority 2007-ASpecial Tax Bonds Tejon Industrial Corrplex Public lrrprc:werrents County of Kern, State of California Bruce W. Hull & Associates, Inc. Page 17 County.

Air M eadavvs Field (BF L) Ai rrxirt in B akersfi el d offers nonstop flights to Houston, Las Vegas, Los Angeles, Phoenix, Salt Lake City, and San Francisco and one-stop flights to hundreds of domestic and international destinations on Delta, ExpressJet, Mexicana, United Express and US Airways.

The Bob Hope Airrxirt in Burbank is located approxirrately 00 rniles south of the suqject. It offers flights on carriers Alaska, American, Delta, JetBlue, Skybus, Southwest, United, and US Airways (formerly America West) with frequent schedules along the West Coast; direct and connecting flights across the country; and recently added nonstop flights to Nevv York.

Further afield, Los Angel es World Ai rrxirts offers a system of four airports cwned and operated lJy the City of Los Angeles. Each of the airports - Los Angeles International (LAX), LAi{)ntario International (ONT), Van Nuys (VNY) and LA/Palmdale Regional (PM D) - pays a role in helping to meet regi anal derrand for passenger, cargo and general aviation service.

Ports The nearest ports at Los Angeles-long Beach are approximately 90 rniles b,' rrajor highway to the south. The Port of Los Angeles encompasses 7,500 acres, 43 rriles of waterfront and features 27 cargo terrni nal s, including dry and Ii quid bulk, container, break.bu I k, autornobi I e and ornni facilities. Combined, these terminals handle almost 190 million metric revenue tons of cargo annually. Last year, the Port rnoJed an impressive 8.5 rnil lion containers ("TEU s''), establishing a nevv nati anal container record. The Port is al so home to a cruise passenger cornp ex.

The Port of Long Beach, which occupies 200 acres of land and contains 10 piers, 80 berths and 71 [X)st--panarnax gantry cranes, saw rnore than 6.7 million TE Us in 2005, with cargo valued at rnore than $100 billion, representing rnore than 80 rrillion metric tons. On average, the equivalent of 18,400 20-foot TEU s are processed each day, with 5,313 vessel calls.

Summry Appraisal Report Comrunity Facilities District No. 2000-l Tejon Ranch Public Facilities Financing Authority 2007-ASpecial Tax Bonds Tejon Industrial Corrplex Public lrrprc:werrents County of Kern, State of California Bruce W. Hull & Associates, Inc. Page 18 Port faci Ii ti es in Port H uenerre in Ventura County are approxi rrately 80 rri Ies b,' highway to the southwest.

Summry Appraisal Report Comrunity Facilities District No. 2000-l Tejon Ranch Public Facilities Financing Authority 2007-ASpecial Tax Bonds Tejon Industrial Corrplex Public lrrprc:werrents County of Kern, State of California Bruce W. Hull & Associates, Inc. Page 19 Bruce W. Hull & Associates, Inc. P"''"'" Photo - Air Views -6/15/ll6

Summry Appraisal Report Comrunity Facilities District No. 2000-l Tejon Ranch Public Facilities Financing Authority 2007-ASpecial Tax Bonds Tejon Industrial CorrplexPublic lrrprc:werrents County of Kern, State of California BruceW. Hull & Associates, Inc. Page 20 IMMEDIATE SURROUNDINGS

CFO No. 2CXX}-1 is located in the southern pation of SanJrn.quin Valley in Kern County. The subject properties are approximately three rniles north of the base of the Grapevine Pass, which bisects the Tehachap Mountains. 1-5 dominates the area, and with the exception of cornrnercial uses, which serve the traffic traveling the interstate, the area is basically undeveloped.

Existing land uses in the irnrnediate area include a McDonald's, a Panda Express, a Starbucks, a Petro Travel Plaza, a Truck Stops of America, a Chevron Gas Station, and a Blue Beacon Truck Wash. I n addition, there is a di stri buti on center of nearly 2 rni 11 ion square feet operated 0\/ furnishings retailer Ikea and a sister facility of 651,<:Xl9 square feet operated 0\/ Prologi s.

CFO No. 2CXX}-1 is a pation of the Tejon Ranch. Tejon Ranch, whose history is described earlier, encompasses 420 square rni I es (270,000 acres) and is I ocated approxi rnately 75 rri I es north of Los Angeles and 25 rniles south of Bakersfield. The Tejon Ranch has 16 rniles of freeway frontage and four freeway interchanges on I nterstate 5. It is esti rnated that rnore than 65,000vehicles per day travel this interstate, one of the busiest in the United States. It should be noted that a portion of the 1-5 bisects the CFO area between Sacramento and the northern-most Greater Los Angel es Area

Interstate 5 Annual Average Daily Traffic (AADT) Counts

No. County Location AADT 1 San Diego PershingAvenue- S.D. 207,000 2 San Diego B i rrri ngham Dr. - Encinitas 218,000 3 Orange Red Hill - Tustin 291,000 4 Los Angeles Garfield Ave. - Commerce 228,000 5 Los Angeles Colorado Blvd. Extension - L.A. 273,000 6 Los Angeles California 118 S irri & San Fernando Valley Free.vays 152,000 7 Los Angeles McBean Parkway-Santa Clarita 162,000

Summry Appraisal Report Comrunity Facilities District No. 2000-l Tejon Ranch Public Facilities Financing Authority 2007-ASpecial Tax Bonds Tejon Industrial Corrplex Public lrrprc:werrents County of Kern, State of California Bruce W. Hull & Associates, Inc. Page 21 8 Los Angeles Templin Higfway 63,000 9 Los Angeles S.J ct. CA 138 East (Fwy.) 62,000 10 Los Angeles Gorman Road 65,000 11 Los Angeles Frazier Mountain Park Road 66,000 12 Kern Los Angeles-Kern County Line 66,000 13 Kern FortTejon Road 65,000 14 Kern G rape1ine 65,000 15 Kem wheeler Ridge Road (S ulliect Sile) 65,000 16 Kern California 99 north 29,500 17 Kern Stockdale Road 33,000 18 Fresno Nees Ave. 34,500 19 Merced California 165 north 35,000 20 Stanislaus Del Puerto Canyon Road & Sperry Ave. 19,500 21 Stanislaus I ngram Creek ( H o.vard Road) 27,500 22 SanJoaquin I nterstate 580 west 15,700 23 SanJoaquin 1-205 west- M ossdale 143,000 24 Sacramento H ood-f ran kl in Road 50,000 25 Sacramento ElkGrCNeBlvd. 56,000 26 Sacramento Florin Road- Sacramento 112,000 27 Sacramento 43cd Ave. - Sacramento 126,000 28 Sacramento 1-305 east & U .S . 50 - Sacramento 156,000 29 Sacramento Richards Blvd., - Sacramento 159,000

Source: Caltrans 2002

A graphic representati m of the data ai::x:Ne is pravi ded m the fol I cwi ng page.

Summry Appraisal Report Comrunity Facilities District No. 2000-l Tejon Ranch Public Facilities Financing Authority 2007-ASpecial Tax Bonds Tejon Industrial Corrplex Public lrrprc:werrents County of Kern, State of California Bruce W. Hull & Associates, Inc. Page22 Interstate 5 AADT 300,000

----- Colorado Blvd., LosAngeles

240,000

P!'Jot to 205 fflm>Qff (towa,d Bay A,,ea)

180,000

+---- McOean Pkwy, Sant:i!i <;:lari'!a

l 2C•Jl00

6(•,000

0 ! 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18: 19 20 21 22 23 24 25 26 27 28 29

An EnvironrrEntal Impact Rerx:irt (Sch No. 2001101133) and a specific plan have ~en apprCNed for 1,109 acres on the east side of Interstate 5 at Laval Rrn.dM' heeler Ridge interchange as Tejon Industrial Compex-East. This specific plan required a general plan arrEndrrEnt (ArrEndrrEnt No. 6, Map 219 and A rrEndrrEnt No. 4, Map 202), a specific fl an, a zone change removal ( Case No. 11, Map 219 and Case No. 14, Map 202) from the Agriculture Preserve, and a cancellation of 82.9 acres currently suqject to the Williamson Act. The prorxised project would consist of an 874.5-acre industrial park, 94 acres of comrrErcialpffice suprx:irt, 51.5 acres of public facilities, and 67 acres of streets. A portion of this project is included in the subject CFO (No. 2000-1).

Another significant project located near CFO No. 2000-1 is the Pastoria Pavver Plant, which is 6.5 miles east of the Interstate 5/Pump Plant Rrn.d intersection. This is a 96Q-mega.,vatt natural gas fired, combined cycle electric generating station.

Summry Appraisal Report Comrunity Facilities District No. 2000-l Tejon Ranch Public Facilities Financing Authority 2007-ASpecial Tax Bonds Tejon Industrial Corrplex Public lrrprc:werrents County of Kern, State of California Bruce W. Hull & Associates, Inc. Page23 COMMUNITY FACILITIES DISTRICT NO. 2CXX}-1 (TEI ON INDUSTRIAL COMPLEX PUBLIC IMPROVEMENTS)

CFO No. 2CXX}-1 has been formed to acquire certain public imprCNements. These include (1) roadway facilities; (2) interchange impravementstothe Interstate SiLaval Road interchange; (3) a sewage treatment facility with an ultimate design capacity of approximately 200,CXXl gallons per day; (4) a water reservdr facility consisting of multiple storage tanks with an ultimate design capacity of approximately 1. 5 mi 11 ion gal Ions; ( 5) a water transmission main extending from an existing well; (6) four traffic signals; (7) a fire station; (8) a secondary water source for fire protection including a 270,CXXl gallon water storage tank, approximately 3 miles of water source and a turn-out facility and pump station; and (9) incidental expenses relating to the planning and designing of such facilities.

A $17,CXXl,CXXl bond issue was issued in June of 2CXXl. Of the $17,CXXl,CXXl, an estimated $7,310,CXXl was put into an escrcw account until sufficient value-to-lien ratios were achieved. These escrcwed funds were rel eased in 2002.

The second bond issue was for $6,900,CXXl, of which $5,612,611 was used for impravements and the balance was used for costs of issuance and bond reserve fund. The final bond issue of $6,100,CXXl is ncw being contemplated. A list of the impravements that are to be funded from this bond issue (some of these impravements have already been constructed therefore a portion of the proceeds would be for reimbursement) is prCNi ded in the addendum of this report.

A Rate and Method of Apportionment ("RMA") of Special Taxes for Tejon Ranch Pullie Facilities Financing Authority has been prepared b,' Nevvport Beach-based David Taussig & Associates, Inc. This consultant has assigned a special tax against parcels within CFO No. 2CXX}- 1 ("Assigned Special Tax") according to land-use categories.

Summry Appraisal Report Comrunity Facilities District No. 2000-l Tejon Ranch Public Facilities Financing Authority 2007-ASpecial Tax Bonds Tejon Industrial Corrplex Public lrrprc:werrents County of Kern, State of California Bruce W. Hull & Associates, Inc. Page 24 Land Use Description Assigned Special Tax 1 Travel Plaza $4.9623 per Bldg. SF 2 Comnercial Property $1.700 per Bldg. SF 3 Industrial Property $0.1918 per Parcel SF

The undeveloped maxi mum Iand tax is $9, 189 per acre for Z me 1 and $944. 22 per acre for Z me 2. The current levy m the undeveloped land is $1,880 per acre frr Zone 1 and zero frr Zone 2. This is due to the partially developed status of the CF D.

The ai::xNe rates escalate 0\/ 2 percent on eachJ uly 1.

The Assigned Special Tax wi 11 be Ievi ed p.,1rsuant to the RM A in the fol Iavvi ng manner.

1) Levied r:niportionately m developed property in Zones 1 and 2 up to 100 percent of the app ical:le Assigned Special Tax.

2) If additional monies are required then Assigned Special Tax shall be levied proportionately on undeveloped property Z me 1 at up to 100 percent of maxi mum tax for undeveloped property.

3) If additimal monies are needed then Assigned Special Tax shall be levied proportionately m undeveloped land in Zone 2.

4) If additional monies are needed, then Assigned Special Tax levied on developed property in either Zme 1 or Zme 2 shall be increased propmionately from Assigned Special Tax to Maximum Special Tax.

5) If additional monies are needed then Assigned Special Tax shall be levied upon Taxal:le Property Owner Association Property in Zone 1 cr 2.

6) If additional monies are needed then Assigned Special Tax shall be levied upon Maximum Special Tax frr Taxal:le Pullie Property in Zme 1 or 2.

In fiscal year 2007 (2008, there was a tax levy on all properties with the excep:ion of Zone 2' s undeveloped property and residential property.

Summry Appraisal Report Comrunity Facilities District No. 2000-l Tejon Ranch Public Facilities Financing Authority 2007-ASpecial Tax Bonds Tejon Industrial Corrplex Public lrrprc:wements County of Kern, State of California Bruce W. Hull & Associates, Inc. Page 25 THREE-YEAR SALES HISTORY

Section II describes the Petro Travel Plaza. The lands were contributed to Petro Travel Plaza LLC in January 1999 for $4,508,460, which was based on two acres fronting the freevvay at $10.00 per square foot, $6.75 per square foot to those pations of the property with partial freeway exposure, and the balance of the lands at $1.00 per square foot. Allen Lyda, CFO for the Tejon Ranch Corrpany, indicated that the contribution value in the Tejon--Petro partnership was considered a favorable basis for the Petro Travel Plaza LL C. I n addition, the reader should be aware that at the time of the contribution, the lands were in an undeveloped state with no streets, sewers, or other infrastructure in pl ace.

Section IV involves the Tejon Industrial Complex-West lands. This area is being developed to an industrial park with distribution facilities and support commercial. Approximately 77.9 acres of the site have been sold to Ikea, a rrajor furnishings retailer. This transaction closed escrcw mid-2000 with construction of the first phase of an approximately 1,700,000 square foot building competed in 2001 and 2003. While, I am aware of the details of the transaction, I have also given a pedge of confidentiality to the seller. Because of the structure of the transaction, a portion of the deal was to "seed' the project at a favorable, belcw--rrwket transaction price. In addition, a joint venture was formed between Tejoni{)ermody LLC and Tejon Industrial Corporation to construct a651,909 square foot building on 33 acres. The building has since been competed and sold to ProLogis, a national cwner, manager and developer of distribution facilities. The sale occurred inJ uly 2007with asale price of $29,992,000or $46 per square fact.

A 29.06 acre site was "sold" as part of ajdnt--venture between Tejon Industrial Corporation and Rockefeller Group Development Corporation kncwn as Five West Parcel LLC. The sale was skevved by its nature as ajointventure, being more of a contribution than true sale. In any case, it was not an arm's-length transaction. The site transferred at $1.25 per square foot. There were $999,741 in infrastructure and site impravements in place, creating an effective price of approximately $2 per square foot.

Summry Appraisal Report Comrunity Facilities District No. 2000-l Tejon Ranch Public Facilities Financing Authority 2007-ASpecial Tax Bonds Tejon Industrial Corrplex Public lrrprc:werrents County of Kern, State of California Bruce W. Hull & Associates, Inc. Page 26 There are a number of transactions within the retail pation (Dennis McCarthy Drive) of the Tejon Industrial Compex. These invdve ground leases (McDonalds, Panda), a b.Jilding lease (Starbucks) and one arm's-length land transaction - the fee simpe sale of 57,717 of net square footage to I n--N-Out Burger of Baldwin Park, California, for $950, CXX) or $16.4 5 per square foot.

Also, in September 2006, a 4.75--acre sale occurred for the site of a Chevron station, which is currently under construction. The sale p-ice for the transaction, which occurred between partners Tejon Ranch Company and Petro Travel Plaza LLC, of which Tejon Development Corporation cwns a 60 percent share, was $1,829,520 or $12 per square fact.

These properties are discussed in detai I under Section V of this appraisal repat.

Summry Appraisal Report Comrunity Facilities District No. 2000-l Tejon Ranch Public Facilities Financing Authority 2007-ASpecial Tax Bonds Tejon Industrial Corrplex Public lrrprc:werrents County of Kern, State of California Bruce W. Hull & Associates, Inc. Page27 SECTION I - INDUSTRIAL BUILDINGS

This section will present the appraisal of two industrial b.Jildings within the Tejon Industrial Park. These b.Jildings were competed ~tween 2001 and 2003. Ikea, a major furnishings retailer, constructed and cwns one building. The other building is new cwned by ProLogis.

I KEA BUI LOI NG - Propertypite Description Location: Southwest quadrant of Tejon Industrial Drive and Industrial Parkway Drive, Tejon Industrial Park, Le~c, California

Owner: I kea Property, I nc. Assessor's Parcel 238-450-09 No.: Legal Description: Parcel 1 of Parcel Map No. lcx:i53--Phase "A" according to map thereof recorded i n B ook 51 , Pages 60 through 61 of Parcel M ap i n the office of County Recorder.

Area: 77.9acres ShapeiB oundaries: The project site is rectangular in shape. The eastern boundary Ii ne is Interstate 5; southern boundary line is the California aqueduct; northern boundary line is Industrial Parkway Drive; and the western boundary line i s T ej on I ndustri al Drive. Topography: Level, graded and paved. Zoning: M 1--PD Flood Zone: Zone C, non-hazardous zone. Panel No. 060075-1725B dated Septem~r 29, 1986. Soi I sJE nvi ronmental I have not received a soils or an environmental report for the suqject Issues: property. It is an assump:ion of this appraisal report that the soils are adequate to support the highest and ~st use conclusion.

I mpravements: Built in 2001 and 2003, this facility consists of one distrib.Jtion industrial b.Jilding containing 1,740,685 square feet. First floor warehouse area consists of 1,707,024 square feet, office area of 15,000 square feet, warehouse office of 363 square feet, and mezzanine area of 3,802 square feet.

The b.Jildi ng is a concrete ti It-up with exterior wal I height of 45 to 60 feet

Summry Appraisal Report Comrunity Facilities District No. 2000-l Tejon Ranch Public Facilities Financing Authority 2007-ASpecial Tax Bonds Tejon Industrial Corrplex Public lrrprc:werrents County of Kern, State of California Bruce W. Hull & Associates, Inc. Page 28 with ceiling height of 31 to 51 feet. The roof is a corrugated metal single py roof with R-30 insulation. The electrical is two 4000-arnp services and two 500 KV generators.

There are 164 dock-high doors and an E5FR fire system

Parking includes 465 spaces and 12.06 acres of landscapng. Lct caverage is 48.66%. Utilities: All utilities are availal:fo to the property. Asif Vacant: I ndustri al bui I ding H i ghest and B est Use Conclusion: As If i rnpraved: Current use

Current 5 tat us Existing industrial building

Valuation AnalysisNalue Conclusion This valuation invdves the cost, the income and the sales comparison approaches to value. These have been defined earlier within the appraisal report.

Cost Approach The cost approach is considered since the impravements are relatively recent and represent the highest and best use of the property. I n that regard bcth the historical costs of construction and the independent estimate of the irnpravements have been considered. The first step in this analysis is the estimate of the land value. A collection of sales was compared to the subject property. These have been summarized belON:

Summry Appraisal Report Comrunity Facilities District No. 2000-l Tejon Ranch Public Facilities Financing Authority 2007-ASpecial Tax Bonds Tejon Industrial Corrplex Public lrrprc:werrents County of Kern, State of California Bruce W. Hull & Associates, Inc. Page 29 Land Sale Summary Size Sale Price $;SF $;SF No. Location (Acre) Sale Date ($) Unadjusted Adjusted South Union Ave., 10.96 J un-2007 950,000 1.99 2.29 Bakersfield, CA 93307, APNs: 170-030-04 and 170-030-05

Corrments: Property is ,oned Ml and is adjacent to Bakersfield Municipal Airport Property is inferior to subject in its accessibility to State Highway 99 and 1-5. An upward adjustment was rmde for location. All infrastructure and utilities available to site. 2 2946S. EastAve., 19.00 Feb-2006 2,400,000 2.90 2.46 Fresno, CA 93725 Comments: Property is located within Fresnocity lirrits and is in both an empowerment and enlerprise development zone and special tax incentives may be available. Property hasgoodtruckaccessto both Highway 41 and Highway 99. A dowrMlard adjustment was rmde for the property's incentivi2ECI status.

3 1777 E. Central 5.30 May-2006 400,000 1.73 1.73 Ave., Fresno, CA 93725 APN: 330- 130-23 Comments: Property is located in a rrixed-

Based m these corrparabl es, I have concluded at an estimated value of $2 per square foot for the subject land. This calculates to the follcwi ng estimate of value for the land.

3,392,017 sf (77.9 acres) x $2 psf = $6,784,034 or $6,700,000 rounded

In 2001, 853,222 square feet were constructed with the balance of the building completed in 2003. A cost estimate for bcth phases of construction was prepared in 2003, not long after the

Summry Appraisal Report Community Facilities District No. 2000-l Tejon Ranch Public Facilities Financing Authority 2007-ASpecial Tax Bonds Tejon Industrial Corrplex Public lmprc:wements County of Kern, State of California Bruce W. Hull & Associates, Inc. Page 30 2003 cmstruction was competed. In preparing that cost estimate for the subject property, a review of the historical costs for the project was competed, which was pravided 0\/ Tejon Industrial Corporation. In additim, an independent review of costs via the Marshall and Swift Cost Manual was completed. Once the actual costs were tal Ii ed and evaluated for reasonableness, an historical bui I ding cost factor for cmcrete commercial structures prcwi ded in The 2007 National Building Cost Manual was appied. The table pravides a year--b,;-year factor for compounded increases in cmstructi m cost. I n this case, I took the cost data from 2003 and gnw itto 2007 estimated levels.

Direct Construction Costs: Building Square Footage (1,740,685@ $26.00 psf) $45,257,810

Indirect Costs: Engineering Services/,'\rchitecture $ 300,000 Building Perrrits,f ees 900,000 Financing Original Points $1,035,000 Financing I nterest $ 1,811,250 Taxes During Construction 100,000

Total I ndi rect Costs $ 4,146,250

Total Replacement Costs Ne.v 49,404,060 2007 Cost-Adjusted ( 1.24 multiple) 6 61,261,034 Less Physical Depreciation (10)6) (6,126,103) Replacement Cost Less Depreciation $55,135,000

Entrepreneurial Profit(25% xTotal Replacement Cost $12,351,015 Ne.v) Plus Land Value $6,780,000

Indicated Value via Cost Approach $74,266,015 Rounded $74,300,000

I ncomeApproach The income approach is intended to reflect what the market will pay for an investment talking

6 From historical building cost index for concrete commercial structures, 2007 National Building Cost Manual, Craftsmm Press

Summry Appraisal Report Comrunity Facilities District No. 2000-l Tejon Ranch Public Facilities Financing Authority 2007-ASpecial Tax Bonds Tejon Industrial Corrplex Public lrrprc:werrents County of Kern, State of California Bruce W. Hull & Associates, Inc. Page 31 into consideration the quality, quantity, and durability of the income stream The table indicates comparable rentals of I arge di stri buti on industrial bui I dings.

Summary of Lease Comparables

Clear Base GBA 0cc. Height Lease Lease Lease Tis Rent No. Location (SF) % (Ft.) Tenant Area Date Term ($f-,F) (Sf-,F) 1 Oneida 244,141 N/A 30 Oneida 244,141 Sep- 5-year N/Avail. 0.235 leasefal()49 (Flatware 05 NNN Industrial Park m1ker) Drive, SubjectCFD Comrrents: 15---year rerBNal option. T~re was a tenant i mproverrent al IONance an::l rent abaterrent.

2 Ikea 386,(X)I) N/A 30 Ikea 386,(X)I) 3-year N/Avail 0.235 leasefal049 (Furnishing NNN Industrial Park retailer Drive, SuqjectCFD Co~nts: ~re was a tenant improv~nt allcwan:eard rent abatement.

3 23700 Cactus 532,926 100 32 Minka 532,926 Dec- 7+ 1.00 0.28 Ave., Moreno Lighting 05 years, Valley, CA NNN 92553 Comrrents: Lease comm::nced at a $0.28 PSF base rent with four m:mths rent abaterrent. T~ first escalation is at l year to $0.30 for m:mths 13-36; $0.315 m:mths 37--60; $0.33 for m:mths61---88. Tl's have ~nestimated at $1 PSF. Also, aCFD pass--throUJh has ~n calculated at $0.05 ~r ~uare foot per m:mth. 4 12215 Holly 750,579 80 32 Homedics 586,714 Apr- 10 3.00 0.35 Street, Rialto 07 years, NNN

Commerds: n,ee ["foert annual rent ircreases applied eve,y 30 roonths; $3,SF Tl all

5 1670 400,012 100 30 Complete 400,012 Feb- 3.5 0.00 0.35 Etiwanda Logistics 07 years, Ave., Ontario NNN Comrrents: Escalation to $0.37 ;SF int~ 22'7d m:mth. Lease i rr::lu::les one m:mth free rent an::l m Tl's.

Lease comparables Nos. 1 and 2 are located within the subject CFO. Bcth represent relatively recent signings. Supporting them, is Comparable No. 3, which, although located in Riverside County, represents a high-cube di stri buti on center I ocated on in the easternmost quarter of the Inland Empire. In that respect, it is an analogue to the subject relative to location. Remaining comparables represent sirrilar properties in superior locations to the subject. Based on these

Summry Appraisal Report Comrunity Facilities District No. 2000-l Tejon Ranch Public Facilities Financing Authority 2007-ASpecial Tax Bonds Tejon Industrial Corrplex Public lrrprc:werrents County of Kern, State of California Bruce W. Hull & Associates, Inc:. Page 32 comparables, I have concluded at $0.24 ~r square fact (NNN).

Capitalization Rate Survey Gross Bldg. Size Vacancy Overall No. Location (+/-SF) Sale Date Bldg. Type Year Built Pro Forma Cap Rate 1 4049 Industrial 651,909 J ul-07 D istri buti on,W H 2001 5% 6.00)6 Park Drive, Lebec

2 12471 Riverside 374,000 Jan-07 Distribution,W H 2004 5% 4.5416 Drive, Mira Lorra

3 3645-3655 854,856 Mar-07 D istri buti on,W H 2001 5% 4.60!6 Philadelphia, Ontario 4 1900 B urgundy 397,125 Dec-06 Distribution,W H 1988/1999 5% 5.02% Place, Ontario

5 9345 Santa Anita 275,760 Sep-06 Distri buti on,W H 1989 5% 5.10)6 Avenue, Rancho Cucannnga 6 6125 Sycamore 953,122 Dec-06 Distribution,W H 2005 5% 5.75% Canyon Blvd., Riverside 7 12203 & 12295 40,000 Dec-06 Distri buti on,W H 2001 5% 5.75% Magnolia, Riverside Mean Overall Cap Rate: 5.13% Standard Da,iation: 0.0053

The subject's location, which is in a relatively remote location relative to clusters of other high­ cube di stri buti on pr~rti es, such as those in the I nl and E mp re, exerts up;vard pressure on the indicated captalization rate. Also supporting a higher cwerall rate is the Korpacz Real Estate Investor Survey forthe second quarter of 2007, which reports capitalization rates for the national warehouse market at an average of 6.78 ~rcent. Market participants who were interviewed for the Korpacz survey, including a ~nsion fund advisor, life insurance companies, investment bankers and investment advisors, who reported they generally capitalize net ~rating income before replacement reserves, tenant imprcwements and leasing commissions. I have selected a

Summry Appraisal Report Comrunity Facilities District No. 2000-l Tejon Ranch Public Facilities Financing Authority 2007-ASpecial Tax Bonds Tejon Industrial Corrplex Public lrrprc:werrents County of Kern, State of California Bruce W. Hull & Associates, Inc. Page 33 6.0 percent capitalization rate in the valuation of the Ikea Distribution Center. Based on the ai::xNe information and taking into consideration that the investment would typcally be on a triple net basis, the fdlcwing capital value analysis is estimated:

Direct Income Capitalization Analysis

Item PSF /Year Income RentableSquare Feet 1,740,865 $2.88 $5,013,691 Gross Potential Income $5,013,691 Vacancy & Collections 5% ($250,685) Effective Gross Income $4,763,007 Less Expenses Adrrinistrative Expenses $0.05 $87,043 Expense Total PS F $0.05 $87,043

NOi $4,675,963 Cap Rate 6.00!6 Value as I mprCNed $77,932,723 Rounded to $77,930,000

Belew is a capitalization rate sensitivity study for the suqject property.

Capitalization Rate Sensitivity Analysis

NOi 5.80!6 5.90!6 6. 00)6 6. 10)6 6.20!6 $4,675,963 $80,620,052 $79,253,610 $77,932,717 $76,655,131 $75,418,758 Cap rate increment 0.10)6

Sale Comparison Approach I have collected a number of sales that are considered to be comparable to the subject property.

Summry Appraisal Report Comrunity Facilities District No. 2000-l Tejon Ranch Public Facilities Financing Authority 2007-ASpecial Tax Bonds Tejon Industrial Corrplex Public lrrprc:werrents County of Kern, State of California Bruce W. Hull & Associates, Inc. Page 34 Summary of Sales Comparables Clear GBA Sale Height Year $,5F No. Location (SF) Date (Ft.) Built Sale Price($) Unadj. Comments 1 4049 Industrial Park 651,908 J ul-07 30 2001 29,992,000 46.00 Located in the Dr., Lebec (Subject) subjectCFD; $8,312/acre/yr in special taxes. 2 2500 N. Plaza Drive, 631,000 Oct-06 N/Avail. 2001 24,700,000 39.14 No special Visaiia taxes.

3 1901 E. Brundage 523,651 Aug- N/Avail. 2003 22,500,000 42.97 M ult-tenant Lane, Bakersfield 06 high-rnbe property

4 3366 E. Muscat 347,069 Apr- 33 1975 11,000,000 31.69 Arm's-length Ave, Fresno 06 transaction.

5 12215 Holly Street, 750,579 Jan-07 32 2006 46,911,187 62.50 $4,000/acre/yr Rialto in special taxes.

The range of data forthese buildings is $31.69 to $62.50. Eliminating the Rialto sale, which is furthest afield from subject, and the Fresno sale, which is an aging impravement, a more reasonable predominance emerges - between $39.14 and $46.00. I have concluded at a per square foot price of $46, taking into consideration the location, size, interior impravements, and cther pertinent factors. This cal cul ates as fol I cws:

1,740,865 sf x $46.00 psf = $80,079,790 (Say) $80,100,000.

Reconciliation of Value In the estimate of value for the existing building (Ikea), I have utilized the cost, income, and sales comparison approaches to value. The Cost Approach indicated a value of $74,300,000; the income approach indicated a value of $77,930,000; and the Sales Comparison Approach indicated a value of $80, 100,000. Based on the three approaches, I have concluded at a value of

Summry Appraisal Report Comrunity Facilities District No. 2000-l Tejon Ranch Public Facilities Financing Authority 2007-ASpecial Tax Bonds Tejon Industrial Corrplex Public lrrprc:werrents County of Kern, State of California Bruce W. Hull & Associates, Inc. Page 35 $80,CXX),CXX)fcr the existing b.Jilding and the lands that are cwned b,' Ikea

Summry Appraisal Report Comrunity Facilities District No. 2000-l Tejon Ranch Public Facilities Financing Authority 2007-ASpecial Tax Bonds Tejon Industrial Corrplex Public lrrprc:werrents County of Kern, State of California Bruce W. Hull & Associates, Inc. Page 36 PROLOGIS BUILDING - PropertypiteDescription

Location: Northwest quadrant of Tejon Industrial Drive and Industrial Parkway Drive, Tejon Industrial Park, Lebec, California Owner: Prologis NA3 CA, LLC (formerly Tejon/1)errmdy Industrial LLC) Assessor's Parcel Portion of Assessor's Parcel No. 238-450-18. No.: Legal Description: Parcel 1 of Parcel Map No. lcx:i53--Phase "B" according to map thereof recorded i n B ook 51 , Pages 60 through 61 of Parcel M ap i n the office of recorder.

Area: 32.62 acres. ShapeiB oundaries: The project site is rectangular in shape. The eastern lx:Jundary Ii ne is Interstate 5; southern lx:Jundary line is Industrial Drive; northern boundary line is Tejon Industrial Park; and the western boundary line is Tejon Industrial Park.

T O[X)Qraphy: Level, graded and paved. Zoning: M2--PD Flood Zone: Zone C, non-hazardous zone. Panel No. CXi0075-1725B dated September 29, 1986. Soi I sJE nvi ronmental I have not received a soils or an environmental report for the suqject Issues: property. There is an existing building that was constructed in 2001. It is an assurnpti on of thi s report that the soi I s are adequate to support the highest and best use conclusion. I rrpravements: Built in 2001, this facility consists of one distribution industrial building containing 651,909 square feet. Bui I ding contains office bui I cl-out of approximately 9,000 square feet. The building is a concrete tilt-up with exterior wal I height of 36 feet and a cei Ii ng height of 30 feet. The roof is a corrugated metal single ply roof with R-30 insulation. The electrical is 800 amps, 277 /480 volts, 3-µiase, 4-wi re rxwer service.

There is an ESFR sprinkler system

Utilities: All utilities are availal:fo to the property. Asif Vacant: I ndustri al bui I ding H i ghest and B est Use Conclusion: As If i rrpraved: Current use

Current Stat us Existing industrial building. A total of 244,141 square feet of this

Summry Appraisal Report Comrunity Facilities District No. 2000-l Tejon Ranch Public Facilities Financing Authority 2007-ASpecial Tax Bonds Tejon Industrial Corrplex Public lrrprc:werrents County of Kern, State of California Bruce W. Hull & Associates, Inc. Page 37 b.Jilding are currently being leased b,' flatware maker Oneida. An additional 386,CXX) square feet is being leased b,' furnishings retailer Ikea, leaving 25,CXX) square feet vacant. Rent is $0.235 on a tripe net basis. B cth I eases were signed in 2005 and are for five and three years respectively with periodic escalations. See the Lease Corrparable Tal:le in the preceding section for more detai Is.

Valuation AnalysisNalue Conclusion The valuation analysis includes the Cost, Income, and Sales Corrparison Approaches to value. These have been defined earlier in this appraisal report.

Cost Approach This approach is considered since the imprcwernents are relatively mw and represent the highest and best use of the property. I n that regard bcth the historical costs of construction and the independent estimate of the i mpravernents are talken into consideration.

Based on these corrparables, I have concluded the subject site has an estimated value of $2 per square fact. This calculates to the follcwi ng estimate of value for the land.

1,420,927 sf (32.62 acs) x $2 psf = $2,841,854 (say) $2,800,CXX).

As stated earlier, the building was constructed in 2001. In preparing a cost estimate for the subject property, a review of the historical costs for the project was completed, which was pravided b,' Tejon Industrial Corporation. In addition, an independent review of costs via the Marshall and Swift Cost Manual was completed. Once the actual costs were tallied and evaluated for reasonal:l eness, an historical bui I ding cost factor for concrete commercial structures pravided in The 2007 National Building Cost Manual was applied. The tal:le prcwides a year-by-year factor for compounded increases in construction cost. I n this case, I took the cost data from 2003 and grew it to 2007 estimated I evel s. The fd I cwi ng represents a cost estimate for the subject.

Summry Appraisal Report Comrunity Facilities District No. 2000-l Tejon Ranch Public Facilities Financing Authority 2007-ASpecial Tax Bonds Tejon Industrial Corrplex Public lrrprc:werrents County of Kern, State of California Bruce W. Hull & Associates, Inc. Page 38 Direct Construction Costs: Building Square Footage, shell only (651,909@ $21.25.00 psf) $13,853,066

Indirect Costs: Engi neeri ng Services/Architecture $ 509,928 Building Perrrits,f ees 324,480 Financing Original Points 1,235,740 Financing I nterest $ 50, Taxes During Construction

Total I ndi rect Costs $ 2,120,148

Total Replacement Costs Ne.v 15,973,214 2007 Cost-Adjusted ( 1.24 multiple) 7 19,806,785 Less Physical Depreciation (5%) (990,339) Replacement Cost Less Depreciation 18,816,446

Entrepreneurial Profit(25% xTotal Replacement Cost 3,993,304 Ne.v) Plus Land Value $2,800,

Indicated Value via Cost Approach $25,609,750 Rounded $25,600,

I ncaneApproach The income approach is intended to reflect what the market will pay for an investment taking into consideration the quality, quantity, and durablity of the income stream. The subject has been I eased to flatware maker Oneida and I kea At the p-esent ti me the bui I ding is being I eased $0.235 per square foot. In accordance with our research, I have concluded a market rent of $0.24. Also, relative to our previous research, I have concluded a 6 percent capitalization rate in the valuation of the Prol ogi s bui I ding. Based on the al::xNe i nforrrati on and taking into consideration that the investment would typically be on a triple net basis, the fdlcwing capital value analysis is esti rrated.

7 From historical building cost index for concrete commercial structures, 2007 National Building Cost Manual, Craftsmm Press

Summry Appraisal Report Comrunity Facilities District No. 2000-l Tejon Ranch Public Facilities Financing Authority 2007-ASpecial Tax Bonds Tejon Industrial Corrplex Public lrrprc:werrents County of Kern, State of California Bruce W. Hull & Associates, Inc. Page 39 Direct Income Capitalization Analysis

Item PSF /Year Income RentableSquare Feet $2.88 $1,877,498 Gross Potential Income $1,877,498 Vacancy & Collections 5% ($93,875) Effective Gross Income $1,783,623 Less Expenses Adrrinistrative Expenses $0.05 $32,595 Expense Total PS F $0.05 $32,595

NOi $1,751,028 Cap Rate 6.00!6 Value as I mprCNed $29, 183, 793 Rounded to $29,180,000

A captalization rate sensitivity study is pravided belavv.

Capitalization Rate Sensitivity Analysis

NOi 5.80!6 5.90!6 6. 00!6 6. 10)6 6.20!6 $1,751,028 $30,190, 138 $29,678,441 $29,183,800 $28,705,377 $28,242,387 Cap rate increment 0.10)6

Sale Comparison Approach I have collected a number of sales that are considered to be comparable to the suqject building. They are shavvn earl i er i n thi s report.

The range of data forthese buildings is $31.69 to $62.50. Eliminating the Rialto sale, which is furthest afield from subject, and the Fresno sale, which is an aging impravernent, a more reasonable predominance emerges - between $39.14 and $46.00. A particularly strong sale is one that occurred inJ uly of 2007within the suqject CFO - the ProLogis sale - at $46 per square foot. I have concluded at a per square foot price of $46, taking into consideration the location, size, interior i rnpravernents, and other pertinent factors. This cal cul ates as fol I avvs:

Summry Appraisal Report Comrunity Facilities District No. 2000-l Tejon Ranch Public Facilities Financing Authority 2007-ASpecial Tax Bonds Tejon Industrial Corrplex Public lrrprc:werrents County of Kern, State of California Bruce W. Hull & Associates, Inc. Page40 651, <:Xl9 square feet x $46.00 psf = $29,987,814. (Say) $30,CXX),CXX)

Reconciliation of Value In the estimate of value for the subject existing building I have utilized the cost, income, and sales comparison app-oaches to value. The cost approach indicated a value of $25,600,CXX); the income approach indicated a value of $29, 180,CXX); and the sales comparison approach indicated a value of $30,CXX),CXX)_ I have concluded at $30,CXX),CXX) forthe stabilized value for the building and lands cwned 0\/ ProLogis.

Section I -Summary There are two industrial buildings valued in this section. The Ikea bui Iding consists of 1,707,024 square feet on 77.9 acres. The value conclusion for this building was estimated at $80,CXX),CXX)_ The second building, avvned 0\/ ProLogis, consists of 651,909 square feet on 32.62 acres. The value conclusion forthis building and the lands was estimated at $30,CXX),CXX)_

The aggregate value for Section I is $110,CXX),CXX)_

Summry Appraisal Report Comrunity Facilities District No. 2000-l Tejon Ranch Public Facilities Financing Authority 2007-ASpecial Tax Bonds Tejon Industrial Corrplex Public lrrprc:werrents County of Kern, State of California Bruce W. Hull & Associates, Inc. Page41 SECTION II -ASSESSED VALUES-IMPROVED PARCELS

This sectim relates to three parcels located east of Interstate 5, and me parcel located west of Interstate 5 in the Tejon Industrial Complex. The parcels m the east are impraved with a Chevron gas statim, a Blue Beacm truck wash and a Truck Stops of America The parcel m the west side of the 1-5 is a Petro Travel Plaza The follcwing are property descrip:ims from our fi I es and as prCNi ded b,' the Kern County Assessor' s Office in 2003.

Assessor's Parcel No. 238-091-20 This is a 5.84-acre parcel of land located east of 1-5 with the follcwing impravements. The cwner, per assessment records, is Tejm Ranch Company.

Storage 931 SF Service Statim Building 5,846 SF Building-Shops 11,302 SF Service Area 12,098SF Mall Shops 3,5CXi SF Mini-Store 2,400SF

Total Square Footage 36,083SF

The County Assessor has assigned an imprCNement and "other impravement" value from the unsecured tax rol I of $3,699,147, a land value of $3,341 from the secured tax rol I to this parcel for a total assessed value of $3,702,488.

Assessor's Parcel No. 238-091-19 This is a 7.29-acre parcel of land located east of 1-5 with the follcwing impravements. The cwner, per assessment records, is Tejm Ranch Company.

Office Area 432 SF Mechanical 12,002 SF Wash Bay 1 3,203 SF Wash Bay 2 3,203 SF Steel Building 320SF

Summry Appraisal Report Comrunity Facilities District No. 2000-l Tejon Ranch Public Facilities Financing Authority 2007-ASpecial Tax Bonds Tejon Industrial Corrplex Public lrrprc:werrents County of Kern, State of California Bruce W. Hull & Associates, Inc. Page42 Total Square Footage 19,160SF

The County Assessor has assigned an impravement and "other imprcwement" value of $418,653 from the unsecured tax roles and a land value of $4,255 from the secured tax rde, for a tctal assessed value (I ess personal property) of $422,

Assessor's Parcel Nos. 238-450-042 This parcel represents a Mobil Stationfetro mini--rrBJt, located west of 1-5. The cwners, according to assessor records, are Petro Travel Plaza LLC and Tejon Industrial Corporation respectively. The County Assessor has assigned a total assessed value to the 1.84-acre parcel of $2,420,320 for a total assessed value of $2,420,320, both from the secured tax rd I.

Assessor's Parcel No. 238-091-33 This is a 31.83--acre parcel of land located east of 1-5, of which Truck Stops of America is located on 15.78 acres with the balance undeveloped. The cwner, according to assessor records, is Tejon Ranch Company. The County Assessor has assigned a land value of $305,236 to this parcel for a total assessed value of $305,236, bcth from the secured tax rol I.

Assessor's Parcel Nos. 238-450-03, 06, and 07 This is a 50.08--acre parcel of land located west of 1-5 in the Tejon Industrial Complex. The cwner, according to assessor records, is Petro Travel Plaza LLC. It is impraved with a travel center. Within this travel center, kncwn as the Petro Travel Center, which includes a restaurant, trucker convenience store, mcwie theater, truck support facilities, video arcade, and laundry faci I iti es.

In addition there is a diesel fuel facility (4,100 square feet), a truck service facility (13,000 square feet), truck wash support structure (4,000 square feet), a convenience store and gas station (4,000 square feet). There are 13 fueling stations for diesel and 8 for gasoline. There is also a truck seal e.

Summry Appraisal Report Comrunity Facilities District No. 2000-l Tejon Ranch Public Facilities Financing Authority 2007-ASpecial Tax Bonds Tejon Industrial Corrplex Public lrrprc:werrents County of Kern, State of California Bruce W. Hull & Associates, Inc. Page43 The total assessed value (land and impuverrEnts) frr these three parcels is $16,789,889. This includes Fi seal Year 2007-2008 "Other I mr:xuverrEnt" assessed value.

Tctal Assessed Value- I mpraved Parcels The total Assessed Value forthese parcels is as fdlcws:

APN Assessed Value 238-450-42 (Mobile Station) $2,420,320 238-091--20 (Existing Cha

Summry Appraisal Report Comrunity Facilities District No. 2000-l Tejon Ranch Public Facilities Financing Authority 2007-ASpecial Tax Bonds Tejon Industrial Corrplex Public lrrprc:werrents County of Kern, State of California Bruce W. Hull & Associates, Inc. Page44 SECTION 111 -UNDEVELOPED LANDS EAST OF TRUCK STOPS OF AM ERi CA

This section involves the undeveloped lands located east of Interstate 5 and across from the Truck Stops of America and B I ue Beacon faci Ii ti es.

Property pite Description Location: Northeast quadrant of Wheeler Ridge Road and Interstate 5, Kern County.

Owner: Tejon Ranchcorp

Assessor's Parcel A portion of 238-091-33 No.: 238-091-28 Area: The gross acreage of APN 238-091-33 represents 16.05 gross acres. The net acreage, ±16 acres. For APN 238-091-28, the gross acreage is 20.65 and 18 net acres.

ShapeiB oundari es: The site is irregular in shape. The boundaries of the subject are I nterstate 5 to the west; Wheeler Ridge Road and tank farms to the east; the on­ ramp to the Interstate 5 to the south; and undeveloped lands to the north.

T O[X)Qraphy: The site is level. Zoning: Commercial per the Tejon Industrial Complex East Specific Plan. The site is part of a larger 1,lOQ-acre site that that has been appraved as a Specific Plan (Tejon Industrial Complex-East).

Soi I sJE nvi ronmental This property is a portion of Tejon Industrial Comp ex-East, a 1, 109-acre Issues: development in which an Environmental I mpact Report has been prepared. While there are a number of mitigation requirements for the entire 1, 109-acre project, there is no specific reference to the 16--acre site. The site does have a contiguous parcel that is utilized as a "tank farm" An assum[Xi on of this report is that there are no environmental or taxi c issues that would i rrpair development of the site.

I am not aware of any soils reports that have been prepared on this site. An assumption of this report is that soi Is are adequate to support the highest and best use of the property.

Streets: I nterstate 5 i s I ocated para! I el to the site and a freeway on ramp i s the subject's southern boundary line. Wheeler Ridge Road is the suqject's eastern boundary Ii ne and is uni mpraved exce[X for pavement.

Summry Appraisal Report Comrunity Facilities District No. 2000-l Tejon Ranch Public Facilities Financing Authority 2007-ASpecial Tax Bonds Tejon Industrial Corrplex Public lrrprc:werrents County of Kern, State of California Bruce W. Hull & Associates, Inc. Page45 Utilities: Water, gas and electric are avai Iable for devel oprrEnt.

H i ghest and Best Use Conclusim: The highest and best use is for eventual devel opnent to comrrErci al uses.

Valuation AnalysisNalue Conclusion In valuing this property, I have cmsidered the Sales Comparism Apprrn.ch to value.

Commercial Land Sale Summary Sale Price $;SF $;SF No. Location Size (Acre) Sale Date ($) Unadjusted Adjusted l s. Ahern Road, 9.48 Aug-05 1,400,000 3.39 3.73 Tracy, CA 95378

Comnents: Property along 1-5 with access from north-and southbourd traffic. Property is :roned C-fS (Comrrercial Freeway Services). Prior lo sale, property was markeled as Iocatirn for truck. slDp, gas s1ati on, fast-food reslaurant or hospi t,J ily use. Up,vard adjuslment made for suqject' s exposure lo superior traffic counts.

2 Feather River Blvd., 9.20 Sep-06 1,600,000 3.99 4.39 OrCNille, CA 95965 Comments: Property is a highway commercial site ,oned C2. All services are ator near site. Property is flanked by two large chain hotels and has good access lo highway, though it is inferior lo subject relative lo traffic-rnuntexposure. An ur,.vard adjuslment was made for the subject's superior exposure lo traffic. 3 Road 426 at Fresno 8.34 Mar-05 1,876,000 5.16 5.16 River, Oakhurst, CA 93644 Comnents: Cornrrercially :roned property on river with existing irrprovements. Market at time of sale for mall developmen~ technology business park. or clesti natirn center for local and louri st traffic. Incl ucles 27 sewer uni ts.

4 Retail Pad, Subject 4.75 Sep-06 1,829,520 12.00 N /,'\ CFD, Dennis McCarthy Dr., APN: 238-04 5-046 Corrrnents: Site of future Chevron station. Transaction was between T ejon and joint-venture company. There was arrbiguity regarding the per-square-foot price of the sale. The above figure was provided by the Tejon Ranch Corrµ,.ny.

Based on the comparables, with particular emphasis to Sale No. 1 for its exposure to sanewhat si rri lar traffic patterns almg the 1-5, I have estimated a value of $4 per square fact or $174,240 per acre, for the suqj ect property.

Summry Appraisal Report Community Facilities District No. 2000-l Tejon Ranch Public Facilities Financing Authority 2007-ASpecial Tax Bonds Tejon Industrial Corrplex Public lmprc:wements County of Kern, S1ate of California Bruce W. Hull & Associates, Inc. Page46 The subject p-operty consists of two special tax zones of CFO No. 2CXX}-l. APN 238-091-28 consists of 20.65 gross acres (estimated at 18 net acres) and is subject to CFO No. 2CXX}-1 undeveloped land tax of $944.22 per acre.

That pation of APN 238-091-33 that is undeveloped and being valued in this section of the appraisal report consists of 16. 05 gross acres (estimated at 16 net acres). These I ands are Iocated within Zone 1 and are suqject to an undeveloped I and tax of $1,880 per acre for 2007 (2008, per David Taussig and Associates Report.

I n the estimation of the value for these Iands, I have taken the fol Icwi ng into account.

APN 238-091-28 Assumptions: • Undeveloped Iand tax of $944 per acre • 6% bond i nterest rate • 25-year term • Present worth factor of 12. 78

Cal cul ati ons: $944 per acre x 12.78 = $12,064 (p-esentworth of CFO special tax) @ 5% probability = $603 per acre adjustment

$174,240 per acre(• $603 per acre= $173,637 per acre adjusted for CFO.

APN 238-091-33 (Portion) That portion of APN 238-091-33 is anticipated to have a special tax of $1,880 per acre for the undeveloped land. This parcel is in an Assigned Special Tax Zone (Zone 1) and, as a result of the structure of the RM A, there is more of a certainty of the Assigned Special Tax occurring. Assumptions: • Undeveloped I and tax of $1,880 per acre • 6% bond interest rate • 25-year term • Present worth factor of 12. 78

Summry Appraisal Report Comrunity Facilities District No. 2000-l Tejon Ranch Public Facilities Financing Authority 2007-ASpecial Tax Bonds Tejon Industrial Corrplex Public lrrprc:werrents County of Kern, State of California Bruce W. Hull & Associates, Inc. Page47 Cal cul ati ons: $1,880 ~r acre x 12.78 =$24,026 (p-esentworth of CFO s~cial tax) @ <:D'/4 probability = $21,623 ~r acre adjustment

$174,240 ~r acre(• $21,623 ~r acre =$152,616 ~r acre

Summary -Section 111 This section involved the app-ai sal of I ands north and west of Wheel er Ridge Road and fronting I nterstate 5. The results are as fol I cws:

Market Value Per Acre Net Acres Subject to CFO Value Estimate APN 238-091-33 (portion of): 16.0 X $152,616 $2,441,856

APN 238-091-28 18.0 X $173,672 $3,126,0

Total (rounded) $5,567,000

Summry Appraisal Report Comrunity Facilities District No. 2000-l Tejon Ranch Public Facilities Financing Authority 2007-ASpecial Tax Bonds Tejon Industrial Corrplex Public lrrprc:werrents County of Kern, State of California Bruce W. Hull & Associates, Inc. Page48 SECTION IV - TEI ON INDUSTRIAL COM PL EX LANDS

This section involves the appraisal of the Tejon Industrial Compex lands, still avvned 0\/ the Tejon Industrial Corporation. The Tejon Industrial Corporation, which was formed on Navember 13, 1998 for the purpose of cwning and developing the lands within the Tejon Industrial Complex.

Prg:Jerty(Site Description Location: The I ands are west of I nterstate 5, north and south of the existing Petro Travel Plaza Laval Road • sects the proposed project.

Owner: Tejon Industrial Corporation

Legal Descrip:ion: Portions of Parcels 2, 4 and 5 of Parcel Map No. 10502.

Area: 104± acres of I and acres of I and.

Section IV Properties APN Classification Lot Size (acres) Status Industrial Land 238-450-47 Land south of Laval Rd. 65.47 Vacant

Industrial Camt2us 238-460-01 Campus Parcel 8.49 Vacant 238-460-02 Campus Parcel 2.49 Vacant 238-460-03 Campus Parcel 3.23 Vacant 238-460-05 Campus Parcel 1.87 Vacant 238-460-06 Campus Parcel 1.37 Vacant 238-460-07 Campus Parcel 1.34 Vacant 238-460-08 Campus Parcel 1.30 Vacant 238-460-09 Campus Parcel 1.27 Vacant 238-460-10 Campus Parcel 1.23 Vacant 238-460-11 Campus Parcel 1.20 Vacant

Summry Appraisal Report Comrunity Facilities District No. 2000-l Tejon Ranch Public Facilities Financing Authority 2007-ASpecial Tax Bonds Tejon Industrial Corrplex Public lrrprc:werrents County of Kern, State of California Bruce W. Hull & Associates, Inc. Page49 Retail 238-450-40 Retai I pad at crescent 0.85 Vacant 238-4 50-41 Retai I pad at crescent 0.58 Vacant 238-4 50-34 T ~ on Carrpus 5.78 Vacant 238-450-35 T ~ on Carrpus 7.53 Vacant

Total Acreage: 104.00

Sh~and Boundaries: The site is irregular in sh~. The boundaries are Interstate 5 to the east; the proposed Tecuya Creek Restoration Area to the west; the California Aqueduct to the south; and undeveloped land to the north.

T O[X)Qraphy: The I ands are general Iy I eve I .

Zoning: A zone change was appraved (March 27, 2CXX)) for 125 acres of the site to ~ re-zoned frorn Ii ght industrial to medi urn industrial zoning. The remaining lands were zoned M2--PD. These zone changes were a result of a General Plan Amendment (also appraved on the sarne date as the zone change-General Plan Amendment Case No. 3, Map No. 202, General Plan Amendment Case No. 5, Map No. 219). In these General Plan Amendments 125 acres of the project were designated for industrial use under the Kern County General Plan. The General Plan Amendment changed the designation frorn Map Code 7.1 to 7.2, a Service Industrial designation. I n addition, the additional General PI an Amendment for the rernai ni ng I ands was changed frorn Resource ( 8. 1, 8. 3) to a Service Industrial designation (7.2). These actions 0\/ the Board were Resolution Nos. 200Q-87, --88 and Ordinance Nos. G--6667 and G--6668.

The action taken 0\/ the Board of Supervisors on March 28, 2CXX) pravi ded for various permitted uses of the property. The actual development parameters and conditions for development of Tejon Industrial Complex granted April 6, 2CXX) Planning Directors hearing pravides for the fdlavving:

• Precise Development Plan No. 71, Map No. 202 and Precise Development Plan No. 16, Map 219, which together constitute a Master Precise Development Plan for industrial and commercial devel oprnent.

• Zone Variance Case No. 10, Map No. 219 allavving for an ~lisk sign structure.

Summry Appraisal Report Comrunity Facilities District No. 2000-l Tejon Ranch Public Facilities Financing Authority 2007-ASpecial Tax Bonds Tejon Industrial Corrplex Public lrrprc:werrents County of Kern, State of California Bruce W. Hull & Associates, Inc. Page 50 • Vesting Tentative Parcel No. lcx:i63 to create 39 lcts including 31 industrial lots, 6 commercial lots, and 2 common lcts.

In addition to the al::xNe, the follcwi ng appravals took place on March 28, 2CXXl b,' the Kern County Board of Supervisors.

• Exclusion of 156 acres from the boundaries of an Agriculture Preserve No. 19 ( Resol uti on N o. 2CXXl-090).

• Amendment of the Land U se, Open Space and Conservation EI ement of Kern County from Map Code 9.3 (Extensive Agriculture) and 7.1 (Light Industrial) to Map Code 7.2 (Service Industrial). Resolution No. 2CXXJ-87.

Flood Zone: The subject is located within the SanJ rn.quin Valley drainage basin, which collects water runoff from the western two thirds of lands within the area that represents Kern County. There are several natural drainage courses in the area These include Salt Creek, Tecuya Creek, Grapevine Creek, and Pastoria Creek. While all of these drainage courses are subject to flash­ type fl o.,vs during heavy rains, the proposed devel oprnent is outside of the FEMA lOOyear flood line, therefore, the subject is not suqject to flooding during a 1CD-year event.

Project site water runoff fl cws from south to north and, according to the EI R document, wi 11 eventually discharge into either an existing Cal trans drai nage faci I i ty on the east si de of I nterstate 5 or i nto T ecuya Creek.

Soils: The suqject is located at the southern end of San Joaquin Valley, at the base of the Grapevine Pass. The topography of the site is level with soils consisting of predominately gravelly sands, sandy gravel, and silty sand and silt.

Earthquake Fault: While the site is in an area of faults (Wheeler Ridge, White Wolf, Plieto, Garlock and San Andreas), the subject is not within an Alquist--Priolo zone.

Environmental Issues: The Tecuya Creek is the subject's western boundary line. According to the El R, the use of Tecuya Creek as a wildlife mavement corridor might be adversely impacted b,' development.

As part of the Board of Supervisors certification of the EI R document (SCH No. 99CXi1016), a mitigation measure was adop:ed in which the Master Developer shall develop a "lo.,v effect" Habitat Conservation Plan

Summry Appraisal Report Comrunity Facilities District No. 2000-l Tejon Ranch Public Facilities Financing Authority 2007-ASpecial Tax Bonds Tejon Industrial Corrplex Public lrrprc:werrents County of Kern, State of California Bruce W. Hull & Associates, Inc. Page 51 (HCP) to p-eserve and enhance habitat frr the SanJraquin Kit Fox and Blunt Nose Leopard Lizard. Ccrnpliance with the HCP is ~ing mmitcred b,' the Staff Biologist of the Tejon Ranch Ccrnpany in conjunction with a third party, Rangeland Trust, which audits Tejon Ranch Company annually for cornpl i ance issues.

The El R states that no special status plan or wildlife species exist on site, but does state that the site represents suitable habitat frr the San J raquin Kit Fox.

As part of the appraved El R and apprCNal frr the General Plan Amendment, a rritigation measure requires monitoring of the site within 30 days prior to any ground construction b,' a qualified bid ogi st. If any active dens are detected on site, the dens and app-opriate buffer will ~ p-otected b,' the applicant with fencing until all pups and adults have vacated. All surveys, monitoring, excavation, and fencing shall ~ conducted and mmitcred and reported to the USFWS and CDFG according to USFWS public shed protocols frr these species.

The EIR states that the prqject could result in the loss of active nests of ground nesting bird species, which would ~ a potentially significant impact and in conflict with the Migratory Bird Act and California Fish and Game Code.

As part of the app-aval process a mitigation measure for this includes a field survey conducted b,' a qualified biologist to determine if active nests of b rd species p-otected b,' the M i gratory B i rd A ct and pr Cal i forni a Fi sh and Game Code are p-esent or within 200 feet of the p-qject site.

If active nests are found, a minimum So-foot buffer shall ~ created around the nest site with fencing. The biologist shall serve as a construction mmitcr during those periods when construction activities wi 11 occur near active nest areas to ensure that no inadvertent impacts of these nests wi 11 occur. In addition, the final EI R pravides frr these rritigation measures.

• Pravision of a cultural resource mmitcr during excavation activities on the site to help insure the protection of any buried cultural resources.

• Pre-construction biological surveys.

• Shielded lighting on the perimeter of the p-oject site to p-event spi 11 age into the rerrai ni ng natural and open space areas.

Summry Appraisal Report Comrunity Facilities District No. 2000-l Tejon Ranch Public Facilities Financing Authority 2007-ASpecial Tax Bonds Tejon Industrial Corrplex Public lrrprc:werrents County of Kern, State of California Bruce W. Hull & Associates, Inc. Page 52 • Dust cmtrol plans appraved 0\/ the SanJraquin Valley Air Pdlution Cmtrol District.

• Streetsi{:irculation: The suqject property is located at the Laval Rood interchange at I nterstate 5. I n addition, Laval Rrad and Dennis McCarthy Drive are access roods throughout the project. As a result of the construction of the Petro Travel Plaza, significant constructim occurred to accomnodate this facility including a new bridge to accomrrodate traffic traveling southbound.

Utilities and Public Services: Water: The Rose Station Well, an offsite water well, which has been constructed as part of the Petro Travel Plaza, will serve the proposed development. The proposed development, as well as Petro Travel Plaza, has been annexed into the Tejon--CastacWater District. The water delivery system includes an existing 500,CXX}-gallon storage tank that must be expanded to serve the Tejon Industrial Complex.

The existing water tank site is approximately 6 acres in size and located 2,400 feet south of the prqject site. It has been designed for future expansion to meet the storage requirements of the proposed development.

Wastewater: Wastewater would be treated at the tertiary treatment water reel arnati on pl ant, which serves the Petro Travel Plaza The prqj ect has been designed for expansim to serve the future uses in the area

Solid Waste: Sdid waste generated will be transported to the Arvin Landfill. This landfill is anticipated to be closed in approximately 3 years with future waste generated most Ii kely transported to Taft Landfi II.

Pavver: Pacific Gas and Electric pravides the electricity, while The Gas Company supp i es natural gas.

Communications: AT& T pravi des tel ephme service whi I e cable tel evi si m is pravided via Cox Cable.

Total E sti mated Development Costs The table belavv is based m CFO cost data pravided 0\/ the Tejon Ranch Company.

Summry Appraisal Report Comrunity Facilities District No. 2000-l Tejon Ranch Public Facilities Financing Authority 2007-ASpecial Tax Bonds Tejon Industrial Corrplex Public lrrprc:werrents County of Kern, State of California Bruce W. Hull & Associates, Inc. Page 53 CF D Cost Overvi evv Current Bond CFD 2007-A $5,439,125 Facilities Cost to C orrpl ete 4,840,397 I ncurred but not rei rrbursed 2,179,934 UnrecCNered costs (Tejon $1,620,331 responsibility) Source: Tejon Ran::::h Co. See Adden:lum for tTDre cost-to-complete information.

Mi scel I aneous: The p-oject has been designed to accommodate Early Supp-ession Fast Response ("ESFR") fire system This system is critical for larger distribution centers. An independent cmsultant, Allan Automatic, has i ndi cated the prqj ect desi gn has been consi stent with E SF R, I n addition, Tejon Industrial Corporatim has reportedly met with three of the largest insurance underwriters (Factory Mutual, Fireman's Fund and GE) to be assured that the design of the backbone system will adequately supply water needed for ESFR system

H i ghest and B est Use Conclusim: Highest and best use is considered to be industrial development with support commercial (i.e. fast food, motel),

Current Status: Undeveloped

Three-Year Sales History: Tejon Industrial Corporation, a wholly avvned subsidiary of Tejm Ranch Company, was formed on Navember 13, 1998. There was no market transaction of the I ands, as this was an inter-company transaction.

Valuation AnalysisNalue Conclusion The val uatim of the suqject property wi II be p-esented as follavvs. First, a discussion of each of the market data types uti Ii zed in the val uatim of the subject property (i.e. Industrial, commercial, quasi-commercial) wil I be p-esented The valuation analysis will estal:l ish a" retail", or finished

I ct value, for each of the parcels. The valuation of the "retai I", or finished I ct value, wi 11 uti Ii ze

Summry Appraisal Report Comrunity Facilities District No. 2000-l Tejon Ranch Public Facilities Financing Authority 2007-ASpecial Tax Bonds Tejon Industrial Corrplex Public lrrprc:werrents County of Kern, State of California Bruce W. Hull & Associates, Inc. Page 54 the Sales Canparison App-oach.

I ndi cated Value APN Classification Lot Size (acres) PSF I ndi cated Value Industrial Land 238-450-47 Land south of Laval 65.47 $2.00 $5,703,746 Rd.

Industrial Cam(;!us 238-460-01 Campus Parcel 8.49 $3.50 $1,294,385 238-460-02 Campus Parcel 2.49 $3.50 $379,625 238-460-03 Campus Parcel 3.23 $3.00 $422,096 238-460-05 Campus Parcel 1.87 $3.00 $244,372 238-460-06 Campus Parcel 1.37 $3.00 $179,032 238-460-07 Campus Parcel 1.34 $3.00 $175,111 238-460-08 Campus Parcel 1.30 $3.00 $169,884 238-460-09 Campus Parcel 1.27 $3.00 $165,964 238-460-10 Campus Parcel 1.23 $3.00 $160,736 238-460-11 Campus Parcel 1.20 $4.00 $209,088

Retail 238-450-40 Retai I pad at 0.85 $15.00 $555,390 crescent 238-450-41 Retai I pad at 0.58 $15.00 $378,972 crescent 238-450-34 Tej on Campus 5.78 $4.00 $1,007,107 238-450-35 Tej on Campus 7.53 $4.00 $1,312,027

Total Acreage: 104.00 12,357,536

The Sales Canparison Approach is estimated 0\/ comparing p-operties sinilar to the suqject p-operty that have recently been sold, are Ii sted for sale, or are under contract. After the determination of the retail value of the subject property indicated al::xNe, the next step in the Discounted Cash Flew Analysis is to deternine an absorption period to schedule the timing of the sale of the master developer lots. Next, the costs associated with the subject develop-nent (to bring the p-operty from its current condition to the "salable" or "retail" condition) need to be determined along with a construction schedule. Finally, the resulting cash flews need to be discounted 0\/ an approp-i ate discount rate due to ( 1) the ti me value of money, ( 2) the risk

Summry Appraisal Report Comrunity Facilities District No. 2000-l Tejon Ranch Public Facilities Financing Authority 2007-ASpecial Tax Bonds Tejon Industrial Corrplex Public lrrprc:werrents County of Kern, State of California Bruce W. Hull & Associates, Inc. Page 55 associated with the p-qject, and (3) a profit due to the developer. The analysis of the alxNe revenues and costs results in a p-esent value for the subject property in its" as is'' condition, and represents a" bulk" sale.

Based on the talle alxNe and accompanying discounted cash-flavv analysis, I have attributed a value of $12,585,CXn

Summry Appraisal Report Comrunity Facilities District No. 2000-l Tejon Ranch Public Facilities Financing Authority 2007-ASpecial Tax Bonds Tejon Industrial Corrplex Public lrrprc:werrents County of Kern, State of California Bruce W. Hull & Associates, Inc. Page 56 SECTION V - PARCELS UNDER CONSTRUCTION OR COMPLETED- DENNIS MCCARTHY DRIVE

There are seven parcels being valued in this section. They are fast-food restaurants McDonalds, Starbucks and Panda Express, which are corrpleted buildings, and an I n--N--Out Burger restaurant, which is nearly corrplete. In addition, this section wi II value the Best Western Hotel, which is complete and has been operating for five years, as wel I as the sites of a Chevron station andwarehouseft:listribution center, which are currently under construction.

Section V Properties

Designation Status Ownership Lot Size McDonald's Operational Tejon Industrial Corp. 47,044 Panda Express Operational Tejon Industrial Corp. 32,670 Starbucks Operational Tejon Industrial Corp. 52,707 Best Western Motel Operational Unity Property M gt. 204,296 I n-N-Out Burger Nearing corrpl eti on I n-N-Out Burger 76,665 Cha

McDONALD'S - Property pite Description Location: Northwest corner of Laval Road and Dennis McCarthy Drive, Lebec Owner: Tejon Industrial Corporation (ground lease to McDonald's) Assessor's Parcel 238-450-27 No.: Area: 1.08 acres ShapeiB oundaries: The site is irregular in shape and fronts the off rarnp for Laval Road.

Topography: The site is level. Zoning: The zoning of the subject property is M 2PD, which allavvs cornrnercial and industrial uses.

Summry Appraisal Report Comrunity Facilities District No. 2000-l Tejon Ranch Public Facilities Financing Authority 2007-ASpecial Tax Bonds Tejon Industrial Corrplex Public lrrprc:werrents County of Kern, State of California Bruce W. Hull & Associates, Inc. Page 57 Soi I sJE nvi rmmental An assum[Xi on of this report is that there are no environmental or taxi c Issues: issues, which would impair use of the site. An assumption of this report is that soi Is are adequate to su[l)Ort the highest and best use of the property. Building: A 3,530 square foot McDonald's has been constructed m this site. Built in 2002 the building is one---51:ay frame and stucco building that can accommodate 98. There is m site parking for 49 cars. Streets: Interstate 5 runs parallel to the site. Dennis McCarthy Drive and Laval Road are fully impraved streets that pravide excellent access to the site.

Utilities: Water, gas and electric service the suqj ect property. H i ghest and Best The highest and best use is for the existing development to continue. Use Conclusim:

Current Stat us Exi sti ng retai I bui Idi ng

Valuation Analysis The direct income capitalization approach, along with sales comparism approach, was used to develop an opinion of value of this parcel. It should be ncted that this property, along with the Panda Express restaurant in the follcwing sectim represent ground leases. For this reason, actual rents were nct used as representative income as they only rel ate to the Iand and nct the bui Iding. Since the previously stated purpose of this CFO appraisal is to value the fee simple interest for all properties within the CFO area, market income streams were approxirrated based on net operating i ncorne of comparabl es.

Direct Income Capitalization Approach The direct income captalization approach is used to convert an estirrate of a single-year's income expectancy into an i ndi cati m of value in one direct step b,' dividing the income esti rrate b,' an appropriate rate. First, cwerall market capitalization rates for fast-food purchase or purchase-leaseback transactions have been examined. See the table belcw.

Summry Appraisal Report Comrunity Facilities District No. 2000-l Tejon Ranch Public Facilities Financing Authority 2007-ASpecial Tax Bonds Tejon Industrial Corrplex Public lrrprc:werrents County of Kern, State of California Bruce W. Hull & Associates, Inc. Page 58 Summary of Sales Comparables

GBA Sale Year $,5F Cap. No. Location (SF) Date Built Sale Price($) Unadj. Rate 1 Jack in the Box 2,636 May--06 1977 2,000,000 758.73 5.50)6 1881 Sixth Ave., Kingsburg

2 chi potle,5 tar bucks 4,188 May-07 2007 3,300,000 787.97 550!6 4219 S. Mooney Blvd. Visalia

3 Taco Bell 2,575 Dec--06 2005 1,545,000 600.00 5.50)6 4857 E. McKinley Ave., Fresno

4 Jack in the Box 2,834 Apr-07 1998 1,675,000 591.04 4.99)6 1167 N. C ICNis, Fresno

5 Wendy's 2,786 J ul-07 1986 1,740,000 624.55 5.50)6 4270W. Shaw Ave., Fresno

The range of capitalization rates were exanined and found to be extremely narrcw. A capitalization rate of 5.5 was selected. The market-derived capitalization rate was then applied to

a market-derived net operating income per square fact of gross bui I ding area See chart bel ON for analysis.

Net Operating Incomes for Comparables, Subject

Net Operating Comparable Income GBA NOi ,G BA Starbucks,5 ubj ect CF D $78,120 1,509 $51.77 Jack in the Box, Kingsburg $110,880 2,636 $42.06 Starbucks,Chipotle, Visalia $181,500 4,188 $43.34 Taco Bell, Fresno $85,000 2,575 $33.01 Wendy's, Fresno $94,000 2,786 $33.74

Summry Appraisal Report Comrunity Facilities District No. 2000-l Tejon Ranch Public Facilities Financing Authority 2007-ASpecial Tax Bonds Tejon Industrial Corrplex Public lrrprc:werrents County of Kern, State of California Bruce W. Hull & Associates, Inc. Page 59 Jack in the Box, Fresno $83,583 2,834 $29.49 Taco Bell, Bakersfield $79,873 3,000 $26.62 Dorrinion Pizza/f -Mobile $143,055 4,635 $30.86 Mean: 34.16 Median: 33.01

Subject Indicated NOi Total Rooms Selected NOi r:, BA McDonald's $148,260 3,530 $42.00

A net o~rating incorre ~r square foot of gross building area ("GBA") of $42.00 was selected, indicating a market net o~rating incOITE of $148,260. The higher ~r-square-foot incOITE of the Starbucks on the subject CFO was likely skevved b,' its smaller building size. Most weight was given to theJ ack in the Box in Kingsburg for its similar p-oximity to and visibility from a major Freevvay.

Using a market-derived cwerall captalization rate of 5.50 ~rcent and a market-derived net ~rating incorre of $148,260 (based on the subject's building area), I can infer a value of $2,695,636 for the fee sirrple value of the land and building or $2,700,000 rounded. A capitalization rate sensitivity matrix is pravided belcw.

Capitalization Rate Sensitivity Analysis NOi 5.10% 5.30!6 5.50)6 5.70)6 5.90!6 $148,260 $2,907,059 $2,797,358 $2,695,636 $2,601,053 $2,512,881 Cap rate increment 0.20!6

Sales Comparison Approach Empo,;ing our Summary of Fast-food Comparables table earlier in this section, I see a range of values from a lavv of $591.04 ~r square fact for aJ ack in the Box in an industrial section of Fresno to a high of $787.97 for a building comp-ising a Chipotle Mexican restaurant and Starbucks in a relatively nevv regional po.,ver center in Visalia A price ~r square foot of $760 was selected, which results in an indicated value of $2,682,800 or $2,690,000.

Value Conclusion The incOITE capitalization app-oach resulted in an indicated value of $2,700,000. The sales

Summry Appraisal Report Comrunity Facilities District No. 2000-l Tejon Ranch Public Facilities Financing Authority 2007-ASpecial Tax Bonds Tejon Industrial Corrplex Public lrrprc:werrents County of Kern, State of California Bruce W. Hull & Associates, Inc. Page60 comparism awroach resulted in an indicated value of $2,690,CXn The final opnion of value for the fee si mp e estate is $2,700, CXXl.

PANDA EXPRESS - Property pite Description Location: East side of Dennis McCarthy Drive, south of Petro Convenience Store, Le~c.

Owner: Tejon Industrial Corporation (Panda Express occuped)

Assessor's Parcel 238-450-43 No.: Area: 34,263 square feet ShapeiB oundaries: The site is irregular in shape and fronts the off ramp for Laval Road. T O[X)Qraphy: The site is level. Zoning: The zoning of the subject property is M 2PD. Flood Zone: Soi I sJE nvi ronnnental An assum[Xi on of this report is that there are no envi ronnnental or taxi c Issues: issues, which would irrpair development of the site. An assumption of this report is that soi Is are adequate to support the highest and ~st use of the subject property.

Building: There is a 2,400 square foot building on the site operated as a Panda Express Chinese restaurant.

Streets: Interstate 5 runs parallel to the site. Dennis McCarthy Drive and Laval Road are fully impraved streets that pravide excellent access to the site.

Utilities: Water, gas and electric service the suqj ect property. H i ghest and Best The highest and ~st use is forthe building to~ completed. Use Conclusion:

Current Stat us Retail building.

Valuation AnalysisNalue Conclusion The analyses conducted in the preceding McDonald's valuation apply to this property, which is

Summry Appraisal Report Comrunity Facilities District No. 2000-l Tejon Ranch Public Facilities Financing Authority 2007-ASpecial Tax Bonds Tejon Industrial Corrplex Public lrrprc:werrents County of Kern, State of California Bruce W. Hull & Associates, Inc. Page 61 located app-oximately 100 yards fran it and is roughly the sarrE age and in the sarrE condition as the McDonald' s.

Terrpered by the results of the direct income captalization and sales comparison approaches used in the McDonald' s section abcwe, our conclusion of the averal I value of the fee simple estate is as fol I cws:

Direct income capitalization approach In congruity with the preceding McDonald's valuation, a capitalization rate of 5.5 percent was selected for the subject, along with an inferred NOi of $42 per square foot of gross building space. 2,400 square feet multi pied by $42 equals $100,800, which divided by a captalization rate of 5.5 percent equals $1,832,727.27 or $1,830,CXX) rounded, indicating a value by the direct income capitalization approach. A captalization rate sensitivity matrix is pravided belavv.

Capitalization Rate Sensitivity Analysis NOi 5.10% 5.30% 5.50)6 5.70)6 5.90!6 $100,800 $1,976,471 $1,901,887 $1,832,727 $1,768,421 $1,708,475 Cap rate increment 0.20!6

Sales comparison approach Also in reference to the preceding McDonald's valuation, I have selected an indicated value per square foot of gross building area of $760, which multi pied by the subject's 2,400 square feet, indicates a value by this approach of $1,825,CXX).

Value Conclusion The income capitalization app-oach resulted in an indicated value of $1,830,CXX). The sales comparison approach resulted in an indicated value of $1,825,CXX). The final opnion of value for the fee simpe estate is $1,830,CXX).

STARBUCKS - Propertypite Description Location: East side of Dennis McCarthy Drive, south of McDonald's, Lebec.

Summry Appraisal Report Comrunity Facilities District No. 2000-l Tejon Ranch Public Facilities Financing Authority 2007-ASpecial Tax Bonds Tejon Industrial Corrplex Public lrrprc:werrents County of Kern, State of California Bruce W. Hull & Associates, Inc. Page62 Owner: Tejon Industrial Corrxiration Assessor's Parcel 238-450-28 No.: Area: 35,CXX) square feet (parcel is 1.21 acres with the difference attributed to common area parking). Sh~iB oundaries: The site is irregular in sh~ and fronts the off ramp for Laval Rood. T orx:igrapiy: The site is level. Zoning: The zoning of the subject property is M 2PD. Soi I sJE nvi ronnnental An assum[Xi on of this rerxirt is that there are no envi ronnnental or taxi c Issues: issues, which would irrpair development of the site. An assumption of this rerxirt is that soi Is are adequate to support the highest and best use of the property.

Building: A 1,509 square foot Starbucks building has been constructed on this site. Built in 2002 the building is Construction rated V one story frame and stucco building. Flat roof with 3 ply built-up bitmunious roofing system. There is on site parking for 40 cars. Additional bathroom space of 628 square feet have been added to the bui I ding si nee its original construction. Streets: Interstate 5 runs parallel to the site. Dennis McCarthy Drive and Laval Rood are fully impraved streets that pravide excellent access to the site. Utilities: Water, gas and electric service the suqj ect property H i ghest and B est The highest and best use is for the existing development to continue. Use Conclusion:

Current Stat us Retail Building

Valuation Analysis The Starbucks, as oprxised to the McDonald's and Panda Express abave, is a build-to-5uit property, whereby the Tejon Industrial Corporation not only cwns the land, but constructed the bui I ding to specification for the Starbucks cwnershi p entity and I eases the I and and bui I ding together to Starbucks. This structure most closely resernbl es that of the fast-food sales in the tal:le belavv.

Summry Appraisal Report Comrunity Facilities District No. 2000-l Tejon Ranch Public Facilities Financing Authority 2007-ASpecial Tax Bonds Tejon Industrial Corrplex Public lrrprc:werrents County of Kern, State of California Bruce W. Hull & Associates, Inc. Page 63 Summary of Sales Comparables

GBA Sale Year $,5F Cap. No. Location (SF) Date Built Sale Price($) Unadj. Rate 1 Jack in the Box 2,636 May--06 1977 2,000,000 758.73 5.50)6 1881 Sixth Ave., Kingsburg

2 Chi potle,5 tar bucks 4,188 May-07 2007 3,300,000 787.97 5.50)6 4219S. Mooney Blvd. Visalia

3 Taco Bell 2,575 Dec--06 2005 1,545,000 600.00 5.50)6 4857 E. McKinley Ave., Fresno

4 Jack in the Box 2,834 Apr-07 1998 1,675,000 591.04 4.9916 1167 N. c lewis, Fresno

5 Wendy's 2,786 J ul-07 1986 1,740,000 624.55 5.50)6 4270W. Shaw Ave., Fresno

Two approaches to value have been used to develop an opinion of value for the fee-simpe i nterest of the Starbucks. These are the sales compari son approach and the di rect i ncome capitalization approach.

Sales Comparison Approach The comparables in the table al:x:we exhibit a range of unadjusted square-foot values from $591.04 to $787.97. The three lavvest indicated values referto properties that are in residential or mixed-use neighborhoods with no freeway proxinity or visibility. Sale No. 2 represents a building that houses a Chipctle Mexican Grill and a Starbucks located in a newer regional pavver center with large national retail anchors. Sale No. 1 represents aJ ack in the Box with freeway frontage in the tourist-driven city of Kingsburg. Given the suqject' s visibility from the 1-5 atthe location of a geographic landmark (the Grapevine), an indicated price per square gross building area of $760 was selected. The suqject' s gross building area of 1,509 square feet multi pied 0\/ the sel ected price per square foot of $ 760 i ndi cates a val ue of $1 , 146,840 or $1 , 150, 000 rounded.

Summry Appraisal Report Comrunity Facilities District No. 2000-l Tejon Ranch Public Facilities Financing Authority 2007-ASpecial Tax Bonds Tejon Industrial Corrplex Public lrrprc:werrents County of Kern, State of California Bruce W. Hull & Associates, Inc. Page64 Income Capitalization The direction income capitalization approach is used to convert an estimate of a single-year's income expectancy into an i ndi cation of value in one direct step by dividing the income estimate by an appropriate rate. First, cwerall market capitalization rates for fast-food purchase or purchase-leaseback transactions have been exanined. An averall capitalization rate of S.S% has been selected. See the table al:xNe for an cwerview of market capitalization rates. It should be noted that market participants in nati anal strip shopping centers and regi anal pcwer centers interviewed in the Korpacz Real Estate Investor Survey almost uniformly captalized net operating income before deducting i terns such as Tl s, replacement reserves and I easing commissions. Where possible, I have done the same. The table belcw capitalizes one year's income using a market-derived averall capitalization rate.

Subject B uild-to--5 uit Lease Indicated Value Indicated Building Valuef-,F Franchise/location Size (SF) Annual Rent Cap. Rate Indicated Value (Bldg.) Starbucks/Laval 1-5 1,509 $78, 120 5.50)6 $1,420,363 941.26

Thus, the indicated value of the subject property using the direct capitalization approach is $1,420,363 or $1,420,000 rounded.

Capitalization Rate Sensitivity Analysis NOi 5.10% 5.30% 5.50)6 5.70)6 5.90!6 $78,120 $1,531,765 $1,473,962 $1,420,364 $1,370,526 $1,324,068 Cap rate increment 0.20!6

Value Conclusion The sales comparison approach indicates a fee simpe value of $1,lS0,000. The income capitalization approach indicates a value of $1,420,000. Given market requirements and the

Summry Appraisal Report Comrunity Facilities District No. 2000-l Tejon Ranch Public Facilities Financing Authority 2007-ASpecial Tax Bonds Tejon Industrial Corrplex Public lrrprc:werrents County of Kern, State of California Bruce W. Hull & Associates, Inc. Page 65 likely thinking of the average investor regarding this type of property, the income capitalization approoch has ~en given greatest weight. I have concluded a value of $1,400,CXX) with most weight given to the income capitalization approoch.

IN--N-OUT BURGER - PropertypiteDescription Location: West side of Dennis McCarthy Drive, south of Petro Travel Plaza, Le~c. Owner: I n--N-Out Burger Assessor's Parcel 238-450-45 No.: Area: 1.8 gross acres; 1.33 net acres ShapeiB oundari es: Irregular. Site borders Laval Rood and Dennis McCarthy Drive.

Topography: The site is level. Zoning: The zoning of the subject property is M 2PD.

Soi I sJE nvi ronmental An assum[Xi on of this report is that there are no environmental or taxi c Issues: issues, which would impair devel oprnent of the site. Building: Gross bui Iding area is stated as 3,980 square feet. On the day of the inspection, the building appeared nearly compete and will ~ valued as such i n thi s report.

Streets: Interstate 5 runs parallel to the site. Dennis McCarthy Drive and Laval Rood are fully impraved streets that pravide excellent access to the site.

Utilities: Water, gas and electric service the property H i ghest and Best The highest and ~st use is for the existing development to continue. Use Conclusion:

Current Stat us Nearly compete construction.

Valuation AnalysisNalue Conclusion The analyses conducted in the preceding McDonald's and Panda Express valuation apply to this property, which is located approxirrately 100 yards west of the McDonald's in an area of new construction. The bui Iding is nearly complete and operati anal.

Summry Appraisal Report Comrunity Facilities District No. 2000-l Tejon Ranch Public Facilities Financing Authority 2007-ASpecial Tax Bonds Tejon Industrial Corrplex Public lrrprc:werrents County of Kern, State of California Bruce W. Hull & Associates, Inc. Page66 Terrpered by the results of the direct income captalization and sales comparison approaches used in the McDonald' s section abcwe, our conclusion of the averal I value of the fee simple estate is as fol I cws:

Direct income capitalization approach In congruity with the preceding McDonald's valuation, a capitalization rate of 5.5 percent was selected for the subject, along with an inferred NOi of $42 per square foot of gross building space. 3,900 square feet multi pied by $42 equals $167,160, which divided by a captalization rate of 5. 5 percent equals $3,039,272 or $3,040,000 rounded, is the selected value by the direct income capitalization approach.

Sales comparison approach Also in reference to the preceding McDonald's valuation, I have selected an indicated value per square foot of gross building area of $760, which multi pied by the subject's 3,980 square feet, indicates a value by this approach of $3,024,000 or $3,025,000 rounded.

Value Conclusion The income capitalization approach resulted in an indicated value of $3,040,000. The sales comparison approach resulted in an indicated value of $3,025,000. The final opnion of value for the fee simpe estate is $3,000,000.

CHEVRON STATION (PETRO 111) - Property pite Description Location: West side of Dennis McCarthy Drive, south of Petro Travel Plaza, Lebec. Owner: Petro Travel PlazaLLC Assessor's Parcel 238-450-46 No.: Area: 4. 75 gross acres ShapeiB oundari es: Irregular. Site borders Laval Road and Dennis McCarthy Drive. Topography: The site is level. Zoning: The zoning of the subject property is M 2PD. Environmental An assum[Xi on of this report is that there are no environmental or taxi c issues, which would impair devel oprnent of the site.

Summry Appraisal Report Comrunity Facilities District No. 2000-l Tejon Ranch Public Facilities Financing Authority 2007-ASpecial Tax Bonds Tejon Industrial Corrplex Public lrrprc:werrents County of Kern, State of California Bruce W. Hull & Associates, Inc. Page 67 Issues: Building: Chevron station under construction. No set of plans of the impravernent, which is under construction, was made avai Iable by the developers.

Streets: Interstate 5 runs parallel to the site. Dennis McCarthy Drive and Laval Road are fully impraved streets that pravide excellent access to the site.

Utilities: Water, gas and electric service the property. H i ghest and Best The highest and best use is for the existing development to continue. Use Conclusion:

Current Stat us Bui Iding under construction

Sales comparison approach A I so in reference to the preceding valuation of retai I vacant Iand in Section IV, I have selected an indicated value per square foot of gross site area of $12, which multiplied by the subject's site area, indicates a value by this approach of $2,482,920.

Value Conclusion The sales comparison approach resulted in an indicated value of the land of $2,482,920. The final opnion of value, rounded, forthe fee simple estate is $2,500,000.

INDUSTRIAL LOT (UNDER CONSTRUCT! ON) - Property pite Description Location: South of Laval Road, L ebec. Owner: Five West Parcel LLC Uoint venture between Rockefeller Group Development Corporation and Tejon Industrial Corporation) Assessor's Parcel 238-4 SQ--44 No.: Area: 29.06 gross acres ShapeiB oundaries: Rectangular. Site borders Industrial Parkway Drive and Tejon Industrial Drive Topography: The site is level. Zoning: The zoning of the subject property is M 2PD.

Summry Appraisal Report Comrunity Facilities District No. 2000-l Tejon Ranch Public Facilities Financing Authority 2007-ASpecial Tax Bonds Tejon Industrial Corrplex Public lrrprc:werrents County of Kern, State of California Bruce W. Hull & Associates, Inc. Page68 Envi rmmental An assum[Xi on of this report is that there are no environmental or taxi c Issues: issues, which would impair devel opnent of the site. Building: A warehouseft:listribution center is under construction at the site. At inspection, work m foundation was noted. The building will have cross­ dock design, a 32-foot clear height, ESFR Plus sprinkler system, 117 dock-high doors, 3 drive-in doors and 2. 5 percent skylights. Streets: Interstate 5 runs parallel to the site. Dennis McCarthy Drive and Laval Road are fully impraved streets that pravide excellent access to the site.

Utilities: Water, gas and electric service the property. H i ghest and Best The highest and best use is for the existing developnent to continue. Use Conclusim:

Current Stat us Under constructi m

Sales compari sm approach Also in reference to the preceding valuatim of industrial vacant land in Section IV, I have selected an indicated value per square foot of $2, which multi pied 0\/ the subject's 1,265,854 square feet, indicates a value 0\/ this approach of $2,531,707.

Value Conclusion The sales comparison approach resulted in an i ndi cared value of 2,531,707. The final opi ni m of value, rounded, for the fee simpe estate is $2,500,000.

BEST WE STE RN LIBERTY INN - Property pite Description Locatim: West side of Dennis McCarthy Drive, south of Petro Travel Plaza, Lebec. Owner: Tejon Industrial Corporatim (ground lease to Oalkmar Inns, Inc.) Assessor's Parcel 238-450-33 No.: Area: 4.69acres ShapeiB oundaries: The site is irregular in shape and fronts the off ramp for Laval Road. Topography: The site is level. Zoning: The zoning of the subject property is M 2PD.

Summry Appraisal Report Comrunity Facilities District No. 2000-l Tejon Ranch Public Facilities Financing Authority 2007-ASpecial Tax Bonds Tejon Industrial Corrplex Public lrrprc:werrents County of Kern, State of California Bruce W. Hull & Associates, Inc. Page69 Envi rmmental An assum[Xi on of this report is that there are no environmental or taxi c Issues: issues, which would impair devel opnent of the site. Building: First floor of 15,6<:Xl square feet, secmd floor of 10,555 square feet for a tctal of 30,745 square feet. Built in 2002 the building is a Best Western Motel with 62 rooms (including onsite manager). Stucco and wood siding with roof of Brcwnstone #15 felt. Individual heating/clir conditioning in each roorn; windcws brcwn anodized with dual glaze tinted glass with grids. Spa, pool and sauna Streets: Interstate 5 runs parallel to the site. Dennis McCarthy Drive and Laval Road are fully imp-aved streets that pravide excellent access to the site.

Utilities: Water, gas and electric service the property.

H i ghest and B est The highest and best use is for the existing developnent to continue. Use Conclusim:

Current Stat us lrnpraved I ct with operational inn property

Valuation Analysis The direct income capitalization app-oach, along with the sales comparison approach, was used to develop an opinion of value of this parcel, which is subject to a ground lease. For reasons explained earlier in this report, the fee si mp e value of bcth the I and and bui I ding are being valued in this sectim.

Direct Income Capitalization Approach The direct income captalization approach is used to convert an estimate of a single-year's income expectancy into an i ndi cati m of value in one direct step b,' dividing the income estimate b,' an app-opriate rate. First, OJerall market capitalizatim rates for hosptality purchase transactims have been examined. See the table belcw.

Summry Appraisal Report Comrunity Facilities District No. 2000-l Tejon Ranch Public Facilities Financing Authority 2007-ASpecial Tax Bonds Tejon Industrial Corrplex Public lrrprc:werrents County of Kern, State of California Bruce W. Hull & Associates, Inc. Page 70 Summary of Hospitality Comparables NOi/Av ailable No. of Sale Year Sale Price $/Room Cap. Room- No. Location Rooms Date Built ($) Unadj. Rate Night NOi l Comfort Inn (Reflagged 120 J un-07 1986 9, (X)(), (X)() 75,000 8. 7(5)6 $1&06 $791,200 to Rodeway Inn) 31558 Castaic Road, Castaic 2 Red Lion Hotel 165 jul-06 1974 10,600,000 64,242 7.94% $13.98 $842,104 2400Camino Del Rio, B ai

3 La Quinta Inn & Suites 65 J un-06 N/A 4,576,000 70,400 N/A N/A N/A 8858 Spectrum Pkwy. Bakersfield

4 Garden Suite Inn 67 Mar-Oi' 1996 4,220,000 62,985 JQOQJ6 $1&06 $441,742 23 lOW ible Road B al

5 Quality Inn (former 66 Oct-06 1988 3,750,000 56,818 N/Avail $14.53 $350,000 G uesthouse Inn) 2514White Lane Bakersfield 6 Howard Johnson 150 jan-06 1965 5,375,000 35,833 I l.39¼ $10.30 $563,717 2700W hite Lane B al

Hospitality capitalizatim rates for canparable properties were exarrined and found to range fran 7. 94 percent to 11 . 3 9 percent. A capital i zati m rate of 8. 5 percent was chosen, refI ecti ng the subject's similarity in location to Sale No. 1 in the table alxNe, its flag affiliatim and its relatively young age. The market-derived captalization rate was then appied to a market­ derived net operating income per available roan. Although units of measure such as ADR, occupancy and revenue per available room ("RevPAR") are common in hospitality appraisal, the net operating income was avai I able for al I canparabl es. Ratherthan reconstruct R evPA R, which is normally gross revenue per avai I able roan, I am using the measure "net operating income per available room-night." The net operating income per available room-nighttalkes the net operating income for the calendar year prior to sale and divides it b,' annual room-nights (the property's rooms multiplied b,' 365). See chart belavv for analysis.

Summry Appraisal Report Community Facilities District No. 2000-l Tejon Ranch Public Facilities Financing Authority 2007-ASpecial Tax Bonds Tejon Industrial Corrplex Public lrrprc:wements County of Kern, State of California Bruce W. Hull & Associates, Inc. Page 71 Net Operating Incomes for Comparables, Subject

Net Operating NOi /,'\vailable Room- Comparable Income Total Rooms Night Contort I nn,Castaic $791,200 120 $18.CX5 Red Lion lnn,llakersfield $842,104 165 $13.98 Garden S uites,llakersfield $441,742 67 $18.CX5 Quality lnn,llakersfield $350,000 66 $14.53 Ram1da Suites,llakersfield $665,850 80 $22.80 Ho.vardJ ohnson,llakersfield $563,717 150 $10.30 Mean: $16.29 Median: $16.30

Selected NOi /,'\vailable Subject Indicated NOi Total Rooms Room-Night Best Western $407,340 62 $18.00

Given the suqject's freeway-adjacent positim, intericr ccrridor design, a net operating inccrne ~r available room-night of $18 was selected, indicating a market net o~rating income of $407,340 frr a p-o~rty of this size. I have reviewed the actual gross income from this p-o~rty' s o~rations and its inferred net o~rating income appeared to be lcw.

Using a market-derived averall capitalization rate of 8.5 ~rcent and a market-derived net operating inccrne of $407,340 (based on the subject's room count), I can infer a value of

$4,792, CXX) for the fee simple interest of the Iand and bui Iding.

Sales Comparison Approach I have also developed an opnion of value based on the sales comparison app-oach. An examination of the sales comparables renders a range from $35,833 to $83,500 ~r room Eliminating the Heward Johnson, whose sale price is anomalous and age and cmdition most dissinilar to the suqject, leaves a more meaningful range of between $56,818 and $83,500 ~r room. The suqject' s interior ccrridor design, young age, good cmditim and su~rior visibility from/,3.ccess to 1-5 at cmfluence of 1-5 and Highway 99, put up..vard p-essure m the indicated value ~r room Suqject' s sini larity to Sale 1, with its proxi nity to similar traffic counts on 1-5,

Summry Appraisal Report Comrunity Facilities District No. 2000-l Tejon Ranch Public Facilities Financing Authority 2007-ASpecial Tax Bonds Tejon Industrial Corrplex Public lrrprc:werrents County of Kern, State of California Bruce W. Hull & Associates, Inc. Page 72 and Sale 2, with its interior corridor, suggest an indicated value of $75,000 per roorn. Thus $75,000 multiplied b,' the subject's 62 rooms equals an indicated value of $4,650,000.00

Value Conclusion The sales comparison approach indicates a fee simpe value of $4,650,000. The income capitalization approach indicates a value of $4,792,000. The income captalization approach was given greatest weight in deterrri nation of market ground rent as the typ cal investor in this market would likely place more weight on cash flavvs than price per room. The final opnion of value forthe fee simple estate is $4,790,000.

The fdlavving is a summary of properties and indicated values in this section:

Section V Properties APN Classification Lot Size (acres) BuldingSize(SF) Indicated Value Hos11italiJy 238-450--33 Best Western 4.69 30,745 $4,790,000

Restaurants 238-450--27 McDonald's 1.08 3,530 $2,700,000 238-450--28 Starbucks 1.21 2,137 $1,400,000 238-450-43 Panda Express 0.75 2,400 $1,830,000 238-450-45 I n--N-Out 1.80 3,980 $3,000,000

Retail Pad 238-450-46 Chevron Petro 111 4.75 5,200 $2,500,000

Industrial 238-450-44 FiveWestParcel LLC 29.06 606,000 $2,500,000

Totals: 43.34 653,992 $18,720,000

The estimated value of Section V, as referenced ai::xNe, has been rounded to $18,700,000.

Summry Appraisal Report Comrunity Facilities District No. 2000-l Tejon Ranch Public Facilities Financing Authority 2007-ASpecial Tax Bonds Tejon Industrial Corrplex Public lrrprc:werrents County of Kern, State of California Bruce W. Hull & Associates, Inc. Page 73 SECTION VI AGRICULTURE LANDS SOUTH OF TEI ON INDUSTRIAL COMPLEX-WEST

This section deals with undeveloped lands located south of the California Aqueduct and north of the Petro Travel Plaza plus portions of the Tejon Industrial Cornpex. The lands are zoned Agriculture with the lands north of the Petro Travel Plaza and the Tejon Industrial Complex part of an allwial plain and subject to flooding.

Property pite Description Location: North of Parcels 1 and 2 of Tejon Industrial Complex and south of CaliforniaAqueduct, Kern County. Owner: Tejon Ranchcorp Assessor's Parcel 241-230-28, 241-230-39, 241-230-34, 241-250-01 and 238-450-49. No.: Area: The gross acreage of the site total 1,436 acres. A portion of APN 238- 450-02 is part of the Habitat Preservation Plan and the Tecuya Creek Restoration area and no specific acreage is avai I able; hcwever, no value is attributed to this portion. The balance of the lands north of the Parcels 1 and 2 ofTejon Industrial Complex are located in a flood plain as well. These total 174. 93 acres and no value is attributed to these I ands as wel I. The lands south of the California Aqueduct total 1,261.14 acres. A portion of these lands (160 acres) is subject to a conservation easement and are excluded frorn the valuation. Therefore, I arn valuing 1,101 acres.

ShapeiB oundaries: The site is irregular in shape. For descri p:ive purposes only the lands that are attri buted a val ue wi 11 be descri bed (the I ands south of the aqueduct). The boundaries of these I ands are I nterstate 5 to the east; California Aqueduct to the north, and undeveloped lands to the west and south. Topography: The site is level. Zoning: The zoning of the subject property is Agriculture. E nvi ronrnental pd Is I arn not aware of any envi ronrnental reports that have been prepared. An Issues: assurnp:i on of this report is that there are no envi ronrnental or taxi c issues, which would impair development of the site. I arn not aware of any soils reports that have prepared on this site. An assumption of this report is that soi Is are adequate to support the highest and best use of the property.

Summry Appraisal Report Comrunity Facilities District No. 2000-l Tejon Ranch Public Facilities Financing Authority 2007-ASpecial Tax Bonds Tejon Industrial Corrplex Public lrrprc:werrents County of Kern, State of California Bruce W. Hull & Associates, Inc. Page 74 Streets: Interstate 5 runs parallel to the site. There are dirt service roads on site with Grapevine Exit immediately south of the suqject.

Utilities: Water, gas and electric would need to be extended to the p-operty.

Hi ghest and Best The highest and best use is to hold for future development. Use Conclusim:

Valuation The methodology utilized in the app-aisal of these lands is cmsidered to be the Sales Comparison App-oach. This has been defined earlier in this report. The sales that are considered most helpful are summarized belavv.

Land Sale Summary Sale Price $/Acre $;SF No. Location Size (Acre) Sale Date ($) Unacjjusted Adjusted 1 White River Ranch, 847.29 J ul-2006 1,200,000 1,416.28 N /,'\ Ducor, CA 93218 APN: 344-050--004

Corrments: Fenced and cross-fenced foothill grazing land. Marketed at sale as able to support 70cC>Ns,talves. White River and Coho River traverse property. Property contains rolling hills to steeper terrain. Property said to have year-mund ponds and good ranch roads throughout 2 14091 Higfway 33, 1,100.00 Aug-2006 1,100,000 1,000.00 N /,'\ Lost Hills, CA 93249 Corrments: Property is located 12 miles west of 1-5 and State Highway 46. Land contains five contiguous parcel~ Property is part of a doughnut-shaped exclusion area inside the Berrenda Mesa Water District and suffers significant challenges in respect to irrigation. Well water under property contains ancient marine and oi I deposits and would be useable only with cos~y onsite water treatrnentfacilitie~ Property was said to be have been sold in August 2006, although we could not confirm sale with assessor, Berrenda Mesa Water Di strict or broker. Attempts to contact o..vner were unsuccessful, as wel I.

3 33294 Ruth Hill 1,419.03 J un-2006 2,175,000 1,532.74 N /,'\ Road, Squaw Valley, CA 93646

Corrments: Property was marketed at tirre of sale as cattle ranchland in Sierra foothills. Fenced and cross-fenced with cattle­ handling facilitie~ Property also countains two houses (1,878 and 1,332 square feet, a l,920square-foot barn and 1,500 square­ foot equi prrentftack storage. Property said to have good water acces~

The comparable market data support a cmclusion of $1,300 per acre fee simple. This then

Summry Appraisal Report Community Facilities District No. 2000--l Tejon Ranch Public Facilities Financing Authority 2007-ASpecial Tax Bonds Tejon Industrial Corrplex Public lrrprc:werrents County of Kern, State of California Bruce W. Hull & Associates, Inc. Page 75 cal cul ates as fol I cws:

1,101 acres x $1,300 per acre= $1,431,300

The subject property is suqject to a "back-up'' tax from the CFO. The likelihood of this occurring may be remote due to the structure of the RMA and as well as the land uses within the CFO and the current status of the developed taxes that service the debt. The market would view this as a risk in the sense that these lands are subject to a CFO tax, while the comparables represent fee si rnpl e unencumbered parcels. Therefore, an adjustment needs to be reflected for this potential obi i gati on. I n quantifying this, I have assumed that there is a 5 percent probabi Ii ty of this special tax occurring.

The assum[Xi ons and cal cul ati ons are as fol Icws:

Assumptions: • Undeveloped Iand tax of $944 per acre • Ef/4 bond i nterest rate • 25-year term • Present worth factor of 12. 78

Cal cul ati ons:

$944 per acre x 12. 7s3 = $12,(Xi4

@ 5% probability =$603 per acre adjustment

The final value conclusion is calculated as:

$1,300 per acre -fee simple ( $603) per acre - adj ustment for CFO

$696.78 per acre -subject to CFO Special Tax

$697 per acre x 1, 101 acres = $767,397 (say) $767,000

8 Present worth of 1 per period at 7¥, for 30years.

Summry Appraisal Report Comrunity Facilities District No. 2000-l Tejon Ranch Public Facilities Financing Authority 2007-ASpecial Tax Bonds Tejon Industrial Corrplex Public lrrprc:werrents County of Kern, State of California Bruce W. Hull & Associates, Inc. Page 76 APPRAISAL REPORT SUMMARY

The app-aisal assignrrent invdved several tasks. As a result the report was divided into six sections for reporting purposes.

Section I was the appraisal of two existing industrial buildings. Construction was competed in 2001 and 2003 and bcth of those are new, good quality buildings designed for distribution of goods. I have considered the Cost, lncorre and Sales Comparison App-oaches to value in the appraisal of these properties. I concluded at an estimate of value of $110,CXX),CXX), with the most emphasis given to the Sales Comparison Approach.

Section 11 is the reporting of Assessed Values for parcels that are imp-cwed and located east and west of Interstate 5. These parcels have i mp-averrents ranging from a gas station to truck stops. I have reported the Assessed Value only and have not concluded at an independent opinion of value. The total Assessed Value forthese properties is $23,640,841.

Section 111 i s the app-ai sal of 16 acres of I and Iocated east of I nterstate 5 and northwest of the Section 11 p-operties. These lands have predominant frontage along Interstate 5 and at a freeway onpff ramp. I have used the Sales Comparison Approach in arriving at a $5,567,CXX) market value.

Section IV is the app-aisal of 100 acres of land remaining to be developed in the Tejon

I ndustri al Campi ex. For this valuation, I uti Ii zed a discounted cash-fl ON analysis, which took into consideration the finished lot value, the cost to have the lands developed to a finished site, the indirect costs associated with such a develor:;rnent, and the risk and profit comrrensurate with such a project. I have concluded at $12,585,CXX).

Section V i s the app-ai sal of the fol Iavvi ng parcel s:

Summry Appraisal Report Comrunity Facilities District No. 2000-l Tejon Ranch Public Facilities Financing Authority 2007-ASpecial Tax Bonds Tejon Industrial Corrplex Public lrrprc:werrents County of Kern, State of California Bruce W. Hull & Associates, Inc. Page 77 Sectim V Properties APN Classification Lot Size (acres) BuldingSize(SF) Indicated Value Hos11italiJy 238-450--33 Best Western 4.69 30.745 $4.790.000

Restaurants 238-450--27 McDonald's 1.08 3,530 $2,700,000 238-450--28 Starbucks 1.21 2,137 $1,400,000 238-450-43 Panda Express 0.75 2,400 $1,830,000 238-450-45 I n--N-Out Burger 1.80 3,980 $3,000,000

Retail Pad 238-450-46 Chevron Petro 111 4.75 5,200 $2,500,000

Industrial 238-450-44 FiveWestParcel LLC 29.CX5 6CX5,000 $2,500,000

Totals: 43.34 653,992 $18,720,000

I have concluded an aggregate value, rounded, of $18,700,000 for the combined properties.

Section VI relates to 1,101 acres located south of Tejon Industrial Complex-West and is zmed for Agriculture. I have used the Sales Comparism Approach in the valuatim of the lands. The concluded value is $767,000.

All analyses, valuations, and opinions stated within this report are suqject to the Assumptions and Li rri ting Conditions and the Appraiser's Certification as of the th day of August, 2007.

A summation of values is in the table belcw.

Section Appraised Value Assessed Value I $110,000,000 II $23,640,841 Ill 5,567,000 IV 12,585,000 V 18,700,000 VI $767,000 $147,619,000 $23,640,841

Summry Appraisal Report Comrunity Facilities District No. 2000-l Tejon Ranch Public Facilities Financing Authority 2007-ASpecial Tax Bonds Tejon Industrial Corrplex Public lrrprc:werrents County of Kern, State of California Bruce W. Hull & Associates, Inc. Page 78 APPRAISE R'S CERTI Fl CATI ON

I certify that to the best of my knavvl edge and bel i ef:

1. The statements of fact contained in this report are true and correct.

2. The reported analyses, opnions, and conclusions are lirrited only 0\/ the reported assum[Xions and lirriting conditions, and are my personal, unbiased professional analyses, opinions, and conclusions.

3. I have no present or prospective interest in the property that is the suqj ect of this report and I have no personal interest or bias with respect to the parties involved.

4. My compensation is nct contingent upon the reporting of a predetermined value or direction in value that favors the cause of the client, the amount of the value estimate, the attainment of a stipulated result, or the occurrence of a subsequent event.

5. This appraisal was not based on a requested mini mum valuation, a specific valuation, or the apprCNal of a loan.

6. My analyses, opnions, and conclusions were developed, and this report has been prepared in conformity with the Uniform Standards of Professional Appraisal Practice.

7. I have made a personal inspection of the property that is the subject of this report.

8. Jeremy Bagctt pravi ded significant professi anal assistance in this appraisal assignment.

9. The reported analyses, opinions, and conclusions were developed, and this report has been prepared, in conforrrity with the requirements of the Code of Professional Ethics and the Standards of Professional Appraisal Practice of the Appraisal Institute.

10. The use of this report is suqj ect to the requirements of the Appraisal I nsti tute relating to review 0\/ its duly authorized representatives.

11. As of the date of this report, Bruce W. H ul I, has completed the requirements of the continuing education program of the Appraisal Institute.

BruceW. Hull, MAI State Certified General Real Estate Appraiser (AG004964)

Summry Appraisal Report Comrunity Facilities District No. 2000-l Tejon Ranch Public Facilities Financing Authority 2007-ASpecial Tax Bonds Tejon Industrial Corrplex Public lrrprc:wements County of Kern, State of California Bruce W. Hull & Associates, Inc. Page 79 ADDENDUM TRPFFA CFO 2000--1 Estimated Costs to Complete Assumptions as of August 31, 2007 Proforma JobCostCTD CTC Job No. Job Description 10/14/2006 8/31/2007 10/31/2006 % Complete

l. Roadway Facilities 24,903,301 20,479,888 4,423,413 82.2% 2. I-5/laval Road Interchange 748,151 748,151 0 100.0Yo 3. Waste Water Treatment Facility 553,991 319,691 234,300 57.7% 4. Water Reservor Facility 0 0 0 0.OYo 5. Water Transmission Mail 832,507 649,823 182,684 78.1% 6. Traffic Signals 0 0 0 0.OYo 7. FreStation 3,073,425 3,073,425 0 100.0Yo 8. S econdaryWater Source fcr Fire Protectim 530,158 530,158 0 100.0Yo 30,641,533 25,801,136 4,840,397 84.2%

Roadway Facilities TIW0005 (800) Petro Travel Plaza 8,900,823 8,900,823 0 100.0Yo TIW0006 (801) TIC Phase 2 2,072,939 2,072,939 0 100.0Yo TIW0007 (802) TIC Ph 2 Infrastructure (IKEA) 5,992,129 5,992,129 0 100.0Yo TIW0009 (805) TIC -Spee Buikling-#1 (Build to Suit) 74,889 74,889 0 100.0Yo TIWOOl l (818) TIC Phase 3 764,236 764,236 0 100.0Yo TIWOOl 2 (833) Laval Road 702,458 192,769 509,689 27.4% TIWOOl 3 (834) Dennis McCarthy Drive 1,168,565 490,881 677,684 42.0Yo TIWOOl 4 (835) Dennis McCarthy Drive -Ext South 1,389,049 949,943 439,106 68.4% TIWOOl 5 (836) Dennis McCarthy Drive -Ext Ncrth 646,186 642,361 3,825 99.4% TIWOOl 6 (837) Tejm lnd.Jstrial Drive -Ext North 833,773 141,454 692,319 17.0Yo TIWOQ77 Tejm lnd.Jstrial Drive -ExtS outh 285,000 0 285,000 0.OYo TIW0023 TIC West Camp.JS 1,946,398 130,608 1,815,790 6.7% TIW0025 F re S talion S ur.pcrt lnfras tructure 126,856 126,856 0 100.0Yo 24,903,301 20,479,888 4,423,413 82.2%

1-5 Interchange TIWOOl 9 (840) 1-5 Interchange 748,151 748,151 0 100.0Yo 748,151 748,151 0 100.0Yo

Wastewater Treatment Facility TIWOOl 7 (838) Sewage Treatment Plant-West 553,991 319,691 234,300 57.7% 553,991 319,691 234,300 57.7%

Water Reservoir Facility Included in earty RoaCMlay Facilities 0 0 0.OYo 0 0 0 0.OYo

Water Transmission Main TIWOOl 8 (839) Water Filtration Plant 832,507 649,823 182,684 78.1% 832,507 649,823 182,684 78.1%

Traffic Signals Included in earty RoaCMlay Facilities 0 0 0 0.OYo

Fire Station TIW0003 (831) TIC F re S tationt, heriff Subs talion 2,918,102 2,918,102 0 100.0Yo TIW0026 Hangar /KCFD 155,323 155,323 0 100.0Yo 3,073,425 3,073,425 0 100.0Yo

Secondary Water Source TCWD Acq.ieductTumout 530,158 530,158 0 100.0Yo 530,158 530,158 0 100.0Yo

30,641,533 25,801,136 4,840,397 84.2%

CTO Remaining % Com12lete Not a Part of the CFO TIWOOOl (848) TIC West Entitlement 1,887,761 1,887,761 0 100.0Yo Corrplete TIW0033 TIC West General Planning 158,000 22,901 135,099 14.5% Ongoilg entitlement corrpliance wcrk TIW0002 (821) Starbucks - Buildilg / Ons ites 470,375 470,375 0 100.0Yo Corrplete TIW0004(829) Tejm Demmy, Phase II-Bldg 5West 1,100 1,100 0 100.0Yo Corrplete TIWOOl O (817) Tecuya Creek 47,374 47,374 0 l 00.0Yo Corrplete TIW0020 (846) Tecuya Creek Section 7 Ccnpliance 79,986 60,045 19,941 75.1% Corrplete t,.,i 4th Qtr 2007 TIW0030 Actlitimal Pylon S igi 0 313,388 (313,388) 0.OYo To be reini:Jursed t,.,i tenants with panels m sigi TIW0031 ln--N-Out S itewcrk 0 28,907 (28,907) 0.OYo To be reini:Jursed by ln--N-Out TIW0032 ln--N-Out ;PETRO Corrrmn Area 0 453,973 (453,973) 0.OYo To be reini:Jursed by ln--N-Out & Petro TIW0024 Drailage Repairs 0 0 0 0.OYo Costs were reiITTJUrsed t,.,i Petro TIW0027 Pad 4 Onsites (Tejm Dernndy LLC work) 124,068 124,068 0 100.0Yo Onsites TIW0028 Pad 5 Onsites (Tejm Dernndy LLC work) 990,664 990,664 0 100.0Yo Onsites Total Entitlement /Cons !ruction Cos ts 3,759,328 4,400,556 (641,228) 117.1% Nctes regarding preceding Costs to Complete

There has been expended $2,179,934 of costs that are CFO eligible. The prorx:ised bond (CFO 2001-01) 2007-A project fund is estimated at $5,400,000, leaving $3,220,066 in remaining costs. The difference between $4,840,397(Cost to complete) and $3,220,066 is $1,620,331 and will be the borne b,1the developer.

On the rx:irtion "Not as Part of the CFO" there is a ($641,228) amount which represents the fact that T ej on wi 11 be reimbursed for certain costs they have expended OJ er and abOJe the CF D. I n essence, there is no remaining costs in the Section.

For purrxises of the DCF we have utilized $1,600,000 as Development Costs. ASSUMPTIONS MATRIX Tejon Industrial Complex Public Improvements CF D 2000-1, Bond Series 2007-1 ---- Parcel's Land-Use Designations ----

PLANNING NET PRICE PRODUCT TYPE AREA ACRES / SQ. FT. lndu strial-Distributior APN238-450--07 35.47 2.00 APN238-450--07 30.00 2.00 Industrial-Distribution Totals 65.47 lndust--Campus APN238-460--01 8.49 5.00 APN238-460--02 2.49 3.00 APN238-460--03 3.23 3.00 APN238-460--05 1.87 3.00 APN238-460--06 1.37 3.00 APN238-460--07 1.34 3.00 APN238-460--08 1.30 3.00 APN238-460--09 1.27 3.00 APN238-460-10 1.23 3.00 APN238-460-11 1.20 5.00 lndust--Campus Totals 23.79 Comm-Campus APN238-450-34 5.78 12.00 APN238-450-35 7.53 12.00 Comm-Campus Totals 13.3 Retail Pad 0.85 15.00 0.58 15.00 Retail Pad Totals 1.43 Grand Total 104.00

Gen Dev Costs (before finance costs) ...... 1,620,000

Inflation Rates Annually Appreciation of Property ...... 2.00% Cost Increases ...... 1.00%

Indirect Costs AdminJ:onting ...... 2.00% Sales & Marketing Costs ...... 2.00% Taxes (See schedule) -- Other Assumptions -- Annual Discount Rate ...... 18.00% Each time period =Annual

CONCLUSIONS Present Value of the Property (millions) ...... $12.585 ABSORPTION SCHEDULES Annual

Potential Products LOTS /ACRES ABSORBED PLANNING NET ------PERIODS------ACRE PRODUCT TYPE AREA ACRES 2 3 4 5 TOTALS Industrial-Distribution APN238-450--07 35.471 35.471 35.471 APN238-450--07 30.00 3o.ool I I II 30.00 I Industrial-Distribution Totals I 65.4711 35.471 30.001 I I II 65.471 I ndu st--Campu s APN238-460--01 8.49 8.49 8.49 APN238-460--02 2.49 2.49 2.49 APN238-460--03 3.23 3.23 3.23 APN238-460--05 1.87 1.87 1.87 APN238-460--06 1.37 1.37 1.37 APN238-460--07 1.34 1.34 1.34 APN238-460--08 1.30 1.30 1.30 APN238-460--09 1.27 1.27 1.27 APN238-460-10 1.23 1.23 1.23 APN238-460-11 1.20 1.20 1.20 I lndust--Campus Totals I 23.7911 17.281 2.71 I 3.80 23.791 Comm-Campus APN238-450-34 5.781 5.781 5.781 APN238-450-35 7.53 7.531 7.53 I Comm-Campus Totals 13.31 II 5.781 7.531 13.311 !Retail Pad 0.851 0.851 I ~::!II o.58I 0.58 I I Retail Pad Totals 1.4311 o.85I o.58I 1.431 I ACRE GRAND TOTALS 104.0011 59.381 40.821 3.801 104.00 I

Bruce W. Hull, MAI GROSS REVENUES MILLIONS

Potential Products PLANNING PRICE NET ------PERIODS------PRODUCT TYPE AREA /SQ.FT. ACRES 2 3 4 5 TOTAL Indus trial-Distribution AP N238-450-07 2.00 35.471 3.0901 3.0901 AP N238-450-07 2.00 30.00 2.6141 I I II 2.614 I Industrial-Distribution Totals! I 65.4711 3.0901 2.6141 I I II 5.7041 lndust--Campus AP N238-460-01 5.00 8.49 1.849 1.849 AP N238-460-02 3.00 2.49 0.325 0.325 AP N238-460-03 3.00 3.23 0.422 0.422 AP N238-460-05 3.00 1.87 0.244 0.244 AP N238-460-06 3.00 1.37 0.179 0.179 AP N238-460-07 3.00 1.34 0.175 0.175 AP N238-460-08 3.00 1.30 0.170 0.170 AP N238-460-09 3.00 1.27 0.166 0.166 AP N238-460-10 3.00 1.23 0.161 0.161 AP N238-460-11 5.00 1.20 0.261 0.261 I lndust--Campus Totals! I 23.7911 3.1021 0.3541 0.497 3.9531 Comm-Campus AP N238-450-34 12.00 5.781 3.0211 3.0211 AP N238-450-35 12.00 7.53 3.9361 3.936 I Comm-Campus Totals 13.3111 3.0211 3.9361 6.9571 !Retail Pad 15.00 0.5551 0.5551 I 15.00 ~:~!II 0.3791 0.379 I I RetailPadTotals 1.4311 o.5551 0.3791 0.9341 I GRAND TOTALS 104.00 II 9.769 I 7.283 I 0.497 17.549 I

Bruce W. Hull, MAI CASH FLOW ANALYSIS OF THE PROJECT

:'ERIO- 1 2 3 4 5 TOTAL PROJECT REVENUES: Revenues $9.769 $7.283 $0.497 $17.549 Adjusted Revenues $9.965 $7.577 $0.527 $18.069 Price Inflation (Annually) 2.0036 PROJECT COSTS: DIRECT COSTS Direct Construction Costs (W /OUT Land): Total Backbone costs $1.620 $1.620 Cost Inflation (Anually) 1.0036 Cost Inflation - Annual 1.0036 1.010 1.020 1.030 1.041 1.051 Total Adjusted Direct Costs $1.636 $1.636

INDIRECT COSTS Ad Valorem Prop Tax $0.187 $0.140 $0.004 $0.331 CFD Tax $0.128 $0.014 $0.004 $0.146 Additional Indirect Costs $0.199 $0.152 $0.011 $0.362 Admin.~onting. 2.0036 $0.199 $0.152 $0.011 $0.361 Sale & Marketing 2.0036 $0.199 $0.152 $0.011 $0.361 Total Indirect Costs $0.913 $0.609 $0.040 $1.562

TOTAL COSTS $2.549 $0.609 $0.040 $3.198 CASH FLOW ANALYSIS Nominal Dollars: Cash Flow-Year $7.416 $6.968 $0.487 $14.871 Cumulative $7.416 $14.384 $14.871 $14.871 $14.871 $14.871 Mid Annual Period Discount Factor 0.500 1.500 2.500 3.500 4.500 Discount Factor: 18.0036 0.9206 0.7801 0.6611 0.5603 0.4748 Discounted Cash Flow $6.827 $5.436 $0.322 $12.585 Cumulative $12.585 $6.827 $12.263 $12.585 $12.585 $12.585

Bruce W. Hull, MAI QUALIFICATIONS OF BRUCE W. HULL, MAI

Business Locations: 1056 E. Meta Street, Suite 202 Ventura, California 93001 (805) 641-3275 * Facsimile (805) 641-3278 E-Mail Address [email protected]

Direct Correspondence to Ventura Location

115 E. Second Street, Suite 100 Tustin, California 92780 (949) 581-2194 * Facsimile (949) 581-2198

Bruce W. Hull & Associates, Inc. is an appraisal firm that provides a wide variety of appraisal assignments for public agencies, developers and financial institutions. The principal, Bruce W. Hull, MAI, has been in the appraisal field since graduation in 1969 from Westmont College, Santa Barbara. After being employed by the Ventura County Assessor's Office for five years, he established an appraisal company in Orange County in 1974. In August of 1995 he established an office in Ventura while maintaining an Orange County location. While most of the appraisal assignments are in Southern California, assignments have been completed in areas from San Francisco/Bay Area and Lake Tahoe to San Diego. The appraisal assignments completed have been diverse in nature, including such property types as large masterplanned developments, shopping centers, large retail uses, and mitigation land. A brief summary of the more challenging assignments is given on the following pages. Master-planned Development These are typically more than 1,000 acres in size and have a wide variety of residential product, often ranging from condominiums to large estate type of properties. In addition, there is often a commercial use within the development. I have been involved in the following projects. Lake Sherwood, Hidden Valley Wood Ranch, Simi Valley Rancho San Clemente, San Clemente Towne Center, Rancho Santa Margarita Rancho Trabuco North and South, Rancho Santa Margarita Hunters Ridge, Fontana The Corona Ranch, Corona Mountain Cove, T emescal Mountain Gate, South Corona The Foothill Ranch, Corona Orangecrest, City of Riverside Aliso Viejo, County of Orange Talega Valley, City of San Clemente/County of Orange Olay Ranch, City of Chula Vista Retail Use Consultant to City of Long Beach regarding a 30 acre site (Long Beach Naval Hospital) which the city was acquiring from the U.S. Navy for inclusion in a 100 acre shopping center site. Towne Center, Rancho Santa Margarita, is a master-planned project, which contains two shopping centers (Towne Center, 160,000 SF plus a Target Store, 122,000 SF; Plaza Antonio, 165,000 SF). Mission Grove, City of Riverside, is a 395,362 SF center which included a K-Mart Department Store among the major tenants. Victoria Gardens Masterplan was a proposed mixed use project consisting of3,065 acres ofland which included a mixture ofresidential (2,150 acres); commercial (33 5 acres ofwhich 91.9 acres was a regional center site); schools; parks; and open space for the remainder of the lands. Menifee Village, Riverside County, is a 1977 acre masterplanned development which had approvals for 5,256 units. The assignment included the valuation of Planning Area 2-7 which was a commercial site that had been developed with a Target Store, Ralph's Market, and in-line stores (190,000 SF with eventually being a 257,000 SF center). Mitigation Lands These assignments involved valuing lands that are considered mitigation lands which are often acquired by public agencies or nonprofit organizations. Bolsa Chica, Huntington Beach, a 42-acre site which was part of a larger wetlands conservation program. This particular acreage was unique since it was subject to "tidal flushing" and had both fresh and saltwater impacting the lands. This assignment was completed for Metropolitan Water District. San Joaquin Marsh, City of Irvine, consisted of approximately 289 acres of wetlands which were acquired for use as a "buffer" zone by the Irvine Ranch Water District. Eagle Valley, a 1072- acre parcel near Lake Matthews in Riverside County, was acquired by Metropolitan Water District for use as a water treatment plant and buffer zone. Poormans Reservoir, Moreno Valley, a 38-acre site acquired by the City of Moreno Valley for preservation/open space use. Assessment Districts/Bond Issues Have been involved in the appraisals of the following Bond Issues regarding Community Facilities Districts and/or Assessment Districts. (This represents a partial list of assignments completed from 1990 thru Present.) CFD No. 9 (Orangecrest - Impr. Areas I, 3 & 5); City of Riverside CFD No. 2000-1 (Crosby Estate@ Rancho Santa Fe); Solana Beach CFD No. 2001-01 (Murrieta Valley U.S.D.);Murrieta CFD No. 90-1 (Lusk-Highlander); City of Riverside Otay Ranch SPA I- CFD No. 99-2; City of Chula Vista CFD No. 7 (Victoria Grove); County of Riverside CFD No. 10 (Fairfield Ranch); City of Chino Hills CFD No. 2000-1; Tejon Industrial Complex; Lebec CFD No. 99-1; Santa Margarita Water District CFD No. 97-3; City of Chula Vista CFD No. 2 (Riverside Unified School District); City of Riverside CFD No. 89-1; City of Corona Lake Sherwood AD. Refunding; County of Ventura CFD No. 9; City of Chino Hills CFD NO. 88-12; City of Temecula CFD No. 90-1 (Refunding); City of Corona AD. No. 97-1-R; City of Oxnard AD. No. 96-1; Valley Center Municipal Water District; San Diego County AD. No. 96-1; City of Oxnard CFD No. 88-1 (Saddleback Valley Unified School Dist.); Rancho Santa Margarita CFD No. 89-2 (Saddleback Valley Unified School Dist.); Rancho Santa Margarita CFD No. 89-3 (Saddleback Valley Unified School Dist); Rancho Santa Margarita Centex AD. No. 95-1; City of Corona Coyote Hills AD. No. 95-1; City of Fullerton Sycamore Creek AD. No. 95-1; City of Orange Prop. CFD No. 2 (Riverside Unified School District); City of Riverside CFD No. 91-1; City of Rancho Cucamonga Prop. CFD No. 2; City of Chino CFD No. 9; County of San Bernardino AD. No. 89-1; City of Corona CFD No. 87-1 (Series B); City of Moreno Valley CFD No. 90-1; City of Corona CFD No. 89-1; (Saddleback Valley Unified School District); Orange County AD. No. 96-1; City of Oxnard AD. Nos. 86-3, 87-1 and 89-1 (Refunding); City of Oxnard CFD No. 90-1; City of Corona CFD No. 1 (Refunding); City of Jurupa CFD No. 88-12; City of Temecula

Partial List of Clients Have completed appraisal assignments for a wide variety of clients. A partial list of these includes the following. Anaheim City Unified School District Bank of America NT & SA Bank of Montreal Bear, Steams & Co., Inc. Best Best & Krieger LLP (Law Firm) Carpentaria Valley Unified School District Chino Unified School District Citicorp, N.A City of Brea City of Chino City of Chino Hills City of Chula Vista City of Colton City of Corona City of Fullerton City of Huntington Beach City of Jurupa City of Mission Viejo City of Moreno Valley City of Orange City of Oxnard City of Rancho Cucamonga City of Riverside City of San Bernardino City of San Marcos City of Temecula Coast Federal Bank Colton Joint Unified School District County of Los Angeles County of Orange County of Riverside County of San Bernardino County of Ventura Downey Savings and Loan Federal National Mortgage Association (FNMA) Federal Deposit Insurance Corporation (FDIC) Fieldman, Rolapp & Associates (Financial Consultants) Irvine Ranch Water District Irvine Unified School District Jurupa Community Services District Metrobank Metropolitan Water District Meserve, Mumper & Hughes (Law Firm) Munger, Tolles & Olson LLP (Law Firm) Murrieta Valley Unified School District Rialto Unified School District Riverside Unified School District Saddleback Valley Unified School District Santa Margarita Water District Sidley & Austin (Law Firm) Solana Beach Unified School District Southern California Edison Company Stone & Youngberg LLC (Bond Underwriters) Talmantz Aviation The Irvine Company Wells Fargo Bank Wells Fargo Mortgage Company Weyerhaeuser Mortgage Company Court Experience Qualified Expert Witness in the following courts: United States District Court/Central District of California, Los Angeles Los Angeles County Superior Court Orange County Superior Court Riverside County Superior Court Ventura County Superior Court Organizations Member - Appraisal Institute (No. 6894) Licenses Real Estate Broker - State of California Certified General Real Estate Appraiser - State of California (Certificate: AG004964) Guest Speaker (for) UCLA Symposium on Mello Roos Districts - 1988, 2001, and 2005 "Exploring the Rumors & Realities of Land Secured Debt in California" - Conference sponsored by Stone & Youngberg, LLC, bond underwriters, held in Los Angeles on January 15, 1992 "Appraisals for Land Secured Financing" presentation for Stone & Youngberg, LLC, bond underwriters, held at San Francisco Headquarters on March 5, 1998 Miscellaneous Member Advisory Panel to California Debt Advisory Commission regarding Appraisal Standards for Land Secured Financing (May, 1994) and (June 2004) Qualification Summary

JERE MY BAG OTT, APPRAISER, State License No. License#AR031250

EDUCATION: California State University, Northridge, Bachelor of Arts

Graduate Studies in Business, Pepperdine

Appraisal Institute, Associate Member

PROFESSIONAL: Eugene Fritz& Associates Appraiser, Los Angeles Retail, commercial, industrial, SBA, single-family

EvalueAppraisal Company Appraiser, Oxnard, California Single-family residential, small-income

Los Angeles Daily News Editor, staff writer, Los Angeles Wire editor, copy desk, business writer

United States Marine Corps APPENDIXC

GENERAL INFORMATION CONCERNING THE COUNTY OF KERN

There follows in this Official Statement a brief description of Kern County, California (the "County"), together with current information concerning the County's economy and governmental organization. Neither the faith and credit nor the taxing power of the Tejon Ranch Public Facilities Financing Authority (the "Authority"), the County, Tejon-Castac Water District (the "Water District"), the State of California or any political subdivision thereof is pledged to the payment of the 2007 Bonds. Except for Special Taxes, no other taxes are pledged to the payment of the 2007 Bonds. The 2007 Bonds are not obligations of the County or the Water District or general obligations of the Authority, but are limited obligations of the Authority issued by the Authority for the Tejon Ranch Public Facilities Financing Authority Community Facilities District No. 2000-1 (Tejon Industrial Complex Public Improvements) payable solely from Special Taxes and certain amounts held under the Fiscal Agent Agreement as more fully described in this Official Statement.

General Information The County was organized on April 2, 1866 from portions of Los Angeles and Tulare Counties as then constituted. The County is the southernmost county of the State's San Joaquin Valley. It covers 8,073 square miles, making it the State's third largest county in geographical size. The County's population is approximately 801,648 as of January 2007. The City of Bakersfield, with a population of approximately 323,213, is the County seat.

The County is organized as a general law county under State law. As required by State and federal mandate, the County is responsible at the local level for activities involving public welfare, health and justice (courts and jails) and for the maintenance of public records. The County also provides services such as law enforcement, fire protection and public works to cities within the County on a cost-recovery contract basis. The County also operates recreational and cultural facilities serving both the incorporated and unincorporated areas of the County.

Governmental Organization

The County is governed by a five-member Board of Supervisors. Supervisors are elected by district to serve four-year alternating terms at elections held every two years. Other elected offices are as follows: (i) the Assessor-Recorder, (ii) the Auditor-Controller-County Clerk, (iii) the District Attorney, (iv) the Sheriff­ Coroner-Public Administrator, and (v) the Treasurer-Tax Collector. All other departments are headed by appointed officials.

C-1 Population

The following table shows the population of State of California, the County and various incorporated cities within the County for 2003 to 2007. The County's population increased by approximately 91,825, or approximately 12.9%, over the five year period 2003 to 2007.

POPULATION KERN COUNTY AND INCORPORATED CITIES 2003-2007(!)

2003 2004 2005 2006 2007 Arvin 14,164 14,632 15,016 15,042 16,138 Bakersfield 269,146 282,182 296,846 312,087 323,213 California City 11,179 11,390 11,533 12,056 13,123 Delano 42,351 43,521 45,184 49,393 53,037 Maricopa 1,137 1,149 1,151 1,137 1,135 McFarland 10,720 11,238 12,214 12,545 12,686 Ridgecrest 26,877 27,255 27,493 27,530 27,944 Shafter 13,454 13,810 14,163 14,512 14,982 Taft 9,033 9,018 9,073 9,152 9,161 Tehachapi 11,450 11,771 11,930 12,617 13,063 Wasco 22,414 23,008 23,765 24,303 24,156 Unincorporated 277,898 283,416 287,151 289,116 293,010 Total County 709,823 732,390 755,519 779,490 801,648 State of California 35,691,534 36,252,878 36,743,186 37,195,240 37,662,518

Cl) As of January 1 for the year shown. Source: State of California, Employment Development Department: E-4 Population Estimates for Cities, Counties and State, 2001-2007 with 2000 DRU Benchmark

C-2 Employment

As of 2006, the County's labor force was 338,400, an increase of 2.2% over the County's labor force in 2005. The unemployment rate in year 2006 decreased to 7.6% from 8.4% in year 2005. The following table compares labor force, employment and unemployment for the County, the State of California and the United States for the years 2002 through 2006.

KERN COUNTY ANNUAL A VERA GE LABOR FORCE AND INDUSTRY EMPLOYMENT 2000 THROUGH 2006

Civilian Unemployment 1 3 Year Area Labor Force Employmeni > Unemployment'! Rat/ J 2002 Kern County 307,100 277,000 30,100 9.8% California 17,343,600 16,180,800 1,162,800 6.7 United States(4l 144,863,000 136,485,000 8,378,000 5.8

2003 Kern County 314,100 281,600 32,500 10.3% California 17,418,700 16,227,000 1,191,700 6.8 United States(4l 146,501,000 138,556,000 7,945,000 5.4

2004 Kern County 317,500 286,000 31,500 9.9% California 17,538,800 16,444,500 1,094,300 6.2 United States(4l 147,877,000 140,278,000 7,599,000 5.1

2005 Kern County 330,800 303,000 27,800 8.4% California 17,740,400 16,782,300 958,100 5.4 United States(4l 149,874,000 142,918,000 6,956,000 4.6

2006 Kern County 338,400 312,800 25,600 7.6% California 17,901,900 17,029,300 872,600 4.9 United States(4l 150,027,000 142,772,000 7,255,000 4.8

Cl) Includes persons involved in labor-management trade disputes. CZ) Includes all persons without jobs who are actively seeking work. 3 C) The unemployment rate is computed from unrounded data; therefore, it may differ from rates computed from rounded figures in this table. 4 C) Not strictly comparable with data for prior years. Source: California Employment Development Department, based on March 2007 benchmark and U.S. Department of Labor, Bureau of Labor Statistics.

C-3 Major Employers

The major employers in the County and their type of business are set forth in the following table:

COUNTY OF KERN MAJOR EMPLOYERS

Employer Type ofBusiness ARB, Inc. Construction Services City of Bakersfield Government Bakersfield Memorial Hospital Healthcare Bear Creek Productions General Farming Benjamin Picar Farm Labor Labor Contractor Chevron Texaco Oil and Gas Production China Lake Naval Weapons Ctr. Military Edwards Air Force Base Military Giumarra Farms General Farms Grimmway Farms General Farms Kern County Government Mercy Hospital Healthcare Kern Medical Center Healthcare Pando! & Sons General Farms San Joaquin Hospital Healthcare State Farm Insurance Insurance Agents, Brokers & Service Sun World, Inc. General Farming Wm. Bolthouse Farms, Inc. General Farming

Source: Greater Bakersfield Chamber of Commerce.

C-4 Indnstry and Employment

The largest industries in the County, in terms of the percentage of employment in each respective industry, are as follows:

COUNTY OF KERN ANNUAL A VERA GE EMPLOYMENT BY INDUSTRY 2007(!)

Percentage of Industry County Industry Employment(2) Employment Government 58,900 22% Agriculture 39,000 14 Retail Trade 29,000 11 Educational and Health Services 23,300 9 Professional and Business Services 25,600 9 Leisure and Hospitality 20,600 8 Construction 19,900 7 Manufacturing 12,900 5 Transportation, Warehousing and Utilities 9,400 3 Natural Resources and Mining 9,500 3 Other Services 6,700 2 Wholesale Trade 7,500 3 Finance and Insurance 5,800 2 Real Estate and Rental and Leasing 3,100 1 Information 2 500 1 273 700 100%

(1) Preliminary through March 2007. (2) Industry employment is by place of work; excludes self-employed individuals, unpaid family workers, household domestic workers, and workers on strike. Source: State of California Employment Development Department

C-5 The following table shows employment by industry group in the County of Kern from 2002 to 2006:

COUNTY OF KERN ANNUAL A VERA GE EMPLOYMENT BY INDUSTRY GROUP('l 2002 to 2006

2002 2003 2004 2005 2006 Civilian Labor Force 307,100 314,100 317,500 330,800 338,400 Civilian Employment 277,000 281,600 286,000 303,000 312,800 Civilian Unemployment 30,100 32,500 31,500 27,800 25,600 Civilian Unemployment Rate 9.8% 10.3% 9.9% 8.4% 7.6%

Total Farm 40,400 41,900 39,500 44,400 44,600 Total Nonfarm 205,100 207,100 211,800 222,100 232,600 Total Private 149,900 152,600 157,700 166,300 175,300 Goods Producing 32,800 34,200 36,300 39,100 42,200 Natural Resources and :Mining 7,900 8,000 8,100 8,500 9,300 Construction 13,300 13,600 15,400 18,200 20,000 Manufacturing 11,600 12,600 12,700 12,400 12,900 Service Providing 172,300 172,900 175,500 183,000 190,400 Trade, Transportation and Utilities 39,000 39,700 41,100 43,600 46,100 \Vholesale Trade 6,100 6,200 6,500 6,800 7,500 Retail Trade 24,600 24,800 25,800 27,600 29,200 Transportation, Warehousing and 8,300 8,700 8,800 9,200 9,300 Utilities fuformation 2,500 2,500 2,500 2,500 2,600 Financial Activities 8,000 8,300 8,600 8,700 9,000 Professional and Business Services 22,400 21,700 21,700 23,000 25,000 Educational and Health Services 20,700 21,300 21,600 22,200 22,900 Leisure and Hospitality 17,600 18,000 19,000 20,100 20,700 Other Services 6,900 6,900 7,000 7,100 6,900 Government 55 200 54 500 54 000 55 800 57 300 Total Wage and Salary 244 400 249 000 251,300 266,500 277 200

(1) Colunms may not add to annual industry totals because of independent rounding. (2) Employment is by place of work and does not include persons who are involved in labor management trade disputes, self employed, or unpaid family workers. (3) Includes all civilian government employees regardless of activity in which engaged. Source: State of California Employment Development Department.

C-6 Effective Buying Income

The following table summarizes the total effective buying income and the median household effective buying income for the County of Kern, the State of California, and the United States between 2001 and 2005:

EFFECTIVE BUYING INCOME 2001 THROUGH 2005(11

Total Effective Buying Income Median Household Effective Year Area (000s Omitted/21 Buying Income 2001* Kern County $ 7,981,251 $ 31,223 California 650,521,407 43,532 United States 5,303,481,498 38,365

2002* Kern County 8,627,018 32,367 California 647,879,427 42,484 United States 5,340,682,818 38,035

2003* Kern County 9,003,708 32,978 California 674,721,020 42,924 United States 5,466,880,008 38,201

2004* Kern County 9,640,460 34,220 California 705,108,410 43,915 United States 5,692,909,567 39,324

2005** Kern County 10,208,275 34,883 California 720,798,122 44,681 United States 5,894,664,154 40,529

(1) Not comparable with prior years. Effective Buying Income is now based on money income (which does not take into account sale of property, taxes and social security paid, receipt of food stamps, etc.) versus personal income. (2) Dollars in thousands. Source: *"Survey of Buying Power," Sales & Marketing Management Magazine. **"Demographics USA 2006-County Edition," Trade Dimensions International, Inc.

C-7 Commercial Activity

Commercial activity is an important contributor to the County's economy. The following table shows the County's taxable transactions from year 2002 to year 2006:

COUNTY OF KERN TAXABLE TRANSACTIONS BY TYPE OF BUSINESS FOR CALENDAR YEARS 2002 THROUGH 2006 (IN THOUSANDS)

Type of Business 2002 2003 2004 2005 2006(l) Apparel Stores $ 147,836 $ 151,985 $ 193,597 $ 218,516 $ 55,298 General Merchandise 854,466 899,479 952,154 1,061,864 267,766 Specialty Stores 461,344 478,613 546,379 620,476 165,258 Eating & Drinking 547,753 589,186 651,907 724,358 194,659 Building Materials 343,969 405,751 571,343 683,112 173,816 Automotive 1,706,222 1,895,533 2,067,291 2,433,562 691,020 Other Retail 337 867 387 080 445 493 548 986 188 307 Retail Stores Total $ 5,042,742 $ 5,477,154 $ 6,192.813 $ 7,146,289 $ 1,967,080 Business & Personal Services 292,290 303,152 330,714 348,577 133,310 All Other Outlets 2 230 860 2 240 837 2 606 388 3 121 011 1 015 075 Total All Outlets $ 7,565,892 $ 8,021,143 $ 9,129,915 $10,651,857 $ 3,115,465

(1) Figures through second quarter 2006. Source: Taxable Sales In California, California State Board of Equalization.

Construction Activity

The total valuation of building permits issued in the County amounted to approximately $1,367,688 in 2006 for both residential and commercial construction. The following table provides a building permit valuation summary for the County for 2002 through 2006:

COUNTY OF KERN NEW BUILDING PERMIT VALUATION 2002 THROUGH 2006 (IN THOUSANDS)

Type of Permit 2002 2003 2004 2005 2006 Residential: New Single-Dwelling $ 597,933 $ 776,322 $ 951,317 $1,202,201 $ 907,665 New Multi-Dwelling 17,897 31,540 48,846 66,876 85,344 Additions/Alterations 27 936 34 534 43 234 60 981 64 688 Total Residential $ 643,766 $ 842,396 $ 1,043,397 $1,330,058 $1,057,697 Non Residential: New Commercial $ 110,025 $ 70,955 $ 59,074 $ 55,572 $ 119,353 New Industrial 17,140 80,107 20,207 68,093 23,699 Other 114,423 88,972 80,350 95,561 76,010 Additions/Alterations 59 487 64 611 92 344 76 259 90 929 Total Non Residential $ 301,075 $ 304,645 $ 251,975 $ 295,485 $ 309,991 Total Valuation $ 944,841 $ 1,147,041 $ 1,295,372 $ 1,625,543 $1,367,688

Source: Construction Industry Research Board. Note: Totals may not add up due to independent rounding.

C-8 Agriculture

Agricultural production totaled approximately $3.5 billion in 2006. The following table provides a summary of agricultural production for the years 2002 through 2006.

COUNTY OF KERN AGRICULTURAL PRODUCTION 2002 THROUGH 2006 (IN THOUSANDS)

Crop 2002 2003 2004 2005 2006 Fruit & Nut Crops $1,234,716.0 $ 1,119,789.0 $ 1,518,104.0 $ 1,908,630.0 $ 1,639,222.0 Field Crops & Rangeland 376,894.0 385,726.0 510,222.0 407,383.0 393,819.0 Vegetable Crops 552,229.5 507,620.0 470,687.4 445,513.0 647,412.0 Nursery Crops 115,383.0 100,702.0 101,850.0 105,728.0 109,329.5 fudustrial & Wood Crops 12,431.0 5,793.0 4,810.0 5,760.0 5,985.0 Seed Crops 5,378.0 9,024.0 12,598.0 5,198.0 5,701.0 Livestock & Poultry 68,100.0 81,240.0 104,263.0 212,346.0 215,277.0 Livestock & Poultry Products 206,632.0 256,764.0 405,487.0 441,253.0 426,099.0 Apiary Products 14 483.0 17 018.0 14 460.0 18 901.0 34 119.0 Total $ 2,586,246.5 $ 2,483,676.0 $ 3,142,481.4 $ 3,550,712.0 $ 3,476,963.5

Source: County of Kern Agricultural Crop Report.

Transportation

The County is crossed by major state and interstate highways including State Routes 99 and 58 and Interstate 5. The County's communities are linked by 3,343 miles of County-maintained roads and 867 miles of State roads.

Meadows Field, located in Bakersfield, is served daily by United Express and America West Express as well as four commuter lines, and provides connections to five major airline hubs throughout the nation. In addition, there are six smaller airports throughout the County which comprise a complete aviation network.

Culture and Recreation

The County operates a network of regional recreational facilities, including 52 regional and community parks and three regional golf courses. The County also operates a museum

C-9 [THIS PAGE INTENTIONALLY LEFT BLANK] APPENDIXD

SUMMARY OF FISCAL AGENT AGREEMENT

The following is a brief summary of certain provisions of the Fiscal Agent Agreement not otherwise described in the text of this Official Statement. Such summary is not intended to be definitive, and reference is made to the text of the Fiscal Agent Agreement for the complete terms thereof.

Definitions

Except as otherwise defined in this summary, the terms previously defined in this Official Statement have the respective meanings previously given. In addition, the following terms have the following meanings when used in this summary:

"Administrative Expenses" means costs directly related to the administration of the District consisting of the costs of computing the Special Taxes and preparing the annual Special Tax collection schedules (whether by the Treasurer or designee thereof or both) and the costs of collecting the Special Taxes (whether by the County or otherwise); the costs of remitting the Special Taxes to the Fiscal Agent; fees and costs of the Fiscal Agent (including its legal counsel) in the discharge of the duties required of it under the Fiscal Agent Agreement; the costs of the Authority or its designee of complying with the disclosure provisions of the Act, the Continuing Disclosure Agreement and the Fiscal Agent Agreement, including those related to public inquiries regarding the Special Tax and disclosures to Bondowners and the Original Purchaser; the costs of the Authority or its designee related to an appeal of the Special Tax; any amounts required to be rebated to the federal government under the Fiscal Agent Agreement; an allocable share of the salaries of the Authority staff directly related to the foregoing and a proportionate amount of Authority general administrative overhead related thereto. Administrative Expenses shall also include amounts advanced by the Authority for any administrative purpose of the District, including costs related to prepayments of Special Taxes, recordings related to such prepayments and satisfaction of Special Taxes, amounts advanced to ensure compliance with the federal rebate provisions of the Fiscal Agent Agreement, and the costs of commencing foreclosure of delinquent Special Taxes.

"Administrative Expense Fund" means the fund by that name established by the Fiscal Agent Agreement.

"Annual Debt Service" means, for each Bond Year, the sum of (i) the interest due on the Outstanding Bonds in such Bond Year, assuming that the Outstanding Bonds are retired as scheduled (including by reason of the provisions of the Fiscal Agent Agreement providing for mandatory sinking payments), and (ii) the principal amount of the Outstanding Bonds due in such Bond Year (including any mandatory sinking payment due in such Bond Year pursuant to the Fiscal Agent Agreement).

"Auditor" means the auditor/controller of the County of Kern.

"Bond Counsel" means (i) Quint & Thirnmig LLP, or (ii) any other attorney or firm of attorneys acceptable to the Authority and nationally recognized for expertise in rendering opinions as to the legality and tax-exempt status of securities issued by public entities.

"Bond Fund" means the fund by that name established by the Fiscal Agent Agreement.

"Bond Year" means the one-year period beginning September 2nd in each year and ending on September 1st in the following year.

D-1 "Bonds" means the Series 2000-A Bonds, the Series 2003-A Bonds, the Series 2007-A Bonds, and, if the context requires, any Parity Bonds, at any time outstanding under the Fiscal Agent Agreement or any Supplemental Agreement.

"Business Day" means any day other than (i) a Saturday or a Sunday or (ii) a day on which banking institutions in the state in which the Fiscal Agent has its principal corporate trust office are authorized or obligated by law or executive order to be closed.

"Continuing Disclosure Agreement" means, collectively, (i) the Continuing Disclosure Agreement of the Authority, dated as of June 1, 2000, by and between the Authority and BNY Western Trust Company, as dissemination agent (the "Original Dissemination Agent"), as originally executed and as it may be amended from time to time in accordance with its terms; (ii) the Continuing Disclosure Agreement of the Authority, dated as of December 1, 2003, between the Authority and the Original Dissemination Agent, as originally executed and as it may be amended from time to time in accordance with its terms; and (iii) the Continuing Disclosure Agreement of the Authority, dated as of November 1, 2007, between the Authority and The Bank of New York Trust Company, N.A., as dissemination agent, as originally executed and as it may be amended from time to time in accordance with its terms.

"Costs of Issuance" means items of expense payable or reimbursable directly or indirectly by the Authority and related to the authorization, sale and issuance of the Bonds, which items of expense shall include, but not be limited to, printing costs, costs of reproducing and binding documents, closing costs, filing and recording fees, initial fees and charges of the Fiscal Agent including its first annual administration fee, expenses incurred by the Authority in connection with the issuance of the Bonds and the establishment of the District, special tax consultant fees and expenses, preliminary engineering fees and expenses, Bond (underwriter's) discount, legal fees and charges, including bond counsel, financial consultants' fees, charges for execution, transportation and safekeeping of the Bonds and other costs, charges and fees in connection with the foregoing.

"Costs of Issuance Fund" means the fund by that name established by the Fiscal Agent Agreement.

"DTC" means the Depository Trust Company, New York, New York, and its successors and assigns.

"Debt Service" means the scheduled amount of interest and amortization of principal payable on the Bonds during the period of computation, excluding amounts scheduled during such period which relate to principal which has been retired before the beginning of such period.

"Depository" means (a) initially, DTC, and (b) any other Securities Depository acting as Depository pursuant to the Fiscal Agent Agreement.

"District Value" means the market value, as of the date of the appraisal described below, of all parcels of real property in the District subject to the levy of the Special Taxes and not delinquent in the payment of any Special Taxes then due and owing, including with respect to such nondelinquent parcels the value of the then existing improvements and any facilities to be constructed or acquired with any amounts then on deposit in the Improvement Fund and with the proceeds of any proposed series of Parity Bonds, as determined by reference to (i) an appraisal performed within six (6) months of the date of issuance of any proposed Parity Bonds or any proposed release of moneys from the Escrow Fund by an MAI appraiser (the "Appraiser") selected by the Authority, or (ii) in the alternative, the assessed value of all such nondelinquent parcels and improvements thereon as shown on the then current County real property tax roll available to the Treasurer. Neither the Authority nor the Treasurer shall be liable to the Owners, the Original Purchaser or any other person or entity in respect of any appraisal provided for purposes of this definition or by reason of any exercise of discretion made by any Appraiser pursuant to this definition.

D-2 "Fair Market Value" means the price at which a willing buyer would purchase the investment from a willing seller in a bona fide, arm's length transaction ( determined as of the date the contract to purchase or sell the investment becomes binding) if the investment is traded on an established securities market (within the meaning of section 1273 of the Code) and, otherwise, the term "Fair Market Value" means the acquisition price in a bona fide arm's length transaction (as referenced above) if (i) the investment is a certificate of deposit that is acquired in accordance with applicable regulations under the Code, (ii) the investment is an agreement with specifically negotiated withdrawal or reinvestment provisions and a specifically negotiated interest rate (for example, a guaranteed investment contract, a forward supply contract or other investment agreement) that is acquired in accordance with applicable regulations under the Code, (iii) the investment is a United States Treasury Security--State and Local Government Series that is acquired in accordance with applicable regulations of the United States Bureau of Public Debt, or (iv) the investment is the Local Authority Investment Fund of the State of California but only if at all times during which the investment is held its yield is reasonably expected to be equal to or greater than the yield on a reasonably comparable direct obligation of the United States.

"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 Fiscal Agent: (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 payment of principal of and interest on which are directly or indirectly guaranteed by the United States of America, including, without limitation, such of the foregoing which are commonly referred to as "stripped" obligations and coupons; or (ii) any of the following obligations of the following agencies of the United States of America: (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 Agent" means the Fiscal Agent appointed by the Authority and acting as an independent fiscal agent with the duties and powers provided in the Fiscal Agent Agreement, its successors and assigns, and any other corporation or association which may at any time be substituted in its place, as provided in the Fiscal Agent Agreement.

"Fiscal Year" means any twelve-month period extending from July 1 in a calendar year to June 30 of the succeeding year, both dates inclusive.

"Improvement Fund" means the fund by that name created by and held by the Fiscal Agent Agreement.

"Independent Financial Consultant" means any consultant or firm of such consultants appointed by the Authority or the Treasurer, and who, or each of whom: (i) is judged by the Treasurer to have experience in matters relating to the issuance and/or administration of bonds under the Act; (ii) is in fact independent and not under the domination of the Authority; (iii) does not have any substantial interest, direct or indirect, with or in the Authority, or any owner of real property in the District, or any real property in the District; and (iv) is not connected with the Authority as an officer or employee of the Authority, but who may be regularly retained to make reports to the Authority.

"Interest Payment Dates" means March 1 and September 1 in each year, commencing, with respect to the Series 2007-A Bonds, March 1, 2008.

"Letter of Credit" means a standby letter of credit, which is:

(i) irrevocable during its term;

D-3 (ii) in a form reasonably satisfactory to counsel to the Original Purchaser;

(iii) for the benefit of the Fiscal Agent;

(iv) issued by federal or state chartered bank or other financial institution reasonably acceptable to the Treasurer and the Original Purchaser, which bank's or institution's unsecured debt obligations are rated at least "A" or better by Moody's or S&P;

(v) at the time of delivery thereof to the Fiscal Agent for purposes of this Agreement, accompanied by one or more opinions addressed to the Fiscal Agent and the Authority to the effect, singly or together, that the Letter of Credit is a legal, valid and binding obligation of the provider thereof, enforceable against the provider thereof in accordance with its terms, except as limited by applicable reorganization, insolvency, liquidation, readjustment of debt, moratorium or other similar laws affecting the enforcement of rights of creditors generally as such laws may be applied in the event of a reorganization, insolvency, liquidation, readjustment of debt or other similar proceeding of or moratorium applicable to the provider thereof and by general principles of equity (regardless of whether such enforceability is considered in a proceeding in equity or at law);

(vi) for a term of at least three years, effective from no later than the date it is delivered to the Fiscal Agent, and any Letter of Credit provided in substitution for any then outstanding Letter of Credit shall be for a term of at least one year commencing not later than the expiration date of the term of the prior Letter of Credit;

(vii) for the account of any entity other than Authority or any other governmental entity;

(viii) in a stated amount equal to two years estimated maximum annual debt service for the portion of any outstanding Bonds attributable to Special Taxes to be levied on the County Assessor's parcels to which it pertains, excluding for such purpose debt service on Bonds attributable to moneys on deposit in the Escrow Fund; and

(ix) not secured, as to the reimbursement of any draws thereon, by any property located in the District, or if so secured, any such security shall be expressly subordinate to the lien of the Special Taxes.

Any Letter of Credit delivered to the Fiscal Agent shall be accompanied by a written certificate from the provider thereof which identifies the County Assessor's parcels in the District to which such Letter of Credit pertains, and will be released when there are no Series 2000-A Bonds or Series 2003-A Bonds Outstanding.

"Maximum Annual Debt Service" means the largest Annual Debt Service for any Bond Year after the calculation is made through the final maturity date of any Outstanding Bonds.

"Moody's" means Moody's Investors Service, and any successor thereto.

"Officer's Certificate" means a written certificate of the Authority signed by an Authorized Officer of the Authority.

"Ordinance" means any ordinance of the Authority levying the Special Taxes.

"Original Purchaser" means Stone & Youngberg, LLC, the first purchaser of the Bonds from the Authority.

D-4 "Outstanding," when used as of any particular time with reference to Bonds, means (subject to the provisions of the Fiscal Agent Agreement) all Bonds except: (i) Bonds theretofore canceled by the Fiscal Agent or surrendered to the Fiscal Agent for cancellation; (ii) Bonds paid or deemed to have been paid within the meaning of the Fiscal Agent Agreement; and (iii) Bonds in lieu of or in substitution for which other Bonds shall have been authorized, executed, issued and delivered by the Authority pursuant to the Fiscal Agent Agreement or any Supplemental Agreement.

"Owner" or "Bondowner" means any person who shall be the registered owner of any Outstanding Bond.

"Parity Bonds" means any bonds issued by the Authority for the District on a parity with any outstanding Bonds pursuant to the Fiscal Agent Agreement.

"Participating Underwriter" shall have the meaning ascribed thereto in the applicable Continuing Disclosure Agreement.

"Permitted Investments" means any of the following, but only to the extent that the same are acquired at Fair Market Value: (a) Federal Securities; (b) investments in a money market fund (including any funds of the Fiscal Agent or its affiliates) rated in the highest rating category ( without regard to plus (+) or minus (-) designations) by Moody's or S&P; (c) investment agreements, guaranteed investment contracts, funding agreements, or any other form of corporate note which represents the unconditional obligation of one or more banks, insurance companies or other financial institutions, or are guaranteed by a financial institution which has an unsecured rating, or which agreement is itself rated, as of the date of execution thereof, "AA" and "Aa2", respectively, by S&P and Moody's, provided that (1) such agreement shall require that if during its term the provider's rating by either S&P or Moody's falls below AA- or Aa3, respectively, the provider shall, at its option, within 10 days of receipt of publication of such downgrade, either (i) collateralize the investment agreement by delivering or transferring in accordance with applicable state and federal laws (other than by means of entries on the provider's books) to the Authority, the Fiscal Agent or a third party acting solely as agent therefor (the "Holder of the Collateral") collateral free and clear of any third-party liens or claims the market value of which collateral is maintained at levels and upon such conditions as would be acceptable to S&P and Moody's to maintain an A rating in an A rated structured financing (with a market value approach); or (ii) at the sole expense of the provider, the provider shall obtain the unconditional assumption of their remaining obligations under the same terms and conditions of the investment agreement from an eligible replacement provider whose ratings are at least AA- and Aa3 by S&P and Moody's, respectively; (2) if the provider's rating by either S&P or Moody's is withdrawn or suspended or falls below A- or A3, respectively, the provider must, at the direction of the Authority or the Fiscal Agent, within 10 days of receipt of such direction, repay the principal of and accrued but unpaid interest on the investment, in either case with no penalty or premium to the Authority; (3) in the event that the provider shall default in its payment obligations, the provider's obligations under the investment agreement shall, at the direction of the Authority or the Fiscal Agent, be accelerated and amounts invested and accrued but unpaid interest thereon shall be repaid to the Authority or the Fiscal Agent, as appropriate; and (4) should the provider become insolvent, not pay its debts as they become due, be declared or petition to be declared bankrupt, etc. ("event of insolvency"), the provider's obligations shall automatically be accelerated and amounts invested and accrued but unpaid interest thereon shall be repaid to the Authority or the Fiscal Agent, as appropriate; and (d) any other lawful investment for Authority funds.

"Principal Office" means the principal corporate trust office of the Fiscal Agent set forth in the Fiscal Agent Agreement, except for the purpose of maintenance of the registration books and presentation of Bonds for payment, transfer or exchange, such term shall mean the office at which the Fiscal Agent conducts its corporate agency business, or such other or additional offices as may be designated by the Fiscal Agent.

"Project" means the facilities more particularly described in the Resolution of Formation.

D-5 "Qualified Reserve Fund Credit Instrument" means an irrevocable standby or direct-pay letter of credit or surety bond issued by a commercial bank or insurance company and deposited with the Fiscal Agent pursuant to the Fiscal Agent Agreement, provided that all of the following requirements are met: (a) the long­ term credit rating or claims paying ability of such bank or insurance company is in one of the two highest rating categories by S&P and Moody's; (b) such letter of credit or surety bond has a term of at least twelve (12) months; (c) such letter of credit or surety bond has a stated amount at least equal to the portion of the Reserve Requirement with respect to which funds are proposed to be released pursuant to the Fiscal Agent Agreement; and ( d) the Fiscal Agent is authorized pursuant to the terms of such letter of credit or surety bond to draw thereunder for the purpose of making payments required pursuant to the Fiscal Agent Agreement.

"Record Date" means the fifteenth day of the month next preceding the month of the applicable Interest Payment Date, whether or not such day is a Business Day.

"Reserve Fund" means the fund by that name established by the Fiscal Agent Agreement.

"Reserve Requirement" means, as of any date of calculation, an amount equal to the least of (i) the then Maximum Annual Debt Service, (ii) one hundred twenty-five percent (125%) of the then average Annual Debt Service, or (iii) ten percent (10%) of the then Outstanding principal amount of the Bonds.

"S&P" means Standard & Poor's Ratings Service, a division of McGraw-Hill, and any successor thereto.

"Series 2000-A Bonds" means the Bonds so designated and authorized to be issued under the Fiscal Agent Agreement.

"Series 2003-A Bonds" means the Tejon Ranch Public Facilities Financing Authority Community Facilities District No. 2000-1 (Tejon Industrial Complex Public Improvements) Special Tax Bonds, Series 2003-A, authorized to be issued under the provisions of Supplemental Agreement No. 1.

"Series 2007-A Bonds" means the Tejon Ranch Public Facilities Financing Authority Community Facilities District No. 2000-1 (Tejon Industrial Complex Public Improvements) Special Tax Bonds, Series 2007-A, authorized to be issued under Supplemental Agreement No. 2.

"Special Tax Fund" means the fund by that name established by the Fiscal Agent Agreement.

"Special Tax Prepayments" means the proceeds of any Special Tax prepayments received by the Authority, as calculated pursuant to the Rate and Method of Apportionment of the Special Taxes for the District, less any administrative fees or penalties collected as part of any such prepayment.

"Special Tax Prepayments Account" means the account by that name established by the Fiscal Agent Agreement.

"Special Tax Revenues" means the proceeds of the Special Taxes received by the Authority, including any scheduled payments and any prepayments thereof, interest thereon and proceeds of the redemption or sale of property sold as a result of foreclosure of the lien of the Special Taxes to the amount of said lien and interest thereon; provided that amounts collected in respect of delinquent Special Taxes shall not be Special Tax Revenues to the extent, and only to the extent, of any proceeds of a draw on a Letter of Credit under the Fiscal Agent Agreement ( which amounts shall be repaid to the Letter of Credit provider, as specified in the Fiscal Agent Agreement). "Special Tax Revenues" does not include any penalties collected in connection with delinquent Special Taxes.

"Special Taxes" means the special taxes levied within the District pursuant to the Act, the Ordinance and the Fiscal Agent Agreement.

D-6 "Supplemental Agreement" means an agreement the execution of which is authorized by a resolution which has been duly adopted by the Authority under the Act and which agreement is amendatory of or supplemental to the Fiscal Agent Agreement, but only if and to the extent that such agreement is specifically authorized under the Fiscal Agent Agreement.

"Supplemental Agreement No. l" means Supplemental Agreement No. 1 to Fiscal Agent Agreement, dated as of December 1, 2003, between the Authority, for and on behalf of the District, and the Fiscal Agent.

"Supplemental Agreement No. 2" means Supplemental Agreement No. 2 to Fiscal Agent Agreement, dated as of November 1, 2007, between the Authority, for and on behalf of the District, and the Fiscal Agent.

"Tax Consultant" means David Taussig & Associates or another independent financial or tax consultant retained by the Authority for the purpose of computing the Special Taxes.

"Treasurer" means the Treasurer of the Authority or such other officer or employee of the Authority performing the functions of the chief financial officer of the Authority.

"Update Property" means an Assessor's Parcel of Undeveloped Property for which a building permit has been issued, but which has not yet been classified as Developed Property, as the terms "Assessor's Parcel" and "Developed Property" are defined in the Rate and Method of Apportionment of the Special Taxes for the District.

Funds and Accounts

The Fiscal Agent Agreement provides for the following funds.

Improvement Fund. There is established under the Fiscal Agent Agreement as a separate fund to be held by the Fiscal Agent, the Improvement Fund, to the credit of which deposits shall be made as required by the Fiscal Agent Agreement. Moneys in the Improvement Fund shall be held in trust by the Fiscal Agent for the benefit of the Authority, and shall be disbursed for the payment or reimbursement of costs of the Project. Amounts in this fund are not pledged to the repayment of the Bonds.

Disbursements from the Improvement Fund shall be made by the Fiscal Agent upon receipt of an Officer's Certificate which shall: (i) set forth the amount required to be disbursed, the account from which the disbursement is to be made, the purpose for which the disbursement is to be made (which shall be for a Project cost otherwise permitted to be paid from the Improvement Fund or to reimburse expenditures of the Authority or any other party for Project costs previously paid), that the disbursement is a proper expenditure from the Improvement Fund, and the person to which the disbursement is to be paid; and (ii) certify that no portion of the amount then being requested to be disbursed was set forth in any Officer's Certificate previously filed requesting a disbursement. Moneys in the Improvement Fund shall be invested and deposited in accordance with the Fiscal Agent Agreement. Interest earnings and profits from such investment and deposit shall be deposited and credited by the Fiscal Agent to the Improvement Fund to be used for the purposes thereof.

Upon the filing of an Officer's Certificate stating that the Project has been completed and that all costs of the Project have been paid, or that any such costs are not required to be paid from the Improvement Fund, the Fiscal Agent shall transfer the amount, if any, remaining in the Improvement Fund to the Bond Fund to be used to pay debt service on the Bonds on the next Interest Payment Date.

Reserve Fund. There is established under the Fiscal Agent Agreement as a separate fund to be held by the Fiscal Agent the Reserve Fund, to the credit of which deposits shall be made as provided in the Fiscal Agent Agreement. Moneys in the Reserve Fund shall be held in trust by the Fiscal Agent for the benefit of the Owners of the Bonds as a reserve for the payment of principal of, and interest and any premium on, the Bonds and shall be subject to a lien in favor of the Owners of the Bonds. Except as otherwise provided below, all

D-7 amounts deposited in the Reserve Fund shall be used and withdrawn by the Fiscal Agent solely for the purpose of making transfers to the Bond Fund in the event of any deficiency at any time in the Bond Fund of the amount then required for payment of the principal of, and interest and any premium on, the Bonds, or for the purpose of redeeming Bonds from the Bond Fund.

\Vhenever, on the Business Day prior to any Interest Payment Date, or on any other date at the request of the Treasurer, the amount in the Reserve Fund exceeds the Reserve Requirement, the Fiscal Agent shall provide written notice to the Treasurer of the amount of the excess and shall transfer an amount equal to the excess from the Reserve Fund to the Bond Fund to be used for the payment of interest on the Bonds on the next Interest Payment Date. Whenever the balance in the Reserve Fund equals or exceeds the amount required to redeem or pay the Outstanding Bonds, including interest accrued to the date of payment or redemption and premium, if any, due upon redemption, the Fiscal Agent shall upon the written direction of the Treasurer transfer the amount in the Reserve Fund to the Bond Fund to be applied, on the next succeeding Interest Payment Date to the payment and redemption of all of the Outstanding Bonds. In the event that the amount so transferred from the Reserve Fund to the Bond Fund exceeds the amount required to pay and redeem the Outstanding Bonds, the balance in the Reserve Fund shall be transferred to the Authority to be used for any lawful purpose of the Authority.

Whenever Special Taxes are prepaid and Bonds are to be redeemed with the proceeds of such prepayment, a proportionate amount in the Reserve Fund (determined on the basis of the principal of Bonds to be redeemed, and the original principal of the Bonds) shall be transferred on the Business Day prior to the redemption date by the Fiscal Agent to the Bond Fund to be applied to the redemption of the Bonds. Amounts in the Reserve Fund may at any time be used, at the written direction of an Authorized Officer, for purposes of paying any rebate liability under the Fiscal Agent Agreement.

The Fiscal Agent shall release a Letter of Credit held for the benefit of the Reserve Fund upon receipt of written direction from the Treasurer to the effect that Special Taxes that may be levied on parcels in the District owned by the property owner who provided the respective Letter of Credit, and affiliates of such property owner will be less than 33% of the annual debt service on the Bonds. In addition, any Letter of Credit held for the benefit of the Reserve Fnnd will be released on the date on which there are no longer any Series 2000-A Bonds or any Series 2003-A Bonds Ontstanding.

The Authority shall have the right at any time to release funds from the Reserve Fund, in whole or in part, by tendering to the Fiscal Agent: (i) a Qualified Reserve Fund Credit Instrument, and (ii) an opinion of Bond Counsel stating that neither the release of such funds nor the acceptance of such Qualified Reserve Fund Credit Instrument will cause interest on the Bonds to become includable in gross income for purposes of federal income taxation. Upon tender of such items to the Fiscal Agent, and upon delivery by the Authority to the Fiscal Agent of a written calculation of the amount permitted to be released from the Reserve Fund (upon which calculation the Fiscal Agent may conclusively rely), the Fiscal Agent shall transfer such funds from the Reserve Fund to the Authority free and clear of the lien of this Agreement. The Fiscal Agent shall comply with all documentation relating to a Qualified Reserve Fund Credit Instrument as shall be required to maintain such Qualified Reserve Fund Credit Instrument in full force and effect and as shall be required to receive payments thereunder in the event and to the extent required to make any payment when and as required under the Fiscal Agent Agreement.

At least fifteen (15) days prior to the expiration of any Qualified Reserve Fund Credit Instrument, the Authority shall be obligated either (i) to replace such Qualified Reserve Fund Credit Instrument with a new Qualified Reserve Fund Credit Instrument, or (ii) to deposit or cause to be deposited with the Fiscal Agent an amount of funds such that the amount on deposit in the Reserve Fund is equal to the Reserve Requirement (without taking into account such expiring Qualified Reserve Fund Credit Instrument). In the event that the Authority shall fail to take action as specified in clause (i) or (ii) of the preceding sentence, the Fiscal Agent shall, prior to the expiration thereof, draw upon the Qualified Reserve Fund Credit Instrument in full and deposit the proceeds of such draw in the Reserve Fund.

D-8 In the event that the Reserve Requirement shall at any time be maintained in the Reserve Fund in the form of a combination of cash and a Qualified Reserve Fund Credit Instrument, the Fiscal Agent shall apply the amount of such cash to make any payment required to be made from the Reserve Fund before the Fiscal Agent shall draw any moneys under such Qualified Reserve Fund Credit Instrument for such purpose. In the event that the Fiscal Agent shall at any time draw funds under a Qualified Reserve Fund Credit Instrument to make any payment then required to be made from the Reserve Fund, the Special Tax Revenues thereafter received by the Fiscal Agent, to the extent deposited to the Reserve Fund under the Fiscal Agent Agreement, shall be used to reinstate the Qualified Reserve Fund Credit Instrument.

Bond Fund. There is established under the Fiscal Agent Agreement as a separate fund to be held by the Fiscal Agent the Bond Fund, to the credit of which deposits shall be made as provided in the Fiscal Agent Agreement. There is also created in the Bond Fund, as accounts to be held by the Fiscal Agent, the Special Tax Prepayments Account and the Capitalized Interest Account, to the credit of which deposits shall be made as provided in the Fiscal Agent Agreement. Moneys in the Bond Fund and the accounts therein shall be held in trust by the Fiscal Agent for the benefit of the Owners of the Bonds, shall be disbursed for the payment of the principal of, and interest and any premium on, the Bonds as provided below, and, pending such disbursement, shall be subject to a lien in favor of the Owners of the Bonds.

On each Interest Payment Date, the Fiscal Agent shall withdraw from the Bond Fund and pay to the Owners of the Bonds the principal, and interest and any premium, then due and payable on the Bonds, including any amounts due on the Bonds by reason of the sinking payments or a redemption of the Bonds, such payments to be made in the priority listed in the second succeeding sentence. In the event that amounts in the Bond Fund are insufficient for the purposes set forth in the preceding sentence, the Fiscal Agent shall withdraw from the Reserve Fund to the extent of any funds therein amounts to cover the amount of such Bond Fund insufficiency. If, after the foregoing transfers, there are insufficient funds in the Bond Fund to make the payments provided for in the first sentence of the first sentence of this paragraph, the Fiscal Agent shall apply the available funds first to the payment of interest on the Bonds, then to the payment of principal due on the Bonds other than by reason of sinking payments, and then to payment of principal due on the Bonds by reason of sinking payments. Any sinking payment not made as scheduled shall be added to the sinking payment to be made on the next sinking payment date.

Moneys in the Special Tax Prepayments Account shall be transferred by the Fiscal Agent to the Bond Fund on the next date for which notice of redemption of Bonds can timely be given under the Fiscal Agent Agreement, and shall be used to redeem Bonds on the redemption date selected.

Proceeds of the Series 2007-A Bonds deposited in the Capitalized Interest Account will be applied solely to pay interest on the Series 2007-A Bonds when due.

Moneys in the Bond Fund, the Capitalized Interest Account and the Special Tax Prepayments Account shall be invested and deposited in accordance with the Fiscal Agent Agreement. Interest earnings and profits resulting from the investment and deposit of amounts in the Bond Fund, the Capitalized Interest Account and the Special Tax Prepayments Account shall be retained in the Bond Fund and such accounts, respectively, to be used for purposes of such fund and accounts.

Special Tax Fund. There is established under the Fiscal Agent Agreement as a separate fund to be held by the Fiscal Agent, the Special Tax Fund, to the credit of which the Authority shall deposit, as soon as practicable following receipt, all Special Tax Revenues received by the Authority and any amounts required by the Fiscal Agent Agreement to be deposited therein. Notwithstanding the foregoing, (i) any Special Tax Revenues constituting payment of the portion of the Special Tax levy for Administrative Expenses shall be deposited by the Treasurer in the Administrative Expense Fund, and (ii) any proceeds of Special Tax Prepayments shall be transferred by the Treasurer to the Fiscal Agent for deposit by the Fiscal Agent as follows: (a) that portion of any Special Tax Prepayment constituting a prepayment of construction costs (which otherwise could have been included in the proceeds of Parity Bonds) shall be deposited by the Fiscal

D-9 Agent to the Improvement Fund, and (b) any remaining portion of any Special Tax Prepayment shall be deposited by the Fiscal Agent directly in the Special Tax Prepayments Account. Moneys in the Special Tax Fund shall be held in trust by the Authority for the benefit of the Authority and the Owners of the Bonds, shall be disbursed as provided below and, pending disbursement, shall be subject to a lien in favor of the Owners of the Bonds and the Authority.

On each Interest Payment Date, the Fiscal Agent shall withdraw from the Special Tax Fund and transfer the following amounts in the following order of priority (i) to the Bond Fund an amount, taking into account any amounts then on deposit in the Bond Fund and any expected transfers from the Improvement Fund, the Reserve Fund, the Capitalized Interest Account, the Special Tax Prepayments Account and the Escrow Fund to the Bond Fund pursuant to the Fiscal Agent Agreement, such that the amount in the Bond Fund equals the principal (including any sinking payment), premium, if any, and interest due on the Bonds on the next Interest Payment Date, and (ii) to the Reserve Fund an amount, taking into account amounts then on deposit in the Reserve Fund, such that the amount in the Reserve Fund is equal to the Reserve Requirement.

Moneys in the Special Tax Fund shall be invested and deposited in accordance with the Fiscal Agent Agreement. Interest earnings and profits resulting from such investment and deposit shall be retained in the Special Tax Fund to be used for the purposes thereof.

Administrative Expense Fund. There is established under the Fiscal Agent Agreement, as a separate fund to be held by the Treasurer, the Administrative Expense Fund to the credit of which deposits shall be made as required by the Fiscal Agent Agreement. Moneys in the Administrative Expense Fund shall be held in trust by the Treasurer for the benefit of the Authority, and shall be disbursed as provided below. Amounts in this fund are not pledged to the repayment of the Bonds.

Amounts in the Administrative Expense Fund will be withdrawn by the Treasurer and paid to the Authority or its order upon receipt by the Treasurer of an Officer's Certificate stating the amount to be withdrawn, that such amount is to be used to pay an Administrative Expense or a Cost of Issuance, and the nature of such Administrative Expenses or Cost of Issuance. Annually, on the last day of each Fiscal Year, the Treasurer shall withdraw any amounts then remaining in the Administrative Expense Fund that have not been allocated to pay Administrative Expenses incurred but not yet paid, and which are not otherwise encumbered, and transfer such amounts to the Fiscal Agent for deposit in the Special Tax Fund.

Moneys in the Administrative Expense Fund must be invested and deposited in accordance with the Fiscal Agent Agreement. Interest earnings and profits resulting from said investment shall be retained by the Treasurer in the Administrative Expense Fund to be used for the purposes of such fund.

Costs of Issuance Fund. There is established under the Fiscal Agent Agreement, as a separate fund to be held by the Fiscal Agent, the Costs of Issuance Fund to the credit of which deposits shall be made as required by the Fiscal Agent Agreement. Moneys in the Costs of Issuance Fund will be held in trust by the Fiscal Agent and shall be disbursed for the payment or reimbursement of Costs of Issuance. Amounts in this fund are not pledged to the repayment of Bonds.

Amounts in the Costs of Issuance Fund will be disbursed from time to time to pay Costs of Issuance, as set forth in a requisition containing respective amounts to be paid to the designated payees, signed by the Treasurer and delivered to the Fiscal Agent concurrently with the delivery of the Bonds. The Fiscal Agent is required to pay all Costs of Issuance after receipt of an invoice from any such payee which requests payment in an amount which is less than or equal to the amount set forth with respect to such payee pursuant to an Officer's Certificate requesting payment of Cost of Issuance. The Fiscal Agent will maintain the Costs of Issuance Fund for a period of 90 days from the date of delivery of the Series 2007-A Bonds and then shall transfer any moneys remaining therein, including any investment earnings thereon, to the Treasurer for deposit by the Treasurer in the Administrative Expense Fund.

D-10 Parity Bonds

The Authority may from time to time issue Parity Bonds, in a principal amount as permitted by the Act for refunding bonds, by means of a Supplemental Agreement and without the consent of any Bondowners, upon compliance with the provisions of the Fiscal Agent Agreement listed below. Any such Parity Bonds will be issued only to refund outstanding Bonds, and shall be secured by a lien on the Special Tax Revenues and funds pledged for the payment of the Bonds under the Fiscal Agent Agreement on a parity with all other Bonds Outstanding thereunder. The Authority may issue the Parity Bonds subject to the following specific conditions precedent:

(A) Current Compliance. The Authority shall be in compliance on the date of issuance of the Parity Bonds with all covenants set forth in the Fiscal Agent Agreement and all Supplemental Agreements.

(B) Payment Dates. The Supplemental Agreement providing for the issuance of such Parity Bonds shall provide that interest thereon shall be payable on March 1 and September 1, and principal thereof shall be payable on September 1 in any year in which principal is payable (provided that there shall be no requirement that any Parity Bonds pay interest on a current basis).

(C) Funds and Accounts; Reserve Fund Deposit. The Supplemental Agreement providing for the issuance of such Parity Bonds may provide for the establishment of separate funds and accounts, and shall provide for a deposit to the Reserve Fund in an amount necessary so that the amount on deposit therein, following the issuance of such Parity Bonds, is equal to the Reserve Requirement.

(D) Value-to-Lien Ratio. The District Value shall be at least four times the sum of: (i) the aggregate principal amount of all Bonds then Outstanding, plus (ii) the aggregate principal amount of the series of Parity Bonds proposed to be issued, plus (iii) the aggregate principal amount of any fixed assessment liens on the parcels in the District subject to the levy of Special Taxes, plus (iv) a portion of the aggregate principal amount of any and all other community facilities district bonds then outstanding and payable at least partially from special taxes to be levied on parcels of land within the District (the "Other District Bonds") equal to the aggregate principal amount of the Other District Bonds multiplied by a fraction, the numerator of which is the amount of special taxes levied for the Other District Bonds on parcels of land within the District, and the denominator of which is the total amount of special taxes levied for the Other District Bonds on all parcels of land against which the special taxes are levied to pay the Other District Bonds (such fraction to be determined based upon the maximum special taxes which could be levied in the year in which maximum annual debt service on the Other District Bonds occurs), based upon information from the most recent available Fiscal Year.

(E) The Special Tax Coverage. The Authority shall obtain a certificate of a Tax Consultant to the effect that (i) the amount of the maximum Special Taxes that may be levied in each Fiscal Year shall be at least one hundred ten percent (ll0%) of the total Annual Debt Service for each such Fiscal Year on the Bonds and the proposed Parity Bonds plus estimated Administrative Expenses, and (ii) based upon the Special Taxes that may be levied under the Rate and Method of Apportionment of the Special Taxes for the District at the time when there is no longer any Undeveloped Property (as defined in said rate and method of apportionment) in the District, and taking into account the status of the then and expected Developed Property (as defined in said rate and method of apportionment) in the District, (a) the estimated maximum Special Taxes that may then be levied in the District on the then existing and expected Developed Property in each Fiscal Year are reasonably expected to exceed one hundred ten percent (ll0%) of the total Annual Debt Service for each Fiscal Year on the Bonds and the proposed Parity Bonds, and (b) the aggregate Special Tax

D-11 Prepayments that could occur after the issuance of the Parity Bonds is not less than the Outstanding principal amount of the Bonds and such Parity Bonds.

(F) Minimum Value Test. The District Value (including, for purposes of this paragraph, only those parcels of real property in the District then constituting "Undeveloped Property", as defined in the Rate and Method of Apportionment of Special Taxes for the District) shall be at least two times (i) the sum of the amounts referred to in clauses (i), (ii), (iii) and (iv) of paragraph (D) above, but including, for purposes of this paragraph, with respect to said clauses (iii) and (iv) only those parcels constituting such "Undeveloped Property", and not all parcels in the District, less (ii) that portion of the principal amount of the Outstanding Bonds and any proposed Parity Bonds the maximum annual debt service on which is equal to the aggregate Maximum Special Tax in the then Fiscal Year for all then Developed Property (as the terms "Maximum Special Tax", and "Developed Property" are defined in the Rate and Method of Apportionment of the Special Taxes for the District).

(G) Officer's Certificate. The Authority shall deliver to the Fiscal Agent an Officer's Certificate certifying that the conditions precedent to the issuance of such Parity Bonds set forth in paragraphs (A), (B), (C), (D), E) and (F) above have been satisfied.

Covenants of the Anthority

The Authority will punctually pay or cause to be paid the principal of, and interest and any premium on, the Bonds when and as due in strict conformity with the terms of the Fiscal Agent Agreement and any Supplemental Agreement, and it will faithfully observe and perform all of the conditions, covenants and requirements of the Fiscal Agent Agreement and all Supplemental Agreements and of the Bonds.

The Bonds are limited obligations of the Authority on behalf of the District and are payable solely from and secured solely by the Special Tax Revenues and the amounts in the Bond Fund (including the Capitalized Interest Account and the Special Tax Prepayment Account therein), the Reserve Fund, the Escrow Fund and the Special Tax Fund created under the Fiscal Agent Agreement.

In order to prevent any accumulation of claims for interest after maturity, the Authority may not, directly or indirectly, extend or consent to the extension of the time for the payment of any claim for interest on any of the Bonds and may not, directly or indirectly, be a party to the approval of any such arrangement by purchasing or funding said claims for interest or in any other manner. In case any such claim for interest shall be extended or funded, whether or not with the consent of the Authority, such claim for interest so extended or funded shall not be entitled, in case of default under the Fiscal Agent Agreement, to the benefits of the Fiscal Agent Agreement, except subject to the prior payment in full of the principal of all of the Bonds then Outstanding and of all claims for interest which shall not have been so extended or funded.

The Authority will not encumber, pledge or place any charge or lien upon any of the Special Tax Revenues or other amounts pledged to the Bonds superior to or on a parity with the pledge and lien under the Fiscal Agent Agreement for the benefit of the Bonds, except as permitted by the Fiscal Agent Agreement.

The Authority will keep, or cause to be kept, proper books of record and accounts, separate from all other records and accounts of the Authority, in which complete and correct entries are made of all transactions relating to the expenditure of amounts disbursed from the Administrative Expense Fund and to the Special Tax Revenues. Such books of record and accounts will at all times during business hours be subject to the inspection of the Fiscal Agent and the Owners of not less than ten percent ( 10%) of the principal amount of the Bonds then Outstanding, or their representatives duly authorized in writing.

The Fiscal Agent will keep, or cause to be kept, proper books of record and accounts, separate from all other records and accounts of the Fiscal Agent, in which complete and correct entries must be made of all transactions relating to the expenditure of amounts disbursed from the Bond Fund (including the Capitalized

D-12 Interest Account and the Special Tax Prepayments Account therein), the Improvement Fund, the Special Tax Fund, the Reserve Fund, the Escrow Fund and the Costs of Issuance Fund. Such books of record and accounts must at all times during business hours be subject to the inspection of the Authority and the Owners of not less than ten percent (10%) of the principal amount of the Bonds then Outstanding, or their representatives duly authorized in writing.

The Authority will preserve and protect the security of the Bonds and the rights of the Owners, and will warrant and defend their rights against all claims and demands of all persons. From and after the delivery of any of the Bonds by the Authority, the Bonds shall be incontestable by the Authority.

On or within five (5) Business Days of each June 1, the Fiscal Agent is required provide the Treasurer with a notice stating the amount then on deposit in the Bond Fund, the Capitalized Interest Account and the Reserve Fund, and informing the Authority that the Special Taxes may need to be levied pursuant to the Ordinance as necessary to provide for Annual Debt Service and Administrative Expenses and replenishment (if necessary) of the Reserve Fund so that the balances therein equal the Reserve Requirement. The receipt of or failure to receive such notice by the Treasurer shall in no way affect the obligations of the Treasurer under the following two paragraphs, and the Fiscal Agent shall not be responsible for any inability or failure to provide such notice. Upon receipt of such notice, the Treasurer shall communicate with the Auditor to ascertain the relevant parcels on which the Special Taxes are to be levied, taking into account any parcel splits during the preceding and then current year.

The Treasurer shall effect the levy of the Special Taxes each Fiscal Year in accordance with the Ordinance by each July 15 that the Bonds are outstanding, or otherwise such that the computation of the levy is complete before the final date on which Auditor will accept the transmission of the Special Tax amounts for the parcels within the District for inclusion on the next real property tax roll. Upon the completion of the computation of the amounts of the levy, the Financial Services Director shall prepare or cause to be prepared, and shall transmit to the Auditor, such data as the Auditor requires to include the levy of the Special Taxes on the next real property tax roll.

The Treasurer shall fix and levy the amount of Special Taxes within the District required for the payment of principal of and interest on any outstanding Bonds of the District becoming due and payable during the ensuing year, including any necessary replenishment or expenditure of the Reserve Fund for the Bonds and an amount estimated to be sufficient to pay the Administrative Expenses (including amounts necessary to pay any rebate due to the federal government) during such year, taking into account the balances in such funds and in the Special Tax Fund. The Special Taxes so levied shall not exceed the authorized amounts as provided in the proceedings pursuant to the Resolution of Formation.

The Special Taxes shall be payable and be collected in the same manner and at the same time and in the same installment as the general taxes on real property are payable, and have the same priority, become delinquent at the same time and in the same proportionate amounts and bear the same proportionate penalties and interest after delinquency as do the ad valorem taxes on real property.

If the Special Taxes levied on any parcel to which a Letter of Credit pertains is not paid in full when due, the Treasurer shall direct the Fiscal Agent to draw upon the applicable Letter of Credit in the amount of such delinquency. Any Letter of Credit will be released at such time when there are no Series 2000-A Bonds or Series 2003-A Bonds Outstanding.

The Treasurer shall notify the Authority Attorney of any delinquency in the payment of Special Taxes of which it is aware, and the Authority Attorney shall commence, or cause to be commenced, such proceedings within sixty (60) days of the date the Treasurer became aware of the delinquency. The Treasurer shall, on or about each March 1 and July 1, compare the amount of Special Taxes theretofore levied in the District to the amount of Special Taxes theretofore received, to determine whether or not any delinquencies in the payment of Special Taxes then exist.

D-13 The Authority shall take any and all actions necessary to assure compliance with section 148(f) of the Code, relating to the rebate of excess investment earnings, if any, to the federal government, to the extent that such section is applicable to the Bonds. If necessary, the Authority may use earnings on amounts in the Reserve Fund, amounts on deposit in the Administrative Expense Fund, and any other funds available to the District, including amounts advanced by the Authority, in its sole discretion, to be repaid by the District as soon as practicable from amounts described in the preceding clauses, to satisfy its obligations described in this paragraph.

The Authority shall take all actions necessary to assure the exclusion of interest on the Bonds from the gross income of the Owners of the Bonds to the same extent as such interest is permitted to be excluded from gross income under the Code as in effect on the date of issuance of the Bonds.

The Authority covenants and agrees that it will comply with and carry out all of the provisions of the Continuing Disclosure Agreement. Notwithstanding any other provision of the Fiscal Agent Agreement, failure of the Authority to comply with the Continuing Disclosure Agreement shall not be considered a default under the Fiscal Agent Agreement; however, any Participating Underwriter or any holder or beneficial owner of the Bonds may take such actions as may be necessary and appropriate to compel performance by the Authority of its obligations thereunder, including seeking mandate or specific performance by court order.

The owners and/or developers of the real property in the District have also executed continuing disclosure agreements for the benefit of the holders and beneficial owners of the Bonds. Any Participating Underwriter or holder or beneficial owner may take such actions as may be necessary and appropriate directly against such a landowner to compel performance by such a landowner of its obligations thereunder, including seeking mandate or specific performance by court order; however the Authority shall have no obligation whatsoever to enforce any obligations under any such agreement.

The Authority covenants and agrees to not consent or conduct proceedings with respect to a reduction in the maximum Special Taxes that may be levied in the District below an amount, for any Fiscal Year, equal to 110% of the aggregate of the debt service due on the Bonds in such Fiscal Year, plus a reasonable estimate of Administrative Expenses for such Fiscal Year. It is hereby acknowledged that Bondowners are purchasing the Bonds in reliance on the foregoing covenant, and that said covenant is necessary to assure the full and timely payment of the Bonds.

The Authority covenants not to exercise its rights under the Act to waive delinquency and redemption penalties related to the Special Taxes or to declare Special Tax penalties amnesty program if to do so would materially and adversely affect the interests of the owners of the Bonds and further covenants not to permit the tender of Bonds in payment of any Special Taxes except upon receipt of a certificate of an Independent Financial Consultant that to accept such tender will not result in the Authority having insufficient Special Tax revenues to pay the principal of and interest on the Bonds and any Parity Bonds remaining Outstanding following such tender.

The Authority may at anytime, without notice to or the consent of the Fiscal Agent or the Bondowners, release property in the District from the lien of Special Taxes pursuant to and in accordance with the provisions of Section I of the Rate and Method of Apportionment of Special Taxes for the District.

Investments

Moneys in any fund or account created or established by the Fiscal Agent Agreement and held by the Fiscal Agent is required to be invested by the Fiscal Agent in Permitted Investments, as directed pursuant to an Officer's Certificate filed with the Fiscal Agent at least two (2) Business Days in advance of the making of such investments. In the absence of any such Officer's Certificate, the Fiscal Agent shall invest to the extent reasonably practicable any such moneys in the Permitted Investments described in clause (b) of the definition thereof in the Fiscal Agent Agreement. Moneys in any fund or account created or established by the Fiscal

D-14 Agent Agreement and held by the Treasurer shall be invested by the Treasurer in any Permitted Investment, which in any event by their terms mature prior to the date on which such moneys are required to be paid out. Obligations purchased as an investment of moneys in any fund shall be deemed to be part of such fund or account, subject, however, to the requirements of the Fiscal Agent Agreement for transfer of interest earnings and profits resulting from investment of amounts in funds and accounts. \Vhenever in the Fiscal Agent Agreement any moneys are required to be transferred by the Authority to the Fiscal Agent, such transfer may be accomplished by transferring a like amount of Permitted Investments.

The Fiscal Agent and its affiliates or the Treasurer may act as sponsor, advisor, depository, principal or agent in the acquisition or disposition of any investment. Neither the Fiscal Agent nor the Treasurer shall incur any liability for losses arising from any investments made pursuant to the Fiscal Agent Agreement. The Fiscal Agent will not be required to determine the legality of any investments.

Except as otherwise provided in the next sentence, all investments of amounts deposited in any fund or account created by or pursuant to the Fiscal Agent Agreement, or otherwise containing gross proceeds of the Bonds (within the meaning of Section 148 of the Code) shall be acquired, disposed of, and valued (as of the date that valuation is required by the Fiscal Agent Agreement or the Code) at Fair Market Value. Investments in funds or accounts (or portions thereof) that are subject to a yield restriction under the applicable provisions of the Code and (unless valuation is undertaken at least annually) investments in the subaccounts within the Reserve Fund shall be valued at their present value (within the meaning of section 148 of the Code). The Fiscal Agent shall not be liable for verification of the application of such sections of the Code.

Investments in any and all funds and accounts may be commingled in a separate fund or funds for purposes of making, holding and disposing of investments, notwithstanding provisions herein for transfer to or holding in or to the credit of particular funds or accounts of amounts received or held by the Fiscal Agent or the Treasurer, provided that the Fiscal Agent or the Treasurer, as applicable, shall at all times account for such investments strictly in accordance with the funds and accounts to which they are credited and otherwise as provided in the Fiscal Agent Agreement. The Fiscal Agent or the Treasurer, as applicable, shall sell at Fair Market Value, or present for redemption, any investment security whenever it shall be necessary to provide moneys to meet any required payment, transfer, withdrawal or disbursement from the fund or account to which such investment security is credited and neither the Fiscal Agent nor the Treasurer shall be liable or responsible for any loss resulting from the acquisition or disposition of such investment security in accordance with the Fiscal Agent Agreement.

Liability of Authority

The Authority shall not incur any responsibility in respect of the Bonds or the Fiscal Agent Agreement other than in connection with the duties or obligations explicitly therein or in the Bonds assigned to or imposed upon it. The Authority shall not be liable in connection with the performance of its duties under the Fiscal Agent Agreement, except for its own negligence or willful default. The Authority shall not be bound to ascertain or inquire as to the performance or observance of any of the terms, conditions, covenants or agreements of the Fiscal Agent in the Fiscal Agent Agreement or of any of the documents executed by the Fiscal Agent in connection with the Bonds, or as to the existence of a default or event of default thereunder.

In the absence of bad faith, the Authority, including the Treasurer, may conclusively rely, as to the truth of the statements and the correctness of the opinions expressed therein, upon certificates or opinions furnished to the Authority and conforming to the requirements of the Fiscal Agent Agreement. The Authority, including the Treasurer, shall not be liable for any error of judgment made in good faith unless it shall be proved that it was negligent in ascertaining the pertinent facts.

No provision of the Fiscal Agent Agreement shall require the Authority to expend or risk its own general funds or otherwise incur any financial liability (other than with respect to the Special Tax Revenues) in the performance of any of its obligations under the Fiscal Agent Agreement, or in the exercise of any of its

D-15 rights or powers, if it shall have reasonable grounds for believing that repayment of such funds or adequate indemnity against such risk or liability is not reasonably assured to it.

The Authority and the Treasurer may rely and shall be protected in acting or refraining from acting upon any notice, resolution, request, consent, order, certificate, report, warrant, bond or other paper or document believed in good faith by it to be genuine and to have been signed or presented by the proper party or proper parties. The Authority may consult with counsel, who may be the Authority Attorney, with regard to legal questions, and the opinion of such counsel shall be full and complete authorization and protection in respect of any action taken or suffered by it under the Fiscal Agent Agreement in good faith and in accordance therewith.

The Authority shall not be bound to recognize any person as the Owner of a Bond unless and until such Bond is submitted for inspection, if required, and his title thereto satisfactory established, if disputed.

Whenever in the administration of its duties under the Fiscal Agent Agreement the Authority or the Treasurer shall deem it necessary or desirable that a matter be proved or established prior to taking or suffering any action under the Fiscal Agent Agreement, such matter (unless other evidence in respect thereof be herein specifically prescribed) may, in the absence of willful misconduct on the part of the Authority, be deemed to be conclusively proved and established by a certificate of the Fiscal Agent, an Independent Financial Consultant or a Tax Consultant, and such certificate shall be full warrant to the Authority and the Treasurer for any action taken or suffered under the provisions of the Fiscal Agent Agreement or any Supplemental Agreement upon the faith thereof, but in its discretion the Authority or the Treasurer may, in lieu thereof, accept other evidence of such matter or may require such additional evidence as to it may seem reasonable.

In order to perform its duties and obligations under the Fiscal Agent Agreement, the Authority and/or the Treasurer may employ such persons or entities as it deems necessary or advisable. The Authority shall not be liable for any of the acts or omissions of such persons or entities employed by it in good faith under the Fiscal Agent Agreement, and shall be entitled to rely, and shall be fully protected in doing so, upon the opinions, calculations, determinations and directions of such persons or entities.

The Fiscal Agent

The Fiscal Agent undertakes to perform such duties, and only such duties, as are specifically set forth in the Fiscal Agent Agreement, and no implied covenants or obligations shall be read into the Fiscal Agent Agreement against the Fiscal Agent.

Any company into which the Fiscal Agent may be merged or converted or with which it may be consolidated or any company resulting from any merger, conversion or consolidation to which it shall be a party or any company to which the Fiscal Agent may sell or transfer all or substantially all of its corporate trust business, provided such company shall be eligible under the following paragraph, shall be the successor to such Fiscal Agent without the execution or filing of any paper or any further act.

The Authority may remove the Fiscal Agent initially appointed, and any successor thereto, and may appoint a successor or successors thereto, but any such successor shall be a bank, corporation or trust company having a combined capital (exclusive of borrowed capital) and surplus of at least Fifty Million Dollars ($50,000,000), and be subject to supervision or examination by federal or state authority. If such bank, corporation or trust company publishes a report of condition at least annually, pursuant to law or to the requirements of any supervising or examining authority above referred to, then the combined capital and surplus of such bank or trust company shall be deemed to be its combined capital and surplus as set forth in its most recent report of condition so published.

The Fiscal Agent may at any time resign by giving written notice to the Authority and by giving to the Owners notice by mail of such resignation. Upon receiving notice of such resignation, the Authority shall

D-16 promptly appoint a successor Fiscal Agent by an instrument in writing. Any resignation or removal of the Fiscal Agent shall become effective upon acceptance of appointment by the successor Fiscal Agent.

If no appointment of a successor Fiscal Agent shall be made within forty-five (45) days after the Fiscal Agent shall have given to the Authority written notice or after a vacancy in the office of the Fiscal Agent shall have occurred by reason of its inability to act, the Fiscal Agent or any Owner may apply to any court of competent jurisdiction to appoint a successor Fiscal Agent. Said court may thereupon, after such notice, if any, as such court may deem proper, appoint a successor Fiscal Agent.

If, by reason of the judgment of any court, or reasonable agency, the Fiscal Agent is rendered unable to perform its duties under the Fiscal Agent Agreement, all such duties and all of the rights and powers of the Fiscal Agent thereunder shall be assumed by and vest in the Financial Services Director of the Authority in trust for the benefit of the Owners. The Authority covenants for the direct benefit of the Owners that its Financial Services Director in such case shall be vested with all of the rights and powers of the Fiscal Agent under the Fiscal Agent Agreement, and shall assume all of the responsibilities and perform all of the duties of the Fiscal Agent thereunder, in trust for the benefit of the Owners of the Bonds. In such event, the Financial Services Director may designate a successor Fiscal Agent qualified to act as Fiscal Agent thereunder.

The recitals of facts, covenants and agreements in the Fiscal Agent Agreement and in the Bonds contained shall be taken as statements, covenants and agreements of the Authority, and the Fiscal Agent assumes no responsibility for the correctness of the same, or makes any representations as to the validity or sufficiency of the Fiscal Agent Agreement or of the Bonds, or shall incur any responsibility in respect thereof, other than in connection with the duties or obligations in the Fiscal Agent Agreement or in the Bonds assigned to or imposed upon it. The Fiscal Agent shall not be liable in connection with the performance of its duties under the Fiscal Agent Agreement, except for its own negligence or willful default. The Fiscal Agent assumes no responsibility or liability for any information, statement or recital in any offering memorandum or other disclosure material prepared or distributed with respect to the issuance of the Bonds.

In the absence of bad faith, the Fiscal Agent may conclusively rely, as to the truth of the statements and the correctness of the opinions expressed therein, upon certificates or opinions furnished to the Fiscal Agent and conforming to the requirements of the Fiscal Agent Agreement; but in the case of any such certificates or opinions by which any provision of the Fiscal Agent Agreement are specifically required to be furnished to the Fiscal Agent, the Fiscal Agent shall be under a duty to examine the same to determine whether or not they conform to the requirements of the Fiscal Agent Agreement. Except as provided above in this paragraph, Fiscal Agent shall be protected and shall incur no liability in acting or proceeding, or in not acting or not proceeding, in good faith, reasonably and in accordance with the terms of the Fiscal Agent Agreement, upon any resolution, order, notice, request, consent or waiver, certificate, statement, affidavit, or other paper or document which it shall in good faith reasonably believe to be genuine and to have been adopted or signed by the proper person or to have been prepared and furnished pursuant to any provision of the Fiscal Agent Agreement, and the Fiscal Agent shall not be under any duty to make any investigation or inquiry as to any statements contained or matters referred to in any such instrument.

The Fiscal Agent shall not be liable for any error of judgment made in good faith unless it shall be proved that the Fiscal Agent was negligent in ascertaining the pertinent facts. No provision of the Fiscal Agent Agreement shall require the Fiscal Agent to expend or risk its own funds or otherwise incur any financial liability in the performance of any of its duties under the Fiscal Agent Agreement, or in the exercise of any of its rights or powers.

The Fiscal Agent shall be under no obligation to exercise any of the rights or powers vested in it by the Fiscal Agent Agreement at the request or direction of any of the Owners pursuant to the Fiscal Agent Agreement unless such Owners shall have offered to the Fiscal Agent reasonable security or indemnity against the costs, expenses and liabilities which might be incurred by it in compliance with such request or direction.

D-17 The Fiscal Agent may become the owner of the Bonds with the same rights it would have if it were not the Fiscal Agent.

The Fiscal Agent shall have no duty or obligation whatsoever to enforce the collection of Special Taxes or other funds to be deposited with it under the Fiscal Agent Agreement, or as to the correctness of any amounts received, and its liability shall be limited to the proper accounting for such funds as it shall actually receive.

In order to perform its duties and obligations under the Fiscal Agent Agreement, the Fiscal Agent may employ such persons or entities as it deems necessary or advisable. The Fiscal Agent shall not be liable for any of the acts or omissions of such persons or entities employed by it in good faith under the Fiscal Agent Agreement, and shall be entitled to rely, and shall be fully protected in doing so, upon the opinions, calculations, determinations and directions of such persons or entities.

The Fiscal Agent shall not be considered in breach of or in default in its obligations hereunder or progress in respect thereto in the event of enforced delay ("unavoidable delay") in the performance of such obligations due to unforeseeable causes beyond its control and without its fault or negligence, including, but not limited to, acts of god or of the public enemy or terrorists, acts of a government, fires, floods, epidemics, quarantine restrictions, strikes, freight embargoes, earthquakes, explosion, mob violence, riot, inability to procure or general sabotage or rationing of labor, equipment, facilities, sources of energy, material or supplies in the open market, malicious mischief, condemnation, and unusually severe weather or delays of suppliers or subcontractors due to such causes or any similar event and/or occurrences beyond the control of the Fiscal Agent.

The Fiscal Agent may rely and shall be protected in acting or refraining from acting upon any notice, resolution, request, consent, order, certificate, report, warrant, bond or other paper or document believed by it to be genuine and to have been signed or presented by the proper party or proper parties. The Fiscal Agent may consult with counsel, who may be counsel to the Authority, with regard to legal questions, and the opinion of such counsel shall be full and complete authorization and protection in respect of any action taken or suffered by it under the Fiscal Agent Agreement in good faith and in accordance therewith.

The Fiscal Agent shall not be bound to recognize any person as the Owner of a Bond unless and until such Bond is submitted for inspection, if required, and his title thereto satisfactorily established, if disputed.

Whenever in the administration of its duties under the Fiscal Agent Agreement the Fiscal Agent shall deem it necessary or desirable that a matter be proved or established prior to taking or suffering any action under the Fiscal Agent Agreement, such matter (unless other evidence in respect thereof be in the Fiscal Agent Agreement specifically prescribed) may, in the absence of willful misconduct on the part of the Fiscal Agent, be deemed to be conclusively proved and established by an Officer's Certificate, and such certificate shall be full warrant to the Fiscal Agent for any action taken or suffered under the provisions of the Fiscal Agent Agreement or any Supplemental Agreement upon the faith thereof, but in its discretion the Fiscal Agent may, in lieu thereof, accept other evidence of such matter or may require such additional evidence as to it may seem reasonable.

Amendment of the Fiscal Agent Agreement

The Fiscal Agent Agreement and the rights and obligations of the Authority and of the Owners of the Bonds may be modified or amended at any time by a Supplemental Agreement pursuant to the affirmative vote at a meeting of Owners, or with the written consent without a meeting, of the Owners of at least sixty percent (60%) in aggregate principal amount of the Bonds then Outstanding, exclusive of Bonds disqualified as provided in the Fiscal Agent Agreement. No such modification or amendment shall (i) extend the maturity of any Bond or reduce the interest rate thereon, or otherwise alter or impair the obligation of the Authority to pay the principal of, and the interest and any premium on, any Bond, without the express consent of the Owner of

D-18 such Bond, or (ii) permit the creation by the Authority of any pledge or lien upon the Special Taxes superior to or on a parity with the pledge and lien created for the benefit of the Bonds (except as otherwise permitted by the Act, the laws of the State of California or the Fiscal Agent Agreement), or (iii) reduce the percentage of Bonds required for the amendment of the Fiscal Agent Agreement. Any such amendment may not modify any of the rights or obligations of the Fiscal Agent without its written consent.

The Fiscal Agent Agreement and the rights and obligations of the Authority and of the Owners may also be modified or amended at any time by a Supplemental Agreement, without the consent of any Owners, only to the extent permitted by law and only for any one or more of the following purposes:

(A) to add to the covenants and agreements of the Authority in the Fiscal Agent Agreement contained, other covenants and agreements thereafter to be observed, or to limit or surrender any right or power in the Fiscal Agent Agreement reserved to or conferred upon the Authority;

(B) to make modifications not adversely affecting any outstanding series of Bonds of the Authority in any material respect;

(C) to make such provisions for the purpose of curing any ambiguity, or of curing, correcting or supplementing any defective provision contained in the Fiscal Agent Agreement, or in regard to questions arising under the Fiscal Agent Agreement, as the Authority or the Fiscal Agent may deem necessary or desirable and not inconsistent with the Fiscal Agent Agreement, and which shall not adversely affect the rights of the Owners of the Bonds;

(D) to make such additions, deletions or modifications as may be necessary or desirable to assure exemption from gross federal income taxation of interest on the Bonds; and

(E) in connection with the issuance of Parity Bonds under and pursuant to the Fiscal Agent Agreement.

Discharge of the Bonds and the Fiscal Agent Agreement

The Authority shall have the option to pay and discharge the entire indebtedness on all or any portion of the Bonds Outstanding in any one or more of the following ways:

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

(B) by depositing with the Fiscal Agent, in trust, at or before maturity, money which, together with the amounts then on deposit in certain funds and accounts therein as provided in the Fiscal Agent Agreement is fully sufficient to pay such Bonds Outstanding, including all principal, interest and redemption premiums; or

(C) by irrevocably depositing with the Fiscal Agent, in trust, cash and Federal Securities in such amount as the Authority shall determine as confirmed by Bond Counsel or an independent certified public accountant will, together with the interest to accrue thereon and moneys then on deposit in the Reserve Fund and in the Bond Fund and accounts therein as provided in the Fiscal Agent Agreement, be fully sufficient to pay and discharge the indebtedness on such Bonds (including all principal, interest and redemption premiums) at or before their respective maturity dates.

If the Authority shall have taken any of the actions specified in (A), (B) or (C) above, and if such Bonds are to be redeemed prior to the maturity thereof notice of such redemption shall have been given as in the Fiscal Agent Agreement provided or provision satisfactory to the Fiscal Agent shall have been made for the

D-19 giving of such notice, then, at the election of the Authority, and notwithstanding that any Bonds shall not have been surrendered for payment, the pledge of the Special Taxes and other funds provided for in the Fiscal Agent Agreement and all other obligations of the Authority under the Fiscal Agent Agreement with respect to such Bonds Outstanding shall cease and terminate. Notice of such election shall be filed with the Fiscal Agent. Notwithstanding the foregoing, the obligation of the Authority to pay or cause to be paid to the Owners of the Bonds not so surrendered and paid all sums due thereon, to pay all amounts owing to the Fiscal Agent pursuant to the Fiscal Agent Agreement, and otherwise to assure that no action is taken or failed to be taken if such action or failure adversely affects the exclusion of interest on the Bonds from gross income for federal income tax purposes, shall continue in any event.

Upon compliance by the Authority with the foregoing with respect to all Bonds Outstanding, any funds held by the Fiscal Agent after payment of all fees and expenses of the Fiscal Agent, which are not required for the purposes of the preceding paragraph, shall be paid over to the Authority and any Special Taxes thereafter received by the Authority shall not be remitted to the Fiscal Agent but shall be retained by the Authority to be used for any purpose permitted under the Act.

D-20 APPENDIXE

CONTINUING DISCLOSURE AGREEMENT OF THE AUTHORITY

This Continuing Disclosure Agreement of the Authority, dated as of November 1, 2007 (the "Disclosure Agreement") is executed and delivered by the Tejon Ranch Public Facilities Financing Authority (the "Issuer") and The Bank of New York Trust Company, N.A., as fiscal agent (the "Fiscal Agent") and as dissemination agent (the "Dissemination Agent"), in connection with the issuance and delivery by the Issuer of $6,100,000 aggregate principal amount of its Community Facilities District No. 2000-1 (Tejon Industrial Complex Public Improvements) Special Tax Bonds, Series 2007-A (the "2007 Bonds"). The 2007 Bonds are being issued pursuant to a Fiscal Agent Agreement, dated as of June 1, 2000, by and between the Authority for and on behalf of the District and Fiscal Agent, as supplemented and amended by Supplemental Agreement No. 1 to Fiscal Agent Agreement, dated as of December 1, 2003, as supplemented and amended by Supplemental Agreement No. 2 to Fiscal Agent Agreement, dated as of November 1, 2007 (collectively, the "Fiscal Agent Agreement"). The Issuer, the Fiscal Agent and the Dissemination Agent covenant as follows:

SECTION 1. Purpose of the Disclosure Agreement. This Disclosure Agreement is being executed and delivered by the Issuer, the Fiscal Agent and the Dissemination Agent, for the benefit of the Owners and Beneficial Owners of the 2007 Bonds and in order to assist the Participating Underwriter in complying with the Rule.

SECTION 2. Definitions. In addition to the definitions set forth in the Fiscal Agent Agreement, which apply to any capitalized term used in this Disclosure Agreement unless otherwise defined in this Section, the following capitalized terms shall have the following meanings:

"Annual Report" shall mean any Annual Report provided by the Issuer pursuant to, and as described in, Sections 3 and 4 of this Disclosure Agreement.

"Beneficial Owner" shall mean any person which (a) has the power, directly or indirectly, to vote or consent with respect to, or to dispose of ownership of, any 2007 Bonds (including persons holding 2007 Bonds through nominees, depositories or other intermediaries), or (b) is treated as the owner of any 2007 Bonds for federal income purposes.

"Central Post Office" means the DisclosureUSA website maintained by the Municipal Advisory Council of Texas or any successor thereto, or any other organization or method approved by the staff or members of the Securities and Exchange Commission as an intermediary through which issuers may, in compliance with the Rule, make filings required by this Disclosure Agreement.

"Disclosure Representative" shall mean the Executive Director of the Issuer or his or her designee, or such other officer or employee as the Issuer shall designate in writing to the Dissemination Agent from time to time.

"Dissemination Agent" shall mean, initially, The Bank of New York Trust Company, N.A., acting in its capacity as Dissemination Agent hereunder, or any successor Dissemination Agent designated in writing by the Issuer and which has been filed with the then current Dissemination Agent a written acceptance of such designation.

"Listed Events" shall mean any of the events listed in Section 5(a) of this Disclosure Agreement.

"National Repository" shall mean any Nationally Recognized Municipal Securities Information Repository for purpose of the Rule.

E-1 "Participating Underwriter" shall mean the original Underwriter of the 2007 Bonds required to comply with the Rule in connection with offering of the 2007 Bonds, which is Stone & Youngberg LLC, whose address for purposes of this Disclosure Agreement is 515 South Figueroa Street, Suite 1060, Los Angeles, California, 90071.

"Repository" shall mean each National Repository and each State Repository.

"Rule" shall mean Rule 15c2-12(b )(5) adopted by the Securities and Exchange Commission under the Securities Exchange Act of 1934, as the same may be amended from time to time.

"State Repository" shall mean any public or private repository or entity designated by the State of California as a state repository for the purpose of the Rule and recognized as such by the Securities and Exchange Commission. As of the date of this Disclosure Agreement, there is no State Repository.

"Tax-exempt" shall mean that interest on the 2007 Bonds is excluded from gross income for federal income tax purposes, whether or not such interest is includable as an item of tax preferences or otherwise includable directly or indirectly for purposes of calculating any other tax liability, including any alternative minimum tax or environmental tax.

SECTION 3. Provision of Annual Reports.

(a) The Issuer shall, or shall cause the Dissemination Agent by written direction to such Dissemination Agent to, not later than December 1 after the end of the Issuer's fiscal year (which currently ends on June 30), commencing with the report due on December 1, 2007, provide to each Repository and the Participating Underwriter an Annual Report which is consistent with the requirements of Section 4 of this Disclosure Agreement. If , in any year, December 1 falls on a Saturday, Sunday or a holiday on which the Dissemination Agent's offices are closed for business, such deadline shall be extended to the next following day on which the Dissemination Agent's offices are open for business. The Annual Report may be submitted as a single document or as separate documents comprising a package, and may include by reference other information as provided in Section 4 of this Disclosure Agreement; provided that the audited financial statements of the Issuer may be submitted separately from and later than the balance of the Annual Report if they are not available by the date required above for the filing of the Annual Report.

An Annual Report shall be provided at least annually notwithstanding any fiscal year longer than 12 calendar months. The Issuer's fiscal year is currently effective from July 1 to the immediately succeeding June 30 of the following year. The Issuer will promptly notify each Repository or the Municipal Securities Rulemaking Board and, in either case, the Fiscal Agent and the Dissemination Agent of a change in the fiscal year dates.

(b) Not later than fifteen (15) Business Days prior to the date specified in subsection (a) for providing the Annual Report to Repositories, the Issuer shall provide the Annual Report to the Dissemination Agent and the Fiscal Agent (if the Fiscal Agent is not the Dissemination Agent). If by fifteen (15) Business Days prior to such date the Fiscal Agent has not received a copy of the Annual Report, the Fiscal Agent shall notify the Issuer and the Dissemination Agent of such failure to receive the report. The Issuer shall provide a written certification with each Annual Report furnished to the Dissemination Agent and the Fiscal Agent to the effect that such Annual Report constitutes the Annual Report required to be furnished by it hereunder. The Dissemination Agent and Fiscal Agent may conclusively rely upon such certification of the Issuer and shall have no duty or obligation to review such Annual Report.

(c) If the Dissemination Agent is unable to verify that an Annual Report has been provided to Repositories by the date required in subsection (a), the Dissemination Agent shall send a notice to each Repository, in substantially the form attached as Exhibit A.

E-2 (d) The Dissemination Agent shall:

(i) determine each year prior to the date for providing the Annual Report the name and address of each National Repository and each State Repository, if any; and

(ii) promptly after receipt of the Annual Report, file a report with the Issuer and (if the Dissemination Agent is not the Fiscal Agent) the Fiscal Agent certifying that the Annual Report has been provided pursuant to this Disclosure Agreement, stating the date it was provided and listing all the Repositories to which it was provided.

(e) Notwithstanding any other provision of this Disclosure Agreement, any of the required filings hereunder may be made through a Central Post Office.

SECTION 4. Content of Annual Report. The Issuer's Annual Report shall contain or include by reference:

(a) Financial Statements. The audited financial statements of the Issuer for the most recent fiscal year of the Issuer then ended. If the Issuer prepares audited financial statement and if the audited financial statements are not available by the time the Annual Report is required to be filed, the Annual Report shall contain any unaudited financial statements of the Issuer in a format similar to the financial statements, and the audited financial statements shall be filed in the same manner as the Annual Report when they become available. Audited financial statements of the Issuer shall be audited by such auditor as shall then be required or permitted by State law or the Fiscal Agent Agreement. Audited financial statements, if prepared by the Issuer, shall be prepared in accordance with generally accepted accounting principles as prescribed for governmental units by the Governmental Accounting Standards Board; provided, however, that the Issuer may from time to time, if required by federal or state legal requirements, modify the basis upon which its financial statements are prepared. In the event that the Issuer shall modify the basis upon which its financial statements are prepared, the Issuer shall provide a notice of such modification to each Repository, including a reference to the specific federal or state law or regulation specifically describing the legal requirements for the change in accounting basis.

(b) Financial and Operating Data. The Annual Report shall contain or incorporate by reference the following information:

(i) the principal amount of 2007 Bonds outstanding as of the September 2 preceding the filing of the Annual Report;

(ii) the balance in each fund under the Fiscal Agent Agreement as of the September 2 preceding the filing of the Annual Report;

(iii) an update on the status of construction of the public improvements to be constructed with the proceeds of the 2007 Bonds, which shall include an update of Table 1 in the Official Statement;

(iv) any changes to the Rate and Method approved or submitted to the qualified electors for approval prior to the filing of the Annual Report and a description of any Zone 2 property which has been released under the Rate and Method and any parcels for which the Special Taxes have been prepaid in the Fiscal Year for which the Annual Report is being prepared;

(v) an update of Table 4 in the Official Statement based upon the most recent Special Tax levy preceding the date of the Annual Report and on the assessed values of property for the current fiscal year;

E-3 (vi) an update of Table 2 in the Official Statement, including a list of all taxpayers within the District which own property in the District upon which 5% or more of the total Special Taxes for the current fiscal year have been levied, and a statement as to whether any of such taxpayers is delinquent in the payment of Special Taxes;

(vii) any event known to the Issuer which reduces the number of square feet of commercial and industrial development permitted to be constructed within the District or which results in a moratorium on future building within the District;

(viii) the amount of Special Taxes levied in the preceding fiscal year, and the percentage delinquent for such fiscal year and the status of any foreclosure actions being pursued by the Issuer with respect to delinquent Special Taxes; and

(ix) any information not already included under (i) through (viii) above that the Issuer is required to file in its annual report to the California Debt and Investment Advisory Commission pursuant to the provisions of the Mello-Roos Community Facilities Act of 1982, as amended.

Notwithstanding the foregoing, for the Annual Report due on December 1, 2007, Tables 1, 2 and 4 in the Official Statement need not be updated, and copies of those tables as they appear in the Official Statement shall be included in the Annual Report due December 1, 2007.

(c) Any or all of the items listed in (a) or (b) above may be included by specific reference to other documents, including official statements of debt issues of the Issuer or related public entities, which have been submitted to each of the Repositories or the Securities and Exchange Commission. If the document included by reference is a final official statement, it must be available from the Municipal Securities Rulemaking Board. The Issuer shall clearly identify each such other document so included by reference.

SECTION 5. Reporting of Significant Events.

(a) Pursuant to the provisions of this Section 5, the Issuer shall give, or cause to be given, notice of the occurrence of any of the following events with respect to the 2007 Bonds, if material:

(1) principal and interest payment delinquencies.

(2) an event of default under the Fiscal Agent Agreement other than as described in (1) above.

(3) unscheduled draws on the Reserve Fund reflecting financial difficulties.

(4) unscheduled draws on any credit enhancements securing the 2007 Bonds reflecting financial difficulties.

(5) any change in the provider of any letter of credit or any municipal bond insurance policy securing the 2007 Bonds or any failure by the providers of such letters of credit or municipal bond insurance policies to perform on the letter of credit or municipal bond insurance policy.

(6) adverse tax opinions or events adversely affecting the Tax-exempt status of the 2007 Bonds.

(7) modifications to the rights of Bond Owners.

(8) unscheduled redemption of any 2007 Bond.

E-4 (9) defeasances.

(10) any release, substitution, or sale of property securing repayment of the 2007 Bonds.

(11) rating changes.

(b) The Fiscal Agent shall, promptly upon the obtaining actual knowledge of the occurrence of any of the Listed Events, contact the Issuer pursuant to the Fiscal Agent Agreement, inform such person of the event, and request that the Issuer promptly notify the Dissemination Agent in writing whether or not to report the event pursuant to subsection (f). For purposes of this Disclosure Agreement, "actual knowledge" of the occurrence of such Listed Events shall mean actual knowledge by the officer at the corporate trust office of the Fiscal Agent with regular responsibility for the administration of matters related to the Fiscal Agent Agreement.

(c) Whenever the Issuer obtains knowledge of the occurrence of a Listed Event, whether because of a notice from the Fiscal Agent pursuant to subsection (b) or otherwise, the Issuer shall as soon as possible determine if such event would be material under applicable federal securities laws. The Fiscal Agent shall have no responsibility to determine the materiality of any of the Listed Events.

(d) If the Issuer has determined that knowledge of the occurrence of a Listed Event would be material under applicable federal securities laws, the Issuer shall promptly notify the Dissemination Agent in writing. Such notice shall instruct the Dissemination Agent to report the occurrence pursuant to subsection (f).

(e) If in response to a request under subsection (b), the Issuer determines that the Listed Event would not be material under applicable federal securities laws, the Issuer shall so notify the Dissemination Agent in writing and instruct the Dissemination Agent not to report the occurrence pursuant to subsection (f).

(f) If the Dissemination Agent has been instructed by the Issuer to report the occurrence of a Listed Event, the Dissemination Agent shall file a notice of such occurrence with (i) the Municipal Securities Rulemak.ing Board or (ii) each National Repository, and in either case, to each State Repository. Notwithstanding the foregoing, notice of Listed Events described in subsections (a)(8) and (9) need not be given under this subsection any earlier than the notice (if any) of the underlying event is given to Owners of affected 2007 Bonds pursuant to the Fiscal Agent Agreement. In each case of the Listed Event, the Dissemination Agent shall not be obligated to file a notice as required in this subsection (f) prior to the occurrence of such Listed Event.

(g) The Issuer hereby agrees that the undertaking set forth in this Disclosure Agreement is the responsibility of the Issuer and that the Fiscal Agent or the Dissemination Agent shall not be responsible for determining whether the Issuer's instructions to the Dissemination Agent under this Section 5 comply with the requirements of the Rule.

(h) Notwithstanding any other provision of this Disclosure Agreement, any of the required filings pursuant to this Section 5 may be made through a Central Post Office.

SECTION 6. Termination of Reporting Obligation. The obligation of the Issuer, the Fiscal Agent and the Dissemination Agent under this Disclosure Agreement shall terminate upon the legal defeasance, prior redemption or payment in full of all of the 2007 Bonds. If such termination occurs prior to the final maturity of the 2007 Bonds, the Issuer shall give notice of such termination in the same manner as for a Listed Event under Section 5.

E-5 SECTION 7. Dissemination Agent. The Issuer may, from time to time, appoint or engage a Dissemination Agent to assist it in carrying out its obligations under the Disclosure Agreement, and may discharge any such Dissemination Agent, with or without appointing a successor Dissemination Agent. If at any time there is not any other designated Dissemination Agent, the Fiscal Agent shall be the Dissemination Agent. The Dissemination Agent may resign by providing (i) thirty days written notice to the Issuer and the Fiscal Agent and (ii) upon appointment of a new Dissemination Agent hereunder.

SECTION 8. Amendment. (a) This Disclosure Agreement may be amended, by written agreement of the parties, without the consent of the Owners, if all of the following conditions are satisfied: (1) such amendment is made in connection with a change in circumstances that arises from a change in legal (including regulatory) requirements, a change in law (including rules or regulations) or in interpretations thereof, or a change in the identity, nature or status of the Issuer or the type of business conducted thereby, (2) this Disclosure Agreement as so amended would have complied with the requirements of the Rule as of the date of this Disclosure Agreement, after taking into account any amendments or interpretations of the Rule, as well as any change in circumstances, (3) the Issuer shall have delivered to the Fiscal Agent an opinion of a nationally recognized bond counsel or counsel expert in federal securities laws, addressed to the Issuer and the Fiscal Agent, to the same effect as set forth in clause (2) above, (4) the Issuer shall have delivered to the Dissemination Agent an opinion of nationally recognized bond counsel or counsel expert in federal securities laws, addressed to the Issuer, to the effect that the amendment does not materially impair the interests of the Owners or Beneficial Owners, and (5) the Issuer shall have delivered copies of such opinion and amendment to each Repository.

(b) This Disclosure Agreement may be amended, by written agreement of the parties, upon obtaining consent of Owners in the same manner as provided in the Fiscal Agent Agreement for amendments to the Fiscal Agent Agreement with the consent of the Owners of the 2007 Bonds, provided that the conditions set forth in Section 8(a)(l), (2) and (3) have been satisfied.

(c) To the extent any amendment to this Disclosure Agreement results in a change in the type of financial information or operating data provided pursuant to this Disclosure Agreement, the first Annual Report provided thereafter shall include a narrative explanation of the reasons for the amendment and the impact of the change.

(d) If an amendment is made to the basis on which financial statements are prepared, the Annual Report for the year in which the change is made shall present a comparison between the financial statements or information prepared on the basis of the new accounting principles and those prepared on the basis of the former accounting principles. Such comparison shall include a quantitative and, to the extent reasonably feasible, qualitative discussion of the differences in the accounting principles and the impact of the change in the accounting principles on the presentation of the financial information.

(e) Neither the Fiscal Agent nor the Dissemination Agent shall be obligated to enter into any such amendment that modifies or increases their respective duties or obligations hereunder.

SECTION 9. Additional Information. Nothing in this Disclosure Agreement shall be deemed to prevent the Issuer from disseminating any other information, using the means of dissemination set forth in this Disclosure Agreement or any other means of communication, or including any other information in any Annual Report or notice of occurrence of a Listed Event, in addition to that which is required by this Disclosure Agreement. If the Issuer chooses to include any information in any Annual Report or notice of occurrence of a Listed Event in addition to that which is specifically required by this Disclosure Agreement, the Issuer shall have no obligation under this Disclosure Agreement to update such information or include it in any future Annual Report or notice if occurrence of a Listed Event.

The Issuer acknowledges and understands that other state and federal laws, including but not limited to the Securities Act of 1933 and Rule l0b-5 promulgated under the Securities Exchange Act of 1934, may

E-6 apply to the Issuer, and that under some circumstances compliance with this Disclosure Agreement, without additional disclosures or other action, may not fully discharge all duties and obligations of the Issuer under such laws.

SECTION 10. Default. In the event of a failure of the Issuer or the Dissemination Agent to comply with any provision of this Disclosure Agreement, any Owner or Beneficial Owner of the 2007 Bonds may take such actions as may be necessary and appropriate, including seeking mandate or specific performance by court order, to cause the Issuer to comply with its obligations under this Disclosure Agreement. A default under this Disclosure Agreement shall not be deemed an Event of Default under the Fiscal Agent Agreement, and the sole remedy under this Disclosure Agreement in the event of any failure of the Issuer or the Fiscal Agent or the Dissemination Agent to comply with this Disclosure Agreement shall be an action to compel performance.

SECTION 11. Duties, Immunities and Liabilities of Fiscal Agent and Dissemination Agent. Article VII of the Fiscal Agent Agreement is hereby made applicable to this Disclosure Agreement as if this Disclosure Agreement were (solely for this purpose) contained in the Fiscal Agent Agreement and the Dissemination Agent and the Fiscal Agent shall be entitled to the same protections, limitations from liability and indemnification hereunder as are afforded the Fiscal Agent thereunder. The Dissemination Agent and the Fiscal Agent shall have only such duties as are specifically set forth in this Disclosure Agreement, and the Issuer agrees to indemnify and save the Dissemination Agent and the Fiscal Agent and their respective officers, directors, employees and agents, harmless against any loss, expense and liabilities which they may incur arising out of or in the exercise or performance of their powers and duties hereunder, including the costs and expenses (including attorneys fees) of defending against any claim of liability, but excluding liabilities due to the Dissemination Agent's or the Fiscal Agent's respective negligence or willful misconduct. The Dissemination Agent shall be paid compensation by the Issuer for its services provided hereunder in accordance with its schedule of fees as amended from time to time and all expenses, legal fees and advances made or incurred by the Dissemination Agent in the performance of its duties hereunder. The Dissemination Agent and the Fiscal Agent shall have no duty or obligation to review any information provided to them hereunder. The obligations of the Issuer under this Section shall survive resignation or removal of the Dissemination Agent and Fiscal Agent and payment of the 2007 Bonds. No person shall have any right to commence any action against the Fiscal Agent or the Dissemination Agent seeking any remedy other than to compel specific performance of this Disclosure Agreement. The Dissemination Agent and the Fiscal Agent shall not be liable under any circumstances for monetary damages to any person for any breach under this Disclosure Agreement. Any company succeeding to all or substantially all of the Dissemination Agent's corporate trust business shall be the successor to the Dissemination Agent hereunder without the execution or filing of any paper or any further act.

SECTION 12. Beneficiaries. This Disclosure Agreement shall inure solely to the benefit of the Issuer, the Fiscal Agent, the Dissemination Agent, the Participating Underwriter and Owners and Beneficial Owners from time to time of the 2007 Bonds, and shall create no rights in any other person or entity.

SECTION 13. Notices. Notices should be sent in writing to the following addresses. The following information may be conclusively relied upon until changed in writing.

Disclosure Representative: Tejon Ranch Public Facilities Financing Authority c/o Tejon Ranch Company 4436 Lebec Road Lebec, California 93243 Attn: Executive Director

Dissemination Agent: The Bank of New York Trust Company, N.A. 700 South Flower Street, Suite 500 Los Angeles, California 90017 Attn: Corporate Trust

E-7 Fiscal Agent: The Bank of New York Trust Company, N.A. 700 South Flower Street, Suite 500 Los Angeles, California 90017 Attn: Corporate Trust

Participating Underwriter: Stone & Youngberg LLC 515 South Figueroa Street, Suite 1060 Los Angeles, California 90071 Attn: Municipal Bond Division

SECTION 14. Counterparts. This Disclosure Agreement may be executed in several counterparts, each of which shall be an original and all of which shall constitute but one and the same instrument.

TEJON RANCH PUBLIC FACILITIES FINANCING AUTHORITY

By: Executive Director

THE BANK OF NEW YORK TRUST COMPANY, N.A., as Fiscal Agent and Dissemination Agent

By: Authorized Officer

E-8 EXHIBIT A

NOTICE TO REPOSITORIES OF FAILURE TO FILE ANNUAL REPORT

Name of Issuer: Tejon Ranch Public Facilities Financing Authority for and on behalf of Tejon Ranch Public Facilities Financing Authority Community Facilities District No. 2000-1 (Tejon Industrial Complex Public Improvements)

Name of Bond Issue: $6,100,000 Tejon Ranch Public Facilities Financing Authority Community Facilities District No. 2000-1 (Tejon Industrial Complex Public Improvements) Special Tax Bonds, Series 2007-A

Date of Issuance: November 14, 2007

NOTICE IS HEREBY GIVEN that the Tejon Ranch Public Facilities Authority has not provided an Annual Report with respect to the above-named Bonds as required by Section 3 of the Continuing Disclosure Agreement of the Authority, dated as of November 1, 2007, by and between the Authority and The Bank of New York Trust Company, N.A., as fiscal agent and dissemination agent. [The Authority anticipates that the Annual Report will be filed by ____.]

Dated:

THE BANK OF NEW YORK TRUST COMPANY, N.A., as Dissemination Agent

cc: Tejon Ranch Public Facilities Financing Authority

E-9 [THIS PAGE INTENTIONALLY LEFT BLANK] APPENDIXF

CONTINUING DISCLOSURE AGREEMENT OF TEJON RANCH CORP

This Continuing Disclosure Agreement of Tejon Ranchcorp (the "Disclosure Agreement") dated as of November 1, 2007 is executed and delivered by the Tejon Ranchcorp, a California corporation (the "Landowner"), and The Bank of New York Trust Company, N.A., as fiscal agent (the "Fiscal Agent") and as dissemination agent (the "Dissemination Agent"), in connection with the execution and delivery by the Tejon Ranch Public Facilities Financing Authority (the "Authority") of $6,100,000 aggregate principal amount of its Community Facilities District No. 2000-1 (Tejon Industrial Complex Public Improvement) Special Tax Bonds, Series 2007-A (the "2007 Bonds"). The 2007 Bonds are being executed and delivered pursuant to a Fiscal Agent Agreement, dated as of June 1, 2000, by and between the Authority for and on behalf of the District and the Fiscal Agent, as supplemented and amended by Supplemental Agreement No. 1 to Fiscal Agent Agreement, dated as of December 1, 2003, as supplemented and amended by Supplemental Agreement No. 2 to Fiscal Agent Agreement, dated as of November 1, 2007 (collectively, the "Fiscal Agent Agreement"). The Landowner covenants and agrees as follows:

SECTION 1. Purpose of the Disclosure Agreement. This Disclosure Agreement is being executed and delivered by the Landowner for the benefit of the Bondowners and Beneficial Owners and in order to assist the Participating Underwriter in complying with Securities and Exchange Commission Rule 15c2-12(b )(5). Pursuant to this Disclosure Agreement, the Landowner agrees to provide the information required to be provided by the Landowner under the Rule at the time and in the manner required by the Rule. This Disclosure Agreement does not address additional undertakings, if any, by or with respect to persons other than the Landowner who may be considered obligated persons or purposes of the Rule, which additional undertakings, if any, may be required for the Participating Underwriter to comply with the Rule.

SECTION 2. Definitions. In addition to the definitions set forth in the Fiscal Agent Agreement, which apply to any capitalized term used in this Disclosure Agreement unless otherwise defined in this Section, the following capitalized terms shall have the following meanings:

"Affiliate" shall mean, with respect to any Person, (a) each Person that, directly or indirectly, owns or controls, whether beneficially or as an agent, guardian or other fiduciary, twenty-five percent (25%) or more of any class of Equity Securities of such Person, (b) each Person that controls, is controlled by or is under common control with such Person or any Affiliate of such Person or (c) each of such Person's executive officers, directors, joint venturers and general partners; provided, however, that in no case shall the Authority be deemed to be an Affiliate of the Landowner for purposes of this Disclosure Agreement. For the purpose of this definition, "control" of a Person shall mean the possession, directly or indirectly, of the power to direct or cause the direction of its management or policies, whether through the ownership of voting securities, by contract or otherwise. Tejon Industrial Corp is an Affiliate of Tejon Ranchcorp for purposes of this Disclosure Agreement.

"Annual Report" shall mean any Annual Report provided by the Landowner pursuant to, and as described in, Sections 3 and 4 of this Disclosure Agreement.

"Beneficial Owner" shall mean any person which has or shares the power, directly or indirectly, to make investment decisions concerning ownership of the 2007 Bonds (including persons holding 2007 Bonds through nominees, depositories or other intermediaries).

"Central Post Office" means the DisclosureUSA website maintained by the Municipal Advisory Council of Texas or any successor thereto, or any other organization or method approved by the staff or members of the Securities and Exchange Commission as an intermediary through which issuers may, in compliance with the Rule, make filings required by this Disclosure Agreement.

F-1 "Disclosure Representative" shall mean the Chief Financial Officer or his designee acting on behalf of the Landowner, or such other officer or employee as the Landowner shall designate in writing to the Dissemination Agent from time to time.

"Dissemination Agent" shall mean The Bank of New York Trust Company, N.A., acting in its capacity as Dissemination Agent hereunder, or any successor Dissemination Agent designated in writing by the Landowner and which has filed with the Landowner and the Authority a written acceptance of such designation.

"District" shall mean Tejon Ranch Public Facilities Financing Authority, Community Facilities District No. 2000-1 (Tejon Industrial Complex Public Improvements).

"Equity Securities" of any Person shall mean (a) all common stock, preferred stock, participations, shares, general partnership interests or other equity interests in and of such person (regardless of how designated and whether or not voting or non-voting) and (b) all warrants, options and other rights to acquire any of the foregoing.

"Fiscal Year" shall mean the period beginning on July 1 of each year and ending on the next succeeding June 30.

"Government Authority" shall mean any national, state or local government, any political subdivision thereof, any department, agency, authority or bureau of any of the foregoing, or any other Person exercising executive, legislative, judicial, regulatory or administrative functions of or pertaining to government.

"Listed Event" shall mean any of the events listed in Section 5(a) of this Disclosure Agreement.

"National Repository" shall mean any Nationally Recognized Municipal Securities Information Repository for purposes of the Rule.

"Official Statement" shall mean the Official Statement, dated November 2, 2007, relating to the 2007 Bonds.

"Parity Bonds" shall mean bonds of the District that are secured on a parity with the 2007 Bonds.

"Participating Underwriter" shall mean the original Underwriter of the 2007 Bonds required to comply with the Rule in connection with offering of the 2007 Bonds, which is Stone & Youngberg LLC, whose address for purposes of this Disclosure Agreement is 515 South Figueroa Street, Suite 1060, Los Angeles, California 90071.

"Person" shall mean any natural person, corporation, partnership, firm, association, Government Authority or any other Person whether acting in an individual fiduciary, or other capacity.

"Repository" shall mean each National Repository and the State Repository.

"Rule" shall mean Rule 15c2-12(b )(5) adopted by the Securities and Exchange Commission under the Securities Exchange Act of 1934, as the same may be amended from time to time.

"Semiannual Report" shall mean any report to be provided by the Landowner on or pnor to December 15 of each year pursuant to, and as described in, Sections 3 and 4 of this Disclosure Agreement.

"State" shall mean the State of California.

F-2 "State Repository" shall mean any public or private repository or entity designed by the State as a state repository for the purpose of the Rule and recognized as such by the Securities and Exchange Commission. As of the date of this Disclosure Agreement, there is no State Repository.

"TRC" shall mean Tejon Ranch Co., a Delaware corporation, and its successors and assigns.

SECTION 3. Provision of Annual Reports.

(a) The Landowner shall, or shall cause the Dissemination Agent to, not later than June 15 of each year, commencing June 15, 2008, provide to each Repository and to Stone & Youngberg LLC an Annual Report which is consistent with the requirements of Section 4 of this Disclosure Agreement. If , in any year, June 15 falls on a Saturday, Sunday or a holiday on which the Dissemination Agent's offices are closed for business, such deadline shall be extended to the next following day on which the Dissemination Agent's offices are open for business. The Annual Report may be submitted as a single document or as separate documents comprising a package, and may include by reference other information as provided in Section 4 of this Disclosure Agreement, provided that the audited financial statements, if any, of the Landowner may be submitted separately from the balance of the Annual Report and later than the date required for the filing of the Annual Report if they are not available by that date. In addition, until such time as the infrastructure to be constructed within the District with the proceeds of the 2007 Bonds and any Parity Bonds is complete, the Landowner shall, or shall cause the Dissemination Agent to, not later than December 15 of each year, commencing December 15, 2008, provide to each Repository and to Stone & Youngberg LLC a Semiannual Report which is consistent with the requirements of Section 4 of this Disclosure Agreement. If , in any year, December 15 falls on a Saturday, Sunday or a holiday on which the Dissemination Agent's offices are closed for business, such deadline shall be extended to the next following day on which the Dissemination Agent's offices are open for business.

(b) Not later than fifteen (15) Business Days prior to the date specified in subsection (a) for providing the Annual Report and Semiannual Report to Repositories, the Landowner shall provide the Annual Report or the Semiannual Report, as applicable, to the Dissemination Agent or shall provide notification to the Dissemination Agent that the Landowner is preparing, or causing to be prepared, the Annual Report or the Semiannual Report, as applicable, and the date which the Annual Report or the Semiannual Report, as applicable, is expected to be available. If by such date, the Dissemination Agent has not received a copy of the Annual Report or the Semiannual Report, as applicable, or notification as described in the preceding sentence, the Dissemination Agent shall notify the Landowner of such failure to receive the report.

(c) If the Dissemination Agent is unable to provide an Annual Report or Semiannual Report to Repositories by the date required in subsection (a) or to verify that an Annual Report or Semiannual Report has been provided to Repositories by the date required in subsection (a), the Dissemination Agent shall send a notice to each Repository in substantially the form attached as Exhibit A.

(d) The Landowner shall, or shall cause the Dissemination Agent to:

(i) determine each year prior to the date for providing the Annual Report and the Semiannual Report the name and address of each National Repository and the State Repository, if any;and

(ii) promptly after receipt of the Annual Report, file a report with the Landowner and the Authority certifying that the Annual Report or the Semiannual Report, as applicable, has been provided pursuant to this Disclosure Agreement, stating the date it was provided and listing all the Repositories to which it was provided.

(e) Notwithstanding any other provision of this Disclosure Agreement, any of the required filings hereunder may be made through a Central Post Office.

F-3 SECTION 4. Content of Annual Report and Semiannual Report.

(a) The Landowner's Annual Report and Semiannual Report shall contain or include by reference the information which is available as of the date of the filing of the Annual Report or the Semiannual Report, as applicable, relating to the following:

1. An update to the section in the Official Statement entitled "THE DEVELOPMENT AND PROPERTY OWNERSHIP," including an update of Table 6 therein and a discussion of the sources of funds to finance development of property owned by the Landowner and its Affiliates within the District, and whether any material defaults exist under any loan arrangement related to such financing.

2. A summary of development activity within the District, including the number of parcels for which building permits have been issued and the square footage of improvements listed thereon, the number of parcels for which certificates of occupancy have been issued, and as to property owned by the Landowner and its Affiliates, the number of parcels for which land sales have closed, including the amount of land in each transaction, the sales price, the name of the purchaser of the land and a statement as to whether, to the knowledge of the Landowner, the purchaser is (i) purchasing for its own use or (ii) purchasing with the intent to build to sell or lease to other end users.

3. Status of any major governmentally-imposed preconditions for commencement or continuation of development of the parcels owned by the Landowner or its Affiliates within the District.

4. Status of completion of the development being undertaken by the Landowner and its Affiliates and any major legislative, administrative and judicial challenges known to the Landowner to or affecting the construction of the development or the time for construction of any public or private improvements to be made by the Landowner or any Affiliate within the District other than the public improvements described in (5) below (the "Landowner Improvements").

5. Status of completion of the development being undertaken by the Landowner and its Affiliates and any major legislative, administrative and judicial challenges known to the Landowner to or affecting the construction of the public improvements to be constructed with proceeds of the 2007 Bonds (the "District Improvements").

6. Any significant amendments to land use entitlements with respect to parcels owned by the Landowner or its Affiliates within the District, or that are otherwise known to the Landowner, including an update of the total acres subject to the levy of Special Taxes if the amendment affects the total number of acres subject to the levy of the Special Taxes.

7. Status of Special Tax payments on all parcels owned by the Landowner and its Affiliates.

8. In the Annual Report only, the audited financial statements of TRC for its most recently completed fiscal year (which currently ends on each December 31), prepared in accordance with generally accepted accounting principles as promulgated to apply to private entities from time to time by the Financial Accounting Standards Board. If TRC has audited financial statements prepared and the audited financial statements are not available by the time the Annual Report is required to be filed pursuant to Section 3(a), the Annual Report shall contain unaudited financial statements in a format similar to the financial statements for the preceding year, and the audited financial statements shall be filed in the same manner as the Annual Report when they become available.

F-4 (b) In the event that as a result of subsequent amendment of the Rule, interpretive releases, no- action letters or other official guidance from the Securities and Exchange Commission or its staff, the information required to satisfy the Rule shall differ from the information described above, the Landowner shall provide to the Dissemination Agent such other information as is available to the Landowner and not otherwise readily available to the Authority.

(c) Any and all of the items listed above may be included by specific reference to other documents, including official statements of debt issues which have been submitted to each of the Repositories or the Securities and Exchange Commission. If the document included by reference is a final official statement, it must be available from the Municipal Securities Rulemaking Board. The Landowner shall clearly identify each such other document so included by reference.

SECTION 5. Reporting of Significant Events.

(a) Pursuant to the provisions of this Section 5, the Landowner shall give, or cause to be given, notice of the occurrence of any of the following events with respect to the 2007 Bonds, if material under clauses (b) and (c):

1. Failure to pay any real property taxes, special taxes or assessments levied within the District on a parcel owned by the Landowner or any Affiliate;

2. Damage to or destruction of any of the Landowner Improvements or the District Improvements which has a material adverse effect on the value of the parcels owned by the Landowner or any Affiliate;

3. Material default by the Landowner or any Affiliate on any loan with respect to the construction or permanent financing of the Landowner Improvements;

4. Material default by the Landowner or any Affiliate on any loan secured by property within the District owned by the Landowner or any Affiliate;

5. Payment default by the Landowner or any Affiliate on any loan of the Landowner or any Affiliate (whether or not such loan is secured by property within the District) which is beyond any applicable cure period in such loan;

6. The filing of any proceedings with respect to the Landowner or any Affiliate, in which the Landowner or any Affiliate, may be adjudicated as bankrupt or discharged from any or all of their respective debts or obligations or granted an extension of time to pay debts or a reorganization or readjustment of debts; and

7. The filing of any lawsuit against the Landowner or any of its Affiliates which, in the reasonable judgment of the Landowner, will adversely affect the completion of the District Improvements, the Landowner Improvements or the development of parcels owned by the Landowner or its Affiliates within the District, or litigation which if decided against the Landowner, or any of its Affiliates, in the reasonable judgment of the Landowner, would materially adversely affect the financial condition of the Landowner or its Affiliates.

(b) Whenever the Landowner obtains knowledge of the occurrence of a Listed Event, the Landowner shall as soon as possible determine if such event would be material under applicable federal securities laws. The Fiscal Agent shall have no responsibility to determine the materiality of any of the Listed Events.

F-5 (c) If the Landowner determines that knowledge of the occurrence of a Listed Event would be material under applicable federal securities laws, the Landowner shall promptly file a notice of such occurrence with the Dissemination Agent which shall then distribute such notice to the Municipal Securities Rulemak.ing Board and each State Repository, with a copy to the Authority.

(d) The Landowner shall also give notice of the occurrence of any of the following events (to the extent the Landowner has actual knowledge thereof): (i) the date of release of any Zone 2 Property and the acreage released, (ii) the date of substitution of any letter of credit provided by the Landowner with respect to the 2007 Bonds and the identity and rating of the new provider, (iii) the date and amount of any draw on any letter of credit provided by the Landowner, and (iv) the date of issuance and principal amount of any Parity Bonds.

(e) Notwithstanding any other provision of this Disclosure Agreement, any of the required filings hereunder may be made through a Central Post Office.

SECTION 6. Termination of Reporting Obligation. The Landowner's obligations under this Disclosure Agreement shall terminate upon the following events:

(a) the legal defeasance, prior redemption or payment in full of all of the 2007 Bonds,

(b) if as of the date for filing the Annual Report the Landowner and its Affiliates own property within the District which is responsible for less than twenty percent (20%) of the Special Taxes levied in the Fiscal Year for which the Annual Report is being prepared, and the Landowner Improvements and any District Improvements to be constructed by the Landowner have been completed,

(c) all of the development planned within the District has been completed and occupied, or

(d) upon the delivery by the Landowner to the Authority of an opinion of nationally recognized bond counsel to the effect that the information required by this Disclosure Agreement is no longer required. Such opinion shall be based on information publicly provided by the Securities and Exchange Commission or a private letter ruling obtained by the Landowner or a private letter ruling obtained by a similar entity to the Landowner. If such termination occurs prior to the final maturity of the 2007 Bonds, the Landowner shall give notice of such termination in the same manner as for an Annual Report hereunder.

SECTION 7. Dissemination Agent. The Landowner may from time to time, appoint or engage a Dissemination Agent to assist it in carrying out its obligations under this Disclosure Agreement, and may discharge any such Dissemination Agent, with or without appointing a successor Dissemination Agent. If the Dissemination Agent is not the Landowner, the Dissemination Agent shall not be responsible in any manner for the form or content of any notice or report prepared by the Landowner pursuant to this Disclosure Agreement. The Dissemination Agent may resign by providing (i) thirty days written notice to the Landowner and the Fiscal Agent and (ii) upon appointment of a new Dissemination Agent hereunder.

SECTION 8. Amendment; Waiver. Notwithstanding any other provision of this Disclosure Agreement, the Landowner may amend this Disclosure Agreement, and any provision of this Disclosure Agreement may be waived, provided that the following conditions are satisfied:

(a) If the amendment or waiver relates to the provisions of Sections 3(a), 4 or 5, it may only be made in connection with a change in circumstances that arises from a change in legal requirements, change in law, or change in the identity, nature or status of an obligated person with respect to the 2007 Bonds, or the type of business conducted;

(b) This Disclosure Agreement, as amended or taking into account such waiver, would, in the opinion of nationally recognized bond counsel addressed to the Authority, the Fiscal Agent and the

F-6 Participating Underwriter, have complied with the requirements of the Rule at the time of the original issuance of the 2007 Bonds, after taking into account any amendments or interpretations of the Rule, as well as any change in circumstances;

(c) The amendment or waiver either (i) is approved by the Bondowners in the same manner as provided in the Fiscal Agent Agreement for amendments to the Fiscal Agent Agreement with the consent of Bondowners, or (ii) does not, in the opinion of nationally recognized bond counsel addressed to the Authority and the Fiscal Agent, materially impair the interests of the Bondowners or Beneficial Owners of the 2007 Bonds; and

(d) The Landowner, or the Dissemination Agent, shall have delivered copies of the amendment and any opinions delivered under (b) and (c) above.

In the event of any amendment or waiver of a provision of this Disclosure Agreement, the Landowner shall describe such amendment in the next Annual Report or Semiannual Report, and shall include, as applicable, a narrative explanation of the reason for the amendment or waiver and its impact on the type (or, in the case of a change of accounting principles, on the presentation) of financial information or operating data being presented by the Landowner. In addition, if the amendment relates to the accounting principles to be followed in preparing financial statements, (i) notice of such change shall be given to the Municipal Securities Rulemaking Board, the State Repository, if any, and the Repositories, and (ii) the Annual Report for the year in which the change is made should present a comparison (in narrative form and also, if feasible, in quantitative form) between the financial statements as prepared on the basis of the new accounting principles and those prepared on the basis of the former accounting principles. The comparison of financial data described in clause (ii) of the preceding sentence shall be provided at the time financial statements, if any, are filed under Section 4(g) hereof.

SECTION 9. Additional Information. Nothing in this Disclosure Agreement shall be deemed to prevent the Landowner from disseminating any other information, using the means of dissemination set forth in this Disclosure Agreement or any other means of communication, or including any other information in any Annual Report or notice of occurrence of a Listed Event, in addition to that which is required by this Disclosure Agreement. If the Landowner chooses to include any information in any Annual Report or notice of occurrence of a Listed Event in addition to that which is specifically required by this Disclosure Agreement, the Landowner shall have no obligation under this Disclosure Agreement to update such information or include it in any future Annual Report or notice of occurrence of a Listed Event.

The Landowner acknowledges and understands that other state and federal laws, including but not limited to the Securities Act of 1933 and Rule lOb-5 promulgated under the Securities Exchange Act of 1934, may apply to the Landowner, and that under some circumstances compliance with this Disclosure Agreement, without additional disclosures or other action, may not fully discharge all duties and obligations of the Landowner under such laws.

SECTION 10. Default. In the event of a failure of the Landowner to comply with any provision of this Disclosure Agreement, any Participating Underwriter or any Bondowner or Beneficial Owner of the 2007 Bonds may, take such actions as may be necessary and appropriate, including seeking mandate or specific performance by court order, to cause the Landowner or the Dissemination Agent to comply with its obligations under this Disclosure Agreement. A default under this Disclosure Agreement shall not be deemed an Event of Default under the Fiscal Agent Agreement, and the sole remedy under this Disclosure Agreement in the event of any failure of the Landowner to comply with this Disclosure Agreement shall be an action to compel performance.

SECTION 11. Duties, Immunities and Liabilities of Dissemination Agent. The Dissemination Agent shall have only such duties as are specifically set forth in this Disclosure Agreement and the Landowner agrees to indemnify and save the Dissemination Agent, its officers, directors, employees and agents, harmless

F-7 against any loss, expense and liabilities which they may incur arising out of or in the exercise or performance of theirs powers and duties hereunder, including the costs and expenses (including attorneys fees) of defending against any claim of liability, but excluding liabilities due to the Dissemination Agent's negligence or willful misconduct. The Landowner agrees to pay the Dissemination Agent a reasonable annual fee for the performance of its duties hereunder. The Dissemination Agent shall not be deemed to be acting in any fiduciary capacity for the Landowner, the Participating Underwriter, Bondowners or Beneficial Owners or any other party. The Dissemination Agent may rely and shall be protected in acting or refraining from acting upon a direction from the Landowner or an opinion of nationally recognized bond counsel. The obligations of the Landowner under this Section shall survive resignation or removal of the Dissemination Agent and payment of the 2007 Bonds. No person shall have any right to commence any action against the Dissemination Agent seeking any remedy other than to compel specific performance of this Disclosure Agreement. The Dissemination Agent may conclusively rely upon the Annual Report provided to it by the Landowner as constituting the Annual Report required of the Landowner in accordance with this Disclosure Agreement and shall have no duty or obligation to review such Annual Report. The Dissemination Agent shall have no duty to prepare the Annual Report nor shall the Dissemination Agent be responsible for filing any Annual Report not provided to it by the Landowner in a timely manner in a form suitable for filing with the Repositories. Any company succeeding to all or substantially all of the Dissemination Agent's corporate trust business shall be the successor to the Dissemination Agent hereunder without the execution or filing of any paper or any further act.

The Dissemination Agent will not, without the Landowner's prior written consent, settle, compromise or consent to the entry of any judgment in any pending or threatened claim, action or proceeding in respect of which indemnification may be sought hereunder unless such settlement, compromise or consent includes an unconditional release of the Landowner and its controlling persons from all liability arising out of such claim, action or proceedings. If a claim, action or proceeding is settled with the consent of the Landowner or if there is a final judgment (other than a stipulated final judgment without the approval of the Landowner) for the plaintiff in any such claim, action or proceeding, with or without the consent of the Landowner, the Landowner agrees to indemnify and hold harmless the Dissemination Agent to the extent described herein.

SECTION 12. Reporting Obligation of Landowner's Transferees; Covenant Running With Land. The Landowner shall, in connection with any sale or transfer of ownership of land within the District which will result in the transferee ( which term shall include any successors and assigns of the Landowner) becoming responsible (i) for the payment of more than 20 percent of the Special Taxes levied on property within the District in the Fiscal Year following such transfer and (ii) for the construction and/or installation of some or all of the improvements needed to permit parcels to be sold and developed, cause such transferee to enter into a disclosure agreement with terms substantially similar to the terms of this Disclosure Agreement, whereby such transferee agrees to be bound by the obligations of the Landowner under this Disclosure Agreement as an additional obligated party. Additionally, the Landowner shall, in connection with any sale or transfer of ownership of land within the District which will result in the transferee becoming responsible for the payment of 20 percent or more of the Special Taxes levied on property within the District in the Fiscal Year following such transfer, but where the transferee is not responsible for the construction or installation of some or all of the infrastructure needed to construct improvements on such land, cause such transferee to enter into a disclosure agreement with terms substantially similar to the terms of this Disclosure Agreement, whereby such transferee agrees to provide its audited financial statements, if any, and the information of the type described in Section 4(a)(2), (3), (6) and (7) of this Disclosure Agreement; provided that such transferee's obligations under such disclosure agreement shall terminate upon the sold or transferred land being improved with structures, or the land owned by the transferee becoming responsible for the payment of less than 20 percent of the annual Special Taxes. The Landowner agrees that its obligations pursuant to this Disclosure Agreement shall be a covenant running with the land owned by the Landowner within the District such that its obligations pursuant to this Disclosure Agreement shall be binding upon all such transferees described above as though the obligations of the Landowner and such transferees were expressly set forth in the grant deeds whereby such transferees obtain title to or an estate in such land from the Landowner as provided in Sections 1460 through 1470 of the Civil Code of the State of California. A memorandum regarding the Landowner's obligations

F-8 under this Disclosure Agreement and of the covenant running with the land created hereby may be recorded in the Official Records in the office of the County Recorder of the County of Kern, California.

SECTION 13. Landowner as Independent Contractor. In performing under this Disclosure Agreement, it is understood that the Landowner is an independent contractor and not an agent of the Authority.

SECTION 14. Notices. Notices should be sent in writing to the following addresses. The following information may be conclusively relied upon until changed in writing.

Disclosure Representative: Tejon Ranch Public Facilities Financing Authority c/o Tejon Ranch Company 4436 Lebec Road Lebec, California 93243 Attn: Executive Director

Dissemination Agent: The Bank of New York Trust Company, N.A. 700 South Flower Street, Suite 500 Los Angeles, California 90017 Attn: Corporate Trust

Fiscal Agent: The Bank of New York Trust Company, N.A. 700 South Flower Street, Suite 500 Los Angeles, California 90017 Attn: Corporate Trust

Participating Underwriter: Stone & Youngberg LLC 515 South Figueroa Street, Suite 1060 Los Angeles, California 90071 Attn: Municipal Bond Division

SECTION 15. Beneficiaries. This Disclosure Agreement shall inure solely to the benefit of the Landowner, the Authority, the Dissemination Agent, the Fiscal Agent, the Participating Underwriter and Bondowners and Beneficial Owners from time to time of the 2007 Bonds, and shall create no rights in any other person or entity.

TEJON RANCHCORP, a California corporation

By:------

THE BANK OF NEW YORK TRUST COMPANY, N.A., as Dissemination Agent and Fiscal Agent

By:------Authorized Officer

F-9 EXHIBIT A

NOTICE TO REPOSITORIES OF FAILURE TO FILE ANNUAL REPORT

Name of the Issuer: Tejon Ranch Public Facilities Financing Authority Community Facilities District No. 2000-1 (Tejon Industrial Complex Public Improvements)

Name of Bond Issue: $6,100,000 Tejon Ranch Public Facilities Financing Authority Community Facilities District No. 2000-1 (Tejon Industrial Complex Public Improvements) Special Tax Bonds, Series 2007-A

Date of Issuance: November 14, 2007

NOTICE IS HEREBY GIVEN that Tejon Ranchcorp has not provided an [Annual Report or Semiannual Report] with respect to the above-named 2007 Bonds as required by the Continuing Disclosure Agreement. [The Landowner anticipates that such [Annual Report or Semiannual Report] will be filed not later than----~ __.]

Dated: ______

THE BANK OF NEW YORK TRUST COMPANY, N.A., as Dissemination Agent

cc: Tejon Ranch Public Facilities Financing Authority

F-10 APPENDIXG

FORM OF OPINION OF BOND COUNSEL

November 14, 2007

Board of Directors Tejon Ranch Public Facilities Financing Authority 4436 Lebec Road Lebec, California 93243

OPINION: $6,100,000 Tejon Ranch Public Facilities Financing Authority Community Facilities District No. 2000-1 (Tejon Industrial Complex Public Improvements) Special Tax Bonds, Series 2007-A

Members of the Board of Directors:

We have acted as bond counsel in connection with the issuance by the Tejon Ranch Public Facilities Financing Authority (the "Authority") of its $6,100,000 Tejon Ranch Public Facilities Financing Authority Community Facilities District No. 2000-1 (Tejon Industrial Complex Public Improvements) Special Tax Bonds, Series 2007-A (the "Bonds") pursuant to the Mello-Roos Community Facilities Act of 1982, as amended (Section 53311 et seq., of the California Government Code) (the "Act"), a Fiscal Agent Agreement, dated as of June 1, 2000 (the "Original Fiscal Agent Agreement"), by and between the Authority, for and on behalf of Tejon Ranch Public Facilities Financing Authority Community Facilities District No. 2000-1 (Tejon Industrial Complex Public Improvements) (the "District"), and The Bank of New York Trust Company, N.A., successor to BNY Western Trust Company, as fiscal agent (the "Fiscal Agent"), as amended and supplemented by Supplement Agreement No. 1 to Fiscal Agent Agreement, dated as of December 1, 2003 (the "First Supplement"), by and between the Authority, for and on behalf of the District, and the Fiscal Agent, and by Supplemental Agreement No. 2 to Fiscal Agent Agreement, dated as of November 1, 2007 (the "Second Supplement"), by and between the Authority, for and on behalf of the District, and the Fiscal Agent, and Resolution No. 07-01 adopted by the Authority on October 16, 2007 (the "Resolution"). The Original Fiscal Agent Agreement, as amended and supplemented by the First Supplement and by the Second Supplement, is referred to below as the "Fiscal Agent Agreement."

We have examined the law and such certified proceedings and other documents as we deem necessary to render this opinion. As to questions of fact material to our opinion, we have relied upon representations of the Authority contained in the Resolution and in the certified proceedings and certifications of public officials and others furnished to us, without undertaking to verify the same by independent investigation.

Based upon the foregoing, we are of the opinion, under existing law, as follows:

1. The Authority is duly created and validly existing as a joint exercise of powers authority, with the power to adopt the Resolution, enter into the Fiscal Agent Agreement and perform the agreements on its part contained therein and issue the Bonds.

2. The Fiscal Agent Agreement has been duly entered into by the Authority and constitutes a valid and binding obligation of the Authority enforceable upon the Authority.

3. Pursuant to the Act, the Fiscal Agent Agreement creates a valid lien on the funds pledged by the Fiscal Agent Agreement for the security of the Bonds, on a parity with the pledge thereof for the security of

G-1 the Series 2000-A Bonds, the Series 2003-A Bonds and any additional Parity Bonds that may be issued under, and as such terms are defined in, the Fiscal Agent Agreement.

4. The Bonds have been duly authorized, executed and delivered by the Authority and are valid and binding limited obligations of the Authority for the District, payable solely from the sources provided therefor in the Fiscal Agent Agreement.

5. Subject to the Authority's compliance with certain covenants interest on the Bonds is excludable from gross income of the owners thereof for federal income tax purposes under section 103 of the Internal Revenue Code of 1986, as amended (the "Code") and, under section 55 of the Code, is not included as an item of tax preference in computing the federal alternative minimum tax for individuals and corporations under the Code but is taken into account in computing an adjustment used in determining the federal alternative minimum tax for certain corporations. Failure by the Authority to comply with one or more of such covenants could cause interest on the Bonds to not be excludable from gross income under section 103 of the Code for the federal income tax purposes retroactively to the date of issuance of the Bonds.

6. The interest on the Bonds is exempt from personal income taxation imposed by the State of California.

Ownership of the Bonds may result in other tax consequences to certain taxpayers, and we express no opinion regarding any such collateral consequences arising with respect to the Bonds.

The rights of the owners of the Bonds and the enforceability of the Bonds, the Resolution and the Fiscal Agent Agreement may be subject to bankruptcy, insolvency, reorganization, moratorium and other similar laws affecting creditors' rights heretofore or hereafter enacted and also may be subject to the exercise of judicial discretion in accordance with general principles of equity.

In rendering this opinion, we have relied upon certifications of the Authority and others with respect to certain material facts. Our opinion represents our legal judgment based upon such review of the law and facts that we deem relevant to render our opinion and is not a guarantee of a result. This opinion is given as of the date hereof and we assume no obligation to revise or supplement this opinion to reflect any facts or circumstances that may hereafter come to our attention or any changes in law that may hereafter occur.

Respectfully submitted,

G-2 APPENDIXH

BOOK-ENTRY SYSTEM

The information in this section concerning DTC and DTC 's book-entry only system has been obtained from sources that the District believes to be reliable, but the District takes no responsibility for the completeness or accuracy thereof The following description of the procedures and record keeping with respect to beneficial ownership interests in the 2007 Bonds, payment ofprincipal, premium, if any, and interest on the 2007 Bonds to DTC Participants or Beneficial Owners, confirmation and transfers of beneficial ownership interests in the 2007 Bonds and other related transactions by and between DTC, the DTC Participants and the Beneficial Owners is based solely on information provided by DTC.

The Depository Trust Company ("DTC"), New York, NY, will act as securities depository for the 2007 Bonds (the "2007 Bonds"). The 2007 Bonds will be issued as fully-registered securities registered in the name of Cede & Co. (DTC's partnership nominee) or such other name as may be requested by an authorized representative of DTC. One fully-registered 2007 Bond certificate will be issued for each maturity of the 2007 Bonds, in the aggregate principal amount of such maturity, and will be deposited with DTC.

DTC, the world's largest securities depository, is a limited-purpose trust company organized under the New York Banking Law, a "banking organization" within the meaning of the New York Banking Law, a member of the Federal Reserve System, a "clearing corporation" within the meaning of the New York Uniform Commercial Code, and a "clearing agency" registered pursuant to the provisions of Section 17A of the Securities Exchange Act of 1934. DTC holds and provides asset servicing for over 2.2 million issues of U.S. and non-U.S. equity issues, corporate and municipal debt issues, and money market instruments from over 100 countries that DTC's participants ("Direct Participants") deposit with DTC. DTC also facilitates the post-trade settlement among Direct Participants of sales and other securities transactions in deposited securities, through electronic computerized book-entry transfers and pledges between Direct Participants' accounts. This eliminates the need for physical movement of securities certificates. Direct Participants include both U.S. and non-U.S. securities brokers and dealers, banks, trust companies, clearing corporations, and certain other organizations. DTC is a wholly-owned subsidiary of The Depository Trust & Clearing Corporation ("DTCC"). DTCC, in turn, is owned by a number of Direct Participants of DTC and Members of the National Securities Clearing Corporation, Fixed Income Clearing Corporation and Emerging Markets Clearing Corporation (NSCC, FICC, and EMCC, also subsidiaries of DTCC), as well as by the New York Stock Exchange, Inc., the American Stock Exchange LLC, and the National Association of Securities Dealers, Inc. Access to the DTC system is also available to others such as both U.S. and non-U.S. securities brokers and dealers, banks, trust companies, and clearing corporations that clear through or maintain a custodial relationship with a Direct Participant, either directly or indirectly ("Indirect Participants"). DTC has Standard & Poor's highest rating: AAA. The DTC Rules applicable to its Participants are on file with the Securities and Exchange Commission. More information about DTC can be found at www.dtcc.com and www.dtc.org.

Purchases of 2007 Bonds under the DTC system must be made by or through Direct Participants, which will receive a credit for the 2007 Bonds on DTC's records. The ownership interest of each actual purchaser of each 2007 Bond ("Beneficial Owner") is in turn to be recorded on the Direct and Indirect Participants' records. Beneficial Owners will not receive written confirmation from DTC of their purchase. Beneficial Owners are, however, expected to receive written confirmations providing details of the transaction, as well as periodic statements of their holdings, from the Direct or Indirect Participant through which the Beneficial Owner entered into the transaction. Transfers of ownership interests in the 2007 Bonds are to be accomplished by entries made on the books of Direct and Indirect Participants acting on behalf of Beneficial Owners. Beneficial Owners will not receive certificates representing their ownership interests in 2007 Bonds, except in the event that use of the book-entry system for the 2007 Bonds is discontinued.

H-1 To facilitate subsequent transfers, all 2007 Bonds deposited by Direct Participants with DTC are registered in the name of DTC's partnership nominee, Cede & Co., or such other name as may be requested by an authorized representative of DTC. The deposit of 2007 Bonds with DTC and their registration in the name of Cede & Co. or such other DTC nominee do not effect any change in beneficial ownership. DTC has no knowledge of the actual Beneficial Owners of the 2007 Bonds; DTC's records reflect only the identity of the Direct Participants to whose accounts such 2007 Bonds are credited, which may or may not be the Beneficial Owners. The Direct and Indirect Participants will remain responsible for keeping account of their holdings on behalf of their customers.

Conveyance of notices and other communications by DTC to Direct Participants, by Direct Participants to Indirect Participants, and by Direct Participants and Indirect Participants to Beneficial Owners will be governed by arrangements among them, subject to any statutory or regulatory requirements as may be in effect from time to time. Beneficial Owners of 2007 Bonds may wish to take certain steps to augment the transmission to them of notices of significant events with respect to the 2007 Bonds, such as redemptions, tenders, defaults, and proposed amendments to the 2007 Bond documents. For example, Beneficial Owners of 2007 Bonds may wish to ascertain that the nominee holding the 2007 Bonds for their benefit has agreed to obtain and transmit notices to Beneficial Owners. In the alternative, Beneficial Owners may wish to provide their names and addresses to the registrar and request that copies of notices be provided directly to them.

Redemption notices shall be sent to DTC. If less than all of the 2007 Bonds within a maturity are being redeemed, DTC's practice is to determine by lot the amount of the interest of each Direct Participant in such maturity to be redeemed.

Neither DTC nor Cede & Co. (nor any other DTC nominee) will consent or vote with respect to 2007 Bonds unless authorized by a Direct Participant in accordance with DTC's procedures. Under its usual procedures, DTC mails an Omnibus Proxy to the District as soon as possible after the record date. The Omnibus Proxy assigns Cede & Co.' s consenting or voting rights to those Direct Participants to whose accounts 2007 Bonds are credited on the record date (identified in a listing attached to the Omnibus Proxy).

Principal, redemption price and interest payments on the 2007 Bonds will be made to Cede& Co., or such other nominee as may be requested by an authorized representative of DTC. DTC's practice is to credit Direct Participants' accounts upon DTC's receipt of funds and corresponding detail information from the District or the Fiscal Agent, on payable date in accordance with their respective holdings shown on DTC's records. Payments by Participants to Beneficial Owners will be governed by standing instructions and customary practices, as is the case with securities held for the accounts of customers in bearer form or registered in "street name," and will be the responsibility of such Participant and not of DTC, the Fiscal Agent, or the District, subject to any statutory or regulatory requirements as may be in effect from time to time. Payment of principal, redemption price and interest payments to Cede & Co. ( or such other nominee as may be requested by an authorized representative of DTC) is the responsibility of the District or the Fiscal Agent, disbursement of such payments to Direct Participants will be the responsibility of DTC, and disbursement of such payments to the Beneficial Owners will be the responsibility of Direct and Indirect Participants.

DTC may discontinue providing its services as depository with respect to the 2007 Bonds at any time by giving reasonable notice to the District or the Fiscal Agent. Under such circumstances, in the event that a successor depository is not obtained, 2007 Bond certificates are required to be printed and delivered.

The District may decide to discontinue use of the system of book-entry-only transfers through DTC (or a successor securities depository). In that event, 2007 Bond certificates will be printed and delivered.

H-2