$10,275,000 City of Redwood City Redwood Shores Community Facilities District No

NEW ISSUE – BOOK ENTRY ONLY NO RATING In the opinion of Nossaman LLP, Irvine, California, Bond Counsel, based on existing statutes, regulations, rulings and court decisions and assuming, among other matters, compliance with certain covenants, interest on the Bonds is excludable from gross income for federal income tax purposes, and is not a specific preference item for purposes of the federal individual or corporate alternative minimum taxes, although Bond Counsel observes that it is included in adjusted current earnings in calculating corporate alternative minimum taxable income. In the further opinion of Bond Counsel, interest on the Bonds is, under existing law, exempt from State of California personal income taxes. Bond Counsel expresses no opinion regarding other federal or State tax consequences relating to the ownership or disposition of, or the accrual or receipt of interest on, the Bonds. See “TAX MATTERS” herein. $10,275,000 CITY OF REDWOOD CITY REDWOOD SHORES COMMUNITY FACILITIES DISTRICT NO. 99-1 (SHORES TRANSPORTATION IMPROVEMENT PROJECT) OF THE CITY OF REDWOOD CITY, SPECIAL TAX REFUNDING BONDS, SERIES 2012B Dated: date of issuance Due: September 1, as shown on inside cover The City of Redwood City, California (the “City”), for and on behalf of the Redwood Shores Community Facilities District No. 99-1 (Shores Transportation Improvement Project) of the City of Redwood City (the “District”), is issuing the above- captioned bonds (the “Bonds”) to (i) refund in full and defease the Redwood Shores Community Facilities District No. 99-1 (Shores Transportation Improvement Project) of the City of Redwood City Special Tax Bonds, Series 2001A and Series 2003B (collectively, the “Prior Bonds”), (ii) fund a reserve fund for the Bonds, and (iii) pay costs of issuing the Bonds and refunding the Prior Bonds. See “PLAN OF REFUNDING.” The Prior Bonds were issued by the District to finance certain public transportation system improvements located within and in the vicinity of the District. The Bonds are being issued pursuant to a Fiscal Agent Agreement, dated as of December 1, 2012 (the “Fiscal Agent Agreement”), by and between the City, for and on behalf of the District, and U.S. Bank National Association, as fiscal agent (the “Fiscal Agent”). The Bonds are payable from the proceeds of an annual Special Tax (as defined in the Fiscal Agent Agreement) being levied on certain property located within the District (see “THE DISTRICT”), and from certain funds pledged under the Fiscal Agent Agreement. The Special Tax is being levied according to a Rate and Method of Apportionment of Special Tax for the District. See “SECURITY FOR THE BONDS—Special Taxes” and Appendix B – “Rate and Method.” Interest on the Bonds is payable on March 1 and September 1 of each year, commencing on March 1, 2013. The Bonds will be issued in book-entry form only and, when delivered, will be registered in the name of Cede & Co., as nominee of The Depository Trust Company, New York, New York (“DTC”), which will act as securities depository for the Bonds. Individual purchases of the Bonds will be made in book-entry form only. Purchasers of the Bonds will not receive physical certificates representing their ownership interests in the Bonds purchased. The Bonds will be issued in the principal amount of $5,000 and any integral multiple thereof. Principal of and interest on the Bonds are payable directly to DTC by the Fiscal Agent. Upon receipt of payments of principal and interest, DTC will in turn distribute such payments to the beneficial owners of the Bonds. See “THE BONDS” and Appendix F – “DTC and the Book-Entry Only System.” The Bonds are subject to optional redemption, mandatory redemption from Special Tax prepayments and related transfers from the Reserve Fund held under the Fiscal Agent Agreement, and mandatory sinking payment redemption prior to maturity. See “THE BONDS—Redemption.” NONE OF THE FAITH AND CREDIT OF THE DISTRICT, THE CITY OR THE STATE OF CALIFORNIA OR OF ANY OF THEIR RESPECTIVE POLITICAL SUBDIVISIONS IS PLEDGED TO THE PAYMENT OF THE BONDS. EXCEPT FOR THE SPECIAL TAXES, NO OTHER TAXES ARE PLEDGED TO THE PAYMENT OF THE BONDS. THE BONDS ARE NEITHER GENERAL OR SPECIAL OBLIGATIONS OF THE CITY NOR GENERAL OBLIGATIONS OF THE DISTRICT, BUT ARE LIMITED OBLIGATIONS OF THE CITY FOR THE DISTRICT, PAYABLE SOLELY FROM CERTAIN AMOUNTS PLEDGED THEREFOR UNDER THE FISCAL AGENT AGREEMENT, AS MORE FULLY DESCRIBED IN THIS OFFICIAL STATEMENT. This cover page contains certain information for quick reference only. Investors should read the entire Official Statement to obtain information essential to the making of an informed investment decision with respect to the Bonds. The purchase of the Bonds involves significant risks, and the Bonds are not appropriate investments for all types of investors. See “SPECIAL RISK FACTORS” in this Official Statement for a discussion of certain risk factors that should be considered, in addition to the other matters set forth in this Official Statement, in evaluating the investment quality of the Bonds. The Bonds are offered when, as and if issued, subject to approval as to their legality by Nossaman LLP, Irvine, California, Bond Counsel, and certain other conditions. Certain legal matters with respect to the Bonds will be passed upon for the City by the City Attorney, and by Quint & Thimmig LLP, San Francisco, California, in its capacity as Disclosure Counsel to the City for the Bonds. Certain legal matters related to the Bonds will be passed upon for the Underwriter by Stradling Yocca Carlson & Rauth, A Professional Corporation, Newport Beach, California, acting as Underwriter’s Counsel. It is anticipated that the Bonds in definitive form will be available for delivery to DTC on or about December 20, 2012.

The date of this Official Statement is December 11, 2012.

$10,275,000 CITY OF REDWOOD CITY REDWOOD SHORES COMMUNITY FACILITIES DISTRICT NO. 99-1 (SHORES TRANSPORTATION IMPROVEMENT PROJECT) OF THE CITY OF REDWOOD CITY, SPECIAL TAX REFUNDING BONDS, SERIES 2012B

MATURITY SCHEDULE

$5,100,000 Serial Bonds

Maturity Date Principal Interest CUSIP (September 1) Amount Rate Yield Price Number(1) 2013 $575,000 3.000% 0.850% 101.490% 757893 DA7 2014 355,000 3.000 1.350 102.758 757893 DB5 2015 370,000 4.000 1.670 106.118 757893 DC3 2016 380,000 2.000 1.920 100.283 757893 DD1 2017 390,000 2.000 2.190 99.154 757893 DE9 2018 400,000 2.250 2.470 98.835 757893 DF6 2019 405,000 2.250 2.620 97.739 757893 DG4 2020 415,000 2.500 2.810 97.865 757893 DH2 2021 425,000 2.750 3.010 98.021 757893 DJ8 2022 440,000 3.000 3.200 98.341 757893 DK5 2023 450,000 3.125 3.310 98.341 757893 DL3 2026 495,000 5.000 3.300 114.005(c) 757893 DN9

$945,000 3.250% Term Bonds due September 1, 2025; Yield 3.500%, Price 97.451, CUSIP No. 757893 DM1(1)

$1,640,000 5.000% Term Bonds due September 1, 2029; Yield 3.550%, Price 111.803(c), CUSIP No. 757893 DP4(1)

$2,590,000 5.000% Term Bonds due September 1, 2033; Yield 3.790%, Price 109.737(c), CUSIP No. 757893 DQ2(1)

(1) Copyright 2012, American Bankers Association. CUSIP data is provided by Standard & Poor’s CUSIP Service Bureau, a division of The McGraw-Hill Companies, Inc., and are provided for convenience of reference only. Neither the City nor the Underwriter assumes any responsibility for the accuracy of the CUSIP data. (c) Priced to first optional redemption date at par of September 1, 2022.

GENERAL INFORMATION ABOUT THIS OFFICIAL STATEMENT

The information contained in this Official Statement has been obtained from sources that are believed to be reliable. No representation, warranty or guarantee, however, is made by the Underwriter as to the accuracy or completeness of any information in this Official Statement, including, without limitation, the information contained in the Appendices, and nothing contained in this Official Statement should be relied upon as a promise or representation by the Underwriter.

Neither the City nor the Underwriter has authorized any dealer, broker, salesperson or other person to give any information or make any representations with respect to the offer or sale of Bonds other than as contained in this Official Statement. If given or made, any such information or representations must not be relied upon as having been authorized by the City or the Underwriter. The information and expressions of opinion in this Official Statement are subject to change without notice, and neither the delivery of this Official Statement nor any sale of the Bonds shall under any circumstances create any implication that there has been no change in the affairs of any party described in this Official Statement, or in the status of any property described in this Official Statement, subsequent to the date as of which such information is presented.

This Official Statement and the information contained in this Official Statement are subject to amendment without notice. The Bonds may not be sold, and no offer to buy the Bonds may be accepted, prior to the time the Official Statement is delivered in final form. Under no circumstances shall this Official Statement constitute an offer to sell or the solicitation of an offer to buy, nor shall there be any sale of, the Bonds in any jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such jurisdiction.

When used in this Official Statement and in any continuing disclosure by the City, in any press release and in any oral statement made with the approval of an authorized officer of the City or any other entity described or referenced in this Official Statement, the words or phrases “will likely result,” “are expected to,” “will continue,” “is anticipated,” “estimate,” “project,” “forecast,” “expect,” “intend” and similar expressions identify “forward looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Such statements are subject to risks and uncertainties that could cause actual results to differ materially from those contemplated in such forward-looking statements. Any forecast is subject to such uncertainties. Inevitably, some assumptions used to develop the forecasts will not be realized, and unanticipated events and circumstances may occur. Therefore, there are likely to be differences between forecasts and actual results, and those differences may be material.

All summaries of the documents referred to in this Official Statement are qualified by the provisions of the respective documents summarized and do not purport to be complete statements of any or all of such provisions.

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 the completeness of such information.”

In connection with the offering of the Bonds, the Underwriter may overallot or effect transactions that stabilize or maintain the market prices of the Bonds at levels above that which might otherwise prevail in the open market. Such stabilizing, if commenced, may be discontinued at any time.

The Bonds have not been registered under the Securities Act of 1933, as amended (the “Securities Act”), in reliance upon an exemption from the registration requirements contained in the Securities Act. The Bonds have not been registered or qualified under the securities laws of any state.

The City maintains an Internet website, but the information on the website is not incorporated in this Official Statement.

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CITY OF REDWOOD CITY

City Council

Alicia C. Aguirre, Mayor Jeffrey Gee, Vice Mayor Jeff Ira, Councilmember Ian Bain, Councilmember Rosanne Foust, Councilmember Barbara Pierce, Councilmember John D. Seybert, Councilmember

City Officials

Robert Bell, City Manager Brian Ponty, Director of Finance Pamela Thompson, Esq., City Attorney Silvia Vonderlinden, City Clerk

PROFESSIONAL SERVICES

Bond Counsel Nossaman LLP Irvine, California

Financial Advisor William Euphrat Municipal Finance, Inc. San Francisco, California

Fiscal Agent and Escrow Bank U.S. Bank National Association San Francisco, California

District Administrator Willdan Financial Services Temecula, California

Disclosure Counsel Quint & Thimmig LLP San Francisco, California

Verification Agent Causey Demgen & Moore Denver, Colorado

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TABLE OF CONTENTS

INTRODUCTION...... 1 Direct and Overlapping Governmental General...... 1 Obligations...... 28 Authority for Issuance...... 1 Projected Debt Service Coverage...... 29 The Bonds...... 2 SPECIAL RISK FACTORS...... 30 Security for the Bonds ...... 2 Concentration of Property Ownership ...... 30 Reserve Fund ...... 3 Payment of the Special Tax is not a Personal The District...... 3 Obligation...... 31 Limited Obligation...... 4 No General Obligation of the City or the No Parity Bonds ...... 4 District...... 31 Bondowners’ Risks...... 4 Property Value...... 31 Continuing Disclosure...... 4 Exempt Properties...... 32 Other Information ...... 4 Risks Associated with Commercial Real Estate PLAN OF REFUNDING...... 5 Properties ...... 32 Redemption of Prior Bonds ...... 5 Parity Taxes and Special Assessments...... 33 Estimated Sources and Uses of Funds ...... 5 Insufficiency of Special Taxes...... 33 THE BONDS...... 6 Tax Delinquencies...... 34 Authority for Issuance...... 6 Bankruptcy Delays...... 34 General Provisions ...... 6 Proceeds of Foreclosure Sales...... 34 Redemption...... 7 Natural Disasters...... 35 Transfer or Exchange of Bonds ...... 9 Hazardous Substances...... 36 Discontinuance of DTC Services...... 10 Disclosure to Future Purchasers ...... 36 Scheduled Debt Service...... 11 FDIC/Federal Government Interests in SECURITY FOR THE BONDS ...... 11 Properties ...... 37 General...... 11 No Acceleration Provision...... 38 Limited Obligation...... 12 Taxability and Audit Risk...... 38 Special Taxes ...... 12 Enforceability of Remedies ...... 39 Special Tax Fund ...... 13 No Secondary Market...... 39 Summary of Rate and Method ...... 13 Proposition 218...... 39 County Teeter Plan ...... 16 Ballot Initiatives...... 40 Reserve Fund ...... 17 TAX MATTERS...... 41 Covenant for Superior Court Foreclosure ...... 18 LEGAL MATTERS...... 42 Investment of Moneys ...... 19 FINANCIAL ADVISOR...... 43 No Parity Bonds ...... 19 VERIFICATION OF MATHEMATICAL THE DISTRICT...... 19 ACCURACY...... 43 Location and Description of the District...... 19 NO RATING...... 43 History of the District ...... 20 LITIGATION ...... 43 Land Ownership and Current Special Tax UNDERWRITING ...... 43 Levy...... 22 CONTINUING DISCLOSURE...... 43 Value-to-Burden Ratio...... 26 MISCELLANEOUS...... 44 Special Tax Levies and Delinquencies ...... 28

APPENDIX A CITY AND COUNTY GENERAL DEMOGRAPHIC INFORMATION APPENDIX B RATE AND METHOD APPENDIX C SUMMARY OF THE FISCAL AGENT AGREEMENT APPENDIX D FORM OF OPINION OF BOND COUNSEL APPENDIX E FORM OF CONTINUING DISCLOSURE AGREEMENT APPENDIX F DTC AND THE BOOK-ENTRY ONLY SYSTEM APPENDIX G DISTRICT BOUNDARY MAP APPENDIX H TAXABLE PARCELS IN THE DISTRICT

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OFFICIAL STATEMENT

INTRODUCTION

This introduction is not a summary of this Official Statement and is only a brief description of and guide to, and is qualified by, more complete and detailed information contained in the entire Official Statement and the documents summarized or described in this Official Statement. A full review should be made of the entire Official Statement by those interested in purchasing the Bonds. The sale and delivery of Bonds to potential investors is made only by means of the entire Official Statement. Certain capitalized terms used in this Official Statement and not defined herein have the meaning set forth in Appendix C – “Summary of the Fiscal Agent Agreement—Definitions” and in Appendix B – “Rate and Method.”

General

The purpose of this Official Statement, which includes the cover page, the inside cover page, the table of contents and the attached appendices (the “Official Statement”), is to provide certain information concerning the issuance of the above-captioned bonds (the “Bonds”). The Bonds are being issued by the City of Redwood City, California (the “City”), for and on behalf of the Redwood Shores Community Facilities District No. 99-1 (Shores Transportation Improvement Project) of the City of Redwood City (the “District”), to (i) refund in full and defease the Redwood Shores Community Facilities District No. 99-1 (Shores Transportation Improvement Project) of the City of Redwood City Special Tax Bonds, Series 2001A (the “Series 2001A Bonds”) and the Redwood Shores Community Facilities District No. 99-1 (Shores Transportation Improvement Project) of the City of Redwood City Special Tax Bonds, Series 2003B (the “Series 2003B Bonds,” and, collectively with the Series 2001A Bonds, the “Prior Bonds”), (ii) fund a reserve fund for the Bonds, and (iii) pay costs of issuing the Bonds and the refunding of the Prior Bonds. See “PLAN OF REFUNDING.” The Prior Bonds were issued to finance certain public transportation system improvements located within and in the vicinity of the District (the “Improvements”). See “THE DISTRICT—History of the District.”

Authority for Issuance

General. The District was formed under the authority of the Mello-Roos Community Facilities Act of 1982, as amended, commencing at Section 53311, et seq., of the California Government Code (the “Act”), which 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. The Act authorizes local governmental entities to establish community facilities districts as legally constituted governmental entities within defined boundaries, with the legislative body of the local applicable governmental entity acting on behalf of the district. Subject to approval by at least a two-thirds vote of the votes cast by the qualified electors within a district and compliance with the provisions of the Act, the legislative body may issue bonds for the community facilities district established by it and may levy and collect a special tax within such district to repay such bonds.

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Bond Authority. The Bonds are authorized to be issued pursuant to the Act, a Resolution adopted on December 3, 2012 (the “Bond Resolution”), by the City Council of the City (the “City Council”) acting as the legislative body of the District, and the Fiscal Agent Agreement dated as of December 1, 2012 (the “Fiscal Agent Agreement”), between the City, for and on behalf of the District, and U.S. Bank National Association, as fiscal agent (the “Fiscal Agent”). For more detailed information about the formation of the District and the authority for issuance of the Bonds, see “THE DISTRICT—History of the District.”

The Bonds

General. The Bonds will be issued only as fully registered bonds, in denominations of $5,000 or any integral multiple thereof, and will bear interest at the rates per annum and will mature on the dates and in the principal amounts set forth on the inside cover page of this Official Statement. The Bonds will be dated the date of their issuance and interest on the Bonds will be payable on March 1 and September 1 of each year (individually an “Interest Payment Date”), commencing March 1, 2013. See “THE BONDS.” The Bonds will be issued in book-entry form only and, when delivered, will be registered in the name of Cede & Co., as nominee of the Depository Trust Company, New York, New York (“DTC”), which will act as securities depository for the Bonds. See “THE BONDS—General Provisions.”

Redemption Prior to Maturity. The Bonds are subject to optional redemption, mandatory redemption from Special Tax prepayments and related transfers of funds from the Reserve Fund, and redemption from mandatory sinking payments, prior to maturity. See “THE BONDS—Redemption.”

Security for the Bonds

Pledge Under the Fiscal Agent Agreement. Pursuant to the Fiscal Agent Agreement, the Bonds are secured by a pledge of all of the Special Tax Revenues (except for the Annual Administrative Expense Deposit) and all moneys deposited in the Bond Fund, the Reserve Fund and, until disbursed in accordance with the Fiscal Agent Agreement, the Special Tax Fund. “Special Tax Revenues,” as defined in the Fiscal Agent Agreement, means the proceeds of the Special Taxes received by the City, including any scheduled payments and any prepayments thereof, interest and penalties thereon and proceeds of the redemption or sale of property sold as a result of foreclosure of the lien of the Special Taxes. “Annual Administrative Expense Deposit,” as defined in the Fiscal Agent Agreement, means, in each Fiscal Year, an amount of Special Taxes initially equal to $31,706.00; increasing, commencing in Fiscal Year 2013/14 and in each Fiscal Year thereafter, by an amount equal to two percent (2%) of the Annual Administrative Expense Deposit for the previous Fiscal Year. The Special Tax Revenues (except for the Annual Administrative Expense Deposit) and all moneys deposited into the Bond Fund, the Reserve Fund and the Special Tax Fund (except as otherwise provided in the Fiscal Agent Agreement) are dedicated to the payment of the principal of, and interest and any premium on, the Bonds in accordance with the Fiscal Agent Agreement until all of the Bonds have been paid or defeased. See “SECURITY FOR THE BONDS—Special Taxes” and Appendix B—“Rate and Method.”

The Annual Administrative Expense Deposit and amounts in the Administrative Expense Fund, the Surplus Fund and the Series 2012 Costs of Issuance Fund (referred to herein as the “Costs of Issuance Fund”), each of which is established under the Fiscal Agent Agreement, are not pledged to the repayment of the Bonds. Proceeds of the Bonds and other amounts deposited to the Escrow Fund established under the Escrow Instructions (which will be used to pay the redemption price of the Prior Bonds) are not pledged to, and are not available for, the repayment of the Bonds. See “PLAN OF REFUNDING—Redemption of Prior Bonds.”

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Special Taxes; Rate and Method. The Special Taxes to be used to pay debt service on the Bonds will be levied in accordance with the Rate and Method (as described under the heading “THE BONDS—Authority for Issuance”). “Special Taxes” are those taxes levied on the Taxable Parcels (as defined under the heading “INTRODUCTION—The District” below) within the District pursuant to the Rate and Method and the Fiscal Agent Agreement.

Limitations. The Improvements are not pledged to pay the debt service on the Bonds. In the event that the Special Taxes are not paid when due, the only sources of funds available to repay the Bonds are amounts held by the Fiscal Agent in the Bond Fund, the Special Tax Fund and the Reserve Fund established under the Fiscal Agent Agreement, and the proceeds, if any, from foreclosure sales of the specific Taxable Parcels with delinquent Special Taxes.

Reserve Fund

The Fiscal Agent Agreement establishes a Reserve Fund as a reserve for the payment of principal of and interest on the Bonds. The Reserve Fund is required to be funded in an amount equal to the lesser of (i) Maximum Annual Debt Service on the Outstanding Bonds (excluding the Bond Year ending September 1, 2013 for the purposes of such calculation), (ii) 125% of average Annual Debt Service for any Bond Year (excluding the Bond Year ending September 1, 2013 for the purposes of such calculation), or (iii) 10% of the original aggregate principal amount of the Bonds (the “Reserve Requirement”). The Reserve Fund will be available to pay the debt service on the Bonds in the event of a shortfall in the amount in the Bond Fund for such purpose, and amounts in the Reserve Fund may also be withdrawn to pay any rebate liability due to the federal government, to pay a portion of the redemption price of Bonds to be redeemed with Special Tax Prepayments, and to transfer to the Bond Fund of amounts therein in excess of the then Reserve Requirement. The Reserve Requirement as of the date of issuance of the Bonds will be $734,600.00. See “ SECURITY FOR THE BONDS—Reserve Fund.”

The District

The District was formed by the City Council pursuant to proceedings conducted under the Act on April 26, 1999. The District includes 55 separate San Mateo County Assessor’s parcels subject to the levy of Special Taxes (collectively, the “Taxable Parcels”) located in the commercial area of a master-planned community known as “Redwood Shores” in the northeastern portion of the City. The Taxable Parcels have been improved with a total of approximately 4,337,241 square feet of commercial structures. See “THE DISTRICT—Location and Description of the District.”

The land and improvements comprising the Taxable Parcels were valued by the San Mateo County Assessor for ad valorem property tax purposes on the Fiscal Year 2012-13 property tax roll at an aggregate value of $1,158,163,515. Based on the County’s Fiscal Year 2012-13 property valuation, all but 14 of the 55 Taxable Parcels in the District have assessed value to estimated share of Bond principal ratios in excess of 100:1, with only 3 Taxable Parcels having an assessed value to estimated share of Bond principal ratio of less than 70:1. See “THE DISTRICT—Value-to-Burden Ratio” and “APPENDIX H—Taxable Parcels in the District.”

The value of individual parcels vary significantly. In addition, County assessed values may not reflect current market values. No recent independent appraisal of the Taxable Parcels has been conducted in connection with the Bonds, and no assurance can be given that should Special Taxes levied on one or more of the Taxable Parcels become delinquent, and should the delinquent Taxable Parcels be offered for sale at a judicial foreclosure sale, that any bid would be received for the property or, if a bid is received, that such bid would be sufficient to pay such parcel’s delinquent Special Taxes. For the current County Assessor’s valuation of each of the

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Taxable Parcels in the District, see “THE DISTRICT—Land Ownership and Current Special Tax Levy.” See also “SPECIAL RISK FACTORS—Property Value” and “SPECIAL RISK FACTORS—Insufficiency of Special Taxes.”

Limited Obligation

NONE OF THE FAITH AND CREDIT OF THE DISTRICT, THE CITY OR THE STATE OF CALIFORNIA OR OF ANY OF THEIR RESPECTIVE POLITICAL SUBDIVISIONS IS PLEDGED TO THE PAYMENT OF THE BONDS. EXCEPT FOR THE SPECIAL TAXES, NO OTHER TAXES ARE PLEDGED TO THE PAYMENT OF THE BONDS. THE BONDS ARE NEITHER GENERAL OR SPECIAL OBLIGATIONS OF THE CITY NOR GENERAL OBLIGATIONS OF THE DISTRICT, BUT ARE LIMITED OBLIGATIONS OF THE CITY FOR THE DISTRICT PAYABLE SOLELY FROM CERTAIN AMOUNTS PLEDGED THEREFOR UNDER THE FISCAL AGENT AGREEMENT, AS MORE FULLY DESCRIBED IN THIS OFFICIAL STATEMENT.

No Parity Bonds

The City has agreed in the Fiscal Agent Agreement not to issue any additional obligations payable from the Special Taxes on a parity with the Bonds. See “SECURITY FOR THE BONDS—No Parity Bonds.”

Bondowners’ Risks

Certain events could affect the ability of the City to pay the principal of and interest on the Bonds when due. Except for the Special Taxes, no other taxes are pledged to the payment of the Bonds. See “SPECIAL RISK FACTORS” for a discussion of certain factors that should be considered in evaluating an investment in the Bonds. The purchase of the Bonds involves significant risks, and the Bonds are not appropriate investments for all types of investors.

Continuing Disclosure

For purposes of complying with Rule 15c2-12(b)(5) promulgated under the Securities Exchange Act of 1934, as amended (the “Rule”), the City has agreed to provide, or cause to be provided, to the Municipal Securities Rulemaking Board (the “MSRB”) certain annual financial information and operating data and notice of certain significant events. These covenants have been made in order to assist the Underwriter in complying with the Rule. See “CONTINUING DISCLOSURE” and Appendix E for a description of the specific nature of the annual reports and notices of significant events, as well as the terms of the Continuing Disclosure Agreement pursuant to which such reports and notices are to be made.

Other Information

This Official Statement speaks only as of its date, and the information contained in this Official Statement is subject to change without notice. Except where otherwise indicated, all information contained in this Official Statement has been provided by the City on behalf of the District.

Copies of the Fiscal Agent Agreement and certain other documents referenced in this Official Statement are available for inspection at the office of, and (upon written request and payment to the City of a charge for copying, mailing and handling) are available for delivery from, the City’s Director of Finance, 1017 Middlefield Road, Redwood City, California 94603.

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PLAN OF REFUNDING

Redemption of Prior Bonds

The net proceeds of the sale of the Bonds, together with certain other funds held under the Fiscal Agent Agreement, dated as of February 1, 2001 pursuant to which the Prior Bonds were issued (as amended by the First Supplemental Fiscal Agent Agreement, dated as of August 1, 2003, the “Prior Fiscal Agent Agreement”), will be deposited in an escrow account (the “Escrow Fund”). The Escrow Fund will be held by U.S. Bank National Association, in its capacity as escrow bank (the “Escrow Bank”) and as the Prior Fiscal Agent, pursuant to Escrow Instructions among the City, the District and the Escrow Bank, dated for reference purposes as of December 1, 2012, and will be applied to legally defease all of the outstanding $10,315,000 principal amount of the Prior Bonds as of the date of delivery of the Bonds.

Amounts in the Escrow Fund will be invested in certain Escrowed Securities (as defined in the Escrow Instructions), and will be sufficient to redeem the Prior Bonds on March 1, 2013, at a redemption price equal to the principal amount of the Prior Bonds to be redeemed plus accrued interest to the redemption date, without premium in the case of the Series 2001A Bonds and with a premium equal to one percent (1%) of the principal of the bonds to be redeemed in the case of the Series 2003B Bonds. The firm of Causey Demgen & Moore will verify the mathematical computations indicating the sufficiency of the amounts in the Escrow Fund to pay the redemption prices of the Prior Bonds on March 1, 2013. See “VERIFICATION OF MATHEMATICAL ACCURACY” herein. Upon the deposit of funds with the Escrow Bank in the Escrow Fund and in accordance with the Escrow Instructions, the Prior Bonds will be legally defeased and will no longer be entitled to the benefits of, or be secured by, the Prior Fiscal Agent Agreement or by any pledge of, or lien on, the Special Taxes levied in the District.

Amounts deposited in the Escrow Fund are not in any way pledged to the payment of, or available to pay, the debt service on the Bonds.

Estimated Sources and Uses of Funds

The sources and uses of funds in connection with the Bonds and the Prior Bonds are as follows:

Principal of Bonds $ 10,275,000.00 Amounts relating to the Prior Bonds 911,361.16 Plus: Net Original Issue Premium 483,912.05 Less: Underwriter’s Discount (65,943.92) Total Sources $ 11,604,329.29

Deposit to Escrow Fund(1) $ 10,681,119.55 Deposit to Reserve Fund(2) 734,600.00 Deposit to Costs of Issuance Fund(3) 188,609.74 Total Uses $ 11,604,329.29

(1) See “PLAN OF REFUNDING—Redemption of Prior Bonds.” (2) Equal to the initial Reserve Requirement. See “SECURITY FOR THE BONDS—Reserve Fund.” (3) Costs of issuance include, without limitation, Fiscal Agent fees and expenses, Financial Advisor fees and expenses, fees and expenses of Bond Counsel and Disclosure Counsel and other legal fees and expenses, Escrow Bank fees and expenses, and printing costs.

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THE BONDS

Authority for Issuance

Pursuant to the Act, on April 26, 1999, the City Council adopted Resolution No. 13611 establishing the District. At that time, the then owners of the land in the District, being the qualified electors for the District, authorized the issuance of bonded indebtedness to finance the Improvements, and approved the rate and method of apportionment of Special Tax (the “Rate and Method”), a copy of which is attached to this Official Statement as Appendix B. See “THE DISTRICT—History of the District.”

The Bonds are authorized to be issued pursuant to (a) the Act, (b) the Bond Resolution, and (c) the Fiscal Agent Agreement. The Special Taxes to be used to pay debt service on the Bonds will be levied in accordance with the Rate and Method.

General Provisions

The Bonds will be issued only as fully registered Bonds, in the denomination of $5,000 or any integral multiple thereof, and will bear interest at the rates per annum and will mature on the dates set forth on the inside cover page of this Official Statement. The Bonds will be dated the date of their issuance and interest on the Bonds will be payable on each Interest Payment Date, commencing March 1, 2013.

Each Bond will bear interest from the Interest Payment Date next preceding the date of authentication thereof by the Fiscal Agent, unless (a) it is authenticated on an Interest Payment Date, in which event it will bear interest from such Interest Payment Date; (b) the date of authentication is after a Record Date and on or before the following Interest Payment Date, in which event it will bear interest from such Interest Payment Date; or (c) it is authenticated on or before February 15, 2013, in which case it will bear interest from the Closing Date; provided, however, that if, as of the date of authentication of a Bond, interest is in default thereon, such Bond shall bear interest from the Interest Payment Date to which interest has previously been paid or made available for payment thereon. Interest with respect to each Bond will be calculated on the basis of a 360-day year consisting of twelve 30-day months.

The Bonds will be payable both as to principal and interest, and as to any premium upon the redemption thereof, in lawful money of the United States of America. Subject to the book-entry only provisions of the Fiscal Agent Agreement, interest on the Bonds is payable on the Interest Payment Dates by check mailed via first class mail on the Interest Payment Date by the Fiscal Agent to the respective Owners thereof as of the preceding Record Date at their addresses as they appear in the registration books of the Fiscal Agent or, upon the written request from any Owner of Bonds aggregating at least $1,000,000 in principal amount received on or prior to the fifteenth day of the month preceding an applicable Interest Payment Date, by wire in Federal Reserve funds to an account within the United States, on the Interest Payment Date with regard to which such payment is made. The principal of the Bonds and any premium due upon the redemption thereof will be payable upon presentation and surrender of the Bonds at the Principal Office of the Fiscal Agent.

The Bonds will be issued in book-entry form only and, when delivered, will be registered in the name of Cede & Co., as nominee of DTC, which will act as securities depository for the Bonds. Individual purchases of the Bonds will be made in book-entry form only. Purchasers of the Bonds will not receive physical certificates representing their ownership interests in the Bonds purchased. Principal and interest payments represented by the Bonds are payable directly to DTC by the Fiscal Agent. Upon receipt of payments of principal and interest, DTC will in turn distribute such payments to the beneficial owners of the Bonds. See Appendix

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F—“DTC and the Book-Entry Only System.” So long as the Bonds are registered in the name of Cede & Co., as nominee of DTC, references in this Official Statement to the owners shall mean Cede & Co., and shall not mean the purchasers or beneficial owners of the Bonds.

Redemption

Optional Redemption. The Bonds maturing on or after September 1, 2023 are subject to optional redemption prior to their stated maturities from any source of available funds, on any date occurring on and after September 1, 2022, in whole or in part, at a redemption price equal to the principal amount of the Bonds to be redeemed together with accrued interest thereon to the date fixed for redemption, without premium.

Mandatory Redemption From Special Tax Prepayments. The Bonds are subject to mandatory redemption prior to their stated maturities on any date from the proceeds of Special Tax Prepayments and corresponding transfers of funds from the Reserve Fund (as described below under “SECURITY FOR THE BONDS—Reserve Fund”), as a whole or in part, pro rata among maturities and by lot within a maturity, at the following redemption prices, expressed as a percentage of the principal amount of the Bonds to be redeemed, plus accrued interest thereon to the redemption date.

Redemption Dates Redemption Prices March 1, 2013 to and including August 31, 2020 103% September 1, 2020 to and including August 31, 2021 102 September 1, 2021 to and including August 31, 2022 101 September 1, 2022 and any date thereafter 100

Except for a prepayment that occurred prior to the issuance of the Series 2001A Bonds, there have been no Special Tax Prepayments in the District; however, no assurance can be given that Special Tax Prepayments will not occur in the future.

Mandatory Sinking Fund Redemption. The Term Bonds maturing on September 1, 2025 are subject to redemption prior to their stated maturity in part by lot, from deposits made to the Bond Fund for such purpose pursuant to the Fiscal Agent Agreement, at a redemption price equal to the principal amount thereof to be redeemed together with accrued interest thereon to the redemption date, without premium, in the aggregate respective principal amounts and on September 1 in each of the respective years as set forth in the following table.

Term Bonds Maturing September 1, 2025

Sinking Fund Redemption Date Principal Amount (September 1) to be Redeemed 2024 $465,000 2025 (maturity) 480,000

The Term Bonds maturing on September 1, 2029 are subject to redemption prior to their stated maturity in part by lot, from deposits made to the Bond Fund for such purpose pursuant to the Fiscal Agent Agreement, at a redemption price equal to the principal amount thereof to be redeemed together with accrued interest thereon to the redemption date, without premium, in the aggregate respective principal amounts and on September 1 in each of the respective years as set forth in the following table.

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Term Bonds Maturing September 1, 2029

Sinking Fund Redemption Date Principal Amount (September 1) to be Redeemed 2027 $520,000 2028 545,000 2029 (maturity) 575,000

The Term Bonds maturing on September 1, 2033 are subject to redemption prior to their stated maturity in part by lot, from deposits made to the Bond Fund for such purpose pursuant to the Fiscal Agent Agreement, at a redemption price equal to the principal amount thereof to be redeemed together with accrued interest thereon to the redemption date, without premium, in the aggregate respective principal amounts and on September 1 in each of the respective years as set forth in the following table.

Term Bonds Maturing September 1, 2033

Sinking Fund Redemption Date Principal Amount (September 1) to be Redeemed 2030 $600,000 2031 630,000 2032 665,000 2033 (maturity) 695,000

If some but not all of the Term Bonds of a given maturity have been redeemed pursuant to the optional redemption or mandatory redemption from special tax prepayments provisions of the Fiscal Agent Agreement described above, the total amount of all future sinking fund payments relating to the Term Bonds shall be reduced by the aggregate principal amount of such Term Bonds so redeemed, to be allocated among such payments on a pro-rata basis in integral multiples of $5,000 as determined by the City (written notice of which determination shall be given by the City to the Fiscal Agent).

Purchase of Bonds In Lieu of Redemption. In lieu of redemption as described above, moneys in the Bond Fund may be used and withdrawn by the Fiscal Agent for purchase of Outstanding Bonds, upon the filing with the Fiscal Agent of an Officer’s Certificate requesting such purchase prior to the selection of Bonds for redemption, at public or private sale as and when, and at such prices (including brokerage and other charges) as such Officer’s Certificate may provide, but in no event may Bonds be purchased at a price in excess of the principal amount thereof, plus interest accrued to the date of purchase, plus the related premium otherwise payable at such redemption.

Notice of Redemption. The Fiscal Agent will cause notice of any redemption to be mailed by first class mail, postage prepaid, at least 30 days but not more than 60 days prior to the date fixed for redemption, to the Securities Depositories and to one or more Information Services, and to the respective registered Owners of any Bonds designated for redemption, at their addresses appearing on the Bond registration books in the Principal Office of the Fiscal Agent; but such mailing is not a condition precedent to 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 Bonds. The redemption notice will state the redemption date and the redemption price and, if less than all of the then Outstanding Bonds are to be called for redemption, will designate the CUSIP numbers and Bond numbers of the Bonds to be redeemed by giving the individual CUSIP number and Bond number of each Bond to be redeemed or will

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state that all Bonds between two stated Bond numbers, both inclusive, are to be redeemed or that all of the Bonds of one or more maturities have been called for redemption, will state as to any Bond called in part the principal amount thereof to be redeemed, and will require that such 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 Bonds will not accrue after the redemption date.

The City has the right in the Fiscal Agent Agreement to rescind any optional redemption by written notice to the Fiscal Agent on or prior to the date fixed for redemption. Any notice of optional redemption shall be cancelled and annulled if for any reason funds will not be or are not available on the date fixed for redemption for the payment in full of the Bonds then called for redemption. The City and the Fiscal Agent shall have no liability to the Owners or any other party related to or arising from any such rescission of optional redemption. The Fiscal Agent shall mail notice of such rescission of optional redemption in the same manner as the original notice of optional redemption was sent.

Selection of Bonds for Redemption. Whenever provision is made in the Fiscal Agent Agreement for the optional redemption of less than all of the Bonds, the Bonds to be redeemed shall be selected by the Fiscal Agent among maturities as designated in writing by the City, and by lot within a maturity. In the case of mandatory sinking fund redemption, the Bonds to be redeemed shall be selected by the Fiscal Agent by lot within the maturity being called for the redemption.

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

Effect of Redemption. From and after the date fixed for redemption, if funds available for the payment of the principal of, and interest and any premium on, the Bonds so called for redemption have been deposited in the Bond Fund, such Bonds so called 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 no interest will accrue thereon on or after the redemption date specified in such notice.

Tender of Bonds in Payment of Special Taxes. The City has covenanted in the Fiscal Agent Agreement not to permit the tender of Bonds in payment of any Special Taxes except upon receipt of a certificate of an Independent Consultant that to accept such tender will not result in the City having insufficient Special tax Revenues to pay the principal or and interest on the Bonds that will remain Outstanding following such tender.

Transfer or Exchange of Bonds

So long as the Bonds are registered in the name of Cede & Co., as nominee of DTC, transfers and exchanges of Bonds shall be made in accordance with DTC procedures. See Appendix F – “DTC and the Book-Entry Only System.” If the book-entry only system for the Bonds is ever discontinued, any Bond may, in accordance with its terms, be transferred or exchanged by the person in whose name it is registered, in person or by his duly authorized attorney, upon surrender to the Fiscal Agent of such Bond for cancellation, accompanied by delivery of a duly written instrument of transfer in a form acceptable to the Fiscal Agent. Whenever any Bond or Bonds are surrendered for transfer or exchange, the City will execute and the Fiscal Agent will authenticate and deliver a new Bond or Bonds, for a like aggregate principal amount of Bonds of authorized denominations and of the same maturity. The Fiscal

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Agent will collect from the Owner requesting such transfer any tax or other governmental charge required to be paid with respect to such transfer or exchange.

No transfers or exchanges of Bonds will be required to be made (i) within 15 days prior to the date established by the Fiscal Agent as the date for selecting Bonds for redemption, or (ii) with respect to any Bond after such Bond has been selected for redemption.

Discontinuance of DTC Services

DTC may determine to discontinue providing its services with respect to the Bonds at any time by giving written notice to the Fiscal Agent during any time that the Bonds are Outstanding, and discharging its responsibilities with respect to the Bonds under applicable law. The City may terminate the services of DTC with respect to the Bonds if it determines that DTC is unable to discharge its responsibilities with respect to the Bonds or that continuation of the system of book-entry transfers through DTC is not in the best interest of the beneficial owners of the Bonds. The City will mail any such notice of termination to the Fiscal Agent.

Upon the termination of the services of DTC as provided in the previous paragraph, and if no substitute Depository willing to undertake the functions can be found which is willing and able to undertake such functions upon reasonable or customary terms, or if the City determines that it is in the best interest of the beneficial owners of the Bonds that they obtain certificated Bonds, the Bonds will no longer be restricted to being registered in the registration books of the Fiscal Agent in the name of Cede & Co., as nominee of DTC, but may be registered in whatever name or name the Owners designate at that time, in accordance with the Fiscal Agent Agreement.

In the event the City determines that it is in the best interests of the beneficial owners of the Bonds that they be able to obtain Bonds, the City may notify the Depository System Participants of the availability of such Bond through the Depository. In such event, the Fiscal Agent will, at the expense of the City, authenticate, transfer and exchange Bonds as required by the Depository and others in appropriate amounts; and whenever the Depository so requests, the City shall cooperate with the Depository in taking appropriate action (i) to make available one or more separate Bonds evidencing the Bonds to any Depository System Participant having Bonds credited to its account with the Depository, or (ii) to arrange for another qualified securities depository to maintain custody of a single Bond evidencing such Bonds, all at the City’s expense.

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Scheduled Debt Service

The following is the debt service schedule for the Bonds, assuming no redemption of Bonds prior to their respective maturities, except from mandatory sinking fund payments:

Period Ending September 1 Principal Interest Total Debt Service 2013 $ 575,000 $ 273,659.72 $ 848,659.72 2014 355,000 375,250.00 730,250.00 2015 370,000 364,600.00 734,600.00 2016 380,000 349,800.00 729,800.00 2017 390,000 342,200.00 732,200.00 2018 400,000 334,400.00 734,400.00 2019 405,000 325,400.00 730,400.00 2020 415,000 316,287.50 731,287.50 2021 425,000 305,912.50 730,912.50 2022 440,000 294,225.00 734,225.00 2023 450,000 281,025.00 731,025.00 2024 465,000* 266,962.50 731,962.50 2025 480,000* 251,850.00 731,850.00 2026 495,000 236,250.00 731,250.00 2027 520,000* 211,500.00 731,500.00 2028 545,000* 185,500.00 730,500.00 2029 575,000* 158,250.00 733,250.00 2030 600,000* 129,500.00 729,500.00 2031 630,000* 99,500.00 729,500.00 2032 665,000* 68,000.00 733,000.00 2033 695,000* 34,750.00 729,750.00 Totals $10,275,000 $5,204,822.22 $15,479,822.22

* Indicates a mandatory sinking fund payment.

SECURITY FOR THE BONDS

General

Pursuant to the Fiscal Agent Agreement, the Bonds are secured by a pledge of, and first lien on, all of the Special Tax Revenues (except for the Annual Administrative Expense Deposit) and all moneys deposited in the Bond Fund, the Reserve Fund and, until disbursed in accordance with the Fiscal Agent Agreement, the Special Tax Fund. The Special Tax Revenues (except for the Annual Administrative Expense Deposit) and all moneys deposited into said funds (except as otherwise provided in the Fiscal Agent Agreement) are dedicated to the payment of the principal of, and interest and any premium on, the Bonds in accordance with the Fiscal Agent Agreement until all of the Bonds have been paid or defeased. “Special Tax Revenues,” as defined in the Fiscal Agent Agreement, means the proceeds of the Special Taxes received by the City, including any scheduled payments and any prepayments thereof, interest and penalties thereon and proceeds of the redemption or sale of property sold as a result of foreclosure of the lien of the Special Taxes. “Annual Administrative Expense Deposit,” as defined in the Fiscal Agent Agreement, means, in each Fiscal Year, an amount of Special Taxes initially equal to $31,706.00; increasing, commencing in Fiscal Year 2013/14 and in each Fiscal Year thereafter, by an amount equal to two percent (2%) of the Annual Administrative Expense Deposit for the previous Fiscal Year.

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Limited Obligation

The Bonds are limited obligations of the City on behalf of the District and are payable solely from and secured solely by the Special Tax Revenues (except for the Annual Administrative Expense Deposit) and the amounts in the Bond Fund, the Reserve Fund and the Special Tax Fund created pursuant to the Fiscal Agent Agreement.

The Annual Administrative Expense Deposit and amounts in the Administrative Expense Fund, the Surplus Fund and the Costs of Issuance Fund are not pledged to the repayment of the Bonds. The Improvements are not pledged to pay the Debt Service on the Bonds. The proceeds of condemnation or destruction of any of the Improvements are not pledged to pay the Debt Service on the Bonds.

In the event that the Special Taxes are not paid when due, the only sources of funds available to repay the Bonds are amounts held by the Fiscal Agent under the Fiscal Agent Agreement in the Bond Fund, the Special Tax Fund and the Reserve Fund, and the proceeds, if any, from foreclosure sales of Taxable Parcels with delinquent Special Tax levies.

Special Taxes

In accordance with the provisions of the Act, the Rate and Method was approved in 1999 by the then qualified electors of the District (being the then owners of the land in the District), and is set forth in its entirety in Appendix B. Under the Fiscal Agent Agreement, the City is obligated to fix and levy the amount of Special Taxes within the District required for the timely payment of principal of and interest on the outstanding Bonds becoming due and payable, including any necessary replenishment of the Reserve Fund and an amount estimated to be sufficient to pay the Administrative Expenses during the applicable year, all in accordance with the Rate and Method and Ordinance No. 2180, adopted by the City Council on August 23, 1999, authorizing the levy of Special Taxes on the Taxable Parcels. The Special Taxes levied on any Taxable Parcel may not exceed the maximum allowed under the Rate and Method. See “SECURITY FOR THE BONDS—Summary of Rate and Method” and Appendix B—Rate and Method.”

The Special Taxes are payable and are collected in the same manner, at the same time and in the same installment as the County ad valorem taxes on property levied on the secured tax roll are payable, and pursuant to the Act have the same priority, become delinquent at the same times and in the same proportionate amounts and bear the same proportionate penalties and interest after delinquency as do the taxes levied on the tax roll; provided, however, that the Special Taxes may be collected in such other manner as the City shall prescribe if necessary to pay the debt service on the Bonds

Although the Special Taxes will constitute a lien on Taxable Parcels within the District, they do not constitute a personal indebtedness of the owners of the Taxable Parcels. Pursuant to Section 53356.1 of the Act, in the event of any delinquency in the payment of the Special Tax on a Taxable Parcel, the City may order the institution of a superior court action to foreclose the lien on the Taxable Parcel within specified time limits. In such an action, the Taxable Parcel may be sold at judicial foreclosure sale. The Act provides that the Special Taxes are secured by a continuing lien which is subject to the same lien priority in the case of delinquency as ad valorem property taxes. See “SECURITY FOR THE BONDS—Summary of Rate and Method,” “— Covenant for Superior Court Foreclosure” and “SPECIAL RISK FACTORS—Parity Taxes and Special Assessments.”

Other liens for taxes and assessments may already exist on the property located within the District and others could come into existence in the future. See “SPECIAL RISK FACTORS—

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Parity Taxes and Special Assessments.” There is no assurance that any owner of a Taxable Parcel will be financially able to pay the annual Special Taxes or that it will pay such taxes even if financially able to do so. See “SPECIAL RISK FACTORS.”

For historical information regarding the payment of, or delinquencies with respect to, Special Taxes in the District, see “THE DISTRICT—Special Tax Levies and Delinquencies.”

Special Tax Fund

Deposit of Special Tax Revenues. The City is obligated by the Fiscal Agent Agreement to deposit in the Special Tax Fund held by the City, immediately upon receipt by the City, all Special Tax Revenue received by the City (except for amounts necessary to pay the Annual Administrative Expense Deposit, which will be deposited to the Administrative Expense Fund). The City will also deposit into the Special Tax Fund certain amounts transferred from the Costs of Issuance Fund and the Surplus Fund pursuant to the Fiscal Agent Agreement. Notwithstanding the foregoing, (i) in each Fiscal Year, from the first remittance of Special Taxes received from the County, the City will transfer an amount equal to that year’s Annual Administrative Expense Deposit to the Administrative Expense Fund, and (ii) any proceeds of Special Tax Prepayments shall be transferred by the Director of Finance to the Fiscal Agent for deposit by the Fiscal Agent in the Series 2012 Prepayments Account established pursuant to the Fiscal Agent Agreement. “Annual Administrative Expense Deposit,” as defined in the Fiscal Agent Agreement, means, in each Fiscal Year, an amount of Special Taxes initially equal to $31,706.00; increasing, commencing in Fiscal Year 2013/14 and in each Fiscal Year thereafter, by an amount equal to two percent (2%) of the Annual Administrative Expense Deposit for the previous Fiscal Year. Moneys in the Special Tax Fund will be held in trust by the City for the benefit of the Owners of the Bonds, will be disbursed as described below and, pending such disbursement, will be subject to a lien in favor of the Owners of the Bonds.

Disbursements. No later than ten (10) Business Days prior to each Interest Payment Date, the City shall withdraw from the Special Tax Fund and transfer, in the following order of priority: (i) to the Fiscal Agent for deposit in the Bond Fund an amount, taking into account any amounts then on deposit in the Bond Fund such that the amount in the Bond Fund equals the principal, premium, if any, and interest due on the Bonds on the next Interest Payment Date, and (ii) to the Reserve Fund an amount such that the amount then on deposit therein is equal to the Reserve Requirement.

Any remaining Special Taxes and other amounts, if any, shall remain in the Special Tax Fund until the end of the Bond Year. At the end of the Bond Year any remaining funds in the Special Tax Fund which are not required to cure a delinquency in the payment of principal and interest on then-outstanding Bonds, or to restore the Reserve Fund to the amount of the Reserve Requirement, shall, without further action by any party, be deposited in the Surplus Fund and used in accordance with the Fiscal Agent Agreement and shall be free and clear of any lien thereon or pledge under the Fiscal Agent Agreement; provided, any funds which are required to cure any delinquency described above shall be retained in the Special Tax Fund and expended or transferred, at the earliest possible date, for such purpose.

Summary of Rate and Method

General. The Special Tax is levied and collected according to the Rate and Method set forth in “APPENDIX B – Rate and Method.” The qualified electors of the District approved the Rate and Method on July 30, 1999. The following is a brief summary of the Rate and Method. Capitalized terms used in the following paragraphs but not defined herein have the meanings given them in the Rate and Method.

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The Rate and Method provides the means by which the City Council may annually levy the Special Taxes on the Taxable Parcels within the District up to the applicable Maximum Special Tax. The Rate and Method provides that the Annual Special Tax may not be levied after June 30, 2036.

Classification of Parcels. On each June 1 of the Fiscal Years that the Special Taxes are to be levied, each San Mateo County Assessor’s Parcel (a “Parcel”) within the District’s boundaries is classified as a (i) “Residential Parcel,” which means any Parcel zoned for single or multi- family residential use or (ii) “Commercial Parcel,” which means any Parcel which is designated for commercial use pursuant to the land use approved for such Parcel by the Redwood Shores Specific Plan or other land use planning document approved by the City (in the event the City has no official land use designation for a Parcel, the land use code on the secured tax rolls of the County may be used to classify such Parcel). Residential Parcels are further classified as “Tax- Exempt Parcels.” Tax-Exempt Parcels are not subject to the levy of Special Taxes.

Each Commercial Parcel in the District is further classified in one of the following categories:

Developed Commercial Parcel – any Commercial Parcel for which a building permit has been issued by the City. Under the Rate and Method, a Developed Commercial Parcel is a “Taxable Parcel” and all of the Taxable Parcels currently are Developed Commercial Parcels.

Approved Commercial Parcel – any Commercial Parcel that has been approved for commercial development by the City pursuant to a vested Development Agreement or a recorded final map approved by the City and is not a Developed Parcel. Under the Rate and Method, an Approved Commercial Parcel is a Taxable Parcel.

Public Parcel – any Parcel that is, or intended to be publicly owned and which is normally exempt from ad valorem taxes under California law, including public streets, schools, district administrative offices, police and fire facilities, parks and public drainage ways, rights- of-way, landscaping, greenbelts and open space. Under the Rate and Method, a Public Parcel is a Tax-Exempt Parcel.

Inactive Parcel – a Parcel which is not classified as a Developed Commercial Parcel, Approved Commercial Parcel, Residential Parcel or Public Parcel. Commercial Parcels without Developed Commercial Square Feet or Approved Commercial Square Feet (as both terms are defined in the Rate and Method) are classified as Inactive Parcels. Under the Rate and Method, an Inactive Parcel is a Tax-Exempt Parcel.

Prepaid Parcel – a Parcel that has prepaid in full pursuant to the Rate and Method the Special Taxes to be levied against such Parcel in satisfaction of its pro rata share of Annual Costs. Under the Rate and Method, a Prepaid Parcel is a Tax-Exempt Parcel.

Once a Parcel is classified as a Taxable Parcel it may not be removed from such classification unless (i) Special Taxes allocable to such Parcel have been prepaid pursuant to the Rate and Method, in which case such Parcel shall be reclassified as a Prepaid Parcel, or (ii) the City Manager determines that such removal shall not cause the Special Tax rate per commercial square foot on remaining Taxable Parcels to exceed their respective Maximum Annual Special Tax Rates. Once the number of Approved Commercial Square Feet and Developed Commercial Square Feet has been initially allocated to a Taxable Parcel (provided such initial allocation is not in error), such number may not be reduced unless the City Manager determines that such reduction shall not cause the Special Tax rate per commercial square foot on remaining Taxable Parcels to exceed their respective Maximum Annual Special Tax Rates. Approved Commercial

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Parcels may be reclassified as Developed Commercial Parcels and, if warranted, their taxable commercial square feet reduced subject to the preceding sentence.

All of the Taxable Parcels are currently classified as Developed Commercial Parcels.

Levy of Special Taxes. The Special Tax will be levied only on Taxable Parcels. The amount of the Special Tax levied on each Taxable Parcel is based on Approved Commercial Square Feet (for Approved Commercial Parcels) or Developed Commercial Square Feet (for Developed Commercial Parcels).

Prior to July 1 of each Fiscal Year, the City Manager shall cause to be prepared a Special Tax Report setting forth: (i) the classification as of the June 1 applicable for such Fiscal Year of each Parcel within the boundaries of the District, (ii) a projected sources and uses of funds for the District in such Fiscal Year showing that projected Annual Tax Revenues are sufficient to pay projected Annual Costs, (iii) the total number of Developed Commercial Square Feet attributable to Developed Commercial Parcels and Approved Commercial Square Feet attributable to Approved Commercial Parcels for such Fiscal Year and, in each case, the Maximum Annual Special Tax Rate applicable to such commercial square feet, (iv) the total number of Developed Commercial Square Feet and Approved Commercial Square Feet allocable to Prepaid Parcels, (v) the net taxable Developed Commercial Square Feet and Approved Commercial Square Feet allocable to Taxable Parcels for such Fiscal Year, (vi) the Special Tax rate necessary to satisfy Annual Costs applicable to such Developed Commercial Square Feet and Approved Commercial Square Feet allocable to each Taxable Parcel for such Fiscal Year, (vii) the amount of Special Taxes to be levied on each Taxable Parcel in the next ensuing Fiscal Year, (viii) the annual Principal Prepayment Amount allocable to each Taxable Parcel, and (ix) a Tax Collection Schedule.

For each Developed Commercial Parcel, “Developed Commercial Square Feet” means the number of square feet approved for construction as shown on a building permit that has been issued by the City for any Developed Commercial Parcel.

A Special Tax rate per Developed Commercial Square Foot or Approved Commercial Square Foot allocable to each Taxable Parcel in the District shall be established annually by the City Council. The Special Tax rate or rates per Developed Commercial Square Foot or Approved Commercial Square Foot allocable to each Taxable Parcel shall then be multiplied by the Developed Commercial Square Feet or Approved Commercial Square Feet on each such Taxable Parcel to determine the Special Tax applicable to each such Taxable Parcel.

Prior to July 1 of each Fiscal Year for which Annual Costs are payable, the amount of the Special Tax for each Taxable Parcel is determined as follows:

Step 1: The total Annual Costs for such Fiscal Year is projected. “Annual Costs” include (i) an amount sufficient to pay debt service on Bonds in a timely manner, (ii) Administrative Expenses and (iii) any amounts needed to replenish Bond reserve funds and to make up for any deficit caused by actual or estimated delinquencies in Special Taxes for the previous or current Fiscal Year.

Step 2: The sum of unexpended fund balances (including amounts collected in the prior Fiscal Year to be applied to Debt Service in such Fiscal Year) held under the fiscal agent agreement securing outstanding Bonds that is available to pay Debt Service in such Fiscal Year shall be determined.

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Step 3: The amount of Debt Service due in such Fiscal Year payable from Annual Tax Revenues collected in the prior Fiscal Year shall be determined.

Step 4: The amounts calculated in Steps 1 and 3 above shall be added together and the amount determined in Step 2 above shall be subtracted from such sum to arrive at the Annual Tax Revenues to be collected in such Fiscal Year.

Step 5: The Maximum Annual Special Tax Rate (or rates, as the case may be) applicable to each Taxable Parcel shall be multiplied by the taxable commercial square feet corresponding to rate(s).

Step 6: If the total of the amounts calculated in Step 5 is than the Annual Costs, all Special Tax rates shall be decreased by equal proportions of the applicable Maximum Annual Special Tax Rates until the Special Tax rates on all Taxable Parcels produces scheduled Annual Tax Revenue equal to the projected Annual Costs.

Step 7: An annual Special Tax shall be determined for each Taxable Parcel by multiplying the Special Tax rate(s) identified in Step 6 above times the number of commercial square feet taxable at such Special Tax rate(s) on each such Taxable Parcel.

Maximum Annual Special Tax Rate. For each Taxable Parcel, the Maximum Annual Special Tax Rate for Developed Commercial Square Feet is that Maximum Annual Special Tax Rate applicable in the year in which such commercial square footage first becomes subject to taxation. The Maximum Annual Special Tax Rate applicable to particular Developed Commercial Square Feet shall not increase after the year in which it is first so applied. All parcels in the District currently classified as Taxable Parcels received their classification in fiscal year 1999-2000 and the Maximum Annual Special Tax for the Taxable Parcels has been set at 23.2 cents per foot of Developed Commercial Square Feet. See “APPENDIX B—Rate and Method.”

Prepayment of Annual Special Taxes. The owner of any Taxable Parcel may prepay the Special Taxes to be levied against such Parcel, in whole but not in part. The Prepayment Amounts for a Parcel either (i) before the issuance of the Series 2001A Bonds or (ii) after the issuance of Series 2001A Bonds are calculated based on various factors, all as specified in “APPENDIX B – Rate and Method – Section 7.” Upon prepayment of the Special Tax, the parcel for which the prepayment was made will no longer be security for the Bonds. Oracle Corporation prepaid the Special Taxes on parcels owned or controlled by it prior to the sale of the Series 2001A Bonds and the Oracle Parcels are not Taxable Parcels. No prepayment of Special Taxes has occurred in the District after the sale of the Series 2001A Bonds. See “THE DISTRICT—Location and Description of the District.”

County Teeter Plan

The County of San Mateo and the other political subdivisions within its boundaries operate under the provisions of Sections 4701 through 4717, inclusive, of the Revenue and Taxation Code of the State of California, commonly referred to as the “Teeter Plan,” with respect to property tax collection and disbursement procedures. These sections provide an alternative method of apportioning secured taxes whereby agencies levying taxes through the County roll may receive from the County 100% of their taxes at the time they are levied. The County treasury’s cash position (from taxes) is insured by a special tax loss reserve fund accumulated from delinquent penalties.

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The Board of Supervisors of the County may discontinue the procedures under the Teeter Plan altogether, or with respect to any tax or assessment levying agency in the County, if the rate of secured tax and assessment delinquency in that agency in any year exceeds 3% of the total of all taxes and assessments levied on the secured rolls for that agency.

The Special Taxes have been and are expected to continue to be collected pursuant to the procedures described above. Thus, so long as the County maintains its policy of collecting taxes pursuant to said procedures and the City meets the Teeter Plan requirements, the City will receive 100% of the annual Special Taxes levied without regard to actual collections; however, there is no assurance that the County Board of Supervisors will maintain its policy of apportioning taxes pursuant to the aforementioned procedures.

Reserve Fund

The Fiscal Agent Agreement establishes a debt service reserve fund (the “Reserve Fund”) as a separate fund to 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 moneys in the Reserve Fund are subject to a lien in favor of the Owners of the Bonds. The Reserve Fund is required by the Fiscal Agent Agreement to be funded in an amount equal to the “Reserve Requirement” which amount is, as of any date of calculation equal to the lesser of (i) Maximum Annual Debt Service on the Outstanding Bonds (excluding the Bond Year ending September 1, 2013 for the purposes of such calculation), (ii) one hundred twenty-five percent (125%) of average Annual Debt Service for any Bond Year (excluding the Bond Year ending September 1, 2013 for the purposes of such calculation), or (iii) ten percent (10%) of the original aggregate principal amount of the Bonds. The Reserve Requirement as of the date of issuance of the Bonds will be $734,600.00.

Except as otherwise provided in the Fiscal Agent Agreement (with respect to the use of moneys in the Reserve Fund (i) for the payment of any rebate liability due to the federal government, (ii) for transfers in connection with Prepayments of Special Taxes, and (iii) the use of moneys in the Reserve Fund in excess of the Reserve Requirement to pay the scheduled debt service on the Bonds), all amounts deposited in the Reserve Fund will be used and withdrawn by the Fiscal Agent solely for the purpose of making transfers to the Bond Fund in the event of any deficiency 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. See Appendix C – “Summary of the Fiscal Agent Agreement.”

Whenever the balance in the Reserve Fund exceeds the amount required to redeem or pay the Outstanding Bonds, including interest accrued to the date of payment or redemption and premium, if any, due upon redemption, the Fiscal Agent will transfer the amount in the Reserve Fund to the Bond Fund to be applied, on the next succeeding Interest Payment Date, to the payment and redemption of all of the Outstanding Bonds. In the event that the amount transferred from the Reserve Fund to the Bond Fund exceeds the amount required to pay and redeem the Outstanding Bonds, the balance in the Reserve Fund will be transferred to the City to be used for any lawful purpose of the City. Notwithstanding the foregoing, no amounts will be transferred from the Reserve Fund as described in the preceding sentence until after (i) amounts in the Reserve Fund are withdrawn for purposes of making rebate payments to the federal government in accordance with the Fiscal Agent Agreement following payment of the Bonds, and (ii) payment of any fees and expenses due to the Fiscal Agent. See Appendix C – “Summary of Fiscal Agent Agreement.”

Whenever Bonds are to be redeemed with proceeds of Prepayments of Special Taxes pursuant to the provisions of the Fiscal Agent Agreement, a proportionate share, determined as provided below, of the amount on deposit in the Reserve Fund shall, on the Business Day prior

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to the date on which such Bonds are to be redeemed, be transferred by the Fiscal Agent from the Reserve Fund to the Series 2012 Prepayment Account and shall be applied to the redemption of said Bonds; provided, however, that such amount shall be so transferred only to the extent that the amount remaining on deposit in the Reserve Fund will be at least equal to the Reserve Requirement (excluding from the calculation thereof said Bonds to be redeemed). Such proportionate share shall be equal to the largest integral multiple of $5,000 that is not larger than the amount equal to the product of (i) the amount on deposit in the Reserve Fund on the date five (5) Business Days prior to the date notice of redemption of such Bonds is required to be given pursuant to the provisions hereof, times (ii) a fraction, the numerator of which is the principal amount of Bonds to be so redeemed and the denominator of which is the principal amount of Bonds to be Outstanding on the day prior to the date on which such Bonds are to be so redeemed.

Covenant for Superior Court Foreclosure

Foreclosure Under the Act. Pursuant to Section 53356.1 of the Act, in the event of any delinquency in the payment of the Special Tax on the taxed parcel, the City may order the institution of a superior court action to foreclose the lien on the taxed parcel within specified time limits. In such an action, the real property subject to the unpaid amount of the Special Tax lien may be sold at judicial foreclosure sale.

City Foreclosure Covenant. The City has covenanted in the Fiscal Agent Agreement for the benefit of the Bondowners that it (i) will commence judicial foreclosure proceedings against all parcels owned by a property owner that is delinquent in the payment of Special Taxes by the October 1 following the close of each Fiscal Year in which such Special Taxes were due, and (ii) will diligently pursue such foreclosure proceedings until the delinquent Special Taxes are paid; provided that, notwithstanding the foregoing, the Fiscal Agent Agreement provides that the City may elect to defer foreclosure proceedings on any Developed Commercial Parcel (see “SECURITY FOR THE BONDS—Summary of Rate and Method – Classification of Parcels”) which is owned by a delinquent property owner whose property is not, in the aggregate, delinquent in the payment of Special Taxes for a period of two years or more or in an amount in excess of $5,000 so long as (a) the amount in the Reserve Fund is at least equal to the Reserve Requirement, and (b) with respect to the Bonds, the City is not in default in the payment of the principal of or interest on the Bonds. The City may, but is not obligated and does not intend to, advance funds from any source of legally available funds in order to maintain the Reserve Fund at the Reserve Requirement or to avoid a default in payment on the Bonds. No assurance can be given as to the time necessary to complete any foreclosure sale or that any foreclosure sale will be successful. The City is not required to be a bidder at any foreclosure sale.

Sufficiency of Foreclosure Sale Proceeds; Foreclosure Limitations and Delays. No assurances can be given that the real property subject to a judicial foreclosure sale will be sold or, if sold, that the proceeds of sale will be sufficient to pay any delinquent Special Tax installment. Subject to the maximum rate, the Rate and Method is designed to generate from all non-exempt property within the District the current year’s debt service, administrative expenses, and replenishment of the Reserve Fund to the Reserve Requirement. However, if foreclosure proceedings are necessary, and the Reserve Fund has been depleted, there could be a delay in payments to owners of the Bonds pending prosecution of the foreclosure proceedings and receipt by the City of the proceeds of the foreclosure sale.

Section 53356.6 of the Act requires that property sold pursuant to foreclosure under the Act be sold for not less than the amount of judgment in the foreclosure action, plus post- judgment interest and authorized costs, unless the consent of the owners of 75% of the outstanding Bonds is obtained. However, under Section 53356.6 of the Act, the City, as judgment creditor, is entitled to purchase any property sold at foreclosure using a “credit bid,”

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where the City could submit a bid crediting all or part of the amount required to satisfy the judgment for the delinquent amount of the Special Tax. If the City becomes the purchaser under a credit bid, the City must pay the amount of its credit bid into the redemption fund established for the Bonds, but this payment may be made up to 24 months after the date of the foreclosure sale. Neither the Act nor the Fiscal Agent Agreement requires the City to purchase or otherwise acquire any Taxable Parcel foreclosed upon if there is no other purchaser at such sale, and the City has no intent to be such a purchaser.

The City will levy the Special Tax to pay the current year’s debt service and related administrative expenses and to replenish the Reserve Fund to the Reserve Requirement, subject to the Maximum Annual Special Tax Rate. However, in the event such superior court foreclosure proceedings are necessary, and if the Reserve Fund is depleted, there could be a delay in payments of principal of and interest on the Bonds pending prosecution of the foreclosure proceedings and receipt by the City of the proceeds of the foreclosure sale. See “SPECIAL RISK FACTORS—Bankruptcy Delays” and “—Proceeds of Foreclosure Sales.”

Investment of Moneys

Except as otherwise provided in the Fiscal Agent Agreement, all moneys in any of the funds or accounts established pursuant to the Fiscal Agent Agreement will be invested by the Fiscal Agent solely in Permitted Investments, as directed by the City. See Appendix C – “Summary of the Fiscal Agent Agreement” for a definition of “Permitted Investments” and for additional provisions regarding the investment of funds held under the Fiscal Agent Agreement.

No Parity Bonds

The City has covenanted in the Fiscal Agent Agreement not to issue any additional obligations payable from Special Taxes on a parity with the Bonds. However, nothing in the Fiscal Agent Agreement prohibits the City from issuing bonds or otherwise incurring debt secured by a pledge of any of the Special Tax Revenues subordinate to the pledge thereof under the Fiscal Agent Agreement. Also, other public agencies could, without the consent or knowledge of the City or the District, levy special taxes or assessments on the Taxable Parcels secured by statutory liens coequal with the lien securing the payment of the Special Taxes (see “SPECIAL RISK FACTORS—Parity Taxes and Special Assessments”).

THE DISTRICT

Location and Description of the District

Redwood Shores is a master-planned community located in the northeastern portion of the City. It comprises approximately 1,500 acres, and is surrounded by Highway 101 on the west, San Francisco Bay on the east, Belmont Slough on the north, and Steinberger Slough on the south. The site was originally part of a marshland system that bordered the San Francisco Bay.

The District comprises the commercial portion of Redwood Shores, and consists of 74 fully subdivided Parcels totaling approximately 300.55 acres. Eleven of the 74 Parcels, comprising a total of 16.115 acres, are used as open space, parking areas, or other uses that exclude them from being subject to Special Taxes under the Rate and Method, are not Taxable Parcels. Sixty-three of the Parcels were initially classified as Taxable Parcels subject to the lien of Special Taxes. Oracle Corporation, the owner or controlling entity of eight of the Parcels in

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the District, prepaid its Special Taxes prior to the issuance of the Series 2001A Bonds, and such Parcels are not Taxable Parcels.

Special Taxes are apportioned among the remaining 55 Taxable Parcels in proportion to their respective Developed Commercial Square Feet. A total of 6,158,921 commercial square feet has been constructed in the District and was initially used as the basis for levying Special Taxes on Taxable Parcels. Oracle prepaid Special Taxes applicable to eight Parcels with 1,819,310 commercial square feet, and those Parcels are no longer subject to the lien of the Special Taxes. The remaining approximately 4,337,241 commercial square feet, located on 262.2 acres comprising the 55 separate Taxable Parcels, is subject to the lien of the Special Taxes. There are approximately 25 different entities that own Taxable Parcels, some of which are related to each other.

The first major commercial development in Redwood Shores, a corporate complex called the Shores Center, was completed in 1979, and attracted companies like DHL, Oral-B Labs, Fluor Mining & Metals, Hotel Sofitel, and many high-tech companies. By 1995 the last commercial property still retained by the Redwood Shores master developer was sold for commercial development. Electronic Arts now occupies approximately 575,000 square feet as its corporate headquarters on that site.

Major owners of the Taxable Parcels in the District include Westport Office Park LLC, Electronic Arts Inc., SPK-Towers at Shores Center LLC, PLCP SF Bay Hotel Co LLC, Metropolitan Life Insurance Corporation and CA-Shorebreeze Office Limited (see “THE DISTRICT—Land Ownership and Current Special Tax Levy – Land Ownership; Current Assessed Values,” and “– Property Owner Information” herein). A partial list of tenants of the buildings located in the District, based on the City’s records regarding business licenses for 2012, include the following: Accuvant Inc., All Nippon Airways Co., Ltd., Allegis Technology Partners LLC, Ascendent Telecommunications Inc., Avangate Inc., Biocentury Publications, Celigo Inc., Checkpoint Software Technologies, Inc., Clarus Systems, Inc., Clickatell Inc., Cloud 9 Analytics Inc., Covington & Burling LLP, Electro-Diagnostic Imaging, Energy Experts International, Ensenta Corporation, Franciscan Builders Inc., Gallasus, Inc., Gazelle Technologies Inc., GX Software Inc., Hotel Sofitel, IAP Solutions, Inc., ICON Clinical Research, Imperva Inc., Inside Secure Corporation, Ipass, Inc., Isocloud LLC, Jivox Corporation, King & Spalding LLP, Liveops, Inc., Manumatix Inc., Matrixstream Technologies, Inc., Mckinley Financial Group, Merchant Esolutions, Inc., Model N, Inc., Nintendo of America, Inc., Openlane, Inc., Pharmagenesis, Platinum Security, Powerspeaking, Inc., Proteus Biomedical, Provident Services Corporation, Qubera Solutions Inc., Research In Motion, Corp., Saba Software, Inc., SACC, Inc., Seven Dreamers Laboratories, Inc., Shutterfly.com, Inc., SSH Communications Security, The Crosby Group, Tragon Corporation, Trion Worlds, Inc., Ubmatrix, Inc., Vyshnavi Information Technologies, Weil, Gotshal & Manges, Westface Financial & Insurance Services, LLC, Xtime, Inc., and Zyme Solutions, Inc. No assurance can be given, however, that any of the foregoing are still tenants in the buildings located in the District, or that any of such entities will remain tenants of such buildings in the future.

History of the District

Pursuant to the Act, the City Council of the City, acting in the capacity as the legislative body of the District, adopted Resolution No. 13590 on March 22, 1999, stating its intention to establish the District and to levy the Special Tax within the District. Attached as Appendix G is the current boundary map of the District. On April 26, 1999, the City Council, acting as the legislative body of the District, adopted resolutions forming the District and authorizing a special election with respect to the incurrence of indebtedness in a principal amount of $13,535,000 and the levy of the Special Tax. Subsequently, the then-owners of the land in the District, as the qualified electors for the District, approved the ballot propositions at an election

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held on July 30, 1999. On August 18, 1999, the City recorded, in the Official Records of the County Recorder for the County of San Mateo, a Notice of Special Tax Lien as required by Section 53328.3 of the California Government Code. On August 23, 1999, the City Council, acting as the legislative body of the District, adopted Ordinance No. 2180 authorizing the levy of a special tax within the District.

The District was formed to provide a method of funding projects that were identified in the Shores Transportation Improvement District Final Report – Phase I and Final Report – Phase II, which were prepared to identify solutions for the traffic congestion problems that were occurring in the area. The Improvements involved the construction of improvements to several intersections in and around the commercial area of Redwood Shores and the reconfiguration of the Marina Parkway/Ralston Avenue U.S. 101 interchange to a partial cloverleaf design. The Improvements included the construction, purchase, modification, expansion, improvement or rehabilitation of sanitary sewers, streets, storm drainage facilities, utilities, parks, landscaping, and other infrastructure improvements and relocations, including traffic and signalization and improvements to street intersections and freeway interchanges, for the following projects:

1. the Marine Parkway intersection at or near Twin Dolphin Parkway; 2. the Marine Parkway intersection at or near Bridge Parkway; 3. the Redwood Shores Parkway intersection at or near Bridge Parkway; 4. the Marine Parkway intersection at or near Oracle West/Shoreway Road; 5. the Ralston Avenue intersection at or near Hiller Street; 6. the northbound U.S. 101 on-ramp at the Marine Parkway/Ralston Avenue interchange; 7. the HOV bypass lanes at the northbound U.S. 101 on-ramp at the Ralston Avenue interchange; and 8. the reconfiguration of the U.S. 101/Marine Parkway /Ralston Avenue interchange to a partial cloverleaf design.

On January 17, 2001, the District issued the Series 2001A Bonds in an initial principal amount of $5,045,000, and on August 12, 2003, the District issued the Series 2003B Bonds in an initial principal amount of $7,505,000. The net proceeds of the Prior Bonds, $10,712,216.25, were deposited to an Improvement Fund established under the Prior Fiscal Agent Agreement and were used to pay costs of the Improvements.

The net proceeds of the Series 2001A Bonds were used to finance a portion of the Improvements (the “Phase I Facilities”), which included the first three projects listed above, and to finance the costs of forming the District and a pro rata share of certain other incidental expenses related to those Improvements. Phase I Facilities included various intersection and street widening improvements designed to improve traffic circulation at peak commute hours. The net proceeds of the Series 2003B Bonds were used to finance a portion of the Improvements designated the “Phase II Facilities,” which included improvements to the U.S. Highway 101 Ralston Avenue/Marine Parkway freeway interchange. The Improvements were completed in the Spring of 2008 and, in general, have a useful life that can exceed 50 years. However, changing traffic patterns and traffic volume may play a role in the need for future improvements in the area.

On December 3, 2012, the City Council of the City, acting in the capacity as the legislative body of the District, adopted the Bond Resolution authorizing the issuance of the Bonds, and approving and authorizing the execution of the Fiscal Agent Agreement, escrow instructions relating to the redemption of the Prior Bonds, the Continuing Disclosure Agreement and other related documents and actions.

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Land Ownership and Current Special Tax Levy

Land Ownership; Current Assessed Values. Table 1 below shows the fee title owners of the Taxable Parcels in the District and the current San Mateo County assessed values of the Taxable Parcels of each such owner. See “APPENDIX H—Taxable Parcels in the District” for a table showing assessed valuation and other information for each Taxable Parcel in the District.

Table 1 Ownership of Taxable Parcels in the District and 2012-2013 Assessed Values

Number Taxable of Building Taxable Square 2012/2013 County Assessed Value(1) Property Owner(1) Parcels Footage(2) Land Building Total WESTPORT OFFICE PARK LLC 3 967,680.0 $ 82,122,095 $176,451,542 $ 258,573,637 ELECTRONIC ARTS INC 3 742,003.0 18,838,815 161,011,820 179,850,635 SPK-TOWERS @ SHORES CENTER LLC 2 340,000.0 54,613,239 66,346,552 120,959,791 PLCP SF BAY HOTEL OWNERCO LLC 1 280,268.0 16,319,972 48,307,118 64,627,090 METROPOLITAN LIFE INS CO 1 239,400.0 15,025,829 32,336,870 47,362,699 CA-SHOREBREEZE OFFICE LTD PTP 2 220,000.0 36,266,603 39,679,931 75,946,534 SPK-TWIN DOLPHIN PLAZA LLC 1 200,000.0 33,813,275 34,453,275 68,266,550 CA 333 TWIN DOLPHIN OFFICE L P 1 183,000.0 30,826,614 31,466,613 62,293,227 PROVIDENT CENTRAL CREDIT UNION 1 165,000.0 9,505,001 25,386,408 34,891,409 REALTY ASSOCIATES FUND VII LP 2 134,989.0 15,980,513 18,255,516 34,236,029 SHAPELL INDUSTRIES INC 1 123,961.0 6,745,381 18,484,847 25,230,228 RNM TWIN DOLPHIN L P 2 121,194.0 5,355,560 16,929,594 22,285,154 BAY CLUB PENINSULA LLC 1 100,088.0 11,754,228 18,771,209 30,525,437 101 REDWOOD SHORES LLC 1 100,000.0 13,295,335 15,993,571 29,288,906 AG PREMIA REDWOOD SHORES LLC 1 88,560.0 1,938,000 5,395,800 7,333,800 HINES VAF NO CAL PROPERTIES L P 1 75,114.0 13,000,000 7,000,000 20,000,000 LBA REALTY FUND III COMPANY I LLC 1 62,500.0 7,359,986 14,639,974 21,999,960 REDWOOD SUITES LLC 1 56,692.0 2,700,000 7,900,000 10,600,000 SHP WESTSHORE LLC 23 49,100.8 9,516,287 6,169,886 15,686,173 350 MARINE PARKWAY LLC 1 33,800.0 7,700,000 2,300,000 10,000,000 BRIDGE PARK CENTER LP 1 25,186.0 5,261,754 4,527,555 9,789,309 MAI SU WUAN TR 1 16,754.0 1,160,408 2,881,069 4,041,477 REDWOOD SHORES ASSOCIATES LLC 1 8,052.0 2,447,054 1,254,898 3,701,952 VERTEX MANAGEMENT INC 1 2,055.9 199,696 199,696 399,392 SAN MATEO CO DENTAL SOCIETY 1 1,843.3 132,381 141,745 274,126 Totals: 55 4,337,241.0 $401,878,026 $756,285,489 $1,158,163,515

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The following Table 2 shows assessed valuation and other information with respect to the owners of Taxable Parcels responsible for more than five percent (5%) of the Fiscal Year 2012-2013 Special Tax levy:

Table 2 Owners of Taxable Parcels With More Than Five Percent of Annual Special Tax Levy

Percentage of Total Value To No. of 2012/2013 2012/2013 Allocable Taxable Special Tax Special Tax Assessed 2012 Bond Property Owner Parcels(1) Use of Property Levy(2) Levy(3) Value(1) Principal(4) WESTPORT OFFICE PARK LLC 3 Developed Commercial $202,384.28 22.31% $258,573,637 112.79 ELECTRONIC ARTS INC 3 Developed Commercial 155,185.34 17.11 179,850,635 102.31 SPK-TOWERS @ SHORES CENTER LLC 2 Developed Commercial 71,108.88 7.84 120,959,791 150.17 PLCP SF BAY HOTEL OWNERCO LLC 1 Hotel 58,616.32 6.46 64,627,090 97.34 METROPOLITAN LIFE INS CO 1 Developed Commercial 50,069.02 5.52 47,362,699 83.51 CA-SHOREBREEZE OFFICE LTD PTP 2 Developed Commercial 46,011.64 5.08 75,946,534 145.72 Totals: $583,375.48 64.32% $747,320,386

(1) From Table 1. (2) From Table 3. (3) Based on amount of Special Taxes levied for Fiscal Year 2012-2013 on each Taxable Parcel in relation to total Fiscal Year 2012-2013 Special Tax levy for all Taxable Parcels. (4) From Table 5. Source: Willdan Financial Services.

Property Owner Information. Information with respect to each owner of the Taxable Parcels responsible for more than five percent (5%) of the Fiscal Year 2012-2013 Special Tax levy is as follows:

Westport Office Park LLC is the owner of three (3) Taxable Parcels in the CFD, which together are responsible for 22.31% of the 2012-2013 Special Tax levy in the District (a total of $202,384.28). The parcels have been improved with twenty (20) separate two-story commercial office buildings with a total of 967,680 of Developed Commercial Square Feet, and have a combined assessed value for 2012-2013 of $258,573,637. The buildings and the immediately surrounding area, with addresses of 800-3800 Bridge Parkway and 900-1300 Island Drive in the City, comprise the Bayshore Technology Park, the rental of which is currently managed by Cassidy Turley Commercial Real Estate Services. Constructed in 2001, the Bayshore Technology Park was designed in a park-like, campus style setting for research and development, high-technology companies, computers manufacturing and biotech industrial tenants. The Bayshore Technology Park includes a fitness center, a training center, a corporate board room, a café with outdoor seating and an on-site management office. Each building has an adjacent parking area. For more information regarding the Bayshore Technology Park, see the website at http://www.bayshoretechpark.com. Neither the City nor the Underwriter make any representation as to the accuracy of the information on the website, and the website is not in any way incorporated into this Official Statement.

Based on information obtained from Business Wire, Westport Office Park LLC is a joint venture between Harvest Properties Inc. and Prudential Real Estate Investors, which acquired the properties comprising the Bayshore Technology Park in August of 2005. According to its website, Harvest Properties Inc. is a commercial real estate firm that specializes in the acquisition, development, management and financing of commercial property, primarily through joint-venture investments in Northern California. Besides the Bayshore Technology Park, joint ventures in which Harvest Properties Inc. has an interest currently own the 327,000 square foot Bay Center in Emeryville, California and the 400,000 square foot Parkside Towers in

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Redwood City. For more information regarding Harvest Properties Inc. see its website at http://www.harvestproperties.net. Prudential Real Estate Investments is the real estate investment business of Prudential Financial, Inc. For more information regarding Prudential Financial, Inc., see its website at http://www.prudential.com. Neither the City nor the Underwriter make any representation as to the accuracy of the information on either of the two foregoing websites, and the websites are not incorporated into this Official Statement.

Electronic Arts Inc. owns three (3) Taxable Parcels in the District, that are improved with buildings with a total of 742,003 Developed Commercial Square Feet, including the Company’s headquarters as well as space for sales, marketing, administration and research and development functions, and a 49,000 square foot conference center. The buildings are located at 207 and 209 Redwood Shores Parkway and 250 Shoreline Drive in the City. The three (3) parcels are responsible for 17.11% of the 2012-2013 Special Tax levy in the District (a total of $155,185.34), and the combined assessed value of the three (3) parcels for 2012-2013 is $179,850,635.

According to its website, Electronic Arts Inc. was incorporated in 1982, and develops, markets, publishes and distributes game software content and services that can be played by consumers on a variety of video game machines and electronic devices (platforms). Its products include software for video game consoles, such as the Sony Playstation 3, Microsoft Xbox 360 and Nintendo Wii; personal computers, including the Apple Macintosh; mobile devices, such as the Apple iPhone and Google Android compatible phones; tablets and electronic readers, such as the Apple iPad and the Amazon Kindle, and the Internet, including social networking sites, such as Facebook. The Company also offers online-delivered content and services that are add- ons or related to its packaged goods products, such as additional game content or enhancements of multiplayer services. It provides other games, content and services that are available only via electronic delivery, such as Internet-only games and game services, and games for mobile devices.

Additional information regarding Electronic Arts Inc. can be found on its most recent Form 10-K filed with the Securities and Exchange Commission, and additional information regarding its products can be found on its website at http://www.ea.com. Neither the City nor the Underwriter make any representation as to the accuracy of the Company’s Form 10-K or the information on the website, and neither any such Form 10-K or such website is incorporated into this Official Statement.

SPK-Towers @ Shores Center LLC is the owner of two (2) of the Taxable Parcels in the District, that are improved with two (2) buildings with a total of 340,000 Developed Commercial Square Feet. The buildings, completed in 2001, are located at 201 and 203 Redwood Shores Parkway in the City. The two (2) parcels are responsible for 7.84% of the 2012-2013 Special Tax levy in the District (a total of $71,108.88), and the combined assessed value of the two (2) parcels for 2012-2013 is $120,959,791. The law firm of Weil, Gotshal & Manges has leased 101,000 square feet of space in one of the buildings, which lease had a 15 year term. The buildings are currently managed by Cornish & Carey Commercial Newmark Knight Frank, and more information regarding the two (2) parcels can be found on the Equity Office website at http://www.equityoffice.com. Neither the City nor the Underwriter make any representation as to the accuracy of the information on the website and the website is not incorporated into this Official Statement.

PLCP SF Bay Hotel Ownerco LLC is the owner of one (1) of the Taxable Parcels in the District. The parcel has been improved with a 415 room Sofitel Hotel, with 280,268 of Developed Commercial Square Feet, which has a long term lease for the property. The parcel is located at 223 Twin Dolphin Drive in the City, and is responsible for 6.46% of the 2012-2013 Special Tax levy in the District (which is $58,616.32). The parcel has an assessed value for 2012-

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2013 of $64,627,090. The hotel includes a restaurant, a piano bar, fitness facilities and over 17,000, square feet of meeting and banquet facilities, with 15 fully-equipped meeting rooms. See the hotel’s website at http://www.sofitel.com for more information regarding the hotel. Sofitel’s parent company, ACCOR, Inc., is headquartered in Paris, France, and owns and operates hotels in Europe, Asia, North American and South America. See the website at http://www.accorhotels.com for more information regarding its hotels. Neither the City nor the Underwriter make any representation as to the accuracy of the information on either of the two aforementioned websites, and they are not incorporated into this Official Statement.

Metropolitan Life Insurance Company owns one (1) of the Taxable Parcels in the District, that has been improved with two (2) four-story office buildings with a total of 239,400 of Developed Commercial Square Feet. The parcel is located at 3 Lagoon Road in the City, and is responsible for 5.52% of the 2012-2013 Special Tax levy in the District (which is $50,069.02). The parcel has an assessed value for 2012-2013 of $47,362,699.

Metropolitan Life Insurance Company and its affiliates provide life, health, disability, auto, and homeowner’s insurance, as well as retirement plans and related services to individual and group clients. It is also involved in a wide range of office buildings, hotels, and industrial properties, the direct acquisition of real estate, and the financing of existing properties on an intermediate term basis. Additional information can be found at its homepage on the Internet at http://www.metlife.com. Neither the City nor the Underwriter make any representation as to the accuracy of the information on the website and the website is not incorporated into this Official Statement.

CA-Shorebreeze Office Limited owns two (2) of the Taxable Parcels in the District, located at 255 and 275 Shoreline Drive in the City. The two (2) parcels have a combined 220,000 of Developed Commercial Square Feet, and are responsible for 5.08% of the 2012-2013 Special Tax levy in the District (a total of $46,011.64). The parcels have a combined assessed value for 2012-2013 of $75,946,534. Information regarding the buildings appears on the website of Equity Office (see information under SPK-Towers @ Shores Center LLC above).

Special Tax Allocation. Table 3 below shows each owner of Taxable Parcels share of the total Fiscal Year 2012-13 Special Tax levy of $907,106.74. See “APPENDIX H—Taxable Parcels in the District” for a table showing each Taxable Parcel’s share of the total Fiscal Year 2012-2013 Special Tax levy and other information regarding the Taxable Parcels in the District.

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Table 3 2012-2013 Special Tax Levy by Property Owner

Percentage Number Taxable Maximum of Total of Building Possible Special Tax 2012/2013 Taxable Square Annual Levy Special Property Owner(1) Parcels(1) Footage(1) Special Tax(2) 2012/2013 Tax Levy WESTPORT OFFICE PARK LLC 3 967,680.0 $ 224,501.76 $202,384.28 22.31% ELECTRONIC ARTS INC 3 742,003.0 172,144.70 155,185.34 17.11 SPK-TOWERS @ SHORES CENTER LLC 2 340,000.0 78,880.00 71,108.88 7.84 PLCP SF BAY HOTEL OWNERCO LLC 1 280,268.0 65,022.18 58,616.32 6.46 METROPOLITAN LIFE INS CO 1 239,400.0 55,540.80 50,069.02 5.52 CA-SHOREBREEZE OFFICE LTD PTP 2 220,000.0 51,040.00 46,011.64 5.08 SPK-TWIN DOLPHIN PLAZA LLC 1 200,000.0 46,400.00 41,828.76 4.61 CA 333 TWIN DOLPHIN OFFICE L P 1 183,000.0 42,456.00 38,273.32 4.22 PROVIDENT CENTRAL CREDIT UNION 1 165,000.0 38,280.00 34,508.72 3.80 REALTY ASSOCIATES FUND VII LP 2 134,989.0 31,317.45 28,232.10 3.11 SHAPELL INDUSTRIES INC 1 123,961.0 28,758.95 25,925.68 2.86 RNM TWIN DOLPHIN L P 2 121,194.0 28,117.01 25,346.96 2.80 BAY CLUB PENINSULA LLC 1 100,088.0 23,220.42 20,932.78 2.31 101 REDWOOD SHORES LLC 1 100,000.0 23,200.00 20,914.38 2.30 AG PREMIA REDWOOD SHORES LLC 1 88,560.0 20,545.92 18,521.76 2.04 HINES VAF NO CAL PROPERTIES L P 1 75,114.0 17,426.45 15,709.62 1.73 LBA REALTY FUND III COMPANY I LLC 1 62,500.0 14,500.00 13,071.48 1.44 REDWOOD SUITES LLC 1 56,692.0 13,152.54 11,856.78 1.31 SHP WESTSHORE LLC 23 49,100.7 11,391.38 10,268.90 1.12 350 MARINE PARKWAY LLC 1 33,800.0 7,841.60 7,069.06 0.78 BRIDGE PARK CENTER LP 1 25,186.0 5,843.15 5,267.48 0.58 MAI SU WUAN TR 1 16,754.0 3,886.93 3,503.98 0.39 REDWOOD SHORES ASSOCIATES LLC 1 8,052.0 1,868.06 1,684.02 0.19 VERTEX MANAGEMENT INC 1 2,055.9 476.96 429.96 0.05 SAN MATEO CO DENTAL SOCIETY 1 1,843.3 427.65 385.52 0.04 Totals: 55 4,337,241.0 $1,006,239.91 $907,106.74 100.00%

(1) From Table 1. (2) Taxable Building Square Footage multiplied by applicable Maximum Annual Special Tax Rate for the respective Taxable Parcels. Source: Willdan Financial Services.

The amount of the Fiscal Year 2012-2013 Special Tax levy is based on the debt service that was projected to be due on the Prior Bonds on March 1, 2013 and September 1, 2013. The Prior Bonds will be defeased on the date of issuance of the Bonds and will be fully redeemed by March 1, 2013 (see “PLAN OF REFUNDING—Redemption of Prior Bonds”). Accordingly, future Special Tax levies on the Taxable Parcels in the District will be lower (see, e.g., Table 7 under “THE DISTRICT—Projected Debt Service Coverage” below).

Value-to-Burden Ratio

No Appraisal of Property in the District. The City has not commissioned an appraisal of the Taxable Parcels in the District in connection with the issuance of the Bonds. Therefore, the valuation of the Taxable Parcels in the District has been estimated for the purposes of the Act, and set forth in this Official Statement, based on the County Assessor’s Fiscal Year 2012-13 assessed values.

Assessed Valuation. The valuation of real property in the City is established by the County Assessor. Assessed valuations are reported at 100% of the full cash value of the property, as defined in Article XIIIA of the California Constitution. Article XIIIA of the California Constitution defines “full cash value” as the appraised value as of March 1, 1975, plus adjustments not to exceed 2% per year to reflect inflation, and requires assessment of “full cash value” upon change of ownership or new construction. Accordingly, the gross assessed

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valuation of any particular Taxable Parcel presented in this Official Statement may not necessarily be representative of the actual market value of that parcel.

Historical Assessed Values. The following Table 4 sets forth the total San Mateo County land and structure assessed values for the Taxable Parcels in the District for the current and each of the last eleven fiscal years.

Table 4 Historical Assessed Values of Taxable Parcels(1)

Total Assessed Number of Total Assessed Value of Total Fiscal Year Taxable Parcels Value of Land Structures Assessed Value 2001/02 55 $219,644,371 $539,114,037 $ 758,758,408 2002/03 55 240,041,793 642,183,380 882,225,173 2003/04 55 231,002,959 629,347,619 860,350,578 2004/05 55 225,506,947 602,893,430 828,400,377 2005/06 55 234,959,206 627,529,786 862,488,992 2006/07 55 308,897,702 670,050,202 978,947,904 2007/08 55 337,441,526 712,843,443 1,050,284,969 2008/09 55 399,899,505 745,007,987 1,144,907,492 2009/10 55 409,869,809 710,881,080 1,120,750,889 2010/11 55 484,415,433 572,695,292 1,057,110,725 2011/12 55 486,645,305 604,487,288 1,091,132,593 2012/13 55 401,878,026 756,285,489 1,158,163,515

(1) Aggregate San Mateo County Assessed Values for all Taxable Parcels in the District. Source: Willdan Financial Services, based on information obtained from County of San Mateo records.

General Information Regarding Value-to-Burden Ratios. The value-to-burden ratio with respect to bonds secured by special taxes will generally vary over the life of those bonds as a result of changes in the value of the property that is security for the special taxes and the principal amount of the bonds.

In comparing the aggregate assessed value of the Taxable Parcels within the District and the principal amount of the Bonds, it should be noted that an individual Taxable Parcel may only be foreclosed upon to pay delinquent installments of the Special Taxes attributable to that Taxable Parcel. The principal amount of the Bonds is not allocated pro-rata among the Taxable Parcels within the District based on assessed value; rather, the principal amount of the Bonds has been allocated based on the allocation of Special Taxes among the Taxable Parcels, and the total Special Taxes have been allocated among the Taxable Parcels within the District according to the Rate and Method.

Economic and other factors beyond the property owners’ control, such as economic recession, deflation of land values, financial difficulty or bankruptcy by one or more property owners, or the complete or partial destruction of Taxable Parcels caused by, among other possibilities, earthquake, flood, fire or other natural disaster, could cause a reduction in the assessed values of the property within the District. See “SPECIAL RISK FACTORS—Property Value” and “Bankruptcy Delays.”

Value-to-Burden Ratio Distribution. The following Table 5 sets forth the distribution of assessed value-to-burden ratios among the owners of Taxable Parcels based on Fiscal Year 2011- 2012 assessed values and their share of the principal of the Bonds. For the assessed value-to- burden ratio for each Taxable Parcel, see “APPENDIX H—Taxable Parcels in the District.”

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Table 5 Assessed Value to Burden Ratios for Property Owners in the District

Value to Number of 2012/2013 Share of Allocable Taxable County Principal of 2012 Bond Property Owner(1) Parcels(1) Assessed Value(1) 2012 Bonds(2) Principal WESTPORT OFFICE PARK LLC 3 $ 258,573,637 $ 2,292,451.80 112.79 ELECTRONIC ARTS INC 3 179,850,635 1,757,818.90 102.31 SPK-TOWERS @ SHORES CENTER LLC 2 120,959,791 805,466.12 150.17 PLCP SF BAY HOTEL OWNERCO LLC 1 64,627,090 663,960.11 97.34 METROPOLITAN LIFE INS CO 1 47,362,699 567,142.94 83.51 CA-SHOREBREEZE OFFICE LTD PTP 2 75,946,534 521,184.09 145.72 SPK-TWIN DOLPHIN PLAZA LLC 1 68,266,550 473,803.68 144.08 CA 333 TWIN DOLPHIN OFFICE L P 1 62,293,227 433,530.42 143.69 PROVIDENT CENTRAL CREDIT UNION 1 34,891,409 390,887.95 89.26 REALTY ASSOCIATES FUND VII LP 2 34,236,029 319,791.28 107.06 SHAPELL INDUSTRIES INC 1 25,230,228 293,665.95 85.91 RNM TWIN DOLPHIN L P 2 22,285,154 287,110.66 77.62 BAY CLUB PENINSULA LLC 1 30,525,437 237,110.26 128.74 101 REDWOOD SHORES LLC 1 29,288,906 236,901.84 123.63 AG PREMIA REDWOOD SHORES LLC 1 7,333,800 209,800.10 34.96 HINES VAF NO CAL PROPERTIES L P 1 20,000,000 177,946.36 112.39 LBA REALTY FUND III COMPANY I LLC 1 21,999,960 148,063.56 148.58 REDWOOD SUITES LLC 1 10,600,000 134,304.39 78.93 SHP WESTSHORE LLC 23 15,686,173 116,318.11 134.86 350 MARINE PARKWAY LLC 1 10,000,000 80,072.81 124.89 BRIDGE PARK CENTER LP 1 9,789,309 59,665.92 164.07 MAI SU WUAN TR 1 4,041,477 39,690.36 101.83 REDWOOD SHORES ASSOCIATES LLC 1 3,701,952 19,075.27 194.07 VERTEX MANAGEMENT INC 1 399,392 4,870.25 82.01 SAN MATEO CO DENTAL SOCIETY 1 274,126 4,366.87 62.77 Totals: 55 $1,158,163,515 $10,275,000.00

(1) From Table 1. (2) Based on each respective Taxable Parcel’s share of the Fiscal Year 2012-13 annual Special Tax levy (see last column in Table 3), and the initial principal amount of the Bonds of $10,275,000. Source: Willdan Financial Services.

Note that the foregoing table does not take into account any direct and overlapping debt applicable to any of the Taxable Parcels. See “THE DISTRICT—Direct and Overlapping Governmental Obligations.”

Special Tax Levies and Delinquencies

Special Taxes were first levied in the District in fiscal year 2002-2003. There have never been any delinquencies in the payment of Special Taxes levied in the District. See also “SECURITY FOR THE BONDS—County Teeter Plan.”

Direct and Overlapping Governmental Obligations

The current and estimated direct and overlapping obligations affecting the property in the District are shown in the following Table 6. Table 6 was prepared by California Municipal Statistics, Inc., and is included for general information purposes only. Neither the City nor the Underwriter has reviewed the table for completeness or accuracy and they make no representation in connection therewith.

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Table 6 Direct and Overlapping Bonded Debt (as of October 31, 2012)

2012-13 Assessed Valuation: $1,158,163,515

DIRECT AND OVERLAPPING TAX AND ASSESSMENT DEBT: % Applicable Debt 1/23/13 (1) San Mateo Community College District General Obligation Bonds 0.796% $ 4,622,054 Sequoia Union High School District General Obligation Bonds 1.933 6,526,581 Belmont-Redwood Shores School District General Obligation Bonds 10.769 3,570,930 Belmont-Redwood Shores School District Redwood Shores School Facilities Improvement District General Obligation Bonds 22.623 5,267,766 San Carlos School District General Obligation Bonds 0.952 495,254 City of Redwood City Redwood Shores Community Facilities District No. 99-1 100. 10,315,000 (2) TOTAL DIRECT AND OVERLAPPING TAX AND ASSESSMENT DEBT $30,797,585

OVERLAPPING GENERAL FUND DEBT: San Mateo County General Fund Obligations 0.796% $2,481,369 San Mateo County Board of Education Certificates of Participation 0.796 95,082 Redwood City School District General Fund Obligations 7.741 397,113 Midpeninsula Regional Park and Open Space District General Fund Obligations 0.690 935,983 TOTAL OVERLAPPING GENERAL FUND DEBT $3,909,547

COMBINED TOTAL DEBT $34,707,132 (3)

(1) Excludes issues sold between date of preparation (10/31/2012) and dated date (12/20/2012). (2) Represents Prior Bonds to be refunded. Excludes refunding Bonds to be sold. (3) Excludes tax and revenue anticipation notes, enterprise revenue, mortgage revenue and non-bonded capital lease obligations.

Ratios to 2012-13 Assessed Valuation: Direct Debt ($10,315,000)...... 0.89% Total Direct and Overlapping Tax and Assessment Debt...... 2.66% Combined Total Debt...... 3.00%

Source: California Municipal Statistics, Inc.

Projected Debt Service Coverage

The table below shows the projected debt service coverage from the annual Special Tax levy in the District for the Bonds, assuming a levy of the maximum Special Tax on all Taxable Parcels, less the Annual Administrative Expense Amount, and no Special Tax delinquencies.

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Table 7 Projected Debt Service Coverage on Bonds

Projected Debt Net Maximum Debt Service Service Coverage Bond Year Special Tax(1) on the Bonds on the Bonds 2012-13 $974,533.91 $848,659.72 115% 2013-14 973,899.79 730,250.00 133 2014-15 973,252.99 734,600.00 132 2015-16 972,593.25 729,800.00 133 2016-17 971,920.32 732,200.00 133 2017-18 971,233.93 734,400.00 132 2018-19 970,533.81 730,400.00 133 2019-20 969,819.68 731,287.50 133 2020-21 969,091.28 730,912.50 133 2021-22 968,348.31 734,225.00 132 2022-23 967,590.48 731,025.00 132 2023-24 966,817.49 731,962.50 132 2024-25 966,029.04 731,850.00 132 2025-26 965,224.82 731,250.00 132 2026-27 964,404.52 731,500.00 132 2027-28 963,567.81 730,500.00 132 2028-29 962,714.37 733,250.00 131 2029-30 961,843.86 729,500.00 132 2030-31 960,955.94 729,500.00 132 2031-32 960,050.26 733,000.00 131 2032-33 959,126.46 729,750.00 131

(1) Reflects projected Maximum Possible Annual Special Tax (see “SECURITY FOR THE BONDS—Summary of Rate and Method – Maximum Annual Special Tax Rate”), less the Annual Administrative Expense Deposit for the applicable Bond Year. Sources: Net Maximum Special Tax – Willdan Financial Services; Debt Service and Projected Coverage – the Underwriter.

SPECIAL RISK FACTORS

The following is a description of certain risk factors affecting the District, the property owners in the District, the Taxable Parcels and the payment of and security for the Bonds. The following discussion of risks is not meant to be a complete list of the risks associated with the purchase of the Bonds and does not necessarily reflect the relative importance of the various risks. Potential investors are advised to consider the following factors along with all other information in this Official Statement in evaluating the investment quality of the Bonds. There can be no assurance that other risk factors will not become material in the future.

Concentration of Property Ownership

Failure of any significant owner of the Taxable Parcels to pay the annual Special Taxes when due could result in the rapid, total depletion of the Reserve Fund prior to replenishment from the resale of the property upon a foreclosure or otherwise or prior to delinquency redemption after a foreclosure sale, if any. See, however, “SECURITY FOR THE BONDS— County Teeter Plan.” In that event, there could be a default in payments of the principal of and interest on the Bonds.

The 55 Taxable Parcels in the District are currently owned by only 25 different owners (some of which are related entities), with one owner’s 3 Taxable Parcels (Westport Office Park LLC) responsible for 22.31% of the Fiscal Year 2012-2013 Special Tax levy, and another owner’s 3 Taxable Parcels (Electronic Arts Inc.) responsible for 17.11% of the Fiscal Year 2012-2013 Special Tax levy. See “THE DISTRICT—Land Ownership and Current Special Tax Levy.” While there is an ability to increase the Special Tax levied on any particular Taxable Parcel up to the maximum Special Tax rate allowed under the Rate and Method (see “SECURITY FOR THE

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BONDS—Summary of Rate and Method”) in order to cover delinquencies in the payment of Special Taxes on other Taxable Parcels, there could be a delay in collections of Special Taxes or an unwillingness by property owners to pay Special Taxes when due. See “THE DISTRICT— Development in the District.”

Payment of the Special Tax is not a Personal Obligation

The owners of the Taxable Parcels in the District are not personally obligated to pay the Special Tax. Rather, the Special Tax is an obligation that is secured only by a lien against the Taxable Parcels on which it is levied. If the value of the Taxable Parcels is not sufficient to secure fully the payment of the Special Tax, the City has no recourse against the landowners. A property owner may be less willing to pay Special Taxes levied on a Taxable Parcel if the total liabilities associated with that property exceed the value of the property.

No General Obligation of the City or the District

The City’s obligations under the Bonds and under the Fiscal Agent Agreement are limited obligations of the City on behalf of the District and are payable solely from and secured solely by the Special Tax Revenues (other than the Annual Administrative Expense Deposit) and amounts in the Special Tax Fund, the Bond Fund and the Reserve Fund. The Bonds are neither general or special obligations of the City nor general obligations of the District, but are limited obligations of the City for the District payable solely from the revenues and funds pledged therefor under the Fiscal Agent Agreement. None of the faith and credit of the District, the City or the State of California or of any of their respective political subdivisions is pledged to the payment of the Bonds.

Property Value

If a landowner defaults in the payment of the Special Tax, the only legal remedy is the institution of a superior court action to foreclose on the delinquent taxable parcel in an attempt to obtain funds with which to pay the Special Tax. The value of the Taxable Parcels in the District could be adversely affected by economic factors beyond the City’s control, including, without limitation, (i) adverse changes in local market conditions, such as changes in the market value of real property in the vicinity of the District, the supply of or demand for competitive properties in such area, and the market value of retail and commercial property in the event of sale or foreclosure; (ii) changes in real estate tax rates and other operating expenses, governmental rules (including, without limitation, zoning laws and laws relating to endangered species and hazardous materials) and fiscal policies; and (iii) natural disasters (including, without limitation, wildfire, earthquakes, tsunamis and floods), which may result in uninsured losses. See “SPECIAL RISK FACTORS—Natural Disasters.”

No assurances can be given that the real property subject to a judicial foreclosure sale will be sold or, if sold, that the proceeds of such sale will be sufficient to pay the delinquent Special Tax installment. No appraisal of the Taxable Parcels in the District has been conducted (see, however, “THE DISTRICT—Value-to-Burden Ratio” for a description of the County Assessor’s valuation of the parcels in the District). Although the Act authorizes the City to cause such an action to be commenced and diligently pursued to completion, the Act does not specify any obligation of the City with regard to purchasing or otherwise acquiring any lot or parcel of property sold at the foreclosure sale in any such action if there is no other purchaser at such sale. The City is not obligated and does not expect to be a bidder at any such foreclosure sale. See “SPECIAL RISK FACTORS—Proceeds of Foreclosure Sale.”

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Exempt Properties

Certain properties are exempt from the Special Tax in accordance with the approved Rate and Method. In addition, the Act provides that properties or entities of the state, federal or local government are exempt from the Special Tax; provided, however, that property within the District acquired by a public entity through a negotiated transaction, or by gift or devise, that is not otherwise exempt from the Special Tax, will continue to be subject to the Special Tax. It is possible that property acquired by a public entity following a tax sale or foreclosure based upon failure to pay taxes could become exempt from the Special Tax. See “SECURITY FOR THE BONDS—Summary of Rate and Method – Classification of Parcels.” In addition, the Act provides that if property subject to the Special Tax is acquired by a public entity through eminent domain proceedings, the obligation to pay the Special Tax with respect to that property, for outstanding Bonds only, is to be treated as if it were a special assessment. The constitutionality and operation of these provisions of the Act have not been tested.

In particular, insofar as the Act requires payment of the Special Tax by a federal entity acquiring property within the District, it may be unconstitutional. If for any reason property within the District becomes exempt from taxation by reason of ownership by a nontaxable entity such as the federal government or another public agency, subject to the limitation of the Maximum Annual Special Tax Rate, 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 timely payment of the Special Tax. Moreover, if a substantial portion of land within the District becomes exempt from the Special Tax because of public ownership, or otherwise, the maximum rate that could be levied upon the remaining acreage might not be sufficient to pay principal of and interest on the Bonds when due and a default would occur with respect to the payment of such principal and interest.

The Act further provides that no other properties or entities are exempt from the Special Tax unless the properties or entities are expressly exempted in a resolution of consideration to levy a new special tax or to alter the rate or method of apportionment of an existing special tax.

Risks Associated with Commercial Real Estate Properties

Dependence on Tenants. The ability of certain owners of Taxable Parcels within the District to pay the Special Taxes which will be levied on their property to pay debt service on the Bonds may depend primarily on the ability of their tenants to meet their financial obligations under their leases. In the event of defaults by tenants, delays may be experienced in enforcing rights and substantial costs may be incurred in protecting the property owner’s investment. Furthermore, at any time, a tenant could seek protection under bankruptcy laws, which could result in the termination of the tenant’s lease and an interruption or loss of rental income.

Tenant Lease Expiration and Reletting of Space. No assurance can be given that tenants of buildings located on Taxable Parcels whose leases expire will renew their leases or that replacement tenants will be found. Consequently, there is a risk that expired leases may not be renewed, that the space may not be relet and that the terms of renewal or reletting (including the cost of required renovations or concessions to tenants) may be less favorable than under expired leases. The occurrence of any, or a combination, of these factors would have an adverse effect on the revenues which will be available to the property owner for the payment of Special Taxes.

Factors Affecting Economic Performance and Value of Commercial Properties. The economic performance and value of the Taxable Parcels in the District will be affected by a

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number of factors, including national economic conditions, regional economic conditions (which may be adversely effected by plant closings, industry slow-downs and other factors), local real estate conditions such as an oversupply of commercial (i.e., office and retail) space or a reduction in the demand for commercial space in the area, the attractiveness of the commercial space to tenants, competition from other commercial centers, the quality of maintenance, the cost of insurance and management services, and increased operating costs. Other factors which may adversely affect the economic performance and value of the Taxable Parcels in the District include changes in government regulations and other laws, rules and regulations governing real estate, zoning or taxes, increases in interest rates, the availability of financing and potential liability under environmental and other laws.

Due to these factors and other risks, there can be no assurance that the developments on the Taxable Parcels within the District will remain economically viable throughout the term of the Bonds, or that the owners of the Taxable Parcels will continue to have the ability throughout the term of the Bonds to pay the Special Taxes which will be levied on their property.

Parity Taxes and Special Assessments

The Special Taxes and any penalties thereon will constitute liens against the Taxable Parcels in the District until they are paid. Such lien is on a parity with all special taxes and special assessments levied by other agencies and is coequal to and independent of the lien for general property taxes regardless of when they are imposed upon the Taxable Parcel. The Special Taxes have priority over all existing and future private liens imposed on the property. The City, however, has no control over the ability of other entities and districts to issue indebtedness secured by special taxes or assessments payable from all or a portion of the Taxable Parcels within the District subject to the levy of Special Taxes. In addition, the landowners within the District may, without the consent or knowledge of the District, petition other public agencies to issue public indebtedness secured by special taxes or assessments, and any such special taxes or assessments may have a lien on a Taxable Parcel on a parity with the Special Taxes. The imposition of additional indebtedness could reduce the willingness and the ability of the owners of the Taxable Parcels in the District to pay the Special Taxes when due.

Insufficiency of Special Taxes

In order to pay debt service on the Bonds, it is necessary that the Special Taxes levied against Taxable Parcels within the District be paid in a timely manner (see, however, “SECURITY FOR THE BONDS—County Teeter Plan”). The City has established the Reserve Fund in an amount equal to the Reserve Requirement to pay debt service on the Bonds to the extent Special Taxes are not paid on time and other funds are not available. See “SECURITY FOR THE BONDS—Reserve Fund” and Appendix C – “Summary of the Fiscal Agent Agreement.” Under the Fiscal Agent Agreement, the City has covenanted to maintain in the Reserve Fund an amount equal to the Reserve Requirement; subject, however, to the limitation that the City may not levy the Special Tax in any fiscal year at a rate in excess of the Maximum Annual Special Tax Rate permitted under the Rate and Method. See “SECURITY FOR THE BONDS—Special Taxes” and “—Summary of Rate and Method.” Consequently, if a delinquency occurs, the City may be unable to replenish the Reserve Fund to the Reserve Requirement due to the limitation of the Maximum Annual Special Tax Rate. If such defaults were to continue in successive years, the Reserve Fund could be depleted and a default on the Bonds would occur if proceeds of a foreclosure sale did not yield a sufficient amount to pay the delinquent Special Taxes.

The City has made certain covenants regarding the institution of foreclosure proceedings to sell certain Taxable Parcels with delinquent Special Taxes in order to obtain funds to pay debt service on the Bonds. See “SECURITY FOR THE BONDS—Covenant for

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Superior Court Foreclosure.” If foreclosure proceedings were ever instituted, any mortgage or deed of trust holder with respect to a delinquent Taxable Parcel could, but would not be required to, advance the amount of delinquent Special Taxes to protect its security interest.

Tax Delinquencies

Under provisions of the Act, the Special Taxes, from which funds necessary for the payment of principal of, and interest on, the Bonds are derived, are being billed to the Taxable Parcels within the District on the regular property tax bills sent to owners of the parcels. Such Special Tax installments are due and payable, and bear the same penalties and interest for non- payment, as do regular property tax installments. Special Tax installment payments cannot be made separately from property tax payments. Therefore, the unwillingness or inability of a property owner to pay regular property tax bills as evidenced by property tax delinquencies may also indicate an unwillingness or inability to make regular property tax payments and Special Tax installment payments in the future. See “SECURITY FOR THE BONDS—Reserve Fund” and “-Covenant for Superior Court Foreclosure” for a discussion of the provisions which apply, and procedures which the District is obligated to follow under the Fiscal Agent Agreement, in the event of delinquency in the payment of Special Tax installments. See also “SECURITY FOR THE BONDS—County Teeter Plan,” and “THE DISTRICT—Special Tax Levies and Delinquencies” for historical Special Tax delinquency history.

Bankruptcy Delays

The payment of the Special Tax and the ability of the City to commence a superior court action to foreclose the lien of a delinquent unpaid Special Tax, as discussed in “SECURITY FOR THE BONDS—Covenant or Superior Court Foreclosure,” may be limited by bankruptcy, insolvency or other laws generally affecting creditors’ rights or by the laws of the State of California relating to judicial foreclosure. Any legal opinion to be delivered concurrently with the delivery of the Bonds (including Bond Counsel’s approving legal opinion) will be qualified as to the enforceability of the various legal instruments by bankruptcy, insolvency, reorganization, moratorium and other similar laws affecting creditors’ rights, by the application of equitable principles and by the exercise of judicial discretion in appropriate cases.

Although bankruptcy proceedings would not cause the Special Taxes to become extinguished, bankruptcy of the owner of a Taxable Parcel or any other person claiming an interest in the Taxable Parcel could result in a delay in superior court foreclosure proceedings and could result in the possibility of Special Tax installments not being paid in part or in full. Such a delay would increase the likelihood of a delay or default in payment of the principal of and interest on the Bonds.

Proceeds of Foreclosure Sales

Pursuant to Section 53356.1 of the Act, in the event of any delinquency in the payment of any Special Tax, the City Council, as the legislative body of the District, may order that the Special Taxes be collected by a superior court action to foreclose the lien within specified time limits. The City has covenanted in the Fiscal Agent Agreement that it will, under certain circumstances, commence such a foreclosure action. See “SECURITY FOR THE BONDS— Covenant for Superior Court Foreclosure.”

No assurances can be given that a Taxable Parcel in the District that would be subject to a judicial foreclosure sale for delinquent Special Taxes will be sold or, if sold, that the proceeds of such sale will be sufficient to pay the delinquent Special Tax installment. Although the Act authorizes the City to cause such an action to be commenced and diligently pursued to completion, the Act does not specify any obligation of the City with regard to purchasing or

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otherwise acquiring any lot or parcel of property sold at the foreclosure sale in any such action if there is no other purchaser at such sale and the City has not in any way agreed nor does it expect to be such a bidder.

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

If foreclosure proceedings were ever instituted, any holder of a mortgage or deed of trust on the affected Taxable Parcel could, but would not be required to, advance the amount of the delinquent Special Tax installment to protect its security interest.

In the event such superior court foreclosure or foreclosures are necessary, there could be a delay in principal and interest payments to the owners of the Bonds pending prosecution of the foreclosure proceedings and receipt by the District of the proceeds of the foreclosure sale, if any. Judicial foreclosure actions are subject to the normal delays associated with court cases and may be further slowed by bankruptcy actions and other factors beyond the control of the City, including delay due to crowded local court calendars or legal tactics and, in any event could take several years to complete. In particular, bankruptcy proceedings involving the owner of a delinquent Taxable Parcel could cause a delay, reduction or elimination in the flow of Special Tax Revenues to the Fiscal Agent. See “–Bankruptcy Delays.”

Natural Disasters

The value of the Taxable Parcels in the future can be adversely affected by a variety of natural occurrences, particularly those that may affect infrastructure and other public improvements and private improvements on the Taxable Parcels and the continued habitability and enjoyment of such private improvements. Such occurrences include, without limitation, wildfire, earthquakes, tsunamis and floods. One or more of such natural disasters could occur and could result in damage to improvements of varying seriousness. The damage may entail significant repair or replacement costs and that repair or replacement may never occur either because of the cost, or because repair or replacement will not facilitate habitability or other use, or because other considerations preclude such repair or replacement. Under any of these circumstances, the value of the Taxable Parcels may well depreciate or disappear.

Like other areas of Northern California, property in the District is subject to the risk of major earthquake damage. During the past 150 years the San Francisco Bay Area has experienced several major and numerous minor earthquakes. The San Andreas fault, at its closest, is about seven miles to the west of the District; the Hayward fault, at its closest, is about 15 miles to the east. A significant earthquake along these or other faults is possible during the period the Bonds will be outstanding. The most recent major earthquake was the October 17, 1989 Loma Prieta earthquake with a magnitude of 7.1 on the Richter scale and an epicenter near Santa Cruz, approximately 50 miles south of the City.

On January 28, 2011, the City’s Engineer received a letter from the Risk Analysis Branch Chief of the Mitigation Division of the Department of Homeland Security’s Federal Emergency Management Agency (“FEMA”) indicating that, based on information provided by the City regarding its levee system and other pertinent reports and studies, the Redwood Shores area of the City, which includes the Taxable Parcels in the District, is within a FEMA one (1) percent annual-chance (base) flood area. FEMA cautions in the letter, however, that flood risk in the

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area still exists, and that levee systems and the estimated level of protection provided by such systems can and do change with time, and that future FEMA flood map updates may require that the relevant levee system be certified again at the time of update. FEMA also notes in the letter that levee systems require regular maintenance and can be overtopped or fail in large flood events. On October 17, 2012, in a letter to the Mayor of the City, FEMA revalidated the determinations made in its prior January 28, 2011 letter.

An earthquake, flood or one or more of the other conditions described in the third preceding paragraph may occur and may cause damage to public and private improvements on parcels in the District of varying seriousness, and any such damage may entail significant repair or replacement costs (or such repair or replacement may never occur either because of the cost or because repair or replacement will not facilitate usability or because other considerations may preclude such repair or replacement). Consequently, the occurrence of any of these conditions could result in a significant decrease in the market value of the Taxable Parcels or in such property becoming unusable or unmarketable.

Hazardous Substances

The presence of hazardous substances on a parcel may result in a reduction in the value of a Taxable 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 has anything to do with creating or handling the hazardous substance. The effect, therefore, should any of the Taxable Parcels be affected by a hazardous substance, is to reduce the marketability and value of the applicable parcel by the costs of remedying the condition, because the purchaser, upon becoming owner, will become obligated to remedy the condition just as is the seller.

The City has not independently verified, but is not aware of, the presence of any hazardous substances within the District.

Disclosure to Future Purchasers

The willingness or ability of an owner of a parcel to pay the Special Tax, even if the value of the property is sufficient to justify payment, 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, at the time of such a levy, has the ability to pay it as well as pay other expenses and obligations. The City has caused a notice of the Special Tax to be recorded in the Office of the County Recorder. Although 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 when purchasing a property within the District or lending money thereon, as applicable.

California Civil Code Section 1102.6b requires that, in the case of transfers, 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 a Taxable Parcel to comply with the above requirements, or failure by a purchaser to consider or understand the nature and existence of the Special Tax, could adversely affect the willingness and ability of the purchaser to pay the Special Tax when due.

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FDIC/Federal Government Interests in Properties

General. The ability of the City to foreclose the lien of delinquent unpaid Special Tax installments may be limited with regard to properties in which the Federal Deposit Insurance Corporation (the “FDIC”), the Drug Enforcement Agency, the Internal Revenue Service, or other federal agency has or obtains an interest.

Federal courts have held that, based on the supremacy clause of the United States Constitution, in the absence of Congressional intent to the contrary, a state or local agency cannot foreclose to collect delinquent taxes or assessments if foreclosure would impair the federal government interest. This means that, unless Congress has otherwise provided, if a federal governmental entity owns a Taxable Parcel within the District but does not pay taxes and assessments levied on the parcel (including Special Taxes), the applicable state and local governments cannot foreclose on the parcel to collect the delinquent taxes and assessments.

Moreover, unless Congress has otherwise provided, if the federal government has a mortgage interest in the parcel and the District wishes to foreclose on the parcel as a result of delinquent Special Taxes, the property cannot be sold at a foreclosure sale unless it can be sold for an amount sufficient to pay delinquent taxes and assessments on a parity with the Special Taxes and preserve the federal government’s mortgage interest. In Rust v. Johnson (9th Circuit; 1979) 597 F.2d 174, the United States Court of Appeal, Ninth Circuit held that the Federal National Mortgage Association (“FNMA”) is a federal instrumentality for purposes of this doctrine, and not a private entity, and that, as a result, an exercise of state power over a mortgage interest held by FNMA constitutes an exercise of state power over property of the United States.

The City has not undertaken to determine whether any federal governmental entity currently has, or is likely to acquire, any interest (including a mortgage interest) in any of the Taxable Parcels, and therefore expresses no view concerning the likelihood that the risks described above will materialize while the Bonds are outstanding.

FDIC. In the event that any financial institution making any loan which is secured by a lien on a Taxable Parcel within the District is taken over by the FDIC, and prior thereto or thereafter the loan or loans go into default, resulting in ownership of the property by the FDIC, then the ability of the District to collect interest and penalties specified by State law and to foreclose the lien of delinquent unpaid Special Taxes may be limited.

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

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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. The Ninth Circuit has issued a ruling on August 28, 2001 in which it determined that the FDIC, as a federal agency, is exempt from Mello-Roos special taxes.

The City 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 Taxable Parcel in which the FDIC has or obtains an interest, although prohibiting the lien of the Special Taxes 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 Bonds.

No Acceleration Provision

The Bonds and the Fiscal Agent Agreement do not contain a provision allowing for the acceleration of the Bonds in the event of a payment default or other default under the terms of the Bonds or the Fiscal Agent Agreement or in the event interest on the Bonds becomes included in gross income for federal income tax purposes.

Taxability and Audit Risk

As discussed herein under the caption “TAX MATTERS—General,” interest on the Bonds could become includable in gross income for purposes of federal income taxation retroactive to the date the Bonds were issued, as a result of future acts or omissions of the City in violation of its covenants in the Fiscal Agent Agreement and otherwise designed to satisfy the requirements of the Code. There is no provision in the Bonds or the Fiscal Agent Agreement for special redemption or acceleration or for the payment of additional interest should such an event of taxability occur, and the Bonds will remain outstanding until maturity or until redeemed under one of the other redemption provisions contained in the Fiscal Agent Agreement.

In addition, Congress is or may be considering in the future legislative proposals, including some that carry retroactive effective dates, that, if enacted, would alter or eliminate the exclusion from gross income for federal income tax purposes of interest on municipal bonds, such as the Bonds. Prospective purchasers of the Bonds should consult their own tax advisors regarding any pending or proposed federal tax legislation. The City can provide no assurance that federal tax law will not change while the Bonds are outstanding or that any such changes will not adversely affect the exclusion of interest on the Bonds from gross income for federal income tax purposes. If the exclusion of interest on the Bonds from gross income for federal income tax purposes were amended or eliminated, it is likely that the market price for the Bonds would be adversely impacted.

The Internal Revenue Service (the “Service”) has an ongoing program of auditing tax- exempt obligations to determine whether, in the view of the Service, interest on such tax- exempt obligations is includable in the gross income of the owners thereof for federal income

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tax purposes. It cannot be predicted whether or not the Service will commence an audit of the Bonds. If an audit is commenced, under current procedures the Service may treat the City as a taxpayer and the Bondholders may have no right to participate in such procedure. The commencement of an audit could adversely affect the market value and liquidity of the Bonds until the audit is concluded, regardless of the ultimate outcome.

Enforceability of Remedies

The remedies available to the Fiscal Agent and the registered owners of the Bonds upon a default under the Fiscal Agent Agreement or any other document described in this Official Statement are in many respects dependent upon regulatory and judicial actions that are often subject to discretion and delay. Under existing law and judicial decisions, the remedies provided for under such documents may not be readily available or may be limited. Any legal opinions to be delivered concurrently with the issuance of the Bonds will be qualified to the extent that the enforceability of the legal documents with respect to the Bonds is subject to limitations imposed by bankruptcy, reorganization, insolvency or other similar laws affecting the rights of creditors generally and by equitable remedies and proceedings generally.

Judicial remedies, such as foreclosure and enforcement of covenants, are subject to exercise of judicial discretion. A California court may not strictly apply certain remedies or enforce certain covenants if it concludes that application or enforcement would be unreasonable under the circumstances and it may delay the application of such remedies and enforcement.

No Secondary Market

No representation is made concerning any secondary market for the Bonds. There can be no assurance that any secondary market will develop for the Bonds. Investors should understand the long-term and economic aspects of an investment in the Bonds and should assume that they will have to bear the economic risks of their investment to maturity. An investment in the Bonds may be unsuitable for any investor not able to hold the Bonds to maturity.

Proposition 218

An initiative measure entitled the “Right to Vote on Taxes Act” (the “Initiative”) was approved by the voters of the State 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.” Provisions of the Initiative have been and will continue to be interpreted by the courts. The Initiative could potentially impact the Special Taxes otherwise available to the District to pay the principal of and interest on the Bonds as described below.

Among other things, Section 3 of Article XIIIC states, “…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, the Governor of the State signed a bill into law enacting Government Code Section 5854, which states that:

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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.

Accordingly, although the matter is not free from doubt, it is likely that Article XIIIC 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 Bonds.

It may be possible, however, for voters or the District or the City Council acting as the legislative body of the District to reduce the Special Taxes in a manner that does not interfere with the timely repayment of the 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 Bonds. Therefore, no assurance can be given with respect to the levy of Special Taxes for Administrative Expenses (as defined in the Fiscal Agent Agreement).

Nevertheless, the City has covenanted in the Fiscal Agent Agreement that it will not initiate proceedings to reduce the maximum Special Tax rates in the District, unless, in connection therewith, (i) the City receives a certification from one or more Independent Consultants which, when taken together, concludes that, on the basis of the land and improvements existing in the District as of the July 1 preceding the reduction, the maximum amount of the Special Tax which may be levied in each Bond Year for any Bonds Outstanding will equal at least 110% of the sum of the estimated Administrative Expenses and gross debt service in each Bond Year on all Bonds to remain Outstanding after the reduction is approved, (ii) the City finds that any reduction made under such conditions will not materially adversely affect the interests of the Owners of the Bonds, and (iii) the City is not delinquent in the payment of the principal of or interest on the Bonds. The City has further covenanted in the Fiscal Agent Agreement that in the event an ordinance is adopted by initiative pursuant to Section 3 of Article XIIIC of the California Constitution, which purports to reduce or otherwise alter the maximum Special Tax rates, it will commence and pursue legal action seeking to preserve its ability to comply with its covenant described in the preceding sentence. However, no assurance can be given as to the enforceability of the foregoing covenants.

The interpretation and application of Article XIIIC and Article XIIID 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 “—Enforceability of Remedies.”

Ballot Initiatives

Articles XIIIC and XIIID of the California Constitution were adopted pursuant to measures qualified for the ballot pursuant to California’s constitutional initiative process, and the State Legislature has in the past enacted legislation which has altered the spending limitations or established minimum funding provisions for particular activities. On March 6, 1995 in the case of Rossi v. Brown, the State Supreme Court held that an initiative can repeal a tax ordinance and prohibit the imposition of further such taxes and that the exemption from the referendum requirements does not apply to initiatives. From time to time, other initiative measures could be adopted by California voters or legislation enacted by the legislature. The

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adoption of any such initiative or legislation might place limitations on the ability of the State, the City, or local districts to increase revenues or to increase appropriations.

TAX MATTERS

General. In the opinion of Bond Counsel, under existing laws, regulations, rulings and judicial decisions, interest on the Bonds is excludable from gross income for federal income tax purposes. Bond Counsel is further of the opinion that interest on the Bonds is not a specific preference item for purposes of the federal individual or corporate alternative minimum taxes, although Bond Counsel observes that it is included in adjusted current earnings for purposes of the federal alternative minimum tax imposed on individuals and corporations. The opinions described in the preceding sentences assume the accuracy of certain representations and compliance by the City with covenants designed to satisfy the requirements of the Code that must be met subsequent to the issuance of the Bonds. Failure to comply with such requirements could cause interest on the Bonds to be included in gross income for federal income tax purposes retroactive to the date of issuance of the Bonds. The City will covenant to comply with such requirements. Bond Counsel has expressed no opinion regarding other federal tax consequences arising with respect to the Bonds. Bond Counsel is of the opinion that under existing laws, regulations, rulings and judicial decisions, interest on the Bonds is exempt from State of California personal income taxes.

The accrual or receipt of interest on the Bonds may otherwise affect the federal income tax liability of the owners of the Bonds. The extent of these other tax consequences will depend upon such owners’ particular tax status and other items of income or deduction. Bond Counsel has expressed no opinion regarding any such consequences. Purchasers of the Bonds, particularly purchasers that are corporations (including S corporations and foreign corporations operating branches in the United States), property or casualty insurance companies, banks, thrifts or other financial institutions, certain recipients of social security or railroad retirement benefits, taxpayers otherwise entitled to claim the earned income credit, or taxpayers who may be deemed to have incurred or continued indebtedness to purchase or carry tax-exempt obligations, should consult their tax advisors as to the tax consequences of purchasing or owning the Bonds.

Backup Withholding. As a result of the enactment of the Tax Increase Prevention and Reconciliation Act of 2005, interest on tax-exempt obligations such as the Bonds is subject to information reporting in a manner similar to interest paid on taxable obligations. Backup withholding may be imposed on payments made after March 31, 2007 to any bondholder who fails to provide certain required information including an accurate taxpayer identification number to any person required to collect such information pursuant to Section 6049 of the Code. The new reporting requirement does not in and of itself affect or alter the excludability of interest on the Bonds from gross income for federal income tax purposes or any other federal tax consequence of purchasing, holding or selling tax-exempt obligations.

Tax Treatment of Original Issue Discount. If the initial offering price to the public (excluding bond houses and brokers) at which a Bond is sold is less than the amount payable at maturity thereof, then such difference constitutes “original issue discount” for purposes of federal income taxes and State of California personal income taxes. If the initial offering price to the public (excluding bond houses and brokers) at which a Bond is sold is greater than the amount payable at maturity thereof, then the excess of the tax basis of a purchaser of such Bond (other than a purchaser who holds such Bond as inventory, stock in trade or for sale to customers in the ordinary course of business) over the principal amount of such Bond constitutes “original issue premium” for purposes of federal income taxes and State of California personal income taxes.

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Under the Code, original issue discount is excludable from gross income for federal income tax purposes to the same extent as interest on the Bonds. Further, such original issue discount accrues actuarially on a constant interest rate basis over the term of each such Bond and the basis of such Bond acquired at such initial offering price by an initial purchaser of each such Bond will be increased by the amount of such accrued discount. The Code contains certain provisions relating to the accrual of original issue discount in the case of purchasers of the Bonds who purchase such Bonds after the initial offering of a substantial amount thereof. Owners who do not purchase such Bonds in the initial offering at the initial offering prices should consult their own tax advisors with respect to the tax consequences of ownership of such Bonds. All holders of such Bonds should consult their own tax advisors with respect to the allowance of a deduction for any loss on a sale or other disposition to the extent that calculation of such loss is based on accrued original issue discount.

Under the Code, original issue premium is amortized for federal income tax purposes over the term of such a Bond based on the purchaser’s yield to maturity in such Bonds, except that in the case of such a Bond callable prior to its stated maturity, the amortization period and the yield may be required to be determined on the basis of an earlier call date that results in the lowest yield on such Bond. A purchaser of such a Bond is required to decrease his or her adjusted basis in such Bond by the amount of bond premium attributable to each taxable year in which such purchaser holds such Bond. The amount of bond premium attributable to a taxable year is not deductible for federal income tax purposes. Purchasers of such Bonds should consult their tax advisors with respect to the precise determination for federal income tax purposes of the amount of bond premium attributable to each taxable year and the effect of bond premium on the sale or other disposition of such a Bond, and with respect to the state and local tax consequences of owning and disposing of such a Bond.

Changes in Federal and State Tax Law. From time to time, there are legislative proposals in the Congress and in the various state legislatures that, if enacted, could alter or amend federal and state tax matters referred to above or adversely affect the market value of the Bonds. It cannot be predicted whether or in what form any such proposal might be enacted or whether if enacted it would apply to bonds issued prior to enactment. In addition, regulatory actions are from time to time announced or proposed and litigation is threatened or commenced which, if implemented or concluded in a particular manner, could adversely affect the market value of the Bonds. It cannot be predicted whether any such regulatory action will be implemented, how any particular litigation or judicial action will be resolved, or whether the Bonds or the market value thereof would be impacted thereby. Purchasers of the Bonds should consult their tax advisors regarding any pending or proposed legislation, regulatory initiatives or litigation. The opinions expressed by Bond Counsel are based upon existing legislation and regulations as interpreted by relevant judicial and regulatory authorities as of the date of issuance and delivery of the Bonds and Bond Counsel has expressed no opinion as of any date subsequent thereto or with respect to any pending legislation, regulatory initiatives or litigation.

Form of Opinion. The form of Bond Counsel’s anticipated opinion is included in Appendix D. The statutes, regulations, rulings, and court decisions on which such opinions will be based are subject to change.

Taxability and Audit Risk. See “SPECIAL RISK FACTORS—Taxability and Audit Risk” for a discussion of certain risk factors applicable to the Bonds.

LEGAL MATTERS

Concurrent with the issuance of the Bonds, Nossaman LLP, Irvine, California, Bond Counsel, will render its opinion substantially in the form set forth in Appendix D to this Official

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Statement. Quint & Thimmig LLP, San Francisco, is acting as Disclosure Counsel to the City with respect to the Bonds. Certain legal matters will be passed upon for the City by the City Attorney. Certain legal matters related to the Bonds will be passed upon for the Underwriter by Stradling Yocca Carlson & Rauth, A Professional Corporation, Newport Beach, California. Payment of the fees and expenses of Bond Counsel, Disclosure Counsel and Underwriter’s Counsel is contingent on the issuance of the Bonds.

FINANCIAL ADVISOR

The City has retained William Euphrat Municipal Finance, Inc., San Francisco, California, as Financial Advisor in connection with the issuance of the Bonds. The Financial Advisor is not obligated to undertake, and has not undertaken to make, an independent verification or assume responsibility for the accuracy, completeness or fairness of the information contained in this Official Statement. The Financial Advisor is an independent financial advisory firm and is not engaged in the business of underwriting, trading or distributing municipal securities or other public securities. Compensation paid to the Financial Advisor is contingent upon the issuance of the Bonds.

VERIFICATION OF MATHEMATICAL ACCURACY

Causey Demgen & Moore, Denver, Colorado, Certified Public Accountants, upon delivery of the Bonds, will deliver a report on the mathematical accuracy of certain computations contained in schedules provided to them which were prepared by the Underwriter, relating to the sufficiency of the anticipated receipts from the Escrowed Securities and uninvested moneys deposited in the Escrow Fund to pay, when due, the applicable redemption prices of the Prior Bonds on March 1, 2013.

NO RATING

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

LITIGATION

The City is not aware of any pending or threatened litigation challenging the validity of the Bonds, the Special Taxes securing the Bonds, or any action taken by the City in connection with the formation of the District, the levying of the Special Taxes or the issuance of the Bonds.

UNDERWRITING

The Bonds are being purchased through negotiation by E.J. De La Rosa & Co., Inc. (the “Underwriter”). The Underwriter agreed to purchase the Bonds at a price of $10,692,968.13 (which is equal to the par amount of the Bonds, plus a net original issue premium of $483,912.05, and less an underwriter’s discount of $65,943.92). The initial public offering prices of the Bonds set forth on the inside cover page may be changed by the Underwriter. The Underwriter may offer and sell the Bonds to certain dealers and others at prices lower than the public offering prices set forth on the inside cover page hereof.

CONTINUING DISCLOSURE

The City has covenanted in a Continuing Disclosure Agreement for the benefit of the Owners of the Bonds to provide certain annual financial information and operating data, and to provide notices of the occurrence of certain enumerated events. The City agreed in its certificate to file, or cause to be filed, with the MSRB such report and notices. See Appendix E – “Form of

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Continuing Disclosure Agreement” for the complete text of the City’s Continuing Disclosure Agreement. The covenants of the City have been made in order to assist the Underwriter in complying with the Rule. The City has not failed to comply in all material respects with any undertaking under the Rule in the past five years, except as follows: (i) with respect to three issues of water revenue bonds, the City sent its annual reports and financial information for its 2010 filing to its dissemination agent, but the dissemination agent failed to file the report and financial information with EMMA; and (ii) various notices of rating changes for several City bond issues, constituting material events, were not timely filed. All required filings have now been made and the City is presently current with all of its continuing disclosure undertakings due during the past five years.

MISCELLANEOUS

Included herein are brief summaries of certain documents and reports, which summaries do not purport to be complete or definitive, and reference is made to such documents and reports for full and complete statements of the contents thereof. Any statements in this Official Statement involving matters of opinion, whether or not expressly so stated, are intended as such and not as representations of fact. This Official Statement is not to be construed as a contract or agreement between the City or the District and the purchasers or Owners of any of the Bonds.

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The execution and delivery of this Official Statement has been duly authorized by the City Council, acting as the legislative body of the District.

CITY OF REDWOOD CITY, CALIFORNIA for and on behalf of the REDWOOD SHORES COMMUNITY FACILITIES DISTRICT NO. 99-1 (SHORES TRANSPORTATION IMPROVEMENT PROJECT) OF THE CITY OF REDWOOD CITY

By: /s/ Brian Ponty Director of Finance

S-1 THIS PAGE INTENTIONALLY LEFT BLANK

APPENDIX A

CITY AND COUNTY GENERAL DEMOGRAPHIC INFORMATION

The Redwood Shores Community Facilities District No. 99-1 (Shores Transportation Improvement Project) of the City of Redwood City (the “District”) is located in the City of Redwood City (the “City”) in San Mateo County (the “County”). The financial and economic data for the City are presented for information purposes only. The Bonds are not a debt or obligation of the City or the County, but are a limited obligation of the City for the District secured solely by the funds pledged for such payment under the Fiscal Agent Agreement.

Location

The County is one of nine counties comprising the economic geographic unit known as the San Francisco Bay Area. The County is a major employment base, and is also accessible to the San Jose and Silicon Valley areas approximately 30 miles south via Interstate 280 or U.S. Highway 101. San Francisco International Airport is located in the County.

The City is located in the San Francisco Bay Area 25 miles south of San Francisco. It is the oldest bayside city in the County. The City was incorporated in 1867, and has been the County Seat since 1856. City limits cover approximately 34 square miles of generally level terrain. The City combines residential, industrial, and commercial elements in a largely urban environment. Its waterfront provides a yacht harbor and the only deep-water port in the South Bay. A wide variety of housing types are available. Services and trade, the County’s two largest industry divisions, are expected to provide close to two-thirds of anticipated growth in the next two years.

Population

The following table lists population estimates for the City, County and the State for the last five calendar years, as of January 1.

SAN MATEO COUNTY Population Estimates Calendar Years 2008 through 2012 as of January 1

2008 2009 2010 2011 2012 City of Redwood City 75,525 76,198 76,766 77,299 78,244 San Mateo County 707,820 713,818 718,614 722,372 729,443 State of California 36,704,375 36,966,713 37,223,900 37,427,946 37,678,563

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

Employment and Industry

The unemployment rate in the San Francisco-San Mateo-Redwood City MD was 7.0% in August 2012, just below the year-ago estimate of 8.4%. This compares with an unadjusted unemployment rate of 10.4% for California and 8.2% for the nation during the same period. The unemployment rate was 6.3% in Marin County, 7.4% in San Francisco County, and 6.8% in San Mateo County.

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SAN FRANCISCO SAN MATEO REDWOOD CITY METROPOLITAN DIVISION (MARIN, SAN FRANCISCO AND SAN MATEO COUNTIES) Civilian Labor Force, Employment and Unemployment; Employment by Industry (Annual Averages)

2007 2008 2009 2010 2011 Civilian Labor Force(1) 935,800 962,600 965,200 961,800 978,200 Employment 898,600 914,700 882,700 874,300 898,300 Unemployment 37,200 47,900 82,500 87,500 79,900 Unemployment Rate 4.0% 5.0% 8.5% 9.1% 8.2% Wage and Salary Employment:(2) Agriculture 2,700 2,700 2,500 2,500 2,200 Mining and Logging 200 200 200 200 200 Construction 45,400 44,300 35,100 32,000 32,500 Manufacturing 43,500 42,100 38,100 37,500 37,000 Wholesale Trade 27,100 26,800 24,500 24,100 24,000 Retail Trade 95,000 94,000 87,700 86,800 87,600 Transportation, Warehousing and 40,600 39,800 37,800 36,600 35,900 Utilities Information 39,500 40,800 39,600 38,500 40,800 Finance and Insurance 67,700 65,600 60,100 57,700 57,500 Real Estate and Rental and Leasing 21,100 21,200 19,500 19,100 19,200 Professional and Business Services 203,900 210,100 198,300 199,000 201,800 Educational and Health Services 105,200 107,400 108,700 108,300 109,800 Leisure and Hospitality 124,300 126,800 122,200 122,300 127,100 Other Services 38,600 39,400 38,000 37,700 39,100 Federal Government 19,400 19,200 18,900 20,100 19,000 State Government 34,900 35,600 35,400 35,300 35,800 Local Government 82,700 83,500 81,400 79,900 81,000 Total, All Industries(3) 991,800 999,300 947,800 937,700 950,300

(1) Labor force data is by place of residence; includes self-employed individuals, unpaid family workers, household domestic workers, and workers on strike. (2) Industry employment is by place of work; excludes self-employed individuals, unpaid family workers, household domestic workers, and workers on strike. (3) Totals may not add due to rounding. Source: State of California Employment Development Department, March 2011 Benchmark.

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The following table shows the major employers in the County as of January 2012, listed in alphabetical order.

SAN MATEO COUNTY Major Employers (Listed alphabetically) January 2012

Employer Name Location Industry AB SCIEX Foster City Scientific Apparatus & Instruments-Mfrs Burlingame Millbrae Yellow Cab Burlingame Taxicabs & Transportation Service Electronic Arts Inc Redwood City Game Designers (Mfrs) Forced Dump Debris Box Svc Burlingame Garbage Collection Franklin Resources Inc San Mateo Investment Management Franklin Templeton Investments San Mateo Banks Franklin Trust Co San Mateo Mutual Funds Genentech Inc South San Francisco Drug Millers (Mfrs) Gilead Sciences Inc Foster City Pharmaceutical Consultants Guckenheimer Inc Redwood City Marketing Programs & Services Health Science Library Daly City Services NEC Kaiser Permanente Medical Ctr Redwood City Hospitals Kaiser Permanente Medical Ctr South San Francisco Hospitals Oracle Corp Redwood City Computer Software-Manufacturers Peninsula Medical Ctr Burlingame Hospitals San Francisco Intl Airport San Francisco Airports San Mateo County Behavior San Mateo County Government-Public Health Programs San Mateo County Human Svc Belmont County Government-Social/Human Resources San Mateo Medical Ctr San Mateo Crisis Intervention Service SRI International Inc Menlo Park Research Service Stanford Linear Accelerator Menlo Park Research Service US Interior Dept Menlo Park Federal Government-Conservation Depts Visa Inc Not Available Credit Card & Other Credit Plans Visa International Svc Assn Foster City Marketing Programs & Services Visa USA Inc Foster City Credit Card & Other Credit Plans

Source: California Employment Development Department, extracted from The America’s Labor Market Information System (ALMIS) Employer Database, 2013 1st Edition.

The following table shows the principal employers in the City as of June 30, 2011.

PRINCIPAL EMPLOYERS City of Redwood City

% of Total Number of City Employer Employees Rank Employment Oracle Corporation 6,700 1 17.63% Electronic Arts 3,416 2 8.99 San Mateo County 2,200 3 5.79 Kaiser Permanente 2,044 4 5.38 Sequoia Hospital 1,013 5 2.67 Redwood City School District 1,000 6 2.63 Broad Vision 759 7 2.00 Sequoia Union High School District 700 8 1.84 City of Redwood City 607 9 1.60 Informatica Corporation 400 10 1.05

Source: City of Redwood City, Comprehensive Annual Financial Report, Fiscal Year Ended June 30, 2011.

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Construction Activity

Provided below are the building permits and valuations for the City and the County for calendar years 2007 through 2011.

CITY OF REDWOOD CITY Total Building Permit Valuations (Valuations in Thousands)

2007 2008 2009 2010 2011 Permit Valuation New Single-family $ 9,615.3 $ 6,051.1 $ 9,249.1 $10,002.2 $ 9,184.5 New Multi-family 0.0 0.0 14,135.0 3,359.4 13,094.9 Res. Alterations/Additions 26,033.9 21,986.0 17,739.0 19,047.3 21,794.1 Total Residential 35,649.1 28,037.1 41,123.2 32,408.9 44,073.5 New Commercial 980.0 32,468.0 0.0 0.0 0.0 New Industrial 3,600.0 2,200.0 5,000.0 0.0 0.0 New Other 1,416.9 1,318.2 2,081.0 1,015.1 135.0 Com. Alterations/Additions 118,838.6 82,204.4 26,760.1 30,631.3 49,043.6 Total Nonresidential $124,835.5 $118,190.7 $33,841.1 $31,646.3 $49,178.6 New Dwelling Units Single Family 29 18 40 46 41 Multiple Family 0 0 105 16 70 TOTAL 29 18 145 62 111

Source: Construction Industry Research Board, Building Permit Summary.

SAN MATEO COUNTY Total Building Permit Valuations (Valuations in Thousands)

2007 2008 2009 2010 2011 Permit Valuation New Single-family $316,491.4 $245,433.9 $147,515.5 $189,296.6 $194,950.0 New Multi-family 67,181.1 122,424.2 74,329.6 21,309.0 107,039.8 Res. Alterations/Additions 274,263.6 272,177.0 204,482.0 262,592.1 250,364.0 Total Residential 657,936.0 640,035.2 426,327.0 473,197.6 552,353.8 New Commercial 366,581.6 114,968.0 17,942.0 62,510.5 25,130.9 New Industrial 29,263.8 2,200.0 5,000.0 0.0 3,359.4 New Other 74,829.0 85,470.2 70,410.1 66,274.8 5,513.6 Com. Alterations/Additions 336,069.0 315,260.4 235,373.3 283,752.5 244,088.9 Total Nonresidential $806,743.4 $517,898.6 $328,725.5 $412,537.8 $278,092.8 New Dwelling Units Single Family 658 312 236 216 213 Multiple Family 367 630 393 111 545 TOTAL 1,025 942 629 327 758

Source: Construction Industry Research Board, Building Permit Summary.

Effective Buying Income

“Effective Buying Income” is defined as personal income less personal tax and nontax payments, a number often referred to as “disposable” or “after-tax” income. Personal income is the aggregate of wages and salaries, other labor-related income (such as employer contributions to private pension funds), proprietor’s income, rental income (which includes imputed rental income of owner-occupants of non-farm dwellings), dividends paid by corporations, interest income from all sources, and transfer payments (such as pensions and welfare assistance).

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Deducted from this total are personal taxes (federal, state and local), nontax payments (fines, fees, penalties, etc.) and personal contributions to social insurance. According to U.S. government definitions, the resultant figure is commonly known as “disposable personal income.”

The following table summarizes the total effective buying income for the City, the County of San Mateo, the State and the United States for the period 2007 through 2011. Figures for 2012 are not yet available.

CITY OF REDWOOD CITY; COUNTY OF SAN MATEO Effective Buying Income As of January 1, 2007 through 2011

Total Effective Buying Median Household Income (000’s Effective Buying Year Area Omitted) Income 2007 City of Redwood City $ 2,275,185 $60,874 San Mateo County 23,043,253 65,262 California 814,894,438 48,203 United States 6,300,794,040 41,792 2008 City of Redwood City $ 2,381,243 $63,326 San Mateo County 23,925,603 67,466 California 832,531,445 48,952 United States 6,443,994,426 42,303 2009 City of Redwood City $ 2,409,628 $65,556 San Mateo County 23,835,480 69,276 California 844,823,319 49,736 United States 6,571,536,768 43,252 2010 City of Redwood City $ 2,335,918 $62,617 San Mateo County 23,489,013 66,508 California 801,393,028 47,177 United States 6,365,020,076 41,368 2011 City of Redwood City $ 2,351,140 $61,892 San Mateo County 23,717,577 66,434 California 814,578,457 47,062 United States 6,438,704,663 41,253

Source: The Neilson Company (US), Inc.

Commercial Activity

In 2010, the State Board of Equalization converted the business codes of sales and use tax permit holders to North American Industry Classification System codes. As a result of the coding change, data for 2010 is not comparable to that of prior years. A summary of historical taxable sales within the City during the past five years in which data is available is shown in the following table. Total taxable sales during calendar year 2010 in the City were reported to be $1,451,454,000, a 4.6% increase over the total taxable sales of $1,387,335,000 reported during calendar year 2009. Figures for 2011 are not yet available.

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

Retail Stores Total All Outlets Number of Taxable Number of Taxable Permits Transactions Permits Transactions 2006 1,043 1,236,743 2,249 1,704,224 2007 1,047 1,257,101 2,228 1,711,777 2008 1,005 1,126,550 2,138 1,600,517 2009 1,193 961,033 1,987 1,387,335 2010 1,230 1,053,741 2,023 1,451,454

Source: California State Board of Equalization, Taxable Sales in California (Sales & Use Tax).

In 2010 the State Board of Equalization converted the business codes of sales and use tax permit holders to North American Industry Classification System codes. As a result of the coding change, data for 2010 is not comparable to that of prior years. A summary of historical taxable sales within the County during the past five years in which data is available is shown in the following table. Total taxable sales during calendar year 2010 in the County were reported to be $11,966,338,000, a 5.6% increase over the total taxable sales of $11,327,022,000 reported during calendar year 2009. Figures for 2011 are not yet available.

COUNTY OF SAN MATEO Taxable Transactions Number of Permits and Valuation of Taxable Transactions (Dollars in Thousands)

Retail Stores Total All Outlets Number of Number of Permits on Taxable Permits on Taxable July 1 Transactions July 1 Transactions 2006 9,467 8,723,143 21,082 12,900,391 2007 9,278 8,998,981 20,202 13,326,306 2008 9,098 8,421,727 19,853 13,137,913 2009 11,143 7,455,767 18,840 11,327,022 2010 11,340 7,846,274 18,979 11,966,338

Source: California State Board of Equalization, Taxable Sales in California (Sales & Use Tax).

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APPENDIX B

RATE AND METHOD

Section 1. Definitions

The defined terms below shall apply wherever such terms are used in this Rate and Method of Apportionment.

“Act” means the Mello-Roos Community Facilities Act of 1982 (Chapter 2.5, Part 1, Division 2, Title 5 of the California Government Code), as amended from time to time.

“Administrative Expenses” means the actual or estimated costs incurred by the City to determine, levy and collect the Special Taxes, including salaries of City employees and the fees of consultants, corporate Bond paying agents, fiscal agents and Bond trustees; the costs of collecting installments of the Special Taxes; preparation and maintenance of required records and reports; preparation of financial audits; and any other costs required to administer the CFD.

“Annual Costs” means, for each Fiscal Year, the total of 1) an amount sufficient to pay Debt Service in a timely manner, 2) Administrative Expenses, and 3) any amounts needed to replenish Bond reserve funds and to make up for any deficit caused by actual or estimated delinquencies in Special Taxes for the previous or current Fiscal Year.

“Annual Tax Revenues” means the amount of Special Taxes collected each Fiscal Year to pay the Annual Costs.

“Approved Commercial Parcel” means a Commercial Parcel that has been approved for commercial development by the City pursuant to a vested Development Agreement or a recorded final map approved by the City and is not a Developed Commercial Parcel.

“Approved Commercial Square Feet” means the maximum amount of commercial square feet that could be constructed on an Approved Commercial Parcel pursuant to a vested Development Agreement or a recorded final map approved by the City. If an Approved Commercial Parcel is subdivided, the City Manager may assign Approved Commercial Square Feet to successor Parcels provided that the total number of Approved Commercial Square Feet on such successor Parcels may not exceed the Approved Commercial Square Feet assigned to the predecessor Parcel.

“Auditor” means the Auditor for the County or his or her designee.

“CFD” means Redwood Shores Community Facilities District No. 99-1 (Shores Transportation Improvement Project) of the City of Redwood City.

“Classification Date” means each June 1.

“City” means the City of Redwood City, California.

“City Council” means the elected legislative body of the City.

“City Manager” means the city manager of the City.

“Commercial Parcel” means a Parcel which is designated for commercial use pursuant to the land use approved for such Parcel by the Redwood Shores Specific Plan or other land use

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planning document approved by the City. In the event the City has no official land use designation for a Parcel, the land use code on the secured tax rolls of the County may be used to classify such Parcel.

“County” means County of San Mateo, California.

“Coverage Factor” means a percentage rate equal to ten (10) percent.

“Debt Service” means the total amount of principal and interest due on outstanding Bonds of the CFD that must be collected by the County in any Fiscal Year in order to make timely payments of principal and interest on such outstanding Bonds.

“Developed Commercial Parcel” means any Commercial Parcel for which a building permit has been issued by the City.

“Developed Commercial Square Feet” means the number of square feet approved for construction as shown on a building permit that has been issued by the City for any Developed Commercial Parcel.

“Development Agreement” means a development agreement approved by the City which allows commercial development of one or more Parcels within the boundaries of the CFD.

“Fiscal Year” means the period beginning July 1 and ending the following June 30.

“Inactive Parcel” means a Parcel which is not classified as a Developed Commercial Parcel, Approved Commercial Parcel, Residential Parcel, or Public Parcel.

“Maximum Annual Special Tax Rate” means the maximum amount of Special Taxes per Approved Commercial Square Foot and Developed Commercial Square Foot that may be levied against a Taxable Parcel.

“Net Taxable Square Feet” means the total amount of Developed Commercial Square Feet and Approved Commercial Square Feet subject to taxation in any given Fiscal Year.

“Parcel” means any Parcel within the boundaries of the CFD that is identified by an Assessor’s parcel number on the secured tax rolls of the County as of the January 1 lien date (or such other lien date as may be established by the Assessor) of each Fiscal Year.

“Parcel Classification” means the placement of each Parcel into its respective classification as such parcel exists each Classification Date.

“Prepaid Parcel” means any Parcel that has prepaid in full pursuant to this Rate and Method of Apportionment the Special Taxes to be levied against such Parcel in satisfaction of its pro rata share of Annual Costs.

“Principal Prepayment Amount” means the amount of unpaid outstanding Bond principal and authorized but unissued Bond principal allocable to each Taxable Parcel as of the date of such calculation.

“Public Parcel” means any Parcel that is, or is intended to be, publicly owned and which is normally exempt from ad valorem taxes under California law, including public streets, schools, school district administrative offices, police and fire facilities, parks, and public drainage ways, rights-of-way, landscaping, greenbelts and open space.

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“Residential Parcel” means any Parcel zoned for single or multi-family residential use.

“Special Tax” or “Special Taxes” means any tax levy with respect to the CFD under the Act on Taxable Parcels.

“Special Tax Report” means the report prepared annually pursuant to Section 3 hereof.

“Tax Collection Schedule” means the document prepared by the City Manager for use by the Auditor in collecting the Special Taxes each Fiscal Year pursuant to Section 6 hereof.

“Taxable Classification Date” means the date on which a Parcel is first classified as a Taxable Parcel.

“Taxable Parcel” means any Developed Commercial Parcel or Approved Commercial Parcel which is not a Prepaid Parcel.

“Tax-Exempt Parcel” means any Parcel that is a Public Parcel or Residential Parcel. However, Taxable Parcels that are acquired by a public entity shall remain subject to the applicable Special Tax pursuant to Section 53317.4 of the Act.

Section 2. Basis of Special Tax Levy

A Special Tax under the Act applicable to each Taxable Parcel shall be levied and collected according to the tax liability determined by the City through the application of the procedures described below.

Section 3. Determination and Classification of Parcels Subject to Special Tax

Prior to the first issuance of Bonds, and thereafter prior to July 1 of each Fiscal Year, the City Manager shall cause to be prepared a Special Tax Report setting forth: 1) the classification as of the Classification Date applicable for such Fiscal Year of each Parcel within the boundaries of the CFD, 2) a projected sources and uses of funds for the CFD in such Fiscal Year showing that projected Annual Tax Revenues are sufficient to pay projected Annual Costs, 3) the total number of Developed Commercial Square Feet attributable to Developed Commercial Parcels and Approved Commercial Square Feet attributable to Approved Commercial Parcels for such Fiscal Year and, in each case, the Maximum Annual Special Tax Rate applicable to such commercial square feet 4) the total number of Developed Commercial Square Feet and Approved Commercial Square Feet allocable to Prepaid Parcels, 5) the net taxable Developed Commercial Square Feet and Approved Commercial Square Feet allocable to Taxable Parcels for such Fiscal Year, 6) the Special Tax rate necessary to satisfy Annual Costs applicable to such Developed Commercial Square Feet and Approved Commercial Square Feet allocable to each Taxable Parcel for such Fiscal Year, 7) the amount of Special Taxes to be levied on each Taxable Parcel in the next ensuing Fiscal Year, 8) the annual Principal Prepayment Amount allocable to each Taxable Parcel, and 9) a Tax Collection Schedule.

Parcels shall be classified as of their status applicable in the next Fiscal Year on each Classification Date. The secured property tax roll, land use codes and plot map books maintained by the County Assessor of the County, in combination with official records maintained by the City regarding Development Agreements, recorded final maps, building permits issued, and other changes in parcel development status, will be the basis for classifying the Parcels in the CFD. If the land use code on the secured property tax roll is incorrect, the City may assign the appropriate code based on its review of the status of the property.

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Commercial Parcels without Developed Commercial Square Feet or Approved Commercial Square Feet shall be classified as Inactive Parcels. Developed Commercial Parcels and Approved Commercial Parcels shall be classified as either Taxable Parcels or, if the Special Taxes for such Parcels have been prepaid, Prepaid Parcels. Residential Parcels and Public Parcels shall be classified as Tax-Exempt Parcels.

Once a Parcel is classified as a Taxable Parcel it may not be removed from such classification unless i) Special Taxes allocable to such Parcel have been prepaid pursuant to Section 7 hereof, in which case such Parcel shall be reclassified as a Prepaid Parcel, or ii) the City Manager determines that such removal shall not cause the Special Tax rate per commercial square foot on remaining Taxable Parcels to exceed their respective Maximum Annual Special Tax Rates. Once the number of Approved Commercial Square Feet and Developed Commercial Square Feet has been initially allocated to a Taxable Parcel (provided such initial allocation is not in error), such number may not be reduced unless the City Manager determines that such reduction shall not cause the Special Tax rate per commercial square foot on remaining Taxable Parcels to exceed their respective Maximum Annual Special Tax Rates. Approved Commercial Parcels may be reclassified as Developed Commercial Parcels and, if warranted, their taxable commercial square feet reduced subject to the preceding sentence.

The Special Tax shall be levied only on Taxable Parcels. The amount of the Special Tax for each Taxable Parcel shall be determined in accordance with the provisions of Section 6 hereof. Each Taxable Parcel’s Special Tax for the next Fiscal Year shall be levied against such Parcel’s assessor’s parcel number as it was shown on the County Assessor’s records of Parcels in the CFD as of the prior January l1ien date, or such other lien date established by the County Assessor.

Section 4. Termination of the Special Tax

When all of the CFD’s Administrative Expenses and Debt Service obligations are satisfied and no Bonds authorized for issuance by the CFD remain either unissued or outstanding, the City Council shall determine that the Special Tax shall cease to be levied. The City Council shall then direct the City Clerk to record a Notice of Cessation of Special Tax as provided by law. Notwithstanding the foregoing, in no event shall the Special Tax be levied after the Fiscal Year ending June 30, 2036.

Section 5. Maximum Annual Special Tax Rate

For each Taxable Parcel, the Maximum Annual Special Tax Rate shall be established for both Developed Commercial Square Feet and Approved Commercial Square Feet as that Maximum Annual Special Tax Rate applicable in the year in which such commercial square footage first becomes subject to taxation. The Maximum Annual Special Tax Rate applicable to particular Developed Commercial Square Feet or Approved Commercial Square Feet shall not increase after the year in which it is first so applied. A Taxable Parcel may have more than one Maximum Annual Special Tax Rate applicable to it. Maximum Annual Special Tax Rates shall be established in accordance with the following schedule.

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If the fiscal year beginning Then for as long as the Parcel on which such 7/1 in which commercial commercial square feet is located is a Taxable square footage first becomes Parcel, such commercial square feet shall subject to taxation is: thereafter be taxed at: 1999 $0.232 per square foot 2000 $0.244 per square foot 2001 $0.258 per square foot 2002 $0.272 per square foot 2003 $0.287 per square foot 2004 $0.303 per square foot 2005 $0.319 per square foot 2006 $0.337 per square foot 2007 $0.355 per square foot 2008 $0.375 per square foot 2009 $0.395 per square foot 2010 $0.417 per square foot 2011 $0.440 per square foot 2012 $0.464 per square foot 2013 $0.490 per square foot Thereafter $0.490 per square foot

Inactive Parcels, Prepaid Parcels and Tax-Exempt Parcels shall not be subject to the levy of Special Taxes.

Section 6. Apportionment, Levy and Selection of Special Tax Rates

A Special Tax rate per Developed Commercial Square Foot or Approved Commercial Square Foot allocable to each Taxable Parcel in the CFD shall be established annually by the City Council. The Special Tax rate or rates per Developed Commercial Square Foot or Approved Commercial Square Foot allocable to each Taxable Parcel shall then be multiplied by the Developed Commercial Square Feet or Approved Commercial Square Feet on each such Taxable Parcel to determine the Special Tax applicable to each such Taxable Parcel.

Prior to July 1 of each Fiscal Year for which Annual Costs are payable, the Special Tax rate per Developed Commercial Square Foot or Approved Commercial Square Foot allocable to each Taxable Parcel in the CFD shall be established as follows:

Step 1 The total Annual Costs for such Fiscal Year shall be projected.

Step 2 The sum of unexpended fund balances (including amounts collected in the prior Fiscal Year to be applied to Debt Service in such Fiscal Year) held under the fiscal agent agreement securing outstanding Bonds that is available to pay Debt Service in such Fiscal Year shall be determined.

Step 3 The amount of Debt Service due in such Fiscal Year payable from Annual Tax Revenues collected in the prior Fiscal Year shall be determined.

Step 4 The amounts calculated in steps 1 and 3 above shall be added together and the amount determined in step 2 above shall be subtracted from such sum to arrive at the Annual Tax Revenues to be collected in such Fiscal Year.

Step 5 The Maximum Annual Special Tax Rate (or rates, as the case may be) applicable to each Taxable Parcel shall be multiplied by the taxable commercial square feet corresponding to such rate(s).

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Step 6 If the total of the amounts calculated in Step 5 is greater than the Annual Costs, all Special Tax rates shall be decreased by equal proportions of the applicable Maximum Annual Special Tax Rates until the Special Tax rates on all Taxable Parcels produces scheduled Annual Tax Revenue equal to the projected Annual Costs.

Step 7 An annual Special Tax shall be determined for each Taxable Parcel by multiplying the Special Tax rate(s) identified in Step 6 above times the number of commercial square feet taxable at such Special Tax rate(s) on each such Taxable Parcel.

After each Parcel has been annually classified, the annual Special Tax and Principal Prepayment Amount for each Taxable Parcel has been calculated, and a Special Tax Report for such Fiscal Year has been approved by resolution of the City Council in July of each Fiscal Year, the City Manager shall forward a Tax Collection Schedule showing the annual Special Tax liability for each Taxable Parcel to the County Auditor, requesting that the Tax Collection Schedule be placed on the secured property tax roll for the applicable Fiscal Year. The Tax Collection Schedule shall be sent not later than August 10 or such other date required by the County Auditor for such placement.

The City shall make every effort to correctly assign the Special Tax rates and calculate the annual Special Tax liability for each Taxable Parcel and the annual Principal Prepayment Amount for each Taxable Parcel. It shall be the burden of the taxpayer to correct any errors in the determination and classification of the Parcels subject to the Special Tax and their respective Special Tax and Principal Prepayment Amount liabilities.

Section 7. Prepayment of Special Taxes

Prepayment Prior to the Initial Sale of Bonds. Prior to the sale of Bonds secured by the Special Taxes, the owner of each Taxable Parcel shall have the option to prepay future Special Taxes to be levied against such Taxable Parcel with a single cash payment. The amount of such optional cash payment shall be determined as follows:

Step 1 Prior to the sale of Bonds, the total number of Developed Commercial Square Feet and Approved Commercial Square Feet allocable to all Taxable Parcels in the CFD shall be determined as of the applicable Classification Date.

Step 2 The maximum approved Bonded indebtedness of the CFD as specified in Resolution No. 13610 adopted on April 26, 1999 shall be determined. From such amount shall be deducted the following Bond financing costs: the projected cost of financing Bond debt service reserve funds, interest projected to be capitalized from the proceeds of Bonds, and any projected underwriter’s discount and Bond insurance premiums, all as identified in the revised Report caused to be prepared by the City Manager in connection with the formation of the CFD as required under Sections 53321.5 and 53325 of the Act. All other budgeted costs of creating the CFD and issuing Bonds approved by the City shall be included as project costs.

Step 3 The net amount determined in step 2 above shall be divided by the total Net Taxable Commercial Square Feet determined in step 1 above.

Step 4 The quotient resulting from step 3 above shall, for each Taxable Parcel, be multiplied by the total number of Developed Commercial Square Feet and Approved Commercial Square Feet allocable to each such Taxable Parcel. The product of such multiplication shall be the optional cash payment amount assigned to each such Taxable Parcel.

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Notice shall be given by mail to each owner of Taxable Parcels within the CFD of a 30- day period prior to the initial sale of Bonds within which cash payments may be made. Only cash payments in whole may be accepted in lieu of the payment of annual Special Taxes. Parcels for which the prepayment of Special Taxes in whole has been made shall be reclassified as Prepaid Parcels and shall no longer be subject to the levy of Special Taxes.

Prepayment Subsequent to the Initial Sale of Bonds. The owner of any Taxable Parcel may prepay the Special Taxes to be levied against such Parcel through the term to maturity of outstanding Bonds and authorized but unissued Bonds. Special Taxes may not be prepaid in part. Optional prepayment amounts for each Taxable Parcel subsequent to the sale of Bonds shall be determined annually for each Fiscal Year at the same time annual Special Taxes are determined as follows.

Step 1 The total number of Developed Commercial Square Feet and Approved Commercial Square Feet allocable to Taxable Parcels in the CFD as of the Classification Date for such Fiscal Year shall be determined.

Step 2 The total amount of unpaid Bond principal outstanding at the beginning of each Fiscal Year plus authorized and unissued Bond principal shall be determined, from which amount shall be subtracted any principal coming due in such Fiscal Year, the payment of which was provided for in the collection of the prior Fiscal Year’s Annual Tax Revenues.

Step 3 The net amount determined in step 2 above shall be divided by the total Net Taxable Square Feet for such Fiscal Year as determined in step 1 above to arrive at the unpaid authorized Bond principal per Net Taxable Square Foot for such Fiscal Year.

Step 4 For each Taxable Parcel, the unpaid authorized Bond principal per Net Taxable Square Foot for such Fiscal Year as determined in step 3 above shall be multiplied by the total number of Net Taxable Square Feet allocable to such Taxable Parcel to arrive at the Principal Prepayment Amount allocable to each such Taxable Parcel.

In each Fiscal Year, the owner of a Taxable Parcel may prepay the future Special Tax obligations of such Parcel by paying in cash the sum of i) the amount of any delinquent and unpaid installments of Special Taxes levied against such Parcel, together with any penalties, interest and costs due thereon, ii) the Special Taxes levied against such Parcel in such Fiscal Year, iii) the Principal Prepayment Amount allocable to such Taxable Parcel in such Fiscal Year, iv) a prepayment premium in an amount equal to the prepayment premium required under the fiscal agent agreement to be paid on outstanding Bonds to be called on the next permissible call date times the ratio that such Parcel’s number of taxable commercial square feet bears to the total taxable commercial square feet in such Fiscal Year times the unpaid Bond principal outstanding at the beginning of such Fiscal Year, v) a reasonable fee, fixed by the City, for the cost of administering the prepayment and the advance redemption of Bonds, and vi) a credit for such Taxable Parcel’s pro rata share of the reserve fund balance (if any) established under the fiscal agent agreement.

Section 8. Application of Surplus Tax Revenues

Any amounts collected in excess of Annual Costs shall be applied as stipulated in the fiscal agent agreement securing outstanding Bonds of the CFD.

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Section 9. Administrative Changes

The City Manager has the authority to make necessary administrative adjustments to the Rate and Method of Apportionment in order to remedy any portions of this Rate and Method of Apportionment that require clarification, provided that no such adjustment shall result in a tax levy on any Taxable Parcel in excess of the applicable Maximum Annual Special Tax Rate for such Taxable Parcel.

Any taxpayer that believes that the amount or formula of the Special Tax is in error may file a written notice with the City Manager appealing the Special Tax. Any such notice of appeal must be filed by January 1 of the fiscal year for which the Special Tax in question has been levied. The City Manager or his designee will then promptly review all such timely-filed appeals, and if necessary, meet with the appellant. If the findings of the City Manager verify that the Special Tax should be modified, a recommendation at that time will be made to the City Council and, as appropriate, the Special Tax shall be corrected and, if applicable, a refund shall be granted from such fund or account established under the fiscal agent agreement securing outstanding Bonds of the CFD for which the payment of such refunds is authorized. The City Manager, in his sole discretion, may review appeals filed after the January 1 deadline, regardless of the merit of any such appeals. Under no circumstances will the City be obligated to grant refunds for a fiscal year extending beyond the fiscal year immediately preceding the fiscal year in which an appeal was filed.

Interpretations may be made by resolution of the City Council for purposes of clarifying any vagueness or ambiguity as it relates to the Special Tax or the Maximum Annual Special Tax Rates, the method of apportionment, the classification of properties, or any definition applicable to the CFD.

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APPENDIX C

SUMMARY OF THE FISCAL AGENT AGREEMENT

Definitions

“Act” means the Mello-Roos Community Facilities Act of 1982, as amended, being Sections 53311 et seq. of the California Government Code.

“Administrative Expenses” means any or all of the following: the fees and expenses of the Fiscal Agent (including any fees and expenses of its counsel), the expenses of the City in carrying out its duties under the Fiscal Agent Agreement (including, but not limited to, the levying and collection of the Special Taxes, and the foreclosure of the liens of delinquent Special Taxes) including the fees and expenses of its counsel, an allocable share of the salaries of City staff directly related thereto and a proportionate amount of City general administrative overhead related thereto, any amounts paid by the City from its general funds pursuant to the Fiscal Agent Agreement constituting rebate to the United States, and all other costs and expenses of the City or the Fiscal Agent incurred in connection with the issuance and administration of the Bonds and/or the discharge of their respective duties under the Fiscal Agent Agreement (including, but not limited to, the calculation of the levy of the Special Taxes, foreclosures with respect to delinquent taxes, and the calculation of amounts subject to rebate to the United States) and, in the case of the City, in any way related to the administration of the District. Administrative Expenses shall include any such expenses incurred in prior years but not yet paid, and any advances of funds by the City under the Fiscal Agent Agreement for rebate to the United States or from amounts related to the Prior Bonds.

“Annual Administrative Expense Deposit” means, in each Fiscal Year, an amount of Special Taxes initially equal to $31,706; provided, this amount shall increase, commencing in Fiscal Year 2013/14 and in each Fiscal Year thereafter, by an amount equal to two percent (2%) of the Annual Administrative Expense Deposit for the previous Fiscal Year.

“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, and (ii) the principal amount of the Outstanding Bonds due in such Bond Year (including any mandatory sinking payments due in such Bond Year).

“Bond Year” means each twelve-month period beginning on September 2 in any year and extending to the next succeeding September 1, both dates inclusive; except that the first Bond Year shall begin on the Closing Date and end on September 1, 2013.

“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 Principal Office of the Fiscal Agent is located are authorized or obligated by law or executive order to be closed.

“CDIAC” means the California Debt and Investment Advisory Commission of the office of the State Director of Finance of the State or any successor agency or bureau thereto.

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

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“County” means the County of San Mateo, California.

“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.

“Director of Finance” means the Director of Finance of the City or the authorized representative of the Director of Finance.

“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 Agency Investment Fund of the State of California.

“Federal Securities” means non-callable, direct obligations of (including obligations issued or held in book entry form on the books of the Department of the Treasury of the United States), or obligations the timely payment of the principal of and interest on which are fully and unconditionally guaranteed by, the United States of America.

“Fiscal Year” means the twelve-month period extending from July 1 in a calendar year to June 30 of the succeeding year, both dates inclusive.

“Independent Consultant” means any consultant or firm of such consultants selected by the City and who, or each of whom (a) is generally recognized to be qualified in the financial consulting field, (b) is in fact independent and not under the domination of the City, (c) does not have any substantial interest, direct or indirect, with or in the District or the City, or any owner of real property in the District, or any real property in the District, and (d) is not connected with the City as an officer or employee thereof, but who may be regularly retained to make reports to the City.

“Interest Payment Dates” means March 1 and September 1 of each year, commencing March 1, 2013.

“Maximum Annual Debt Service” means the largest Annual Debt Service for any Bond Year after the calculation is made through the final scheduled maturity date of any Outstanding Bonds.

“Officer’s Certificate” means a written certificate of the City signed by an Authorized Officer of the City.

“Ordinance” means the ordinance or resolution of the City levying the Special Taxes.

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“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; and (iii) Bonds in lieu of or in substitution for which other Bonds shall have been authorized, executed, issued and delivered by the City pursuant to the Fiscal Agent Agreement or any Supplemental Fiscal Agent Agreement.

“Owner” or “Bondowner” means any person who shall be the registered owner of any Outstanding Bond.

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

1. Direct obligations of the United States of America (including obligations issued or held in book entry form on the books of the Department of the Treasury, but excluding CATS and TIGRS) or obligations the principal of and interest on which are unconditionally guaranteed by the United States of America.

2. Bonds, debentures, notes or other evidence of indebtedness issued or guaranteed by any of the following federal agencies and provided such obligations are backed by the full faith and credit of the United States of America (stripped securities are only permitted if they have been stripped by the agency itself):

Farmers Home Administration (FmHA) Certificates of beneficial ownership

Federal Housing Administration Debentures (FHA)

General Services Administration Participation certificates

Government National Mortgage Association (GNMA or “Ginnie Mae”) GNMA – guaranteed mortgage-backed bonds GNMA – guaranteed pass-through obligations (participation certificates) (not acceptable for certain cash-flow sensitive issues.)

U.S. Maritime Administration Guaranteed Title XI financing

U.S. Department of Housing and Urban Development (HUD) Project Notes Local District Bonds New Communities Debentures – U.S. Government guaranteed debentures U.S. Public Housing Notes and Bonds – U.S. Government guaranteed public housing notes and bonds

3. Bonds, debentures, notes or other evidence of indebtedness issued or guaranteed by any of the following non-full faith and credit U.S. government agencies (stripped securities are only permitted if they have been stripped by the agency itself):

Federal Home Loan Bank Enterprise Senior debt obligations

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Federal Home Loan Mortgage Corporation (FHLMC or “Freddie Mac”) Participation certificates Senior debt obligations

Federal National Mortgage Association (FNMA or “Fannie Mae”) Mortgage-backed securities and senior debt obligations

Resolution Funding Corp. (REFCORP) obligations

Farm Credit Enterprise Consolidated system-wide bonds and notes

Federal Agriculture Mortgage Association

Tennessee Valley District

4. Money market funds registered under the Federal Investment Company Act of 1940, whose shares are registered under the Federal Securities Act of 1933, and having a rating by S&P of “AAAm-G,” “AAA-m,” or “AA-m” and if rated by Moody’s rated “Aaa,” “Aa1” or “Aa2,” including funds for which the Fiscal Agent, its parent holding company, if any, or any affiliates or subsidiaries of the Fiscal Agent provide investment advisory or other management services.

5. U.S. dollar denominated deposit accounts, federal funds and banker’s acceptances with domestic commercial banks (including the Fiscal Agent and its affiliates) which have a rating on their short term certificates of deposit on the date of purchase of “P-1” by Moody’s and “A-1” or “A-1+” by S&P and maturing no more than 360 days after the date of purchase, provided that ratings on holding companies are not considered as the rating of the bank.

6. [Reserved].

7. 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 City, 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 City 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 City; (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 City or the Fiscal Agent, be

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accelerated and amounts invested and accrued but unpaid interest thereon shall be repaid to the City 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 City or the Fiscal Agent, as appropriate.

8. Commercial paper rated, at the time of purchase, “Prime -1” by Moody’s and “A- 1” or better by S&P.

9. Bonds or notes issued by any state or municipality which are rated by Moody’s and S&P in one of the two highest rating categories assigned by such agencies.

10. Federal funds or bankers acceptances with a maximum term of one year of any bank which has an unsecured, uninsured and unguaranteed obligation rating of “Prime -1” or “A3” or better by Moody’s and “A-1+” by S&P.

11. Repurchase agreements for 30 days or less must provide for the transfer of securities from a dealer bank or securities firm (seller/borrower) to the Fiscal Agent (buyer/lender), and the transfer of cash from the Fiscal Agent to the dealer bank or securities firm with an agreement that the dealer bank or securities firm will repay the cash plus a yield to the Fiscal Agent in exchange for the securities at a specified date.

12. Medium-term Notes: Corporate notes issued by corporations organized and operating within the United States with a rating of “AAA” or higher at the time of purchase by a nationally recognized rating service and with a maximum remaining maturity of no more than three (3) years after the date of purchase.

13. The Local Agency Investment Fund created pursuant to Section 16429.1 of the California Government Code, to the extent the Fiscal Agent is authorized to register such investment in its name.

14. The San Mateo County Pooled Investment Fund.

15. Investment Trust of California, doing business as CalTRUST.

16. Shares in a California common law trust established pursuant to Title 1, Division 7, Chapter 5 of the Government Code of the State of California which invests exclusively in investments permitted by Section 53601 of Title 5, Division 2, Chapter 4 of the Government Code of California, as it may be amended.

“Prepayment” means any amounts received by the Fiscal Agent as prepayment in whole or in part of the Special Tax, including interest and premiums related thereto.

“Principal Office” means the corporate trust office of the Fiscal Agent (except for payment, surrender and exchanges of the Bonds which shall be the corporate trust office of the Fiscal Agent in St. Paul, Minnesota), or such other or additional offices as may be designated by the Fiscal Agent.

“Prior Bonds” means, collectively, the Redwood Shores Community Facilities District No. 99-1 (Shores Transportation Improvement Project) of the City of Redwood City Special Tax Bonds, Series 2001A, issued pursuant to the 2001A Fiscal Agent Agreement and the Redwood Shores Community Facilities District No. 99-1 (Shores Transportation Improvement Project) of

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the City of Redwood City Special Tax Bonds, Series 2003B issued pursuant to the 2003B Fiscal Agent Agreement and the 2001A Fiscal Agent Agreement.

“Project” means the reimbursements, acquisitions and improvements financed by the District.

“Rate and Method of Apportionment” means that certain Rate and Method of Apportionment of Special Tax for the District approved pursuant to the Resolution of Formation, as it may be amended in accordance with the Act.

“Record Date” means the fifteenth (15th) day of the month next preceding the month of the applicable Interest Payment Date, whether or not such date is a Business Day.

“Regulations” means temporary and permanent regulations promulgated under the Code.

“Reserve Requirement” means an amount equal to the lesser of (a) Maximum Annual Debt Service on the Outstanding Bonds (excluding the Bond Year ending September 1, 2013 for the purposes of such calculation), (b) 125% of average Annual Debt Service for any Bond Year (excluding the Bond Year ending September 1, 2013 for the purposes of such calculation), or (c) ten percent (10%) of the original aggregate principal amount of the Bonds.

“Resolution” means Resolution No. 15237, adopted by the City Council of the City on December 3, 2012, which resolution, among other matters, authorized the issuance of the Bonds.

“Resolution of Formation” means Resolution No. 13611, adopted by the City Council of the City on April 26, 1999, establishing the District for the purpose of providing for the financing of the Project.

“Special Tax Fund” means the fund established pursuant to the Fiscal Agent Agreement.

“Special Tax Report” means the annual report prepared pursuant to the Rate and Method of Apportionment.

“Special Tax Revenues” means the proceeds of the Special Taxes received by the City, including any scheduled payments and any prepayments thereof, interest and penalties thereon and proceeds of the redemption or sale of property sold as a result of foreclosure of the lien of the Special Taxes.

“Special Taxes” means the special taxes levied within the District pursuant to the Act, the Ordinance and the Fiscal Agent Agreement.

“State” means the State of California.

“Supplemental Fiscal Agent Agreement” means an agreement the execution of which is authorized by a resolution which has been duly adopted by the City 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.

“Surplus Fund” means the fund established pursuant to the Fiscal Agent Agreement.

“Term Bond” means the Bonds maturing on September 1, 2025, September 1, 2029 and September 1, 2033.

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“Tax Consultant” means the independent financial or tax consultant retained by the City for the purpose of computing the Special Taxes.

“2001A Fiscal Agent Agreement” means the Fiscal Agent Agreement, dated as of February 1, 2001, between the District, and the Prior Fiscal Agent.

“2003B Fiscal Agent Agreement” means the First Supplemental Fiscal Agent Agreement, dated as of August 1, 2003, between the District, and the Prior Fiscal Agent.

Execution of Bonds

The Bonds shall be executed on behalf of the City by the Mayor and the City Clerk of the City who are in office on the date of adoption of the Fiscal Agent Agreement or at any time thereafter, and the seal of the City shall be impressed, imprinted or reproduced by facsimile signature thereon. Any Bond may be signed and attested on behalf of the City by such persons as at the actual date of the execution of such Bond shall be the proper officers of the City although at the nominal date of such Bond any such person shall not have been such officer of the City. Only such Bonds as shall bear thereon a certificate of authentication shall be valid or obligatory for any purpose or entitled to the benefits of the Fiscal Agent Agreement, and such certificate of authentication of the Fiscal Agent shall be conclusive evidence that the Bonds registered under the Fiscal Agent Agreement have been duly authenticated, registered and delivered under the Fiscal Agent Agreement and are entitled to the benefits of the Fiscal Agent Agreement.

Transfer of Bonds

Any Bond may, in accordance with its terms, be transferred, upon the books required to be kept pursuant to 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 Bond for cancellation, accompanied by delivery of a duly written instrument of transfer in a form acceptable to the Fiscal Agent. The Fiscal Agent shall collect from the Owner requesting such transfer any tax or other governmental charge required to be paid with respect to such transfer. No transfers of Bonds shall be required to be made (i) within fifteen (15) days prior to the date established by the Fiscal Agent for selection of Bonds for redemption or (ii) with respect to a Bond after such Bond has been selected for redemption.

Exchange of Bonds

Bonds may be exchanged at the Principal Office of the Fiscal Agent for a like aggregate principal amount of Bonds of authorized denominations and of the same maturity. The cost for any services rendered or any expenses incurred by the Fiscal Agent in connection with any such exchange shall be paid by the City. The Fiscal Agent shall collect from the Owner requesting such exchange any tax or other governmental charge required to be paid with respect to such exchange. No exchanges of Bonds shall be required to be made (i) within fifteen (15) days prior to the date established by the Fiscal Agent for selection of Bonds for redemption or (ii) with respect to a Bond after such Bond has been selected for redemption.

Bond Register

The Fiscal Agent will keep or cause to be kept, at its Principal Office, sufficient books for the registration and transfer of the Bonds (the “Bond Register”), which books shall show the series number, date, amount, rate of interest and Owner of each Bond and shall at all times be open to inspection by the City during regular business hours upon reasonable notice; and, upon presentation for such purpose, the Fiscal Agent shall, under such reasonable regulations as it

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may prescribe, register or transfer or cause to be registered or transferred, on said books. The City and the Fiscal Agent shall deem and treat the person in whose name any Outstanding Bond shall be registered upon the Bond Register as the absolute owner of such Bond, whether such Bond shall be overdue or not, for the purpose of receiving payment of, or on account of, the principal of and interest on such Bond and for all other purposes, and all such payments so made to any such Owner or upon his or her order shall be valid and effectual to satisfy and discharge the liability upon such Bond to the extent of the sum or sums so paid, and neither the City nor the Fiscal Agent shall be affected by any notice to the contrary.

Bonds Mutilated, Lost, Destroyed or Stolen

If any Bond shall become mutilated, the City shall execute, and the Fiscal Agent shall authenticate and deliver, a new Bond of like tenor and principal amount in exchange and substitution for the Bond so mutilated, but only upon surrender to the Fiscal Agent of the Bond so mutilated. If any Bond shall be lost, destroyed or stolen, evidence of such loss, destruction or theft may be submitted to the Fiscal Agent and, if such evidence be satisfactory to it and indemnity for the Fiscal Agent and the City satisfactory to the Fiscal Agent shall be given, the City shall execute, and the Fiscal Agent shall authenticate and deliver, a new Bond of like tenor and principal amount in lieu of and in substitution for the Bond so lost, destroyed or stolen. The City may require payment of a sum not exceeding the actual cost of preparing each new Bond delivered under the Fiscal Agent Agreement and of the expenses which may be incurred by the City and the Fiscal Agent for the preparation, execution, authentication and delivery. Any Bond delivered under the provisions of the Fiscal Agent Agreement in lieu of any Bond alleged to be lost, destroyed or stolen shall constitute an original additional contractual obligation on the part of the City whether or not the Bond so alleged to be lost, destroyed or stolen is at any time enforceable by anyone, and shall be equally and proportionately entitled to the benefits of the Fiscal Agent Agreement with all other Bonds issued pursuant to the Fiscal Agent Agreement.

Limited Obligation

All obligations of the City under the Fiscal Agent Agreement and the Bonds shall be special obligations of the City, payable solely from the Special Tax Revenues and the funds pledged therefore under the Fiscal Agent Agreement. Neither the full faith and credit nor the taxing power of the City (except to the limited extent set forth in the Fiscal Agent Agreement) or the State or any political subdivision thereof is pledged to the payment of the Bonds.

No Acceleration

The principal of the Bonds shall not be subject to acceleration under the Fiscal Agent Agreement. Nothing shall in any way prohibit the redemption of Bonds, or the defeasance of the Bonds and discharge of the Fiscal Agent Agreement.

No Parity Bonds

The City covenants that it shall not issue any obligations payable from Special Taxes on parity with the Bonds. Nothing shall prohibit the City from issuing bonds or otherwise incurring debt secured by a pledge of any of the Special Tax Revenues subordinate to the pledge thereof under the Fiscal Agent Agreement.

Pledge of Special Tax Revenues

All of the Special Tax Revenues (except for the Annual Administrative Expense Deposit) and all moneys deposited in the Bond Fund, the Reserve Fund and, until disbursed as provided

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in the Fiscal Agent Agreement, in the Special Tax Fund are pledged to secure the repayment of the Bonds. Such pledge shall constitute a first lien on the Special Tax Revenues (other than the Annual Administrative Expense Deposit) and amounts on deposit in such funds. The Special Tax Revenues (other than the Annual Administrative Expense Deposit) and all moneys deposited into the such funds (except as otherwise provided in the Fiscal Agent Agreement) are dedicated in their entirety to the payment of the principal of, and interest and any premium on, the Bonds as provided in the Fiscal Agent Agreement and in the Act until all of the Bonds have been paid and retired or until moneys or Federal Securities have been set aside irrevocably for that purpose.

The Annual Administrative Expense Deposit and amounts in the Administrative Expense Fund, the Surplus Fund and the Series 2012B Costs of Issuance Fund are not pledged to the repayment of the Bonds The facilities financed with the proceeds of the Prior Bonds are not in any way pledged to pay the Debt Service on the Bonds. Any proceeds of condemnation, destruction or other disposition of any facilities financed with the proceeds of the Bonds are not pledged to pay the Debt Service on the Bonds and are free and clear of any lien or obligation imposed under the Fiscal Agent Agreement.

Special Tax Fund

(A) Establishment of Special Tax Fund. There is established, as a separate fund to be held by the City, the Redwood Shores Community Facilities District No. 99-1 ( Shores Transportation Improvement Project) of the City of Redwood City Special Tax Refunding Bonds, Series 2012B Special Tax Fund, to the credit of which the Director of Finance shall deposit, immediately upon receipt by the City, all Special Tax Revenue received from the City (except for amounts necessary to pay the Annual Administrative Expense Deposit) and amounts transferred to the Costs of Issuance Fund and Surplus Fund. Moneys in the Special Tax Fund shall be held in trust by the City for the benefit of the Owners of the Bonds, shall be disbursed as provided below and, pending any disbursement, shall be subject to a lien in favor of the Owners of the Bonds. In each Fiscal Year, from the first remittance of Special Taxes received from the County, the City shall transfer an amount equal to that year’s Annual Administrative Expense Deposit for deposit in the Administrative Expense Fund. Any proceeds of Prepayments shall be transferred by the Director of Finance to the Fiscal Agent for deposit by the Fiscal Agent (as specified in writing by the Director of Finance to the Fiscal Agent) in the Series 2012B Prepayments Account.

(B) Disbursements. No later than ten (10) Business Days prior to each Interest Payment Date, the City shall withdraw from the Special Tax Fund and transfer, in the following order of priority: (i) to the Fiscal Agent for deposit in the Bond Fund an amount, taking into account any amounts then on deposit in the Bond Fund such that the amount in the Bond Fund equals the principal, premium, if any, and interest due on the Bonds on the next Interest Payment Date, and (ii) to the Reserve Fund an amount such that the amount then on deposit therein is equal to the Reserve Requirement. Any remaining Special Taxes and other amounts, if any, shall remain in the Special Tax Fund until the end of the Bond Year. At the end of the Bond Year any remaining funds in the Special Tax Fund, which are not required to cure a delinquency in the payment of principal and interest on then-outstanding Bonds, or to restore the Reserve Fund shall, without further action by any party, be deposited in the Surplus Fund and used in accordance with the Fiscal Agent Agreement and shall be free and clear of any lien thereon or pledge under the Fiscal Agent Agreement; provided, any funds which are required to cure any delinquency described above shall be retained in the Special Tax Fund and expended or transferred, at the earliest possible date, for such purpose.

(C) Investment. 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

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investment and deposit shall be retained in the Special Tax Fund to be used for the purposes thereof.

Administrative Expense Fund

(A) Establishment of Administrative Expense Fund. There is established, as a separate fund to be held by the Director of Finance, the Redwood Shores Community Facilities District No. 99-1 (Shores Transportation Improvement Project) of the City of Redwood City Special Tax Refunding Bonds, Series 2012B Administrative Expense Fund, to the credit of which shall be the Annual Administrative Expense Deposit and deposits made as required by the Fiscal Agent Agreement. Moneys in the Administrative Expense Fund shall be held in trust by the Director of Finance for the benefit of the City, and shall be disbursed as provided below.

(B) Disbursement. Amounts in the Administrative Expense Fund shall be withdrawn by the Director of Finance to pay an Administrative Expense or Costs of Issuance. Annually, on the last day of each Fiscal Year commencing with the last day of Fiscal Year 2012/13, the Director of Finance shall withdraw any amounts then remaining in the Administrative Expense Fund in excess of amounts that have not been allocated or reserved 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 by the Fiscal Agent in the Special Tax Fund.

(C) Investment. Interest earnings and profits resulting from said investment shall be retained by the Director of Finance in the Administrative Expense Fund to be used for the purposes thereof.

Surplus Fund

(A) Establishment of Surplus Fund. There is established, as a separate fund to be held by the Director of Finance, the Redwood Shores Community Facilities District No. 99-1 ( Shores Transportation Improvement Project) of the City of Redwood City Special Tax Refunding Bonds, Series 2012B Surplus Fund, to the credit of which deposits shall be made as required by the Fiscal Agent Agreement. Moneys in the Surplus Fund shall be held by the Director of Finance for the benefit of the City, and shall be disbursed as provided below.

(B) Disbursement. Amounts in the Surplus Fund shall be withdrawn by the Director of Finance and, at the sole option of the City, be used by the City for repair or replacement costs of the Project; to make deposits to the Rebate Fund, to pay Administrative Expenses not otherwise paid from amounts on deposit in the Administrative Expense Fund (including the expenses and fees relating to any foreclosure action instituted pursuant to the Fiscal Agent Agreement and not otherwise paid from the Administrative Expense Fund), to reduce the next Fiscal Year’s Special Tax levy by depositing such amount in the Special Tax Fund, to redeem Bonds pursuant to a optional redemption, or for any other lawful purpose of the District. The amounts in the Surplus Fund are not pledged to the repayment of the Bonds and may be used by the City for any lawful purpose in the manner described in the Fiscal Agent Agreement. In the event that the City reasonably expects to use any portion of the moneys in the Surplus Fund to pay debt service on any Outstanding Bonds, City will segregate such amount into a separate subaccount, and the moneys on deposit in such subaccount of the Surplus Fund shall be invested in Permitted Investments at a yield not in excess of the yield on the Bonds unless, in the opinion of Bond Counsel, investment at a higher yield will not adversely affect the exclusion from gross income for federal income tax purposes of interest on the Bonds.

(C) Investment. Interest earnings and profits resulting from said investment shall be retained by the Director of Finance in the Surplus Fund to be used for the purposes thereof.

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Bond Fund

(A) Establishment of Bond Fund. There is established, as a separate fund to be held by the Fiscal Agent, the Redwood Shores Community Facilities District No. 99-1 (Shores Transportation Improvement Project) of the City of Redwood City Special Tax Refunding Bonds, Series 2012B Bond Fund, to the credit of which deposits shall be made as required by the Fiscal Agent Agreement or the Act. There is established as a separate account within the Bond Fund to be held by the Fiscal Agent the Series 2012B Prepayment Account. Deposits to the Series 2012B Prepayment Account shall be made as required by the Fiscal Agent Agreement or the Act. Moneys in the Bond Fund 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.

(B) Disbursements. At least fifteen (15) Business Days before each Interest Payment Date, the Fiscal Agent shall notify the Director of Finance in writing as to the principal and premium, if any, and interest due on the Bonds on the next Interest Payment Date. On each Interest Payment Date, the Fiscal Agent shall withdraw from the Bond Fund and pay to the Owners of the Bonds the principal of, and interest and any premium, then due and payable on the Bonds. On any date occurring at least forty-five (45) days following receipt of a Prepayment, the Fiscal Agent shall withdraw from the Series 2012B Prepayment Account and pay to the Owners of the Bonds the principal of, and interest and any premium, then due and payable on the Bonds to be redeemed from such Prepayment (including related amounts transferred from the Reserve Fund. In the event that amounts in the Bond Fund are insufficient to pay regularly scheduled payments of principal of and interest on the Bonds, the Fiscal Agent shall withdraw from the Reserve Fund, to the extent of any funds therein, the amount of such insufficiency, and the Fiscal Agent shall provide written notice to the Director of Finance of the amounts so withdrawn from the Reserve Fund. Amounts so withdrawn from the Reserve Fund shall be deposited in the Bond Fund. If, after the foregoing transfer, there are insufficient funds in the Bond Fund to make the payments provided for to pay regularly scheduled payments of principal of and interest on the Bonds, 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.

(C) Investment. Interest earnings and profits resulting from such investment and deposit shall be retained in the Bond Fund to be used for the purposes of such fund.

(D) Deficiency. If at any time it appears to the City that there is a danger of deficiency in the Bond Fund and that the Fiscal Agent may be unable to pay regularly scheduled Debt Service on the Bonds in a timely manner, the City covenants to increase the levy of the Special Taxes in the next Fiscal Year (subject to the maximum amount authorized by the Resolution of Formation) in accordance with the procedures set forth in the Act for the purpose of curing Bond Fund deficiencies. If at any time the Fiscal Agent is unable to pay principal, interest and premium, if any, due on any Interest Payment Date for the Bonds due to insufficient funds in the Bond Fund, or if funds are withdrawn from the Reserve Fund to pay principal and/or interest on the Bonds the Fiscal Agent shall notify the Director of Finance in writing of such fact, and the Director of Finance shall take such actions as provided in the Fiscal Agent Agreement.

(E) Excess. Any excess moneys remaining in the Bond Fund following the payment of Debt Service on the Bonds and replenishment of the Reserve Fund shall be transferred to the City for deposit in the Special Tax Fund.

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Reserve Fund

(A) Establishment of Reserve Fund. There is established as a separate fund to be held by the Fiscal Agent, the Redwood Shores Community Facilities District No. 99-1 (Shores Transportation Improvement Project) of the City of Redwood City Special Tax Refunding Bonds Series 2012B Reserve Fund, to the credit of which a deposit shall be made as required by 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 on, the Bonds and shall be subject to a lien in favor of the Owners of the Bonds.

(B) Use of Reserve Fund. Except as otherwise provided in the Fiscal Agent Agreement, all 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 on, the Bonds, to pay rebate amounts as provided in (D) below, or to redeem Bonds pursuant to (G) below. Whenever transfer is made from the Reserve Fund to the Bond Fund due to a deficiency in the Bond Fund, the Fiscal Agent shall provide written notice thereof to the Director of Finance.

(C) Transfer of Excess of Reserve Requirement. Whenever, on the Business Day prior to any Interest Payment Date, the amount in the Reserve Fund exceeds the then applicable Reserve Requirement, the Fiscal Agent shall provide written notice to the Director of Finance of the amount of the excess and, following any transfer, shall transfer an amount equal to the excess from the Reserve Fund to the Bond Fund to be used for the payment of the principal of and interest on the Bonds.

(D) Transfer for Rebate Purposes. Investment earnings on amounts in the Reserve Fund may be withdrawn from the Reserve Fund for purposes of making payment to the federal government.

(E) Transfer When Balance Exceeds Outstanding Bonds. Whenever the balance in the Reserve Fund exceeds the amount required to redeem or pay the Outstanding Bonds, including interest accrued to the date of payment or redemption and premium, if any, due upon redemption, and make any transfer required above, the Fiscal Agent shall 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 City, after payment of any amounts due the Fiscal Agent under the Fiscal Agent Agreement, to be used for any lawful purpose of the City. Notwithstanding the foregoing, no amounts shall be transferred from the Reserve Fund until after the calculation of any amounts due to the federal government following payment of the Bonds and withdrawal of any such amount for purposes of making such payment to the federal government, and payment of any fees and expenses due to the Fiscal Agent.

(F) Investment. Interest earnings and profits resulting from such investment and deposit shall be retained in the Reserve Fund to be used and disbursed as provided in the Fiscal Agent Agreement.

(G) Redemption of Bonds. Whenever Bonds are to be redeemed, a proportionate share, determined as provided below, of the amount on deposit in the Reserve Fund shall, on the Business Day prior to the date on which such Bonds are to be redeemed, be transferred by the Fiscal Agent from the Reserve Fund to the Series 2012B Prepayment Account and shall be applied to the redemption of said Bonds; provided, however, that such amount shall be so

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transferred only to the extent that the amount remaining on deposit in the Reserve Fund will be at least equal to the Reserve Requirement (excluding from the calculation thereof said Bonds to be redeemed). Such proportionate share shall be equal to the largest integral multiple of $5,000 that is not larger than the amount equal to the product of (a) the amount on deposit in the Reserve Fund on the date five (5) Business Days prior to the date notice of redemption of such Bonds is required to be given pursuant to the provisions of the Fiscal Agent Agreement, times (b) a fraction, the numerator of which is the principal amount of Bonds to be so redeemed and the denominator of which is the principal amount of Bonds to be Outstanding on the day prior to the date on which such Bonds are to be so redeemed.

Punctual Payment

The City will punctually pay or cause to be paid the principal of, and interest and any premium on, the Bonds when and as due in strict conformity with the terms of the Fiscal Agent Agreement, and it will faithfully observe and perform all of the conditions covenants and requirements of the Fiscal Agent Agreement and all Supplemental Fiscal Agent Agreements and of the Bonds.

Extension of Time for Payment

In order to prevent any accumulation of claims for interest after maturity, the City shall 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 shall 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 City, 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.

Against Encumbrances

The City 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 in the Fiscal Agent Agreement created for the benefit of the Bonds, except as permitted by the Fiscal Agent Agreement.

Books and Accounts

The City will keep, or cause to be kept, proper books of record and accounts, separate from all other records and accounts of the City, in which complete and correct entries shall be made of all transactions relating to the expenditure of amounts disbursed from the Special Tax Fund, the Administrative Expense Fund, the Surplus Fund and to the Special Tax Revenues. Such books of record and accounts shall at all times during business hours be subject to the inspection of 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.

Protection of Security and Rights of Owners

The City 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 City, the Bonds shall be incontestable by the City.

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Compliance with Law

The City will comply with all applicable provisions of the Act .

Tax Covenants

The City shall not take any action or permit to be taken any action within its control which would cause or which, with the passage of time if not cured would cause, the interest on the Bonds or the Prior Bonds to become includable in gross income for federal income tax purposes. To that end, the City makes the following specific covenants:

(a) The City hereby covenants that it shall not make or permit any use of the proceeds of the Bonds or the Prior Bonds that may cause the Bonds to be “arbitrage bonds” within the meaning of Section 148 of the Internal Revenue Code of 1986, as amended.

(b) The City covenants that the proceeds of the Bonds and the Prior Bonds will not be used as to cause the proceeds on the Bonds to satisfy the private business tests of Section 141(b) of the Code or the private loan financing test of Section 141(c) of the Code.

(c) The City covenants not to take any action or permit or suffer any action to be taken if the result of the same would be to cause the Bonds to be “federally guaranteed” within the meaning of Section 149(b) of the Code.

Collection of Special Tax Revenues

The City shall comply with all requirements of the Act so as to assure the timely collection of Special Tax Revenues, including without limitation, the enforcement of delinquent Special Taxes. On or within five (5) Business Days of each June 1, the Fiscal Agent shall provide the Director of Finance with a notice stating the amount then on deposit in the Bond Fund and the Reserve Fund. The City shall effect the levy of the Special Taxes each Fiscal Year in accordance with the Ordinance such that the computation of the levy is complete before the final date on which County Auditor will accept the transmission of the Special Tax amounts for the parcels within the District for inclusion on the next secured real property tax roll. The City 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 during such year, all in accordance with the Rate and Method of Apportionment and the Ordinance. In any event, the Special Taxes so levied shall not exceed the authorized amounts as provided in the proceedings pursuant to the Resolution of Formation. The Special Taxes shall be payable and be collected in the same manner and at the same time and in the same installment as the general taxes on real property are payable, and have the same priority, become delinquent at the same times and in the same proportionate amounts and bear the same proportionate penalties and interest after delinquency as do the general taxes on real property. Notwithstanding the foregoing, the Special Taxes may be collected in such other manner as the City shall prescribe if necessary to pay the debt service on the Bonds.

Further Assurances

The City will adopt, make, execute and deliver any and all such further resolutions, instruments and assurances as may be reasonably necessary or proper to carry out the intention

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or to facilitate the performance of the Fiscal Agent Agreement, and for the better assuring and confirming unto the Owners of the rights and benefits provided in the Fiscal Agent Agreement.

Covenant to Foreclose

The City covenants with and for the benefit of the Owners of the Bonds that it (i) will commence judicial foreclosure proceedings against all parcels owned by a property owner that is delinquent in the payment of Special Taxes by the October 1 following the close of each Fiscal Year in which such Special Taxes were due and (ii) will diligently pursue such foreclosure proceedings until the delinquent Special Taxes are paid; provided that, notwithstanding the foregoing, the City may elect to defer foreclosure proceedings on any parcel of Developed Commercial Parcel which is owned by a delinquent property owner whose property is not, in the aggregate, delinquent in the payment of Special Taxes for a period of two years or more or in an amount in excess of $5,000 so long as (1) the amount in the Reserve Fund is at least equal to the Reserve Requirement, and (2) with respect to the Bonds, the City is not in default in the payment of the principal of or interest on the Bonds. The City may, but shall not be obligated to, advance funds from any source of legally available funds in order to maintain the Reserve Fund at the Reserve Requirement or to avoid a default in payment on the Bonds.

The District covenants that it will deposit the proceeds of any foreclosure which constitute Net Taxes in the Special Tax Fund.

Continuing Disclosure to Owners

The City covenants and agrees that it will comply with and carry out all of its obligations under the Continuing Disclosure Agreement. Notwithstanding any other provision of the Fiscal Agent Agreement, failure of the City 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 City of its obligations thereunder, including seeking mandate or specific performance by court order.

Limits on Special Tax Waivers and Bond Tenders

The City 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 Consultant that to accept such tender will not result in the City having insufficient Special Tax Revenues to pay the principal of and interest on the Bonds remaining Outstanding following such tender.

Reduction of Maximum Special Taxes

The City finds and determines that, historically, delinquencies in the payment of special taxes authorized pursuant to the Act in community facilities districts in California have from time to time been at levels requiring the levy of special taxes at the maximum authorized rates in order to make timely payment of principal of and interest on the outstanding indebtedness of such community facilities districts. For this reason, the City determines that a reduction in the maximum Special Tax rates authorized to be levied in the District below the levels provided in the Fiscal Agent Agreement would interfere with the timely retirement of the Bonds. The City determines it to be necessary in order to preserve the security for the Bonds to covenant, and, to the maximum extent that the law permits it to do so, the City hereby does covenant, that it shall not initiate proceedings to reduce the maximum Special Tax rates in the District, unless, in

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connection therewith, (i) the City receives a certification from one or more Independent Consultants which, when taken together, concludes that, on the basis of the land and improvements existing in the District as of the July 1 preceding the reduction, the maximum amount of the Special Tax which may be levied in each Bond Year for any Bonds Outstanding will equal at least 110% of the sum of the estimated Administrative Expenses and gross debt service in each Bond Year on all Bonds to remain Outstanding after the reduction is approved, (ii) the City finds that any reduction made under such conditions will not materially adversely affect the interests of the Owners of the Bonds, and (iii) the City is not delinquent in the payment of the principal of or interest on the Bonds. For purposes of estimating Administrative Expenses for the foregoing calculation, the Independent Consultants shall compute the Administrative Expenses for the current Fiscal Year and escalate that amount by two percent (2%) in each subsequent Fiscal Year.

The City further covenants that in the event an ordinance is adopted by initiative pursuant to Section 3 of Article XIIIC of the California Constitution, which purports to reduce or otherwise alter the maximum Special Tax rates, it will commence and pursue legal action seeking to preserve its ability to comply with its covenant contained in the preceding paragraph.

Release of Property Subject to Special Tax Lien

The City 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 4 of the Rate and Method of Apportionment, as in effect on the Closing Date.

Deposit and Investment of Moneys in Funds

Amounts on deposit in any fund or account created pursuant to the Fiscal Agent Agreement shall be invested in Permitted Investments which will, as nearly as practicable, mature on or before the dates when such money is anticipated to be needed for disbursement under the Fiscal Agent Agreement, in accordance with such written directions as the City may from time to time provide to the Fiscal Agent. Amounts on deposit in the Reserve Fund shall be invested by the Fiscal Agent, in accordance with written directions from the City, in Permitted Investments (i) having an average aggregate weighted term to maturity not greater than five (5) years, or (ii) of any maturity, but callable at par for any purpose required by the Fiscal Agent Agreement. Except for investment agreements and repurchase agreements, if at any time after investment therein a Permitted Investment ceases to meet the criteria set forth in the definition of Permitted Investments and such obligation, aggregated with other non-conforming investments, exceeds ten percent (10%) of invested funds, such Permitted Investment shall be sold or liquidated.

Rebate of Excess Investment Earnings to the United States

The City shall calculate or cause to be calculated, and shall provide or cause to be provided written notice to the Fiscal Agent of, the excess investment earnings (as defined in the Code, “Excess Investment Earnings”) at such times and in such manner as may be required pursuant to the Code. The City shall inform the Fiscal Agent how frequently calculations are to be made, and shall ensure that a copy of all such calculations is given promptly to the Fiscal Agent. The City agrees to deposit with the Fiscal Agent the amount of Excess Investment Earnings so calculated. The Fiscal Agent shall deposit all amounts paid to it for such purpose by the City in the Rebate Fund. The Fiscal Agent shall pay to the United States of America from the amounts on deposit in the Rebate Fund such amounts as shall be identified pursuant to written notice filed with the Fiscal Agent by the City for such purpose from time to time.

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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, shall be the successor to such Fiscal Agent without the execution or filing of any paper or any further act, anything in the Fiscal Agent Agreement to the contrary notwithstanding. The City 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 or trust company having a combined capital (exclusive of borrowed capital) and surplus of at least Fifty Million Dollars ($50,000,000), and subject to supervision or examination by federal or state authority. The Fiscal Agent may at any time resign by giving written notice to the City and by giving to the Owners notice by mail of such resignation. Upon receiving notice of such resignation, the City shall 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.

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 City, 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, the 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. 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

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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. 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 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, but its liability shall be limited to the proper accounting for such funds as it shall actually receive.

The Fiscal Agent shall not be considered in breach of or in default in its obligations under the Fiscal Agent Agreement 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 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 shall be made of all transactions relating to the expenditure of amounts disbursed therefrom. Such books of record and accounts shall at all times during business hours and upon reasonable prior notice, be subject to the inspection of the City 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 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 a certificate of the City, 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 Fiscal Agent 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.

Amendments Permitted

The Fiscal Agent Agreement and the rights and obligations of the City and of the Owners of the Bonds may be modified or amended at any time by a Supplemental Fiscal Agent 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. 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 City to pay the principal of, and the interest and any premium on, any Bond, without the express consent of the Owner of such Bond, or (ii) permit the creation by the City 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

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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 City and of the Owners may also be modified or amended at any time by a Supplemental Fiscal Agent 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 City 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 City;

(B) to make modifications not adversely affecting any outstanding Bonds 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 City and the Fiscal Agent may deem necessary or desirable, and which shall not adversely affect the rights of the Owners of the Bonds; or

(D) to make such additions, deletions or modifications as may be necessary or desirable to assure compliance with Section 148 of the Code relating to required rebate of excess investment earnings to the United States or otherwise as may be necessary to assure exclusion from gross income for federal income tax purposes of interest on the Bonds or to conform with the Regulations.

Disqualified Bonds

Bonds owned or held for the account of the City, excepting any pension or retirement fund, shall not be deemed Outstanding for the purpose of any vote, consent or other action or any calculation of Outstanding Bonds, and shall not be entitled to vote upon, consent to, or take any other action.

Effect of Supplemental Fiscal Agent Agreement

From and after the time any Supplemental Fiscal Agent Agreement becomes effective the Fiscal Agent Agreement shall be deemed to be modified and amended in accordance therewith, the respective rights, duties and obligations under the Fiscal Agent Agreement of the City and all Owners of Bonds Outstanding shall thereafter be determined, exercised and enforced under the Fiscal Agent Agreement subject in all respects to such modifications and amendments, and all the terms and conditions of any such Supplemental Fiscal Agent Agreement shall be deemed to be part of the terms and conditions of the Fiscal Agent Agreement for any and all purposes.

Opinion of Counsel Regarding Supplemental Fiscal Agent Agreement

The Fiscal Agent shall be furnished, upon request, an opinion of counsel that any Supplemental Fiscal Agent Agreement entered into by the City and the Fiscal Agent complies with the provisions of the Fiscal Agent Agreement, and the Fiscal Agent may conclusively rely upon such opinion.

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Benefits of Fiscal Agent Agreement Limited to Parties

Nothing in the Fiscal Agent Agreement expressed or implied, is intended to give to any person other than the City, the Fiscal Agent and the Owners, any right, remedy, claim under or by reason of the Fiscal Agent Agreement. Any covenants, stipulations, promises or agreements in the Fiscal Agent Agreement contained by and on behalf of the City shall be for the sole and exclusive benefit of the Owners and the Fiscal Agent.

Discharge of Fiscal Agent Agreement

If the City shall pay and discharge the entire indebtedness on all or any portion of the Bonds Outstanding in any one or more of the following ways:

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

(B) by depositing with the Fiscal Agent, in trust, at or before maturity, money which, together with (in the event that all of the Bonds are to be defeased) the amounts then on deposit in the funds and accounts 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 City shall determine as confirmed by an independent certified public accountant will, together with the interest to accrue thereon and (in the event that all of the Bonds are to be defeased) moneys then on deposit in the fund and accounts, be fully sufficient to pay and discharge the indebtedness on such Bonds (including all principal, interest and redemption premiums) at or before their respective maturity dates; and if such Bonds are to be redeemed prior to the maturity thereof notice of such redemption shall have been given as in the Fiscal Agent Agreement provided or provision satisfactory to the Fiscal Agent shall have been made for the giving of such notice, then, at the election of the City, 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 City under the Fiscal Agent Agreement with respect to such Bonds Outstanding shall cease and terminate, except only the obligations of the City to pay or cause to be paid to the Owners of the Bonds not so surrendered and paid all sums due thereon and all amounts owing to the Fiscal Agent; and thereafter Special Taxes shall not be payable to the Fiscal Agent. Notice of such election shall be filed with the Fiscal Agent. Any funds thereafter held by the Fiscal Agent upon payments of all fees and expenses of the Fiscal Agent, which are not required for said purpose, shall be paid over to the City.

Waiver of Personal Liability

No Councilmember, officer, agent or employee of the City shall be individually or personally liable for the payment of the principal of, or interest or any premium on, the Bonds; but nothing in the Fiscal Agent Agreement contained shall relieve any such Councilmember, officer, agent or employee from the performance of any official duty provided by law.

Unclaimed Moneys

Anything contained in the Fiscal Agent Agreement to the contrary notwithstanding, any moneys held by the Fiscal Agent in trust for the payment and discharge of the principal of, and

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the interest and any premium on, the Bonds which remains unclaimed for two (2) years after the date when the payments of such principal, interest and premium have become payable, if such moneys was held by the Fiscal Agent at such date, shall be repaid by the Fiscal Agent to the City as its absolute property free from any trust, and the Fiscal Agent shall thereupon be released and discharged with respect thereto and the Bond Owners shall look only to the City for the payment of the principal of, and interest and any premium on, such Bonds.

Applicable Law

The Fiscal Agent Agreement shall be governed by and enforced in accordance with the laws of the State applicable to contracts made and performed in the State.

Conflict with Act

In the event of a conflict between any provision of the Fiscal Agent Agreement with any provision of the Act as in effect on the Closing Date, the provision of the Act shall prevail over the conflicting provision of the Fiscal Agent Agreement.

Payment on Business Day

In any case where the date of the maturity of interest or of principal (and premium, if any) of the Bonds or the date fixed for redemption of any Bonds or the date any action is to be taken pursuant to the Fiscal Agent Agreement is other than a Business Day, the payment of interest or principal (and premium, if any) or the action need not be made on such date but may be made on the next succeeding day which is a Business Day with the same force and effect as if made on the date required and no interest shall accrue for the period from and after such date.

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APPENDIX D

FORM OF OPINION OF BOND COUNSEL

[Bond Closing Date]

[Addressees]

Re: $10,275,000 City of Redwood City Redwood Shores Community Facilities District No. 99-1 (Shores Transportation Improvement Project) of the City of Redwood City, Special Tax Refunding Bonds, Series 2012B

Ladies and Gentlemen:

We have acted as bond counsel to the City of Redwood City (the “City”) in connection with the issuance by the City of its $10,275,000 City of Redwood City Redwood Shores Community Facilities District No. 99-1 (Shores Transportation Improvement Project) of the City of Redwood City, Special Tax Refunding Bonds, Series 2012B (the “Bonds”), on behalf of Redwood Shores Community Facilities District No. 99-1 (Shores Transportation Improvement Project) of the City of Redwood City (the “District”). The Bonds are being issued 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 December 1, 2012 (the “Fiscal Agent Agreement”), between the City on behalf of the District and U.S. Bank National Association (the “Fiscal Agent”). We have examined the law and such certified proceedings and other documents as we deem necessary to render this opinion. Capitalized undefined terms used herein have the meanings ascribed thereto in the Fiscal Agent Agreement.

As Bond Counsel we have examined copies certified to us as being true and complete copies of the proceedings of the City and in connection with the authorization and sale of the Bonds. In this connection, we have also examined such other documents, opinions and instruments as we have deemed necessary in order to render the opinions expressed herein. In such examination, we have assumed the genuineness of all signatures on original documents (other than signatures of the City) and the conformity to the original documents of all copies submitted to us. We have also assumed the due execution and delivery of all documents (other than with respect to the City) which we have examined where due execution and delivery are a prerequisite to the effectiveness thereof. As to the various questions of fact material to our opinion, we have relied upon statements or certificates of officers and representatives of the City, public officials and others.

On the basis of the foregoing examination and assumptions and in reliance thereon and on all such other matters of fact as we deemed relevant under the circumstances, and upon consideration of the applicable law, we are of the opinion that:

1. The City is duly created and validly existing as a public body, corporate and politic, with the power to adopt the resolution authorizing the issuance of the Bonds, enter into the Fiscal Agent Agreement and perform the agreements on its part contained therein and issue the Bonds.

2. The Bonds have been duly authorized, executed and delivered by the City and are valid and binding limited obligations of the City, payable solely from the sources provided therefore in the Fiscal Agent Agreement.

3. The Fiscal Agent Agreement has been duly entered into by the City and constitutes a valid and binding obligation of the City enforceable upon the City. Pursuant to the Act, the Fiscal Agent

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Agreement creates a valid lien on the funds pledged by the Fiscal Agent Agreement for the security of the Bonds.

4. Interest received by the owners of the Bonds is excludable under existing statutes, regulations, rulings and court decisions, from gross income for Federal income tax purposes pursuant to Section 103(a) of the Internal Revenue Code of 1986, as amended (the “Code”). Interest on the Bonds is not a specific preference item for purposes of the federal individual or corporate alternative minimum taxes, although the interest is included in adjusted current earnings in calculating corporate alternative minimum taxable income. Interest received by the owners of the Bonds is exempt from personal income taxes of the State of California under present law.

In rendering the opinions expressed in paragraph 4 above, we are relying upon representations and covenants of the City in the Fiscal Agent Agreement and in the Tax Certificate of the City, dated as of the date hereof, concerning the use of the facilities financed with Bond proceeds, the investment and use of Bond proceeds and the rebate, if any, to the Federal government of certain earnings thereon. In addition, we have assumed that all such representations are true and correct and that the City will comply with such covenants. We express no opinion with respect to the exclusions of the interest from gross income under Section 103(a) of the Code in the event that any such representations are untrue or the City fails to comply with such covenants. Except as stated above, we express no opinion as to any Federal tax consequences of the receipt of interest on, or the ownership or disposition of, the Bonds.

Certain agreements, requirements and procedures contained or referred to in the Fiscal Agent Agreement, the Tax Certificate and other relevant documents may be changed, and certain actions (including, without limitation, defeasance of the Bonds) may be taken or omitted under the circumstances and subject to the terms and conditions set forth in such documents. No opinion is expressed herein as to any payment of interest on the Bonds if any such change occurs or action is taken or omitted to be taken upon the advice or approval of counsel other than ourselves.

Further, we note that the rights of the owners of the Bonds and the enforceability of the Bonds or the Fiscal Agent Agreement may be subject to bankruptcy, insolvency, reorganization, arrangement, fraudulent conveyance, moratorium and other similar laws affecting creditors’ rights, to the application of equitable principles, to the exercise of judicial discretion in appropriate cases and to the limitations on legal remedies against governmental entities in the State of California. We express no opinion with respect to any indemnification, contribution, choice of law, choice of forum or waiver provisions contained in the foregoing documents, nor do we express any opinion with respect to the plans, specifications, maps, reports, or other engineering or financial details of the proceedings, or upon the Rate and Method or the validity of the Special Taxes levied upon any individual parcel. Finally, we undertake no responsibility herein for the accuracy, completeness or fairness of the Official Statement or other offering material relating to the Bonds and express no opinion with respect thereto.

Respectfully submitted,

NOSSAMAN LLP

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APPENDIX E

FORM OF CONTINUING DISCLOSURE AGREEMENT

THIS CONTINUING DISCLOSURE AGREEMENT (the “Disclosure Agreement”), dated as of December 1, 2012, is by and between WILLDAN FINANCIAL SERVICES, as dissemination agent (the “Dissemination Agent”), and the CITY OF REDWOOD CITY, CALIFORNIA (the “City”), for and on behalf of the Redwood Shores Community Facilities District No. 99-1 (Shores Transportation Improvement Project) of the City of Redwood City (the “District”).

RECITALS:

WHEREAS, the City has issued, for and on behalf of the District, the City of Redwood City Redwood Shores Community Facilities District No. 99-1 (Shores Transportation Improvement Project) of the City of Redwood City, Special Tax Refunding Bonds, Series 2012B (the “Bonds”) in the initial principal amount of $10,275,000; and

WHEREAS, the Bonds are being issued pursuant to a Fiscal Agent Agreement, dated as of December 1, 2012 (the “Fiscal Agent Agreement”), by and between U.S. Bank National Association, as fiscal agent (the “Fiscal Agent”) and the City, for and on behalf of the District; and

WHEREAS, this Disclosure Agreement is being executed and delivered by the City and the Dissemination Agent for the benefit of the owners and beneficial owners of the Bonds and in order to assist the underwriter of the Bonds in complying with United States Securities and Exchange Commission Rule 15c2-12(b)(5).

AGREEMENT:

NOW, THEREFORE, for and in consideration of the premises and mutual covenants herein contained, and for other consideration the receipt and sufficiency of which is hereby acknowledged, the parties hereto agree as follows:

Section 1. Definitions. In addition to the definitions of capitalized terms set forth in Section 1.03 of the Fiscal Agent Agreement, which apply to any capitalized term used in this Disclosure Agreement unless otherwise defined in this Section or in the Recitals above, the following capitalized terms shall have the following meanings when used in this Disclosure Agreement:

“Annual Report” means any Annual Report provided by the City pursuant to, and as described in, Sections 3 and 4 of this Disclosure Agreement.

“Beneficial Owner” shall mean any person who (a) has the power, directly or indirectly, to vote or consent with respect to, or to dispose of ownership of, any Bond (including persons holding any Bonds through nominees, depositories or other intermediaries), or (b) is treated as the owner of any Bond for federal income tax purposes.

“Disclosure Representative” means the Director of Finance of the City or the Director of Finance’s designee, or such other officer or employee as the City shall designate as the Disclosure Representative hereunder in writing to the Dissemination Agent from time to time.

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“Dissemination Agent” means Willdan Financial Services, acting in its capacity as Dissemination Agent hereunder, or any successor Dissemination Agent designated in writing by the City and which has filed with the City a written acceptance of such designation.

“EMMA” or “Electronic Municipal Market Access” means the centralized on-line repository for documents to be filed with the MSRB, such as official statements and disclosure information relating to municipal bonds, notes and other securities as issued by state and local governments.

“Listed Events” means any of the events listed in Section 5(a) or 5(b) of this Disclosure Agreement.

“MSRB” means the Municipal Securities Rulemaking Board, which has been designated by the Securities and Exchange Commission as the sole repository of disclosure information for purposes of the Rule, or any other repository of disclosure information which may be designated by the Securities and Exchange Commission as such for purposes of the Rule in the future.

“Official Statement” means the Official Statement, dated December 11, 2012, relating to the Bonds.

“Participating Underwriter” means the original underwriter of the Bonds required to comply with the Rule in connection with offering of the Bonds.

“Rule” means Rule 15c2-12(b)(5) adopted by the Securities and Exchange Commission under the Securities Exchange Act of 1934, as the same may be amended from time to time.

Section 2. Purpose of the Disclosure Agreement. This Disclosure Agreement is being executed and delivered by the City and the Dissemination Agent for the benefit of the owners and Beneficial Owners of the Bonds and in order to assist the Participating Underwriter in complying with the Rule.

Section 3. Provision of Annual Reports.

(a) Delivery of Annual Report. The City shall, or shall cause the Dissemination Agent to, not later than nine months after the end of the City’s fiscal year (which currently ends on June 30), commencing with the report for the 2011-12 Fiscal Year, which is due not later than March 30, 2013, file with EMMA, in a readable PDF or other electronic format as prescribed by the MSRB, an Annual Report that is consistent with the requirements of Section 4 of this Disclosure Agreement. The Annual Report may be submitted as a single document or as separate documents comprising a package and may cross-reference other information as provided in Section 4 of this Disclosure Agreement; provided that the audited financial statements of the City may be submitted separately from the balance of the Annual Report and later than the date required above for the filing of the Annual Report if they are not available by that date.

(b) Change of Fiscal Year. If the City’s fiscal year changes, it shall give notice of such change in the same manner as for a Listed Event under Section 5(c), and subsequent Annual Report filings shall be made no later than six months after the end of such new fiscal year end.

(c) Delivery of Annual Report to Dissemination Agent. Not later than fifteen (15) Business Days prior to the date specified in subsection (a) (or, if applicable, subsection (b) of this Section 3 for providing the Annual Report to EMMA), the City shall provide the Annual Report to the Dissemination Agent (if other than the City). If by such date, the Dissemination Agent has not received a copy of the Annual Report, the Dissemination Agent shall notify the City.

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(d) Report of Non-Compliance. If the City is the Dissemination Agent and is unable to file an Annual Report by the date required in subsection (a) (or, if applicable, subsection (b)) of this Section 3, the City shall send a notice to EMMA substantially in the form attached hereto as Exhibit A. If the City is not the Dissemination Agent and is unable to provide an Annual Report to the Dissemination Agent by the date required in subsection (c) of this Section 3, the Dissemination Agent shall send a notice to EMMA in substantially the form attached hereto as Exhibit A.

(e) Annual Compliance Certification. The Dissemination Agent shall, if the Dissemination Agent is other than the City, file a report with the City certifying that the Annual Report has been filed with EMMA pursuant to Section 3 of this Disclosure Agreement, stating the date it was so provided and filed.

Section 4. Content of Annual Reports. The Annual Report shall contain or incorporate by reference the following:

(a) Financial Statements. Audited financial statements of the City for the most recently completed fiscal year, prepared in accordance generally accepted accounting principles as promulgated to apply to governmental entities from time to time by the Governmental Accounting Standards Board, together with the following statement:

THE CITY’S ANNUAL FINANCIAL STATEMENT IS PROVIDED SOLELY TO COMPLY WITH THE SECURITIES EXCHANGE COMMISSION STAFF’S INTERPRETATION OF RULE 15C2-12 UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED. NO FUNDS OR ASSETS OF THE CITY ARE REQUIRED TO BE USED TO PAY DEBT SERVICE ON THE BONDS. INVESTORS SHOULD NOT RELY ON THE FINANCIAL CONDITION OF THE CITY IN EVALUATING WHETHER TO BUY, HOLD OR SELL THE BONDS.

If the City’s audited financial statements are not available by the time the Annual Report is required to be filed pursuant to Section 3(a), the Annual Report shall contain unaudited financial statements in a format similar to the financial statements contained in the final Official Statement, and the audited financial statements shall be filed in the same manner as the Annual Report when they become available.

(b) Other Annual Information. To the extent not included in the audited final statements of the City, the Annual Report shall also include the following information:

(i) The most recent annual information required to be provided to the California Debt and Investment Advisory Commission pursuant to Section 5.11 of the Fiscal Agent Agreement, which shall include, in any event, the principal amount of the Bonds outstanding and the balance in the Reserve Fund.

(ii) The levy of the Special Taxes (as defined in the Fiscal Agent Agreement), for the most recent fiscal year by County Assessor’s parcel number.

(iii) Any amendments or changes to the Rate and Method of Apportionment of the Special Taxes since the last Annual Report.

(iv) The total current year’s assessed value of all parcels subject to the Special Taxes and the current year’s assessed value for each such parcel.

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(v) The Special Tax and property tax delinquency rate for parcels in the District for the most recent year.

(vi) Concerning delinquent parcels:

• the number of parcels delinquent in payment of Special Tax, • the amount of total delinquency and as a percentage of total Special Tax levy, and • the status of the District’s actions on covenants to pursue foreclosure proceedings upon delinquent properties.

(vii) The identity of any delinquent tax payer obligated for more than 5% of the annual Special Tax levy and:

• the assessed value of applicable properties, and • a summary of results of foreclosure sales, if available.

(viii) Any change in the application of the County’s Teeter Plan to the Special Taxes levied in the District since the last Annual Report.

(c) Cross References. Any or all of the items listed above may be included by specific reference to other documents, including official statements of debt issues of the City or related public entities, which are available to the public on EMMA. The City shall clearly identify each such other document so included by reference.

If the document included by reference is a final official statement, it must be available from EMMA.

(d) Further Information. In addition to any of the information expressly required to be provided under paragraph (b) of this Section 4, the City shall provide such further information, if any, as may be necessary to make the specifically required statements, in the light of the circumstances under which they are made, not misleading.

Section 5. Reporting of Events.

(a) Listed Events. The City shall, or shall cause the Dissemination Agent (if not the City) to, give notice of the occurrence of any of the following events with respect to the Bonds:

(1) Principal and interest payment delinquencies.

(2) Unscheduled draws on debt service reserves reflecting financial difficulties.

(3) Unscheduled draws on credit enhancements reflecting financial difficulties.

(4) Substitution of credit or liquidity providers, or their failure to perform.

(5) Defeasances.

(6) Rating changes.

(7) Tender offers.

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(8) Bankruptcy, insolvency, receivership or similar event of the obligated person.

(9) Adverse tax opinions, the issuance by the Internal Revenue Service of proposed or final determinations of taxability, Notices of Proposed Issue (IRS Form 5701-TEB) or other material notices or determinations with respect to the tax status of the security, or other material events affecting the tax status of the security.

Note: For the purposes of the event identified in subparagraph (8), the event is considered to occur when any of the following occur: the appointment of a receiver, fiscal agent or similar officer for an obligated person in a proceeding under the U.S. Bankruptcy Code or in any other proceeding under state or federal law in which a court or governmental authority has assumed jurisdiction over substantially all of the assets or business of the obligated person, or if such jurisdiction has been assumed by leaving the existing governmental body and officials or officers in possession but subject to the supervision and orders of a court or governmental authority, or the entry of an order confirming a plan of reorganization, arrangement or liquidation by a court or governmental authority having supervision or jurisdiction over substantially all of the assets or business of the obligated person.

(b) Material Events. The City shall give, or cause to be given, notice of the occurrence of any of the following events with respect to the Bonds, if material:

(1) Non-payment related defaults.

(2) Modifications to rights of security holders.

(3) Bond calls.

(4) The release, substitution, or sale of property securing repayment of the securities.

(5) The consummation of a merger, consolidation, or acquisition involving an obligated person or the sale of all or substantially all of the assets of the obligated person, other than in the ordinary course of business, the entry into a definitive agreement to undertake such an action or the termination of a definitive agreement relating to any such actions, other than pursuant to its terms.

(6) Appointment of a successor or additional trustee, or the change of name of a trustee.

(c) Time to Disclose. The City shall, or shall cause the Dissemination Agent (if not the City) to, file a notice of such occurrence with EMMA, in an electronic format as prescribed by the MSRB, in a timely manner not in excess of 10 business days after the occurrence of any Listed Event. Notwithstanding the foregoing, notice of Listed Events described in subsections (a)(5) and (b)(3) above need not be given under this subsection any earlier than the notice (if any) of the underlying event is given to owners of affected Bonds under the Fiscal Agent Agreement.

Section 6. Identifying Information for Filings with EMMA. All documents provided to EMMA under this Disclosure Agreement shall be accompanied by identifying information as prescribed by the MSRB.

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Section 7. Termination of Reporting Obligation. The City’s obligations under this Disclosure Agreement shall terminate upon the defeasance, prior redemption or payment in full of all of the Bonds. If such termination occurs prior to the final maturity of the Bonds, the City shall give notice of such termination in the same manner as for a Listed Event under Section 5(c).

Section 8. Dissemination Agent.

(a) Appointment of Dissemination Agent. The City 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 agent, with or without appointing a successor Dissemination Agent. The initial Dissemination Agent shall be Willdan Financial Services.

If the Dissemination Agent is not the City, the Dissemination Agent shall not be responsible in any manner for the content of any notice or report prepared by the City pursuant to this Disclosure Agreement. It is understood and agreed that any information that the Dissemination Agent may be instructed to file with EMMA shall be prepared and provided to it by the City. The Dissemination Agent has undertaken no responsibility with respect to the content of any reports, notices or disclosures provided to it under this Disclosure Agreement and has no liability to any person, including any Bond owner, with respect to any such reports, notices or disclosures. The fact that the Dissemination Agent or any affiliate thereof may have any fiduciary or banking relationship with the City shall not be construed to mean that the Dissemination Agent has actual knowledge of any event or condition, except as may be provided by written notice from the City.

(b) Compensation of Dissemination Agent. The Dissemination Agent shall be paid compensation by the City for its services provided hereunder as agreed to between the Dissemination Agent and the City from time to time and all expenses, legal fees and expenses and advances made or incurred by the Dissemination Agent in the performance of its duties hereunder. The Dissemination Agent shall not be deemed to be acting in any fiduciary capacity for the City, owners of the Bonds or Beneficial Owners, or any other party. The Dissemination Agent may rely, and shall be protected in acting or refraining from acting, upon any direction from the City or an opinion of nationally recognized bond counsel. The Dissemination Agent may at any time resign by giving written notice of such resignation to the City. The Dissemination Agent shall not be liable hereunder except for its negligence or willful misconduct.

(c) Responsibilities of Dissemination Agent. In addition of the filing obligations of the Dissemination Agent set forth in Sections 3(e) and 5, the Dissemination Agent shall be obligated, and hereby agrees, to provide a request to the City to compile the information required for its Annual Report at least 30 days prior to the date such information is to be provided to the Dissemination Agent pursuant to subsection (c) of Section 3. The failure to provide or receive any such request shall not affect the obligations of the City under Section 3.

Section 9. Amendment; Waiver. Notwithstanding any other provision of this Disclosure Agreement, the City may amend this Disclosure Agreement (and the Dissemination Agent shall agree to any amendment so requested by the City that does not impose any greater duties or risk of liability on the Dissemination Agent), and any provision of this Disclosure Agreement may be waived, provided that all of the following conditions are satisfied:

(a) Change in Circumstances. If the amendment or waiver relates to the provisions of Sections 3(a), 4 or 5(a) or (b), 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

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in the identity, nature, or status of an obligated person with respect to the Bonds, or the type of business conducted.

(b) Compliance as of Issue Date. The undertaking, as amended or taking into account such waiver, would, in the opinion of a nationally recognized bond counsel, have complied with the requirements of the Rule at the time of the original issuance of the Bonds, after taking into account any amendments or interpretations of the Rule, as well as any change in circumstances.

(c) Consent of Holders; Non-impairment Opinion. The amendment or waiver either (i) is approved by the Bond owners in the same manner as provided in the Fiscal Agent Agreement for amendments to the Fiscal Agent Agreement with the consent of Bond owners, or (ii) does not, in the opinion of nationally recognized bond counsel, materially impair the interests of the Bond owners or Beneficial Owners.

If this Disclosure Agreement is amended or any provision of this Disclosure Agreement is waived, the City shall describe such amendment or waiver in the next following Annual 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 City. 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 in the same manner as for a Listed Event under Section 5(c), 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.

Section 10. Additional Information. Nothing in this Disclosure Agreement shall be deemed to prevent the City 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 City 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 City 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.

Section 11. Default. In the event of a failure of the City to comply with any provision of this Disclosure Agreement, any Bond owner or Beneficial Owner, or the Fiscal Agent or the Participating Underwriter, may take such actions as may be necessary and appropriate, including seeking mandate or specific performance by court order, to cause the City to comply with its obligations under this Disclosure Agreement. The sole remedy under this Disclosure Agreement in the event of any failure of the City to comply with this Disclosure Agreement shall be an action to compel performance.

Section 12. Beneficiaries. This Disclosure Agreement shall inure solely to the benefit of the City, the Fiscal Agent, the Dissemination Agent, the Participating Underwriter and holders and Beneficial Owners from time to time of the Bonds, and shall create no rights in any other person or entity.

Section 13. 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.

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IN WITNESS WHEREOF, the parties hereto have executed this Disclosure Agreement as of the date first above written.

CITY OF REDWOOD CITY, CALIFORNIA for and on behalf of the REDWOOD SHORES COMMUNITY FACILITIES DISTRICT NO. 99-1 (SHORES TRANSPORTATION IMPROVEMENT PROJECT) OF THE CITY OF REDWOOD CITY

By: Director of Finance

WILLDAN FINANCIAL SERVICES, as Dissemination Agent

By: Its:

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EXHIBIT A

NOTICE TO MUNICIPAL SECURITIES RULEMAKING BOARD OF FAILURE TO FILE ANNUAL REPORT

Name of Obligor: City of Redwood City, California for and on behalf of the Redwood Shores Community Facilities District No. 99-1 (Shores Transportation Improvement Project) of the City of Redwood City

Name of Bond Issue: City of Redwood City Redwood Shores Community Facilities District No. 99-1 (Shores Transportation Improvement Project) of the City of Redwood City, Special Tax Refunding Bonds, Series 2012B

Date of Issuance: December 20, 2012

NOTICE IS HEREBY GIVEN that the Obligor has not provided an Annual Report with respect to the above-named Bonds as required by Section 3 of the Continuing Disclosure Agreement, dated as of December 1, 2012, between the Obligor and Willdan Financial Services, as dissemination agent, and Section 5.13 of the Fiscal Agent Agreement, dated as of December 1, 2012, between the Obligor and U.S. Bank National Association, as fiscal agent. The Obligor anticipates that the Annual Report will be filed by ______.

Date:

WILLDAN FINANCIAL SERVICES, as Dissemination Agent on behalf of the City of Redwood City

By: Its:

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APPENDIX F

DTC AND THE BOOK-ENTRY ONLY SYSTEM

The information in this Appendix F has been provided by The Depository Trust Company (“DTC”), New York, NY, for use in securities offering documents, and the City does not take responsibility for the accuracy or completeness thereof. The City cannot and does not give any assurances that DTC, DTC Participants or Indirect Participants will distribute to the beneficial owners of the Bonds (the “Beneficial Owners”) either (a) payments of interest, principal or premium, if any, with respect to the Bonds or (b) certificates representing ownership interest in or other confirmation of ownership interest in the Bonds, or that they will so do on a timely basis or that DTC, DTC Direct Participants or DTC Indirect Participants mill act in the manner described in this Official Statement.

The following description of DTC, the procedures and record keeping with respect to beneficial ownership interests in the Bonds, payment of principal, interest and other payments on the Bonds to DTC Participants or Beneficial Owners, confirmation and transfer of beneficial ownership interest in the Bonds and other related transactions by and between DTC, the DTC Participants and the Beneficial Owners is based solely on information provided by DTC. Accordingly, no representations can be made concerning these matters and neither the DTC Participants nor the Beneficial Owners should rely on the foregoing information with respect to such matters, but should instead confirm the same with DTC or the DTC Participants, as the case may be.

Neither the issuer of the Bonds (the “Issuer”) nor the trustee, fiscal agent or paying agent appointed with respect to the Bonds (the “Agent”) take any responsibility for the information contained in this Appendix.

No assurances can be given that DTC, DTC Participants or Indirect Participants will distribute to the Beneficial Owners (a) payments of interest, principal or premium, if any, with respect to the Bonds, (b) certificates representing ownership interest in or other confirmation or ownership interest in the Bonds, or (c) redemption or other notices sent to DTC or Cede & Co., its nominee, as the registered owner of the Bonds, or that they will so do on a timely basis, or that DTC, DTC Participants or DTC Indirect Participants will act in the manner described in this Appendix. The current “Rules” applicable to DTC are on file with the Securities and Exchange Commission and the current “Procedures” of DTC to be followed in dealing with DTC Participants are on file with DTC.

1. The Depository Trust Company (“DTC”), New York, NY, will act as securities depository for the Bonds (the “Securities”). The Securities will be issued as fully-registered securities registered in the name of Cede & Co. (DTC’s partnership nominee) or such other name as may be requested by an authorized representative of DTC. One fully-registered Security certificate will be issued for each issue of the Securities, each in the aggregate principal amount of such issue, and will be deposited with DTC. If, however, the aggregate principal amount of any issue exceeds $500 million, one certificate will be issued with respect to each $500 million of principal amount, and an additional certificate will be issued with respect to any remaining principal amount of such issue.

2. DTC, the world’s largest securities depository, is a limited-purpose trust company organized under the New York Banking Law, a “banking organization” within the meaning of the New York Banking Law, a member of the Federal Reserve System, a “clearing corporation” within the meaning of the New York Uniform Commercial Code, and a “clearing agency” registered pursuant to the provisions of Section 17A of the Securities Exchange Act of 1934. DTC holds and provides asset servicing for over 3.5 million issues of U.S. and non-U.S. equity issues, corporate and municipal debt issues, and money market instruments (from over 100 countries) that DTC’s participants (“Direct Participants”) deposit with DTC. DTC also

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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 is the holding company for DTC, National Securities Clearing Corporation and Fixed Income Clearing Corporation, all of which are registered clearing agencies. DTCC is owned by the users of its regulated subsidiaries. Access to the DTC system is also available to others such as both U.S. and non-U.S. securities brokers and dealers, banks, trust companies, and clearing corporations that clear through or maintain a custodial relationship with a Direct Participant, either directly or indirectly (“Indirect Participants”). On August 8, 2011, Standard & Poor’s downgraded its rating of DTC from AAA to AA+. The DTC Rules applicable to its Participants are on file with the Securities and Exchange Commission. More information about DTC can be found at www.dtcc.com and www.dtc.org. The information contained on this Internet site is not incorporated herein by reference.

3. Purchases of Securities under the DTC system must be made by or through Direct Participants, which will receive a credit for the Securities on DTC’s records. The ownership interest of each actual purchaser of each Security (“Beneficial Owner”) is in turn to be recorded on the Direct and Indirect Participants’ records. Beneficial Owners will not receive written confirmation from DTC of their purchase. Beneficial Owners are, however, expected to receive written confirmations providing details of the transaction, as well as periodic statements of their holdings, from the Direct or Indirect Participant through which the Beneficial Owner entered into the transaction. Transfers of ownership interests in the Securities are to be accomplished by entries made on the books of Direct and Indirect Participants acting on behalf of Beneficial Owners. Beneficial Owners will not receive certificates representing their ownership interests in Securities, except in the event that use of the book-entry system for the Securities is discontinued.

4. To facilitate subsequent transfers, all Securities deposited by Direct Participants with DTC are registered in the name of DTC’s partnership nominee, Cede & Co., or such other name as may be requested by an authorized representative of DTC. The deposit of Securities with DTC and their registration in the name of Cede & Co. or such other DTC nominee do not effect any change in beneficial ownership. DTC has no knowledge of the actual Beneficial Owners of the Securities; DTC’s records reflect only the identity of the Direct Participants to whose accounts such Securities are credited, which may or may not be the Beneficial Owners. The Direct and Indirect Participants will remain responsible for keeping account of their holdings on behalf of their customers.

5. Conveyance of notices and other communications by DTC to Direct Participants, by Direct Participants to Indirect Participants, and by Direct Participants and Indirect Participants to Beneficial Owners will be governed by arrangements among them, subject to any statutory or regulatory requirements as may be in effect from time to time. Beneficial Owners of Securities may wish to take certain steps to augment the transmission to them of notices of significant events with respect to the Securities, such as redemptions, tenders, defaults, and proposed amendments to the Security documents. For example, Beneficial Owners of Securities may wish to ascertain that the nominee holding the Securities for their benefit has agreed to obtain and transmit notices to Beneficial Owners. In the alternative, Beneficial Owners may wish to provide their names and addresses to the registrar and request that copies of notices be provided directly to them.

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6. Redemption notices shall be sent to DTC. If less than all of the Securities within an issue are being redeemed, DTC’s practice is to determine by lot the amount of the interest of each Direct Participant in such issue to be redeemed.

7. Neither DTC nor Cede & Co. (nor any other DTC nominee) will consent or vote with respect to Securities unless authorized by a Direct Participant in accordance with DTC’s MMI Procedures. Under its usual procedures, DTC mails an Omnibus Proxy to Issuer as soon as possible after the record date. The Omnibus Proxy assigns Cede & Co.’s consenting or voting rights to those Direct Participants to whose accounts Securities are credited on the record date (identified in a listing attached to the Omnibus Proxy).

8. Redemption proceeds, distributions, and dividend payments on the Securities will be made to Cede & Co., or such other nominee as may be requested by an authorized representative of DTC. DTC’s practice is to credit Direct Participants’ accounts upon DTC’s receipt of funds and corresponding detail information from Issuer or Agent, on payable date in accordance with their respective holdings shown on DTC’s records. Payments by Participants to Beneficial Owners will be governed by standing instructions and customary practices, as is the case with securities held for the accounts of customers in bearer form or registered in “street name,” and will be the responsibility of such Participant and not of DTC, Agent, or Issuer, subject to any statutory or regulatory requirements as may be in effect from time to time. Payment of redemption proceeds, distributions, and dividend payments to Cede & Co. (or such other nominee as may be requested by an authorized representative of DTC) is the responsibility of Issuer or Agent, disbursement of such payments to Direct Participants will be the responsibility of DTC, and disbursement of such payments to the Beneficial Owners will be the responsibility of Direct and Indirect Participants.

9. DTC may discontinue providing its services as depository with respect to the Securities at any time by giving reasonable notice to Issuer or Agent. Under such circumstances, in the event that a successor depository is not obtained, Security certificates are required to be printed and delivered.

10. The Issuer may decide to discontinue use of the system of book-entry-only transfers through DTC (or a successor securities depository). In that event, Security certificates will be printed and delivered to DTC.

11. The information in this section concerning DTC and DTC’s book-entry system has been obtained from sources that Issuer believes to be reliable, but Issuer takes no responsibility for the accuracy thereof.

F-3 THIS PAGE INTENTIONALLY LEFT BLANK APPENDIX G

DISTRICT BOUNDARY MAP

G-1 G-2 G-3 G-4 G-5

G-6 APPENDIX H TAXABLE PARCELS IN THE DISTRICT

San Mateo Percentage County Taxable Maximum of Total Value to Assessor's Building Possible Special Tax 2012/2013 Share of Allocable Parcel Square 2012/2013 County Assessed Value(1) Annual Special Levy Special Principal of 2012 Bond Number Property Owner(1) Parcel Address(1) Footage(2) Land Building Total Tax(3) 2012/2013 Tax Levy 2012 Bonds Principal 095-012-220 WESTPORT OFFICE PARK LLC 800 BRIDGE PARKWAY 96,768.0 $ 8,101,232.00 $ 17,756,129.00 $ 25,857,361.00 $ 22,450.18 $ 20,238.42 2.23% $ 229,245.09 105.50 095-012-450 WESTPORT OFFICE PARK LLC 1400 BRIDGE PKWY 145,152.0 13,261,607.00 25,524,436.00 38,786,043.00 33,675.26 30,357.64 3.35 343,867.75 105.50 095-012-460 WESTPORT OFFICE PARK LLC 1600 BRIDGE PKWY 725,760.0 60,759,256.00 133,170,977.00 193,930,233.00 168,376.32 151,788.22 16.73 1,719,338.96 105.50 095-152-080 REALTY ASSOCIATES FUND VII LP 1 TWIN DOLPHIN DR 55,989.0 8,212,208.00 7,324,401.00 15,536,609.00 12,989.45 11,709.74 1.29 132,638.83 109.56 095-152-090 REALTY ASSOCIATES FUND VII LP 100 MARINE PKWY 79,000.0 7,768,305.00 10,931,115.00 18,699,420.00 18,328.00 16,522.36 1.82 187,152.45 93.46 095-153-080 METROPOLITAN LIFE INS CO 3 LAGOON DR 239,400.0 15,025,829.00 32,336,870.00 47,362,699.00 55,540.80 50,069.02 5.52 567,142.94 78.11 095-220-210 101 REDWOOD SHORES LLC 101 REDWOOD SHORES PKWY 100,000.0 13,295,335.00 15,993,571.00 29,288,906.00 23,200.00 20,914.38 2.30 236,901.84 115.64 095-220-220 RNM TWIN DOLPHIN L P 330 TWIN DOLPHIN DR 45,792.0 2,174,010.00 8,464,797.00 10,638,807.00 10,623.74 9,577.10 1.06 108,481.94 91.73 095-220-230 RNM TWIN DOLPHIN L P 350 TWIN DOLPHIN DR 75,402.0 3,181,550.00 8,464,797.00 11,646,347.00 17,493.26 15,769.86 1.74 178,628.72 60.98 095-221-120 SPK-TWIN DOLPHIN PLAZA LLC 555 TWIN DOLPHIN DR 200,000.0 33,813,275.00 34,453,275.00 68,266,550.00 46,400.00 41,828.76 4.61 473,803.68 134.77 095-222-270 BAY CLUB PENINSULA LLC 288 REDWOOD SHORES PKWY 100,088.0 11,754,228.00 18,771,209.00 30,525,437.00 23,220.42 20,932.78 2.31 237,110.26 120.42 095-222-280 LBA REALTY FUND III COMPANY I LLC 100 REDWOOD SHORES PKWY 62,500.0 7,359,986.00 14,639,974.00 21,999,960.00 14,500.00 13,071.48 1.44 148,063.56 138.98 095-222-300 SHAPELL INDUSTRIES INC 210 REDWOOD SHORES PKWY 123,961.0 6,745,381.00 18,484,847.00 25,230,228.00 28,758.95 25,925.68 2.86 293,665.95 80.36 095-222-330 REDWOOD SUITES LLC 1000 TWIN DOLPHIN DR 56,692.0 2,700,000.00 7,900,000.00 10,600,000.00 13,152.54 11,856.78 1.31 134,304.39 73.82 095-232-020 HINES VAF NO CAL PROPERTIES L P 130 SHORELINE DR 75,114.0 13,000,000.00 7,000,000.00 20,000,000.00 17,426.45 15,709.62 1.73 177,946.36 105.13 095-233-090 CA-SHOREBREEZE OFFICE LTD PTP 255 SHORELINE DR 110,000.0 17,919,968.00 19,733,299.00 37,653,267.00 25,520.00 23,005.82 2.54 260,592.05 135.15 095-233-150 CA 333 TWIN DOLPHIN OFFICE L P 333 TWIN DOLPHIN DR 183,000.0 30,826,614.00 31,466,613.00 62,293,227.00 42,456.00 38,273.32 4.22 433,530.42 134.40 095-233-180 PLCP SF BAY HOTEL OWNERCO LLC 223 TWIN DOLPHIN DR 280,268.0 16,319,972.00 48,307,118.00 64,627,090.00 65,022.18 58,616.32 6.46 663,960.11 91.04 095-233-190 CA-SHOREBREEZE OFFICE LTD PTP 275 SHORELINE DR 110,000.0 18,346,635.00 19,946,632.00 38,293,267.00 25,520.00 23,005.82 2.54 260,592.05 137.45 095-233-200 PROVIDENT CENTRAL CREDIT UNION 303 TWIN DOLPHIN DR 165,000.0 9,505,001.00 25,386,408.00 34,891,409.00 38,280.00 34,508.72 3.80 390,887.95 83.49 095-241-030 MAI SU WUAN TR 350 BRIDGE PKWY 16,754.0 1,160,408.00 2,881,069.00 4,041,477.00 3,886.93 3,503.98 0.39 39,690.36 95.24 095-242-120 REDWOOD SHORES ASSOCIATES LLC 358 MARINE PKWY 8,052.0 2,447,054.00 1,254,898.00 3,701,952.00 1,868.06 1,684.02 0.19 19,075.27 181.53 095-242-250 BRIDGE PARK CENTER LP 370 BRIDGE PKWY 25,186.0 5,261,754.00 4,527,555.00 9,789,309.00 5,843.15 5,267.48 0.58 59,665.92 153.46 095-242-260 350 MARINE PARKWAY LLC 350 MARINE PKWY 33,800.0 7,700,000.00 2,300,000.00 10,000,000.00 7,841.60 7,069.06 0.78 80,072.82 116.81 095-441-030(4) AG PREMIA REDWOOD SHORES LLC 1201 RADIO RD 88,560.0 1,938,000.00 5,395,800.00 7,333,800.00 20,545.92 18,521.76 2.04 209,800.10 32.70 095-481-040 ELECTRONIC ARTS INC 207 REDWOOD SHORES PKWY 369,204.0 8,132,659.00 57,927,269.00 66,059,928.00 85,655.33 77,216.74 8.51 874,651.21 70.65 095-481-050 ELECTRONIC ARTS INC 209 REDWOOD SHORES PKWY 46,650.0 4,040,381.00 44,358,441.00 48,398,822.00 10,822.80 9,756.56 1.08 110,514.73 409.63 095-481-070 ELECTRONIC ARTS INC 250 SHORELINE DR 326,149.0 6,665,775.00 58,726,110.00 65,391,885.00 75,666.57 68,212.04 7.52 772,652.96 79.16 095-481-150 SPK-TOWERS @ SHORES CENTER LLC 203 REDWOOD SHORES PKWY 194,712.0 26,239,954.00 41,599,929.00 67,839,883.00 45,173.18 40,722.80 4.49 461,276.22 137.56 095-481-160 SPK-TOWERS @ SHORES CENTER LLC 201 REDWOOD SHORES PKWY 145,288.0 28,373,285.00 24,746,623.00 53,119,908.00 33,706.82 30,386.08 3.35 344,189.89 144.36 111-910-010 SAN MATEO CO DENTAL SOCIETY 240 TWIN DOLPHIN DR # A-1 1,843.34 132,381.00 141,745.00 274,126.00 427.65 385.52 0.04 4,366.87 58.72 111-910-020 SHP WESTSHORE LLC 240 TWIN DOLPHIN DR # A2 1,844.4 355,554.00 235,293.00 590,847.00 427.90 385.74 0.04 4,369.36 126.49 111-910-030 SHP WESTSHORE LLC 240 TWIN DOLPHIN DR # A3 1,463.86 282,351.00 183,004.00 465,355.00 339.62 306.14 0.03 3,467.72 125.52 111-910-040 SHP WESTSHORE LLC 240 TWIN DOLPHIN DR # A4 3,197.49 627,448.00 386,926.00 1,014,374.00 741.82 668.72 0.07 7,574.74 125.26 111-910-050 SHP WESTSHORE LLC 240 TWIN DOLPHIN DR # A5 1,859.24 360,782.00 224,835.00 585,617.00 431.34 388.84 0.04 4,404.48 124.37 111-910-060 SHP WESTSHORE LLC 240 TWIN DOLPHIN DR # A6 1,940.86 376,468.00 245,749.00 622,217.00 450.28 405.90 0.04 4,597.72 126.58 111-910-070 SHP WESTSHORE LLC 220 TWIN DOLPHIN DR # B1 3,181.59 616,990.00 402,613.00 1,019,603.00 738.13 665.40 0.07 7,537.13 126.53 111-910-080 SHP WESTSHORE LLC 220 TWIN DOLPHIN DR # B2 1,735.75 334,638.00 224,835.00 559,473.00 402.69 363.02 0.04 4,112.01 127.26 111-910-090 SHP WESTSHORE LLC 220 TWIN DOLPHIN DR # B3 1,416.69 271,894.00 183,004.00 454,898.00 328.67 296.28 0.03 3,356.03 126.79 111-910-100 SHP WESTSHORE LLC 220 TWIN DOLPHIN DR # B4 2,567.85 496,729.00 324,181.00 820,910.00 595.74 537.04 0.06 6,083.17 126.23 111-910-110 SHP WESTSHORE LLC 220 TWIN DOLPHIN DR # B5 2,449.13 470,587.00 308,494.00 779,081.00 568.20 512.22 0.06 5,802.03 125.60 111-910-120 SHP WESTSHORE LLC 200 TWIN DOLPHIN DR # C1 1,599.54 313,723.00 198,690.00 512,413.00 371.09 334.52 0.04 3,789.18 126.49 111-910-130 SHP WESTSHORE LLC 200 TWIN DOLPHIN DR # C2 2,715.19 522,874.00 345,096.00 867,970.00 629.92 567.86 0.06 6,432.28 126.22 111-910-140 SHP WESTSHORE LLC 200 TWIN DOLPHIN DR # C3 1,442.66 282,351.00 183,004.00 465,355.00 334.70 301.72 0.03 3,417.65 127.36 111-910-150 SHP WESTSHORE LLC 200 TWIN DOLPHIN DR # C4 2,666.43 517,644.00 339,868.00 857,512.00 618.61 557.66 0.06 6,316.74 126.98 111-910-160 VERTEX MANAGEMENT INC 210 TWIN DOLPHIN DR # D1 2,055.87 199,696.00 199,696.00 399,392.00 476.96 429.96 0.05 4,870.25 76.71 111-910-170 SHP WESTSHORE LLC 210 TWIN DOLPHIN DR # D2 1,820.55 350,325.00 224,835.00 575,160.00 422.37 380.74 0.04 4,312.73 124.74 111-910-180 SHP WESTSHORE LLC 210 TWIN DOLPHIN DR # D3 2,051.63 397,383.00 266,664.00 664,047.00 475.98 429.08 0.05 4,860.28 127.80 111-910-190 SHP WESTSHORE LLC 230 TWIN DOLPHIN DR #E1 2,840.8 554,246.00 324,181.00 878,427.00 659.07 594.12 0.07 6,729.73 122.09 111-910-200 SHP WESTSHORE LLC 230 TWIN DOLPHIN DR #E2 1,982.73 386,926.00 256,207.00 643,133.00 459.99 414.66 0.05 4,696.95 128.08 111-910-210 SHP WESTSHORE LLC 230 TWIN DOLPHIN DR #E3 1,986.97 381,697.00 256,207.00 637,904.00 460.98 415.56 0.05 4,707.14 126.76

H-1

(1) Based on San Mateo County 2012/2013 Secured Property Tax Roll. (2) Equal to the “Developed Commercial Square Feet” for the respective parcel, as such term is used in the Rate and Method of Apportionment of Special Taxes for the District. (3) Taxable Building Square Footage multiplied by applicable Maximum Annual Special Tax Rate for the respective Taxable Parcels. (4) This parcel, and an adjacent parcel (County Assessor’s Parcel No. 095-441-040) which contains a related parking area, had previously each been classified as Taxable Parcels. However, it was recently determined that all of the Developed Commercial Square Feet previously assigned to the two parcels was in fact located only on County Assessor’s Parcel No. 095-441-030, so that in future fiscal years all of the Special Taxes that previously would have been levied equally on both parcels will instead only be levied only on this County Assessor’s Parcel No. 095-441-030. Source: Willdan Financial Services.

H-2